Super funds aim at retirement advice via sole purpose test changes
Changing the superannuation fund sole purpose test to allow super funds to provide personal advice has been strongly supported the Association of Superannuation Funds of Australia (ASFA) including advice to members in retirement phase.
In its submission responding to the Quality of Advice Review (QAR) proposals, ASFA also welcomed and supported the QAR proposal to allow super funds to continue offering intra-fund advice to their members “on a range of topics that are relevant to their interest in the fund, including when they are transitioning to retirement.”
It stated that this should include “when they are transitioning to retirement and the associated considerations including the member’s personal circumstances, their family situation and social security entitlements relevant to the provision of the advice”.
“It is important that funds are enabled to provide advice to members in the retirement phase following the introduction of the retirement income covenant,” the ASFA submission said. “Intra-fund advice is an accessible and affordable way by which financial advice can be provided to consumers.”
“Superannuation funds can provide intra-fund advice efficiently due to their large scale and ease of access to their members. Further, many funds are resourced to deliver quality advice across a range of means from simple phone conversations, digital advice to face to face advice.”
“We support the proposal to allow fund trustees to continue to collectively charge members of the fund or have fees deducted from the member’s account for advice provided. Trustees are required to determine whether any expenditures by the fund satisfy members best financial interests and comply with obligations about fund expenditure in Prudential Standard SPS 515.”
“ASFA also supports the proposal for the Sole Purpose Test within the SIS Act to be amended to provide trustees with clarity beyond doubt that they can provide personal advice to members about their interests in a fund and to apply fund assets to meet the cost of providing advice to members about their interest in the fund. This would support the provision of advice to members in the retirement phase including consideration of assets and liabilities, social security entitlements and aged care needs.”
They provide it, but not compliantly, with little penalty. Should their scope be broadened when they don’t adhere to the current framework?
Why wouldn’t they support a measure that allows them to do everything they want? I wonder, has a superannuation fund employee adviser ever said to a client, ‘on the balance of things, we’re not the fund for you. I recommend you switch to XYZ fund’? I doubt it because if they did it, they’d probably be sacked. So they need to very specifically differentiate the intra fund advice from actual advice. It is effectively product advice with some add ons, and shouldn’t be allowed to extend too far beyond that. I do believe that this type of advice is necessary and valuable within the Australian retirement context because it would allow people who can’t otherwise afford advice, to get some. But its not professional advice services and shouldn’t be portrayed as such.
Vertical integration and product flogging dressed up as advice. Only popular because it’s either free or so cheap as to not represent the cost of the service.