Over the next decade and in the wake of the current significant exodus of financial advisers, increasing numbers of people will access financial advice via their superannuation funds.
What is more, anyone reading the answers provided by superannuation funds to questions on notice from the House of Representatives Standing Committee on Economics will observe that superannuation funds of all stripes – industry and retail – are gearing up to meet that demand.
And that is why the Australian Securities and Investments Commission (ASIC) needs to gear itself up to properly examine the quality of advice being delivered by superannuation funds, including the quality of and appropriateness of intrafund advice.
This is not to suggest that there is anything wrong with the quality of financial advice being delivered by superannuation funds but is, rather, a plea to the regulator to clear the air by ensuring that the advice delivered by salaried advisers working within superannuation funds is subjected to the same level of scrutiny as that delivered by independent financial advisers (IFAs) or, indeed, those working for AMP and IOOF.
Has ASIC conducted a shadow-shop of industry fund financial advice? Not to our knowledge. Has ASIC scrutinised the quality of intrafund advice and whether it leaves individual clients generally better off? Not to our knowledge.
Closer ASIC scrutiny is warranted not only because superannuation funds are going to be playing a greater role in the delivery of affordable financial advice into the future but because it will help clear the air and remove some of the politics. Because politics are, indeed, being played with respect intrafund advice – something which was obvious in questions directed towards ASIC by members of the House of Representatives Standing Committee on Economics around intrafund advice and scaled personal advice.
What is more, some of the members of that committee made clear that their questioning had been prompted by financial advisers who believe that some industry superannuation funds are pushing the edge of the envelope in terms of how far they can go within the delivery of intrafund advice and, to be fair, some industry fund executives have canvassed expanding the intrafund boundaries.
ASIC has already signalled that it is looking at advice delivery and the cost of advice in the context of advisers leaving the industry and has engaged external consultants to undertake research to help it understand the issues. The regulator said it wanted Australian consumers to have access to affordable, quality personal advice that meets their needs.
Industry superannuation funds can, unquestionably, afford to deliver advice at scale and at a reasonable price and it is for this very reason that ASIC would be serving the industry and the broader community by closely examining how well superannuation fund advisers have performed to date and, in doing so, clarify the status of intrafund advice.
