More not less advice needed in super

There needs to be more financial advice within superannuation and the Government and the regulators need to think about amending many of the restrictions and impediments to the delivery of that advice.

That is one of the key bottom lines of a roundtable of superannuation industry executives conducted by Money Management’s sister publication, Super Review, with the consensus being that financial advice needs to be an integral offering to superannuation fund members.

However, for some superannuation fund executives such as NESS Super chief executive, Paul Cahill the advice offered by actual funds should only be “in the areas they need to offer advice”.

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“Funds should not be offering financial planning services for negatively gearing properties and things like that,” Cahill said. “We need to be able to service our members and that means taking members from work-based accumulation to building up a balance in retirement and then across the bridge into retirement.”

“So, the advice model should fit around what we need to do to help our members,” he said.

However, Deloitte superannuation partner, Russell Mason said he saw things differently and pointed to the declining relevance of the sole purpose test.

He said many superannuation funds had become financial institutions in their own right and on that basis he would like to see funds and the financial advisers they employed allowed to deliver a broad range of advice.

“I would like to see the funds and the advisers they employ able to give advice that covers my entire financial situation, not just one element of it which may be superannuation, which is likely the most important element,” he said.

“I want to be able to get advice that my partner and I can work together on and look at our retirement in a holistic point of view, not thinking that they can only advise me on super now,” Mason said. “Where do I go to get advice about other things?”

“So, I think financial planners in the area of super have largely had one hand tied behind their back. I'd like, within the realms of reasonableness, for them to have a greater degree of flexibility. To advise me on the situation without this artificial distinguishing between super and non-super.”

TAL chief commercial officer, Andrew Howard said that it was a fact of life that people contacted superannuation funds seeking simple advice and then were prompted to seek more complex advice and those situations needed to be addressed.

“The funds need to be able to go beyond education and help members act upon their financial future and advice is key to that,” he said. “And so there will be transitions where people go from no insurance to having insurance, size that insurance up or size it back down and we haven't talked about retirement income yet.

“With the retirement income journey and the retirement income review we get into longevity type solutions. These are these are more complex questions for people to answer and there needs to be the ability for funds to help people make those transitions.”

“So, I think the role of advice in superannuation is really important. It will be different fund by fund as to whether they sort of stick to the journey or whether their members needs could be served by more holistic financial planning and I suspect that's a fund by fund question,” Howard said.

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That is fine for super fund advisers to offer comprehensive advice, as long as the cost of the advice is FULLY paid for by the individual member. The cost should include ALL expenses, not just the advisers salary (i.e. executive & management salaries, compliance & support staff and rent etc).
The super funds should also recognise that members seek advice on their fund holdings from external advisers and these members should be allowed to opt out of the recently disclosed "intra-fund" costs as they are not utilising any of these services.

So industry funds become the next version of banks and in ten years we will have another Royal Commission which will find exactly the same issues with vertically integrtaed businesses. Financial advice is already fully roadmapped and if Super funds want to provide it, build an advice team and provide advice. If they simply want to tell people stay in their product this does not satisfy best interest so is not advice, it is product information. If they want to avoid advice documents and plug product - they are not doing advice

AND.... anyone employed by the super fund giving that kind of advice needs to go through the same training and licensing process that I have had to go through. No ducking and weaving. Level playing fields please.

.... and don't forget that all important PI cover costing hundreds of thousands of $s per year, providing sweet FA benefit.

I seem to remember the last 10 to 15 years being told how conflicted I am receiving commissions, using related products. As a result, I am now doing another Degree, I must pass a FASEA course to make sure I get my ethics up to speed, and commissions have been turned off as this was seen as "conflicted remuneration" and the experts believed I only used those products because I was being paid to do so. That seems to be why I am in need ethics -- bad me. I also had many fellow Financial Planners (and the FPA) telling me that this is all necessary for our industry to become a profession and if my service were of any value, I would have no problem charging the client directly.

OK, I adapt and I'll be fine.

Now it appears FPA (Ben Marshan et al) like Financial Planners being paid by the Product manufacturer. Seems it is OK to charge all members a fee, have no obligation to deliver any "Advice" for this fee, the members can't opt out of this fee, there is no FDS for this fee, and a Financial Planner can sit around living on this fee and only do some work when a member calls.
I'm not sure why this is not a completely conflicted remuneration model like the very old AMP agents were years and years ago but I am doing the FASEA ethics so I guess I will work it out at some point.

In the meantime, all those Financial Planners employed by a product manufacture, let me know what it is I am missing. Seems like you want to do more.

Great points made, Realistic. The whole situation is a joke. First we had retail super funds that paid commissions to financial advisers and many disengaged members who didnt receive advice who were in effect subsidising the members who did bother seeking advice.
Then, under FOFA, this conflicted remuneration was removed and clients had to opt-in to receive advice, which meant that only engaged members had fees deducted from their super accounts. All the while, industry funds were crowing about how their funds were so much better because they didnt pay financial adviser commissions.
We now have the farcical situation where industry funds have employed financial advisers to provide "intra-fund advice", the cost of which is essentially included in the administration fee and subsidised largely by disengaged members.
So, the conflicted fees have effectively been switched from retail to industry funds.
And the non-aligned advisers, who are the only ones who should be giving advice, are the ones getting truly shafted.
This was an inside job hatched by some smart people who have one foot in politics and one foot in the private sector. I encourage everyone to watch a documentary called "Inside Job" - the same thing is now happening in Australia. Powerful people making laws that benefit nobody but themselves. Sounds like a conspiracy theory, but it looks like playing out like a concocted plan.

The FPA lost a whole lot of advisers when the Banks stopped paying them in bulk and got out of advice. That lost revenue source is now being replaced, by a bulk list of Advisers names, all working in Union run Super funds. I'm pretty confident that the FPA will be the voice piece of those Super funds over the coming 5 years. Ongoing advice fees will be dying out Advice fees out of super dead. Once off advice via a call centre is and will be the future. Some small boutique firms charging ongoing advice will be the future.'s jobs for the boys and we are not one of the boys! Couldn't agree more. Everything we have been belittled for, and told we were unprofessional for and how conflicted we were is what the Industry Super Intrafund advice Model is.
Tell me what i am missing as well.

I agree with the comments.
We have seen the institutionalization of our industry and how it has stuffed our industry somewhat hat has brought us to where we are today.
The super funds are just another form of this. They are stating to behave like dealer groups. Has anyone else had to fill out attestation paperwork? Has anyone else had platforms and super funds request SOAs to justify advice?
It is just the re engineering of vertical integration, fees for no service, and scaled advice or general advice, glossed up as meeting best interest.
Will there the inevitable call for carve outs or another tier of advice with less qualifications?
I know why not just add another regulator....yes that will fix it.

I've been in contact with my local federal member for a couple of years now at how their changes will take us back to agency days which weren't acceptable. Hopefully it's not too late for them to turn this ship.
Individual licensing and any licensed adviser can draw a 1 off advice fee from any super fund. With no in house fund advisers.

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