In a letter to Prime Minister Scott Morrison dated 30 October, Roxburgh Securities director Steve Blizard outlined how, in their final term in office, the former Labor government passed legislation permitting superannuation funds to charge for intra-fund advice from administration fees paid for by members.
“Much media focus has been made about the FOFA legislation and bank advisers since 2013, but virtually nothing has been reported by the media about intra-fund advice payments (to fund marketing representatives) or by the consumer advocacy groups,” Mr Blizard said.
“It is almost like there is a cone of silence that exists around intra-fund advice. Since Labor introduced these various laws in 2013, the industry super funds have continued to grow, while their competitors have been attacked through strident media campaigns, or through the assistance of pro-industry fund journalists and book authors.”
Mr Blizard said that financial advisers across Australia are now being forced to terminate their relationships with lower income clients, as the cost of opt-in agreements and notifications exceeds the revenue these clients generate.
“Moving to annual invoicing, as recommended by the Hayne royal commission, would be the last straw for many advisers servicing small clients,” he said.
“If you don’t have $100,000 in your super fund and you cannot afford expensive ‘top end of town’ advice costs, very soon you will be all on your own, without support.”
An increasing number of advisers are expected to leave the industry over the coming year as regulatory pressure, compliance costs and education requirements force professionals out of the industry.
Meanwhile, Mr Blizard notes that there has been significant growth among intra-fund advisers.
“Industry Super Funds now directly employ 969 advisers, up from 713 three years ago. The biggest super fund employer of advisers is State Super (281), followed by Industry Fund Services (106), Qinvest (94), UniSuper (74) and SunSuper (70),” Mr Blizard said.
“While a number of these advisers would deliver a certain level of compliance information for clients (i.e. statements of advice for rollovers), they do not have to comply with any other form of FOFA red tape, such as annual fee disclosure statements, nor do they have to chase up bi-annual opt ins, simply to get paid.
“Instead, the majority of these staff are remunerated primarily from collective intra-fund commissions automatically paid out of all of the member administration fees.
“While bank staff have been totally banned from earning sales bonuses, many of these industry super fund staff are permitted under the intra-fund system to earn performance bonuses, in addition to receiving complimentary gym membership.”
The Perth-based adviser, who has been working in the advice industry since 1987, said he has discussed his concerns with intra-fund advice with WA senator Michaelia Cash.
He suggested that either a major overhaul of intra-fund legislation must be undertaken or it should be scrapped altogether.
“Alternatively, the ‘opt-in’ legislation impacting personal advisers should be changed to ‘opt-out’,” Mr Blizard said.
“Either way, the current legislative and marketing imbalance cannot be permitted to continue in its current form.”
[quote=Anonymous]Great to see so many ‘well informed’ people discussing the merits or otherwise of intra-fund advice with very few facts. Also love how the conversation deviates to asset allocation of industry funds when that is not the topic of the article – seriously people, are we that bitter about the them vs us argument? It is getting a little tired (as too am I!).
Intra-fund advice offers a fantastic opportunity for those who can’t typically afford to engage a Planner (ie a typical Australian!) to seek advice on a product they already hold. Typically this relates only to risk profiling and appropriate investment choice, contributions to their fund and insurance needs. In many instances, these clients would’ve paid thousands to seek that same advice from another Planner and wouldn’t have been able to afford to do so. Therefore missing the opportunity to improve their future. Whether the product is appropriate or not is typically outside of the scope of these Advisers – which is very clearly articulated to the member. However given these Planners are also bound by the Code of Ethics and every other professional obligation that ALL Advisers are required to adhere to, where they identify requirements beyond their scope or inappropriateness of any recommendation they could make, they will recommend to refer to a more comprehensively licensed Adviser. Suggesting they are ‘getting away’ with things is a very bitter view of the misinformed.
If you think intra-fund advice has no place, are you suggesting you will provide these clients/members with advice on how to contribute to their super for less than a few hundred dollars? Of course, you will be able to take the fee from their super if it relates only to their super – but in my experience, this has resulted in Planners charging far more than they ordinarily would!!
