Corporate super advisers caught in hiatus on advice
Financial planners providing corporate superannuation advice have been caught between legislation, which regards their advice as conflicted, and Government moves to shift corporate funds to a new default fund regime.
Corporate Superannuation Specialists Association (CSSA) president Douglas Latto said planners offering advice in this space were caught between legislation requiring them to give statements of advice and further legislation that said fees received from fund administrators were conflicts.
At the same time many corporate super funds may be forced to change providers under proposed default fund arrangements and require advice, which was being impacted by issues around conflicts.
"If you do give a tender, you have to give a statement of advice as the employer is a retail client under the legislation," Latto said, speaking at the Association of Financial Advisers National Adviser Conference in Cairns.
"The Australian Securities and Investments Commission has considered us to be conflicted if we do that and subsequently receive outsourced payments from providers despite best interest duty."
"We are in difficult hiatus period and if the default super scenario ends up that an employer cannot use a current fund and they have to go out to market there will be thousands of employers having to do that."
"While these things have made it hard for us to provide services the Government has not provided an alternative course of action."
Latto said the corporate superannuation sector, particularly employers, have also seen the potential problem and are concerned about the scale of the possible change.
"Corporate funds have realised there are a lot of services we provide, such as policy meetings, seminars, education to members, and if we are not going to do that who is going to?"
"It is very hard for corporate super funds to adopt a model for direct serving, there are just too many funds out there, and so these outsourced arrangements are not advice but services that we deliver."
Latto said while service fees in corporate super are diminishing and would be gone by the time of transition to MySuper a shift to make any MySuper fund a default fund would boost the corporate super advice sector.
"There is a strong possibility that any MySuper fund could become a default fund if that happens it could be an opportunity for corporate super specialists."
"We believe any MySuper fund should be a default fund. We believe in a competitive market."
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