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Industry funds want relaxation of advice rules
Industry superannuation funds are better positioned than most to provide low cost financial advice to members in a post-Royal Commission world, according to industry funds groups the Australian Institute of Superannuation Trustees (AIST) and Industry Funds Services (IFS).
IFS chief executive, Cath Bowtell has pointed to a likely softening of “the rules that hamstring low-cost simple advice”.
Speaking following a Melbourne symposium on advice in superannuation, Bowtell also pointed to the likelihood that a price would be paid by vertically-integrated groups.
She said that while vertical integration of financial products remained lawful, the separation of product and advice was starting to underpin advice discussions that retail superannuation funds were having.
“Financial advice provided through profit-to-member superannuation funds has always been first and foremost a service, not a distribution channel,” Bowtell said. “As the market changes, and this becomes the norm in financial advice, the rules that hamstring the provision of low-cost simple advice could be relaxed.”
Further, she said the non-conflicted governance model of profit -to-member funds meant they were in a strong position to provide quality, low-cost advice to members.
“Profit-to-member superannuation trustees put members’ interests first and this extends to the financial advice their funds provide,” Bowtell said.
AIST chief executive, Eva Scheerlinck said the Royal Commission had proved yet again that there were problems with conflicted financial advisors but demand for quality financial advice was increasing.
“We know that the number of people who need advice is growing and there is a demand from members for advice on a host of financial matters” Scheerlinck said, suggesting this included advice on account consolidation, advice to spouses and advice on Centerlink entitlements.
“The time is ripe for the legal framework around advice – and how advice is described – to change,” Scheerlinck said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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