Is intra-fund advice really the issue here? And are these clients/members your ideal client right now anyway? [/quote][quote=Anonymous]Great to see so many ‘well informed’ people discussing the merits or otherwise of intra-fund advice with very few facts. Also love how the conversation deviates to asset allocation of industry funds when that is not the topic of the article – seriously people, are we that bitter about the them vs us argument? It is getting a little tired (as too am I!).
Intra-fund advice offers a fantastic opportunity for those who can’t typically afford to engage a Planner (ie a typical Australian!) to seek advice on a product they already hold. Typically this relates only to risk profiling and appropriate investment choice, contributions to their fund and insurance needs. In many instances, these clients would’ve paid thousands to seek that same advice from another Planner and wouldn’t have been able to afford to do so. Therefore missing the opportunity to improve their future. Whether the product is appropriate or not is typically outside of the scope of these Advisers – which is very clearly articulated to the member. However given these Planners are also bound by the Code of Ethics and every other professional obligation that ALL Advisers are required to adhere to, where they identify requirements beyond their scope or inappropriateness of any recommendation they could make, they will recommend to refer to a more comprehensively licensed Adviser. Suggesting they are ‘getting away’ with things is a very bitter view of the misinformed.
If you think intra-fund advice has no place, are you suggesting you will provide these clients/members with advice on how to contribute to their super for less than a few hundred dollars? Of course, you will be able to take the fee from their super if it relates only to their super – but in my experience, this has resulted in Planners charging far more than they ordinarily would!!
Is intra-fund advice really the issue here? And are these clients/members your ideal client right now anyway? [/quote]
Care to put up a list of the fees that industry Funds or at least the one you work at charge for personal advice. Not the standard report letter but actual personal advice in as getting a plan done.
Hi Steve you like so many others have done a “compare the pair” and called for changes to be made to intra fund advice…
There are so many great things that advisers do every day to help improve their client’s financial lives yet things like this are another example of what is wrong with our industry. Hayne missed a wonderful opportunity to make relevant and meaningful changes at the RC that could have seen more Australians receiving affordable advice in the future.
What we got instead were some of the things you have mentioned… Real shame is Hayne used data supplied by the big end of town being the banks and their best friend former minister Kelly O’Dwyer, plus industry funds and insurance companies who also weighed in. Conveniently advisers were then blamed which deflected attention away from those instos. Brilliant strategy well played!
Good luck with your campaign to the PM.
What’s very obvious is these crap Industry Funds (both in terms of service and performance) are employing Sales Distribution people in far greater numbers. I ran into one who said they were an adviser and I just laughed, and laughed and I’m still laughing when I read their comments posted here. The problem with intra fund advice is you may as well walk to Harvey Norman and ask if the Vacuum cleaner salespeople would like a job.
Ok boomer. Enjoy your retirement.
[quote=Anonymous]Great to see so many ‘well informed’ people discussing the merits or otherwise of intra-fund advice with very few facts. Also love how the conversation deviates to asset allocation of industry funds when that is not the topic of the article – seriously people, are we that bitter about the them vs us argument? It is getting a little tired (as too am I!).
Intra-fund advice offers a fantastic opportunity for those who can’t typically afford to engage a Planner (ie a typical Australian!) to seek advice on a product they already hold. Typically this relates only to risk profiling and appropriate investment choice, contributions to their fund and insurance needs. In many instances, these clients would’ve paid thousands to seek that same advice from another Planner and wouldn’t have been able to afford to do so. Therefore missing the opportunity to improve their future. Whether the product is appropriate or not is typically outside of the scope of these Advisers – which is very clearly articulated to the member. However given these Planners are also bound by the Code of Ethics and every other professional obligation that ALL Advisers are required to adhere to, where they identify requirements beyond their scope or inappropriateness of any recommendation they could make, they will recommend to refer to a more comprehensively licensed Adviser. Suggesting they are ‘getting away’ with things is a very bitter view of the misinformed.
