Super funds leery of unfinished DBFO
With the Government still yet to deliver the next tranche of the Delivering Better Financial Outcomes (DBFO) legislation, a panel of superannuation executives and trustees has pointed to the still grey dividing line between general and personal advice.
The panel made clear that superannuation funds are having to find their way through a regime which imposes requirements via the Retirement Income Covenant yet leaves them worried about crossing over into the highly regulated area of personal advice.
The panel made up of Colonial First State director, Jo-Anne Bloch, Team Super Chief Retirement Officer, Sarah Forman, Deloitte partner, Steven Freeborn and State Super board member, Russell Mason acknowledged that technology was playing an increasing role, but the environment is challenging.
Forman told Financial Newswire’s Advice Wealth and Super Conference that she did not believe that, in essence, superannuation funds were competing with financial advisers for clients.
“The marketplace for advice is big and the role super funds are playing does not mean they are competing for the same Australians; those who are highly affluent, have an sef-managed fund or other complex needs,” she said
Forman said that in circumstances where only between 10% to 15% of people were receiving advice, there would need to be a seven-fold increase in adviser numbers and that is not feasible.
She said that, in those circumstances superannuation funds are trying to help every Australian get advice and the challenge existed around creating a personalised meaningful response to those needs.
Bloch emphasised the value of technology and delivery of hybrid advice, noting that there is now more information available to members than ever before but “what is missing is the desire to convert that to doing something”.
She referenced the CFS hybrid advice model, which she said emphasised the importance of advice by allowing members to put a toe in the water.
“We have learned, you can’t just put something out there, you have to walk people through it, build trust and explain why its important,” Bloch said.
So, post royal commission the FSC and Superannuation industry assisted in removing over 20000 advisers, now they say we do not have enough advisers, but they are not willing to train advisors to the new standards that they asked the Government to put in place. So their solution is to lower the standards, and they will do the training in house, so they can keep funds under management. None of these reviews or discussions have actual advisers represented.
In summary let’s go back to the way it was before the royal commission and if we get penalised either the shareholders or members will pay. How many bank or Superannuation fund Directors received a penalty or paid the millions of dollars of fines?
Then they wonder why people are moving to self managed funds.
The main difference this time round is that it will the profit for members that will be paying the fines and penalties. It’s hard to object to product providers giving information and guidance to their members, but personal advice should be given by qualified professional advisers, with a best interest duty.
I consider CFS’s “hybrid model” an attempt from CFS to side-line advisers. Bold move from them.
Agree – no carve outs to platforms, no carve outs to accountants. No carve outs full stop.