The question of whether the Australian Securities and Investments Commission (ASIC) is being consistent in its handling of salaried planners employed by industry superannuation funds or their service providers has been raised by a number of financial planners.
In particular, the advisers pointed to the manner in which superannuation fund salaried advisers were being paid out of the fund’s administration fees or investment fees, meaning that all members of the fund were paying for advice whether they had received it or not.
The advisers raised the issue on the back of the latest announcement from ASIC concerning Commonwealth Financial Planning completing its enforceable undertaking relating to fee for no service.
In doing so, they pointed to the latest Financial Services Guides (FSGs) issued by two major industry funds – AustralianSuper and REST – which they said confirmed that financial advice salaries were being paid out of administration fees.
The advisers questioned whether the use of the administration fund to pay the salaried advisers meant that members were paying for advice but not receiving it.
The advisers described the ability of the industry funds to utilise their administration fees to pay salaried planners “discriminatory” and noted that ASIC had previously precluded the payment of external advisers under similar arrangements.
They said they believed the bottom line was that superannuation funds which owned salaried financial planning businesses were benefiting from not having to deal with client ‘opt-in’ or deal with fee disclosure statements because their operating expenses were covered out of the investment fees.austral
Comments
this is not right...
Yes it is discriminatory and it's a disgrace that ASIC are allowing it. There is something rotten going on at ASIC and there is a pattern of behaviour this is very concerning when it comes to these funds. Why did ASIC use the brand name 'Industry Fund' in their sample statement of advice? Why do they tolerate these funds charging low income, disengaged members with insurance premiums for policies they don't know exist and in some cases can't even make a claim on them? How does this meet the requirement to act 'honestly, fairly and efficiently'? Why do they allow these funds to issue super fund comparisons which are blatantly wrong (I have had two clients show me a report which contained the wrong version of their super fund and poor performing investments which have never been in their portfolio). Using Chant West as cover is no excuse. If they can't get the comparisons right, it should not be allowed. Gosh, if I gave a client a comparison report and it contained false information and was not in the form of an SOA, there would be hell to pay. Yet they get away with it? Why do they allow these funds to get away with the misleading 'whole of fund' performance comparisons? Are ASIC really that dumb that they don't understand how this distorts the statistics? Finally, look at Australian Super's 'balanced fund'. It contains an allocation of just 21% in cash and fixed interest investments. That is NOT a balanced fund, not even close. Yet despite all of these shortcomings, ASIC chose this fund as their default for their own employees!
Perhaps Hedware can tell us what deals have been done to allow this? After all, this issue is the Elephant in the room in my book.
Seriously, I thought this was an April fools article at first. The attempted misdirection and logic is laughable if it were not real.
If advisers are paid from a funds consolidated revenue, but also charged appropriate fees for their services to fund members actually getting personal advice, and being invoices for that, what’s the issue?
Do they also think funds, AMP and others provide factual and general advice by call centres should separately invoice for those services too???
Maybe as they arent working for all the clients that pay thier wages? You cant see anything wrong with that? If they stood on thier own two feet and only operated on fee for service only this would be different, but to subsidise advisers through everyones member fees isnt in the members best interests. How can it be? Your example of amp et all isnt a true comparison thier advisers need to charge clients directly they dont get paid wages.
Could ASIC's surveillance/blind eye approach of Industry Funds have anything to do with the history of some who worked at ASIC e.g.Kell who came out of CHOICE which is a biased leftwing operation?
Still trying to work out why ASIC appointed Australian Super as their employee default super fund, when all of the loyal Barefoot Investors know that HostPlus is a far superior fund...lol
A call centre employee is NOT a financial adviser. BIG difference. The reality is that most Union Super Fund members refuse to pay for financial advice, so it is being covered up under "general" advice. This came to light recently when Money Management reported (14 March 2019) that Cath Bowtell of Industry Funds Services (IFS) was wanting to expand the definition of intrafund advice. As most of their members refuse to pay for ongoing financial advice, the Union funds are now hiding it all in the admin fee (or kick back investment fees). Note the cost of such is not disclosed in their annual reports. As a consumer, why pay $2000 for a phone, when you can pay $50 a month for "calls" instead? The real April fool joke is on the all the planners, lumbered with exams & years of University units, who are currently denied by ASIC to charge for general advice provision from their super fund admin fees. It has to be a totally separate disclosure, with regular Opt-In documentation. The Union Super Funds are scamming it, & they know it.
And yet another Industry Super Fund increased their admin fees by $2.25 per week today. Little wonder, now their group insurance commissions will be slashed after 1 July 2019, no longer being used to subsidise "free" financial advice out of their admin fees. lol Interesting that UniSuper is increasing their Salary Continuance premiums by 48 percent!!!!
Is this another form of conflicted remuneration under the Corporations Act?
in reality it is a salaried based tied agency force. Therefore Link Advisers paid from all the member admin fees of Australian Super wont be recommending HostPlus or REST, for example. This is salesmanship worse than we ever saw under the old AMP or National Mutual tied agency arrangements. This is AMP round 2, on steroids. And the real independent non-aligned advisers have been hung out to dry by ASIC, which is allowing this tied agency system to even exist. Just appalling. Their inhouse advisers are being paid fortnightly incentives to sell product for the firm they are employed by. They are not looking for the lowest cost fund, for example.
"Industry" Super Funds are just AMP 2.0 run by unions.
ASIC will completely ignore the advisers who have raised this issue of intra-fund advice. The industry funds are now too powerful for anything to be done to fix the blatantly conflicted in-house advice model with even Hayne himself saying this was wrong but absolutely nothing has changed!
the Legislators who tell ASIC what to do, won't be ignoring it.
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