If you think intra-fund advice has no place, are you suggesting you will provide these clients/members with advice on how to contribute to their super for less than a few hundred dollars? Of course, you will be able to take the fee from their super if it relates only to their super – but in my experience, this has resulted in Planners charging far more than they ordinarily would!!
Is intra-fund advice really the issue here? And are these clients/members your ideal client right now anyway? [/quote][quote=Anonymous]Great to see so many ‘well informed’ people discussing the merits or otherwise of intra-fund advice with very few facts. Also love how the conversation deviates to asset allocation of industry funds when that is not the topic of the article – seriously people, are we that bitter about the them vs us argument? It is getting a little tired (as too am I!).
Intra-fund advice offers a fantastic opportunity for those who can’t typically afford to engage a Planner (ie a typical Australian!) to seek advice on a product they already hold. Typically this relates only to risk profiling and appropriate investment choice, contributions to their fund and insurance needs. In many instances, these clients would’ve paid thousands to seek that same advice from another Planner and wouldn’t have been able to afford to do so. Therefore missing the opportunity to improve their future. Whether the product is appropriate or not is typically outside of the scope of these Advisers – which is very clearly articulated to the member. However given these Planners are also bound by the Code of Ethics and every other professional obligation that ALL Advisers are required to adhere to, where they identify requirements beyond their scope or inappropriateness of any recommendation they could make, they will recommend to refer to a more comprehensively licensed Adviser. Suggesting they are ‘getting away’ with things is a very bitter view of the misinformed.
If you think intra-fund advice has no place, are you suggesting you will provide these clients/members with advice on how to contribute to their super for less than a few hundred dollars? Of course, you will be able to take the fee from their super if it relates only to their super – but in my experience, this has resulted in Planners charging far more than they ordinarily would!!
Is intra-fund advice really the issue here? And are these clients/members your ideal client right now anyway? [/quote]
You can’t legally scope out any part of advice only a client can. This is the problem two sets of rules.
Great to see so many ‘well informed’ people discussing the merits or otherwise of intra-fund advice with very few facts. Also love how the conversation deviates to asset allocation of industry funds when that is not the topic of the article – seriously people, are we that bitter about the them vs us argument? It is getting a little tired (as too am I!).
Intra-fund advice offers a fantastic opportunity for those who can’t typically afford to engage a Planner (ie a typical Australian!) to seek advice on a product they already hold. Typically this relates only to risk profiling and appropriate investment choice, contributions to their fund and insurance needs. In many instances, these clients would’ve paid thousands to seek that same advice from another Planner and wouldn’t have been able to afford to do so. Therefore missing the opportunity to improve their future. Whether the product is appropriate or not is typically outside of the scope of these Advisers – which is very clearly articulated to the member. However given these Planners are also bound by the Code of Ethics and every other professional obligation that ALL Advisers are required to adhere to, where they identify requirements beyond their scope or inappropriateness of any recommendation they could make, they will recommend to refer to a more comprehensively licensed Adviser. Suggesting they are ‘getting away’ with things is a very bitter view of the misinformed.
If you think intra-fund advice has no place, are you suggesting you will provide these clients/members with advice on how to contribute to their super for less than a few hundred dollars? Of course, you will be able to take the fee from their super if it relates only to their super – but in my experience, this has resulted in Planners charging far more than they ordinarily would!!
Is intra-fund advice really the issue here? And are these clients/members your ideal client right now anyway?
The issue is double standards and the proven risk that salaried call centre people will sell using intra fund advice and cross the line into personal advice. It is happening now and the industry funds are the prime offenders.
This isn’t correct! Intra-fund advice IS personal advice and only licensed Advisers can provide it – not a call centre staff member.
The intra-fund Advisers are required to have the same qualifications as every other Planner in the country.
