Don’t collectively bill fund members who receive external advice
Superannuation fund members who pay to receive personal advice providers will be subsidising the costs of fund members wo receive advice via the superannuation fund under the Government’s second tranche DBFO legislation.
That is the assessment of the Stockbrokers and Investments Advisers Association (SIAA) which has also warned that the approach being proposed in the second tranche will also likely cause younger fund members to subsidise older members.
Further it has suggested that superannuation fund members who have external financial advisers should not be forced to contribute to the cost of advice that is collectively charged.
Responding to the exposure draft of the DBFO legislation, the SIAA warned that the bill falls short of enabling more Australians to receive ad ice “as it merely tinkers around the edges of existing provisions”.
It said the impact of the provisions dealing with collectively charged advice was that “superannuation fund members who pay to receive personal advice from an external advice provider are subsidising the costs of those fund members who receive advice via their superannuation fund that is collectively charged and essential ‘free’.”
“Due to the fact that the need for advice increases the closer one gets to retirement, younger members end up subsidising older ones,” it said.
“If a member has opted out of receiving targeted superannuation prompts because they do not want to receive advice from their superannuation fund, it is arguable that they should be forced to contribute to the cost of other members receiving advice that is collectively charged,” the SIAA said.
It said this would particularly be the case if those members wo had opted out had done so because they pay for their own personal advice from their adviser.
The SIAA also raised concerns that the legislation excluded self-managed superannuation funds from the regime of targeted superannuation prompts and recommended that SMSFs be included.
“We recommend that the Bill be amended to allow advice providers to use these ‘nudge’ provisions to send targeted superannuation prompts to their SMSF clients,” it said.
“Our members provide advice to many thousands of SMSF accounts and these provisions should be available to them. Advice licensees are in a particularly good position to use the information they hold on their clients to develop targeted communications to cohorts of SMSFs that can then result in those clients receiving personal advice.”
Yep Hidden Commissions charged to every member creates massive Commissions for no service issues.
Australia already has a huge Wealth inequality problem due to the youngens being locked out of affordable housing. Hidden Commissions charged to all members exacerbates the wealth inequality problem as youungens are forced to pay for older wealthier retirees advice.
Industry Super = HIDDEN COMMISSIONS, compare the pair.
Comrades, that’s how it works. You get your free Advice from an approved source as determined by the Central Political Committee. That Advice controlled by us Comrades is free.
The sooner small business owners give up their hopes and dreams and become Un-sackable Public Servants the better.
This has been obvious since the initial announcement. The super funds can barely keep up with simple withdrawal requests and death claims, they’ll need to raise admin fees substantially to start providing “free” advice to members.
Clearly collective charging is wrong, we had a royal commission about this sort of thing. But the most egregious thing is older members with very healthy balances accessing advice that has been subsidized by the admin fees of younger members with much lower balances. It is an absolute disgrace. Ultimately it shows that the Government has zero understanding of what advice actually is and the intricacies and benefits of quality advice.