Big industry fund cautious on no-advice environment

Australia’s largest industry superannuation fund, AustralianSuper has expressed concern that the Government is looking to legislate to pave the way for superannuation funds to offer complex post-retirement products without the provision of personal advice.

In a submission filed with the Senate Economics Legislation Committee, AustralianSuper said it believed the Government should complete its promised retirement income framework before proceeding to put in place the means testing and other arrangements for new post-retirement products.

It said that as a superannuation trustee, it had concerns about the operation of the means-testing rules and the need for a consumer to understand that they were entering a long-term trade-off for means testing purposes.

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“AustralianSuper as a fiduciary is concerned as to application of these rules to new [comprehensive income in retirement] CIPR products which are designed to be offered by superannuation trustees to their members without personal advice,” it said.

“Traditionally, these types of products have been sold to customers directly not through the fiduciary overlay of superannuation. A higher duty is owed by superannuation trustees as fiduciaries than applies under contract law,” the AustralianSuper submission said.

The submission was at odds with those of the Financial Services Council (FSC), Challenger and Mercer, all of which have urged the Senate Committee to promptly pass the Social Services and other Legislation Amendments (Supporting Retirement Incomes) Bill 2018 which was intended to put in place the underpinnings for the development of new types of retirement income products.

However, AustralianSuper said it did not believe it was the right time to impose means test treatment on limited types of retirement income products based on current products in the market and in circumstances where future innovative products had not been developed, pending the retirement incomes framework being fully developed by Government.

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Over Bloody Complicated O'Dwyer and her Treasury / ATO buffoons want to introduce the most complex of Retirement Income products (that i bet they don't clearly understand) that will also involve complex Estate Planning issues, hopefully Centrelink Assets test benefits and not too mention Complete lack of Access to Capital ongoing - And these nitwits think this should be done with ZERO Advice.
How can such moronic politicians and bureaucrats be running this country ?
Even the Industry Funds that HATE Financial Advisers are concerned there is no Financial Advice !!!!!!

Seems Aust super talk with a forked tongue on advice. Their current members usually don't have any personal advice on investment profiles or insurance to match needs. Why now suddenly say their customers need advice. Ignorance is bliss. She'll be right mate! A new Labour government will look after me with a big pension. So lets eat drink and be merry ....

@John C..... I assume based on your comment that you are unaware that AS has a full suite of advice options including telephone advice on investment choice and insurance amongst other things which is actually free of charge to members of the fund??? The fact that members don't seek out advice doesn't mean it isn't offered. It isn't the fault of the fund that the members don't take up the offering.

Sounds like "fee for no service" on a massive scale.

@John C did you see the part where I wrote 'which is actually free of charge to members of the fund'. Free of charge means there is no fee

The "free advice" is actually paid for by the members. Super funds are allowed to collect money to operate a personal advice area provided the advice meets certain laws. I am sure that Australian super pays it's employees wages and the office costs etc.

Adam, there is a fee - it is NOT "free of charge means there is no fee". You admitted so yourself in another post.

I'm not @John C but I did see the part "which is actually free of charge to the member of the fund". So explain, who pays for the service to be delivered?

Apologies that you don't understand what the @ means. Ill refrain from using it.

My understanding is that the 'intra fund advice' as it is called is paid for out of the operating expenses of the fund. Each member pays a small admin fee (my understanding about $1.50 per week) which contributes towards the operating costs of the fund including wages, office space, technology upgrades, product enhancements, member seminars, advice etc. Each member that pays this admin cost is entitled to that advice should they want it. The individuals admin fee would not cover the full cost of the advice they receive so as the legislation states the 'intra fund advice' can be spread across all the members of the fund.

As someone associated with the industry and having watched the Royal Commission with interest your term 'fee for no advice' refers to fees paid/commissions which were clearly referred to as 'ongoing advice cost' on member statements and in a lot of cases that advice was never delivered despite costing many thousands of $'s per annum. I fail to see the comparison. What do you think that $1.50 would become should the fund stop offering that 'intra fund advice' and reduce fees accordingly? Maybe $1.45 per week?? Remembering that would also mean that you could not get online help via the website, you could not call the fund and get your account balance, you could not get up to date statements for Centrelink, or assistance with paperwork if you want to withdraw funds or your spouse has passed away etc as all of these functions are carried out by the same people that provide the advice. it would be terrible to think that someone ended up with a large tax bill because they withdrew all of their super funds and unfortunately had no one at their super fund to warn them of the risks.

