Separate advice costs, say actuaries

The cost of providing financial advice within superannuation should be separated out for superannuation fund performance reporting purposes as part of a broader subdivision of investment and administration costs, according to the Institute of Actuaries of Australia.

In its submission to the second round of the Cooper Review into superannuation, the institute has leant substantial backing to the approach suggested by two of its members - Colin Grenfell and Ray Stevens - involving the subdivision of fees and costs.

The institute submission argues for the administration component of superannuation fees and costs to be referred to as 'superannuation fees and costs'.

It then suggests these 'superannuation fees and costs' include advice costs that are not covered by specific advice costs.

The submission then argues that advice costs that are covered by specific advice be disclosed separately as a third component of fees and costs.

The institute submission acknowledges the likelihood that some funds might seek to manipulate any split of fees and costs to achieve a perceived competitive advantage but argues this could be addressed by the regulator requiring an auditor to certify the appropriateness of the arrangement.