The advice fee bill will incentivise financial advisers to switch members out of MySuper products and into Choice products to allow advisers to enter into ongoing fee arrangements with superannuation members, according to the Australian Institute of Superannuation Trustees (AIST).
In its submission to the Treasury consultation on enhancing consumer protections and strengthening regulators, the AIST said it did not support the proposed advice fee bill.
It said there was a material risk that a large number of Australians would no longer seek advice relating to their retirement if their access to affordable payment for advice was restricted.
AIST said a practical reality for many Australians was that there was often limited capacity to fund financial advice from take-home pay.
“Banning the deduction of advice fees from MySuper accounts will exacerbate existing difficulties members face accessing high quality, reasonably priced advice that is in their best interests,” AIST said.
“Advice needs to be affordable for both MySuper and Choice members, and the deductibility of super advice fees encourages members to seek advice they might not otherwise obtain.”
AIST said regardless of which category members fell into – MySuper or Choice – members should be able to access advice on the same basis.
“As the advice fee bill currently stands, financial advisers will be incentivised to switch members out of MySuper products and into Choice products, so advisers can enter into ongoing fee arrangements with members,” it said.
“At a practical level, the parameters of what constitutes superannuation advice can be unclear and should be clarified in additional ASIC guidance.”
On intra-fund advice, AIST said clarifying the provision of intra-fund advice on how the member might best provide for their retirement might provide a model for accessible advice that was not prone to misconduct.
“Such a model should also reflect that people commonly seek pre-retirement advice as couples/household, and that this (including consideration of a spouse’s super) should be allowable within an intra-fund advice topic on retirement and paid for via existing intra-fund advice models,” it said.