POWERED BY MOMENTUM MEDIA
Paying advice through super makes QAR draft legislation
The government has released the first consultation on its Delivering Better Financial Outcomes reforms.
Following the Quality of Advice Review (QAR), the first tranche of legislation announced on 14 November aims to cut onerous red tape that adds to the cost of advice with no benefit to consumers.
Half of the QAR recommendations have been adopted including Recommendation 7 on superannuation fees.
This recommends “clarifying the legal basis for superannuation trustees paying a member’s financial advice fees from their superannuation account and associated tax consequences”.
Meanwhile Recommendation 13.2 stated “introducing a specific exception to the conflicted remuneration provisions that permits a superannuation fund trustee to pay a fee for personal advice where the client requests the trustee to pay the fee from their superannuation account.”
Consultation is open until 6 December via email and post.
Last week, Vanguard Super announced that it will be introducing the ability for members to pay advice fees via a deduction from their SaveSmart accounts, effective 6 December 2023.
With written consent, members can agree that personal advice provided by a licensed financial adviser registered with Vanguard, relating to the SaveSmart account, can be paid via a deduction from the account.
The payment of advice fees will also be subject to certain limits, such as a minimum balance of $25,000 at the time of deduction and that the advice fee payable cannot be over 2 per cent of the account balance at the time of deduction.
Vanguard also capped the total amount of advice fees deducted each financial year at $6,000, inclusive of GST.
The remaining recommendations included in the legislation were:
- Recommendation 8: Consolidating different ongoing fee consent documents into one simplified document.
- Recommendation 10: Allowing more flexibility in how financial services guides are provided.
- Recommendations 13.1–13.5: Clarifying that monetary or non‑monetary benefits given by a client are not conflicted remuneration, along with the removal of consequential exceptions.
- Recommendations 13.7–13.9: Introducing new standardised consent requirements for life risk insurance, general insurance and consumer credit insurance commissions.
AUTHOR
Jasmine Siljic
Jasmine Siljic is a cadet journalist at Money Management and Super Review. Prior to joining MM and SR, she also worked across other Momentum Media brands as an intern. Jasmine previously completed an internship at Mamamia news. She is currently studying a Bachelor of Media and Communications at Macquarie University.
Recommended for you
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.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
