Paragem has extended its Australian Financial Services Licence (AFSL) service and compliance support to superannuation funds that are grappling with the grey area between limited and personal advice.
“More and more superannuation funds are extending and growing membership services to the underlying fund members and this includes general and limited advice on the fund’s investment activities,” said Paragem managing director Ian Knox.
He said superannuation funds, however, have seen an increasing need for advice that stretches beyond the boundaries set by limited advice. While historically funds would develop referral relationships, many have seen inherent conflicts in the fact that nearly 80 per cent of the planning industry is now owned by banks, Knox said. Added to this are the concerns around commissions and the possibility that the trustee could arguably be held accountable for any referrals that lead to bad or incorrect advice.
“Accordingly, the funds are having to step into the arena of personal advice,” Knox said. “But it is a highly regulated and costly area to enter without expertise, infrastructure and an understanding of what it takes to run an advice AFSL in this sector.”
As such, Knox said Paragem is utilising its experience already garnered through its Paragem Wholesale AFSL service to provide a complete support service to superannuation funds.
“Furthermore, Paragem is the only provider in the industry that offers this breadth of service without any conflicts of interest or ownership of product,” Knox said.
This new offering, called Paragem Member Advice, is available only to superannuation funds from May 1 and will enable them to act under a licence held by Paragem while Paragem also provides advice, compliance, software, governance, research and practice management support. Knox said Paragem would also help super funds apply for an AFSL.
