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Intra-fund advice fee structure flawed
The Corporate Super Specialist Alliance (CSSA) has called for the separation of the intra-fund advice fee from the administration fee, claiming the current structure is unfair for members.
CSSA, which provides financial advisory services to corporate superannuation funds, has lodged a submission on the Future of Financial Advice (FOFA) legislative amendments in which it pointed out the intra-fund advice fee is not known to members and is effectively paid as a secret commission.
The industry body suggested that the fee be made transparent — that is, separate it from the administration fee.
The current structure, CSSA said, does not assist in improving the quality of financial advice, nor does it build trust and confidence in the financial advice industry.
The superannuation fund administrator has the ability to pass on part of the administration fee it charges its fund members to a third party, to pay for the provision of general advice and services within the fund.
"We suggest that the intra-fund fee should be negotiable at the workplace level in the same way that administration fees are negotiable," the CSSA's submission read.
"Intra-fund fees should be a ‘dial up' fee structure, with the fee being based on the amount of work required at the individual workplace," the industry body added.
"This can vary greatly and is influenced by factors such as the location of the workplace, the demographics of the workforce and the requirements for policy committee and other meetings."
The main problem with corporate superannuation, CSSA said, is that advice is provided to the employer, but the fees are typically deducted from the members' accounts.
The association proposed the alteration of the MySuper legislation in order to allow the payment of a plan service fee, if this fee is agreed to at the workplace.
"This fee could then be disclosed to members so they are aware that they are paying a fee for the services of an adviser, and so that it is not confused with the intra-fund services provided by the superannuation fund itself," CSSA said.
"This may in turn encourage members to use the services the adviser provides."
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