First State Super wraps up StatePlus bid

First State Super has reached a binding settlement to acquire the StatePlus financial planning business — a move that creates the largest member-owned financial planning network in Australia.

The combination of the two will create a financial advice business with over $21 billion in retirement funds and over 200 financial planners in metropolitan and regional centres throughout the country.

First State Super chief executive, Michael Dwyer, said: "Together we will create a financial advice service that builds on the strengths of both organisations. We will leverage our increased scale to maximise retirement income for our members".

Related News:

"First State Super Financial Services and StatePlus will continue to operate as separate and distinct businesses while we develop plans for the future," Dwyer said.

Also commenting on the bid, StatePlus managing director, Michael Monaghan said: "StatePlus is well positioned for growth having successfully executed on a strategy to transform the business and become digitally enabled while continuing to deliver exceptional service".

"As we undergo this ownership transition we remain focused on the clients who rely on us, delivering high quality advice, and service, as usual," he said.

Recommended for you




200 planners that play by the hotel california may get advice from us ...... but you may never leave... the fund that is. Together we will build a financial advice service built on recommending in house products, just like our cousins at the banks. If the laws do ever separate product from advice where would these organisations be? Dosent ASIC look at this and say, mmm 200 planners, all working for the same funds. How will they meet clients best interest in terms of comparing alternative superannuation products? Or do they just scope it out? Mr Jones said he didn't want to look at any other superannuation products, only investment options with our product and salary sacrificing strategies, yea right he did!

The "best interests duty" is law and applies to all advisers. The firm you are criticising (StatePlus) is a professional practice member of the FPA which means that over half of their advisers are CFPs. Do you really think that many CFPs would willingly do the wrong thing by the client? Or that the FPA would stake their reputation on it if the advice process was not what is required for the client? (Which is what you're implying).

Then we have First State Super with $50 Bill in FUM and 700,000 Members, awarded Public Sector Fund of the year in 2015. Hmmm, even if you question the award, can't be too bad? Or perhaps APRA has it wrong according to your thinking?

If your concern is on the principal of vertical integration, then you certainly could have expressed it more thoughtfully.

Not everyone needs an SMSF (with the Trustee Admin fees and responsibilities) or a Wrap which collects 0.5% in admin and 0.8-1.2% in investment fees (for your average account balance) PLUS advice fees. (Interestingly I have seen SMSFs with Wrap accounts - you do the math).

Now, let's see what we have here. A low cost public offer fund, looking to improve service to Members (i.e. one of the main criticisms of industry funds actually being addressed). TJ, I can see why you're concerned.

All valid points TJ.. I wonder also if that sale price was based on advisor fees or FUM fees. I would think the latter.

You make some very good points YJS. And the insurance part of industry funds aside, you must be objective to the quality funds management teams and alternative exposures that some of the larger better run Funds like QSuper provide. Of course, there are many others who have tried to replicate this in the same sector but have failed, but you have to have an open mind, which is really the foundation of best interests.

I will add something, an SMSF with say above $2M in it, use of a wrap account with a capped fee, is still a valid structure. Overall costs can still be 1-1.2% depending on advice fee structures, for active management style, still acceptable.

Hi YJS, all good points and a well though out post thank you. Super is only a small part of my business so I am not concerned personally. I am concerned with having a pre conceived notion that I will not look at the inferred part of the advice which is the suitability of the fund and investments themselves when I meet Mr Jones for example. Its not all about cost either with clients I speak to, mostly its about structure, benefits, ability to link in external extras, ability to move quickly if needed to react to market conditions and ability to meet personal goals and objectives. Yes I also hate vertical integration which seems to be more and more the norm these days when the industry should be moving away from that, just my opinion and have a nice day.

Phil, agree with your comments re Wraps in SMSFs with respect to fees and larger account balances (which is why my comments focused on ‘average’ account balances).

Phil, also agree that high alternatives exposure can be a potential issue with regards to liquidity, valuations, and timing of outstanding liabilities. Certainly something APRA needs to be on top of. Clearly several industry funds have many accumulators which is why they choose to have a higher alternatives exposure (though not all industry funds). This kind of alternatives exposure cannot be maintained to the same extent in a pension environment. A valid point to raise with retiree clients when they come in asking to compare rates of return.

TJ, thank you for taking the time to respond. I believe it is incumbent on all of us in the advice community to work together to help build the public’s trust in the quality of advice overall.

While there are challenges to manage in vertical integration, these should be addressed through facts on the ground and not generalisations or misrepresentations. Particularly with regards to fellow advisers. Enough of that in the general media.

As advisers, let’s all work together on this one.

Enjoy your day everyone, and thanks for the discussion.

This is the joke about platform providers that operate with aligned advisers. Any other industry would be called out for the conflict of interest, perception or otherwise.

Add new comment