Industry funds must remove advice barriers – IFPA

Industry superannuation funds have been accused of placing barriers around the accessibility of financial advice, leading to higher costs to consumers.

Institute of Financial Professionals Australia chair, Scott Heathwood has made the accusation in a statement at the same time as claiming that the cost of regulation is the greatest burden being carried by the advice profession.

As well, he is arguing for accountants to again be “allowed a limited, sensible role in the advice framework” with greater respect being paid to high volume advice providers.

“Since the Royal Commission, every advice interaction – from a rollover to a risk review – sits under a compliance structure that is both rigid and costly. Annual opt-in, fee consent forms, expanded best-interest obligations, FAR reporting, product comparisons, safe-harbour steps, expanded audit trails, and the surge in PI insurance premiums have all contributed,” he said.

Heathwood said industry funds also had to be part of the conversation around the cost of advice.

“One element rarely discussed in the public debate is the role industry funds are playing in advice accessibility – or more accurately, the barriers they place around it,” he said. “This year alone, industry funds registered around 7,500 complaints.
A significant proportion related to delays in claims, disengagement, or clients not being able to obtain personalised assistance.”

But Heathwood claimed that many large funds:

• will not allow external financial advisers to access member information
  • will not permit advisers to charge fees directly from member accounts
  • and will not facilitate even basic forms of personal advice for their own members

“This is counterproductive. If industry funds simply allowed advisers to service members – and to be paid for that service – much of the current outflow to platforms like HUB24 and Netwealth could be stemmed.

“Australians are not leaving because they want ‘more expensive platforms’; they are leaving because they want service, guidance, and someone accountable to talk to.

Heathwood claimed adviser access would improve outcomes, reduce complaints, and stabilise membership retention.

“It is a practical, low-cost, consumer-first solution hiding in plain sight,” he said.

On accountants, Heathwood said allowing them back into the regulated advice space with proper guardrails would increase accessibility, reduce bottlenecks and meaningfully complement the work advisers and industry funds are trying to do.