The Financial Services Council (FSC) has told the Government it should allow members of MySuper products to obtain financial advice in the form of one-off advice with no ongoing fees.
In a submission filed with the Treasury, the FSC has stopped short of the position adopted by the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) which have argued for advice within MySuper and instead suggested the one-off advice arrangement.
In doing so, the FSC said that banning all advice fees from MySuper was only justifiable under two incorrect assumptions:
- Advice about superannuation only includes advice about specific investments and is therefore not required by MySuper members; and
- All MySuper members are disengaged, and they do not seek advice.
However, it claimed that, in reality:
- Many people have actively chosen a MySuper product, potentially via recommendation from their adviser;
- Many default members later become engaged in their superannuation (for example as they approach retirement) and seek advice about their savings; and
- Significant protections are already in place to ensure advice is provided appropriately.
The FSC submission said that for members undergoing (or planning for) significant life changes such as a family separation or retirement, there was a significant need for members who may previously have been disengaged to seek financial advice.
In explaining the organisation’s position, the FSC submission said that there was a danger that totally banning advice within MySuper would significantly worsen outcomes for many superannuation fund members.
“This is because the change will create a two-tiered system that charges out-of-pocket advice fees to some members, but not others. The members most affected by this change would be those who are least able to afford these costs,” it said.
“It is inevitable that fewer people will receive financial advice as a result of this change, as some people would simply walk away when they were unable to meet the full cost. This could materially impact the decisions they make in relation to their retirement savings, and in some cases substantially reduce their savings at retirement.”
Comments
The accountants highjacked the financial planning business, now the lawyers have highjacked it with up front legal style "retainer" fees. This is where we are heading now, in order to minimise the Coalition Govt's red tape.
The Financial Services Council should keep away from suggesting anything whatsoever.
The FSC have made a mess of just about anything they have been involved with over the last 10 years.
So you have a MySuper client who has $350,000 spread across 4-5 different investment options, wants advice on asset allocation, market volatility affecting their investment, contribution levels and types, nomination of beneficiary advice and insurance advice regarding levels types and definitions and wants to be able to contact the adviser at anytime to discuss matters that are important to them and the FSC reckons that a one off advice fee only is going to work ???
Every time the client contacts the adviser or initiates an advice situation, they will then complete another advice fee authorisation form as a once off fee which could occur 4-5 times throughout a year !
This is insane and unworkable.
MySuper was specifically and strategically created as a means of cutting legally approved grandfathered commission payments to advisers.
The initial criteria for changing clients to MySuper products or investment options was to label the member as being
"disengaged" simply because they may not have moved away from a default investment option within a specified time frame.
This was purely an assumption, not based on knowledge of the client, their attitude to investment risk or if they were satisfied with their current investment performance from the default investment option.
It was a way to cut the adviser off, without actually saying that directly, but that is exactly what it was.
For the Govt to be even thinking about the possibility of not allowing MySuper members to pay for advice from their own superannuation account is simply ludicrous.
At what level does this Govt believe that they have the right to dictate whether an engaged and advised superannuation member cannot make a decision in their own right to pay their adviser either an upfront, one off fee or a retainer fee for ongoing advice throughout a year.
Before too long they will be herding all members into a socialist or communist style superannuation fund.
And this bullshit is coming from an elected Liberal Govt (the Govt of small business) !!!!...yeah right.
Well said Agent 86. Additionally, your second last line "Before too long they will be herding all members into a socialist or communist style superannuation fund." I don't have the exact numbers but I suspect no one can match the achievement and legacy of increasing FUM for Industry Super than that of of our once Treasurer and now PM Scott Morrison.
Anyone know the answer to these questions?
Which Australian Federal Treasurer achieved the greatest increased FUM for Industry Super?
Which Australian Federal PM achieved the greatest increased FUM for Industry Super?
Let's face it, with Super almost at $3 Trillion is it any wonder special interest groups are doing everything they can to get their gruby hands on it and control of it? Of course they'll blanket regulate the industry and price out working families and independent advisers, the groups with the most sway have been pushing for a nationalized/universalized Super Fund for a while now anyway. Including the increasing use of it to fund vote buying infrastructure projects managed by Unions and their Industry Super Funds. It has nothing to do with what society wants or what's in members best interests.
Agreed Tommy.
This is definitely about a game of greed and control by the Industry Funds, Trade Unions and Left Wing ideologists.
They have their supporter groups such as Choice and various consumer and legal groups all pushing hard for best interests but in the end it is simply about the greed that drives the control of vast amounts of peoples retirement monies over long periods of time and the vast amount in fees that can be generated.
The more fees generated, the more they can pay their directors who can then elect to transfer their directors fees to the trade union of their choice.
This fight is not about consumer benefits, its about greed ,control and funding your own cause.
So, MySuper members will be able to pay a once off fee every year for the annual review.???
Nothing throughout the year on an ongoing drip feed basis to cover incidental advice during the year, but an annual advice fee once a year only.?
And that fee can be appropriate for the work performed throughout the year and a guesstimate of the cost of the advice for the forthcoming year ?
How hard to want make this Sally Loane ?
Why the hell don't you just get your shit together and agree with the FPA and The AFA that removing the choice of a MySuper member to either pay a once off fee or an ongoing advice fee from their account is a choice that every member should have.
Why would the FSC come out and not just support the stance form the adviser associations for once and appear to be on a united front on such an important issue ?
It's because you want to be in control of the game isn't it ?
Believe it or not the relationship is between the adviser and their client (ie the super member), it is not between the Trustee and the member in reality at all.
The FSC have been a chronic burden to the adviser community for years .
Just do something smart and support the advisers and the value of good advice for the benefit of the consumer.
this is because the board is stacked with insurance companies and fund managers that just want to sell directly and cut advisers out... https://fsc.org.au/about/fsc-people/board do you really think they are acting in the best interest of clients or advisers....
This nation is going 100% full communist, under this hopeless Coalition Govt.
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