Planners off ISA agenda as it targets banks

17 November 2016

Financial planners and financial planning dealer groups are no longer the super-switching bogeymen of the industry superannuation funds, with Industry Super Australia (ISA) now pointing the finger squarely at the banks and general advice.

The ISA's submission to the Productivity Commission (PC) review into alternative default models strongly urges retention of the current default funds under modern awards model and it has urged the PC to be careful in assessing the arguments of the banks.

Referring to the "sales-driven switching", the ISA submission stated that "among those who do intentionally switch funds, this is substantially attributable to the sales efforts of vertically integrated for-profit providers".

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"This was initially undertaken via financial planning networks. Since the Future of Financial Advice Reforms, for-profit providers are increasingly using "general advice" direct institutional sales (i.e., cross-selling of superannuation by bank staff)," the submission said.

It said that while various legislative protections were in place to promote the best interests of members and prevent inappropriate behaviour such as inducement or misleading conduct by providers toward employers, there was little evidence to suggest such protections were routinely enforced.

"That the processes by which most workers join and contribute to a default fund does not function as a ‘market' is evidenced by the fact that while retail funds have on average underperformed relative to most not-for-profit industry funds in terms of net returns to members, they continue to secure a substantial part of the industry, and charge significantly higher fees or margins," the ISA submission said.

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Why not just make it official? Appoint the ISA as the industry watchdog, get rid of ASIC and save millions of dollars? ASIC, banks and regulation have done a great job stifling industry productivity and competition. The ISA could finish the job.

I have been advising for 10 years and considering I am in my mid 30's I have at least 25 more years ahead. After this 35 year period I will be able to say that I never recommended a client to retain or move into an ISA affiliated super fund. The funds are rubbish to start with, but given the ISA's past campaign to tarnish our reputation purely for their commercial advantage, I have extra motivation to ensure they do no profit via my advice. Never forgiven, never forgotten.

Hilarious BM, well said..I concur...these Union run Industry super funds are blot on the super landscape and ruining Australians chances of a decent retirement. me thinks the loss in FUM to SMSF are killing them. Anyway off to chase up some forms that one such funds has lost, no doubt due to them outsourcing work to Lithuania, ....outsourcing no doubt as a result of them having to cut costs to spend money on advertising campaigns comparing their super funds to the 1975 AXA Balanced Fund.

Well, when AXA/MLC/ANZ/CFS stop pillaging 1975 level fees from the billions invested in legacy products, those performance comparisons 'may' converge, at least to the point where they are no longer relevant for marketing pitches.

Until then, the numbers are the numbers, no matter how much we kick and stream otherwise.

In 10 years you have never recommended a client retain a product that is in many cases at least directly comparable to a retail offering? Even after considering the advice fees to switch to that retail offering? Because you know, the financial services industry never acts purely out of commercial interest?

Wow, your dealership must love you, plan like its 1987 baby! Not only will ISA not profit from your 'advice' but with an attitude like that it's fair to question whether your clients do either?

Sounds to me that you're the poster child for the exact type of adviser their campaign was so successful in demonising! well done on your contribution to the industry. Truly Amazing, 10+ years in financial services and that is the level of enlightenment you have achieved? 'Big Mistake' indeed.

Seriously, you think advice is all about the super funds? Its a small part of any advice strategy, if you do it properly, the product itself is just the vehicle , the value add isn't off products, its off the strategy. To sit there and say someones clients aren't profiting from someones advice only due to the reason that they do not use industry funds shows a real lack of subject knowledge of what financial planning is and how its delivered and reviewed and how value is added in the advice process. What level of enlightenment have you achieved in the industry, not much if you think advice is just super funds. The ISA campaign has had NO impact on me, it didn't demonise me or others I work with, so really again you could say it was a massive waste of members money, as per usual from the pot and kettle ISA.

Firstly, the POST IS ABOUT SUPER, specially one class of super product v another. This is not an all encompassing value of advice debate so don't go off on a little 'its all about strategy' tangent, that is a separate issue all together and cannot be used to justify poor or conflicted product choice. It's a straw man and you know it.

Now back on topic, The original poster suggests that they never have nor never will recommend the retention of an ISA fund, on the basis they are all rubbish products. That is absolute crap (and every licensee in the country knows it) and nothing better than a childish me vs them argument, an argument that reinforces the view of the financial planning industry that the ISN has successfully exploited.

We can sit here and sing our personal praises within the bubble that is a financial planners discussion forum all we want, but the forum of public and regulator opinion hold a very different views. Best we as an industry come around to that quick smart and the crap dribbled here regularly suggest we are still a long way from that.

Well it's a fair point you make. To make it in the clients best interest my advice is, I can't work out given all the lies and counter lies between ISA's and Bank/retail funds, which is the best option and the transparency is terrible at a number of levels - so the only option, and the best one, is an SMSF. So basically, all the bickering has and continues to destroy their own businesses, go figure.

In their latest advertising on the radio, Australian Super is telling consumers that advice from their financial planners is 'INDEPENDENT', because they 'do not pay commissions to financial advisers'. What a farce!

Take down times, stations, all the details you can get, and then report it to ASIC. Just to be safe, I would also report to your local MP, and every Senator from your state. Mentioning it here won't change a thing.

Someone is protecting them !

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