AIOFP goes straight to parliamentarians on QAR

Mike Taylor

Managing Editor and Publisher

14 March 2023

Industry superannuation funds which for years criticised the vertically-integrated advice model utilised by the major banks are now guilty of the same conduct, according to the Association of Independently Owned Financial Professionals (AIOFP).

In a document sent to all members of Parliament as a counter to the Government’s approach to the Quality of Advice Review (QAR), the AIOFP credited industry super funds with having “favourably changed the Super savings landscape for consumers”.

The communication to parliamentarians had been timed to coincide with announcements on the QAR by the Assistant Treasurer and Minister for Financial Services, Stephen Jones, but it transpired that Jones offered few incites into the Government’s approach beyond pointing to some announcements in the context of the May Federal Budget and Cabinet consideration of the broader issues.

“There is only one general flaw though, after criticising the Banks for their highly conflicted ‘vertical integration’ advice model for decades, they [industry superannuation funds] now do exactly the same thing. This is not a great outcome for their members, it’s very expensive and around only 10% use it but all members pay for it,” the AIOFP said.

In what it said was a rating of the various players, the AIOFP message to parliamentarians stated:

• The Royal Commission outcome of the Banking ‘fee for no service’ fiasco and the 30 year history of Tens of billions of failed products strongly suggest Banks should stay with Banking Services which they are very good at. They should not be allowed to be a wealth manager or offer Advice services with the exception of inhouse staff being permitted to give information about inhouse product – rating for advice 1/10, rating for Wealth management 1/10.

• Other Wealth Managers that have aligned Advisers [ie AMP, Insignia etc] must be forced to have full and clear disclosure about their conflicts allowing consumers to make an informed decision before investing. Rating? No more than 5/10 due to their conflicts for both functions.

• Wealth Managers without aligned Advisers deserve a high rating for operating a non – conflicted business model – 8/10.

• Industry Super Funds have very favourably changed the Super savings landscape for Consumers. There is only one general flaw though, after criticising the Banks for their highly conflicted ‘vertical integration’ advice model for decades, they now do exactly the same thing. This is not a great outcome for their members, its very expensive and around only 10% use it but all members pay for it. They deserve an 8/10 for wealth management and a 1/10 for advice.

• Independent/independently owned Financial Advisers performance has been rated by an ASIC 827 Report and the latest complaint numbers from AFCA. The ASIC consumer survey found 89% of circa 2,000 Consumers said they will be keeping their financial adviser and the latest AFCA complaint numbers show 98.5% against institutions and 1.5% against Advisers. Based on this the rating it should be at least 8/10.

“We hope this information will assist you with understanding why the Minister may make certain decisions when his Report is released,” the AIOFP communication said.