@Adam, could I ask that you pay my gym membership? It only costs $1.50 per week and I’m sure you would hate to think that I might have a heart attack if I don’t exercise that would cause my family much distress..... wait! You don’t want to? But why? You know my personal trainer told me that ONLY 14% of members go ever so it is never busy and I’m sure that makes you feel better about me being able to exercise without the crowds! In fact, my personal trainer told me that because they are so cheap they are not obliged to follow the same safety rules as every other gym which allows them to keep their fees low, how good is that? I always suspected that those other gyms who insisted on following “the rules” only told me that to get more money and I am so pleased that my exercise routine is not going to cost you that much! BTW did you know that “our gym” will also give your boss free tickets to the tennis because you pay for me to exercise! Adam, wishing that there were so many more generous people like you and I’m an anxiously awaiting your call :-)

Adam, sorry for the delay responding to your post.
You are correct on "inter-fund advice" is charged to "every single" member of the a particular Industry Fund for the provision of advice, and for some reason is seem as appropriate to charge everyone as the members that "do" use the service would not be able or would have to pay the costs associated with their advice directly. This is how the Industry Funds work. It is a very very old model and is essentially commission.
Commission can about when the providers of the products (retail in this case) did not want to cover the costs "including wages, office space, technology upgrades, product enhancements, member seminars, advice" (to quote you) but sort to only pay for actual services (or advice) given. Perhaps you are not aware as I know the regulators are not of the fact that those Advisers holding old commission products still have to provide services to those clients otherwise "Remembering that would also mean that you could not get online help via the website, you could not call the fund and get your account balance, you could not get up to date statements for Centrelink, or assistance with paperwork if you want to withdraw funds or your spouse has passed away etc as all of these functions are carried out by the same people that provide the advice". Remember, Commissions are also paid from the operating cost of the Fund. Historically, the do - gooders have wanted Commission payments to Advisers banned which simple left this payments in the hands of the Super Fund and the Adviser still had to answer all the calls from the client. IMHO, FOFA has made made servicing many of these clients with "Compliant Advice" too costly as turning them into a Fee paying clients lumps the Adviser with many additional costs which must be paid for buy that client - we can not spread it across to someone else's account like an Industry Fund. The difference being is the an Industry Fund has the exemption to give "General Advice" or Inter-fund advice with next to no compliance and frankly, is very likely giving advice for people to roll over existing super/insurance arrangements into the Industry Fund under this General Advice exemption - and a Financial Adviser licensed in the real world can not do this - and ASIC is always watching. Remember, there have been no big issues from the Industry Funds because as has stated THEY HAVE NEVER INVESTIGATED.
Advice Free came about to replace Commissions as Commissions were seem as conflicted and the argument being "if the client is happy to pay a commission to an Adviser then it is simple enough to charge that as a Fee". Some logic there but what gets me is now Adviser Fees etc are being classified by ASIC simply as "Fees for Advice". In ASIC's look back program they have no allowance for "service" at all and only advice counts yet it is termed "fees for no service".
1) So, how can you "I fail to see the comparison" when an Industry Fund charges ever member for someone else's service (even if only $1.50 pw forever regardless of what that member received and not see this is Fee for no service? I could make very good money if I simply charges everyone $1.45 pw and wait for the phone to ring.
2) How do you not see that the Industry Fund with employed staff will in the provision of providing inter-fund advice provide 100% conflicted advice? Remember, Commissions where seem as providing a conflict of interest and ceased (with Grandfather provisions).
3) Do you believe that Industry Funds should be allowed to have employees paid for by the Trustee to provide inter-fund advice which is by structure 100% conflicted, paid for by all members and with exemptions to the regulations under which all other advice (Licensed only) providers must operate?
4) Industry Funds are so vertically inter grated that they are all on the same payroll. AMP and the Banks, if vertical intergration is banned, will simply employ "telephone" consultants in place of holding ASFL's with AR's and provide "inter Fund Advice" with directly controlled employees - and when ASIC comes knocking I would suggest they take ASIC aside and say "nothing to see here mate, we are simply doing what the Industry Funds do".
And that is how the mug Australian will get advice. Only the wealthy will be able to afford Advice.

and also my apologies, I misread the part of the thread that obviously showed you weren't John C

Only an Industry Super Fund planner can provide unbiased advice. The problem is all the other kinds of planners. By reducing other planners the consumer will be the winner with true advice in the clients interest. From little things big things grow. Compare the pair campaign clearly demonstrates only industry super funds and their advisers can add value

You keep believing that message - and put your family's money in there if you are a true believer - and keep it there.

Have you not seen the ads?
Compare the pair
Did you not see the differences in balances?
The proof is in the results
I have my funds in Industry Super
Like the ads say it is never to late to join an Industry Super Fund

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