The chief executive of Australia’s largest superannuation fund, Australian Super, has questioned the degree to which industry funds who use independent financial advisers (IFAs) will be held responsible for the quality of their advice.
Speaking at the Association of Superannuation Funds of Australia national conference in Melbourne, Ian Silk acknowledged the number of IFAs utilised by his fund to deliver advice to members but said the regulatory environment was changing and giving rise to concerns about to what extent a superannuation fund would be held responsible for the quality of the advice.
He said the issue arose because of the manner in which the advice fee was deducted from a member’s Australian Super account.
Silk exampled circumstances where a complaint might be lodged about the quality of advice provided by an IFA utilised by Australian Super.
He said it was something which had not been considered when the fund first ventured into such arrangements with IFAs.
Comments
Silk is trying to divert attention away from the issue of intra fund advice.
This is an area of conflict and should be of concern to the regulator.
Intra fund advice should be prohibited.
Unfortunately the regulators are blind to this and are reluctant to go any where near industry funds.
Sounds like a warm up excuse to stop access to their fund and having to pay IFA's for the service they provide their members. The responsibility for the advice is on the planner. I think this is a heads up to say Australian Super are looking at restricing access to IFA's and members will need to consult their own in-house planners only.
I think he has a valid concern. All the govt red-tape they are imposing always has unintended consequences.
Not sure what he is saying here? that giving advice to move clients to Australian Super is not in a clients best interest? they can only take a fee out if they are giving advice on Australian Super....
Did Ian just admit Australian Super have failed to comply with trustee obligations??? As trustees specifically, they must act in the best interests of the beneficiaries and exercise powers conferred to them as trustees (trust powers) with real and genuine consideration. Ian made a public statement that they didn't make any consideration....
What they are worried about is the new code makes Industry funds internal advisers have to compare for the first time to review members existing super fund arrangements before performing a rollover and not hiding behind using limited advice arrangements. I can only recommend Australian super I cannot review your existing fund. this is my understanding would love to know if this isn't the case?
The " UNABLE to Compare the Pair " campaign ?.....brilliant.
The real question is whether the Industry superannuation funds will be able to provide superannuation only advice considering the Code of Ethics requirements in Standard 6 specifically, but also Standard 5.
I suspect they will be found wanting.
The new Australian Super members don't care....they are off on a short holiday with Qantas courtesy of all family members joining and tipping in $350 each.
Can that fund deliver meaningful retirement benefits or what !
Ideally, the Industry Funds would not want to be involved with any IFA's at all as there is a risk they may potentially lose members or their members educated in relation to many of the garbage insurance definitions imposed on their members.
AustralianSuper will only allow advice fees to be paid to an IFA in relation to the member's AustralianSuper account.
If the advice in relation to the members account was to exit the fund, would the advice fee still be paid or is it only in relation to either recommending or retaining the Australian Super account ?
In addition, the AustralianSuper Financial Services Guide states under the heading of "How will I pay for the service"
.... " The cost of of providing this financial product advice is INCLUDED in the fees charged for membership of AustralianSuper . AustralianSuper does not charge any additional fees or obtain any commissions for advice that they provide"
However, their Fees and Costs section on their website states: " We can provide general or simple personal advice over the phone AT NO COST ".
But, there is a cost (it is included within the cost of the Administration Fee charged to all members and if those members do not request or access any advice, be it general or simple personal advice , they are still paying the advice cost component in the Admin Fee .
In addition, it states..." if you need advice about starting a Choice Income account or transition to retirement options, a fee of up to $295 may be charged".
How does the FSG state that advice fees are included within the membership fees and they don't charge any additional fees for the advice provided, but then the website clearly identifies a potential advice fee of up to $295 for Choice Income or TTR options ??
In the FSG under the heading " What commission/fee does my representative receive"........it states:
The representatives are employees of AustralianSuper and are paid a salary. They do not receive commissions, fees or bonuses for the services they provide to you."
Isn't the cost of the salaries a fund expense shared by all members of the fund ?
For the members who never engage the advice or service of a representative, they are paying for the access and availability, not the service and they are paying a proportion of their Admin fee allocated to the expense of providing advice they also have never accessed or received.
Is this a fee for no service ??
By stating there is no cost for general or simple personal advice over the phone when there is clearly a cost component allocated within the Admin fee ....what does that really mean ?
What is the real Admin Fee cost to those members who do not access or request any general or personal advice and should their Admin Fee be reduced accordingly ?
If one member never accesses advice and another calls every single month for 5 years, they are paying the same advice cost component of the Admin Fee.
If anyone can clearly explain the difference between this model and an IFA charging a fee but delivering no advice please do so.
Does ASIC treat this example completely differently to IFA's ?
If so, why ?
So..... If I had a client with 5 super funds and I charged a fee of $1000 to roll them all into Australian Super, could I deduct the whole $1000 from the Australian Superfund or Just $200? If another client has an Australian super, can I deduct the whole advice fee from it even if I recommended rolling it over to another different one?
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