These funds are aimed at people who believe it costs $1.50 a week to run a fund. Simple. I rang up an Industry Super fund and asked them how I could get them $100K and they told me to fax off a letter so that they can sort the money in the “pool”. I then had to explain to my 18 year staff member what a fax machine was. I told the call centre I don’t have a fax where I live. They said where do you live. I said 2019. If you die in Clubplus they have 1 person working in their deceased estates team and it takes 9 months to start up a reversionary pension. Another industry super fund has 1 person in their insurance team and they don’t work Wednesdays. Another well known Industry Super fund processes documents in India. Given I have been doing this for 20 years and all of my clients have outperformed the majority of industry super funds, I cannot see how it’s in anyone’s interest to use these funds. But as mentioned, I guess they’re fund are aimed at people who believe it costs $1.50 a week to run.
Hostplus in large bold advertising states [i]”$1.50 per week – As an industry super fund, Hostplus administration fees are a low $1.50 a week. Better still, this fee has remained unchanged since 2004. Like all super funds, investment costs do apply. But we do strive to ensure our investment costs are competitive.” [/i][i][/i]
This statement is clearly deceptive, false, misleading. Investors in this fund have been mislead and a class action should commence for this misleading advertising for those investors being duped. Given Hostplus has a range of other fees, (which are only partially disclosed and then in mulitple sections placing it well over 1% to 1.5% it screams as to the ethical and moral character of this industry super fund. Performance of this fund has also lagged returns of any of the recommend portfolio’s put together by asset consultants such as Mercer, Lonsec, Morningstar. I have returns over 20 years for clients that have all outperformed this fund.
[quote=Anonymous][quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner. [/quote][quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner. [/quote]
Jo – you are kidding right? Treading carefully, being oh so politically correct, not upsetting the apple cart and being ‘nice’ is exactly what got us into this problem in the first place.
This is not a schoolyard, regardless of how you perceive yourself and operation, this is ruthless big business with hundreds of millions of future revenue on the line. Whether you like it or not the Industry Funds and Unions are approaching it exactly that way and their end goal does not include the likes of you being in existence anymore unless you’re in their employ. If you wish to still be in business or employed by a non-Industry Fund organisation in future, then shake the trees as hard as you effing can and bang those drums or else simply go silently into the night. [/quote][quote=Anonymous][quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner. [/quote][quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner. [/quote]
Jo – you are kidding right? Treading carefully, being oh so politically correct, not upsetting the apple cart and being ‘nice’ is exactly what got us into this problem in the first place.
This is not a schoolyard, regardless of how you perceive yourself and operation, this is ruthless big business with hundreds of millions of future revenue on the line. Whether you like it or not the Industry Funds and Unions are approaching it exactly that way and their end goal does not include the likes of you being in existence anymore unless you’re in their employ. If you wish to still be in business or employed by a non-Industry Fund organisation in future, then shake the trees as hard as you effing can and bang those drums or else simply go silently into the night. [/quote]
Please, save us the noise and go quietly
I’m glad someone is still trying to bring this to greater attention. How they get away with this is just criminal and hypocritical when other advisers are charged for fee for no service.
I’ve emailed Hume about it and tried to email today tonight about it but nothing as yet.
Typical….
[quote=Anonymous]Ok boomer. [/quote][quote=Anonymous]Ok boomer. [/quote]
Very childish?..
Sounds a bit like this if you ask me:[url=https://encrypted-tbn0.gstatic.com/images?q=tbn%3AANd9GcQEdmOi4AblZWilXLFrzld_wmJSBowXNVd_KsWZH940QSx1Xxc3][/url][url=https://encrypted-tbn0.gstatic.com/images?q=tbn%3AANd9GcQEdmOi4AblZWilXLFrzld_wmJSBowXNVd_KsWZH940QSx1Xxc3][/url]
I love how the script to bash industry funds has not changed 1 bit in the last 15 years!
“How is 75% growth a ‘Balanced’ Fund”
“You can’t talk about performance unless you look at the underlying asset allocation!!!!! WAAHTGGHGH”
“Industry funds advertising is misleading when it comes to performance!! COMPARE THE PAIR IS A LIE! Look at the asset allocation!!”
“Look at HostPlus asset allocation – how can they call property a defensive asset??? TEll me how??”
Like a script!
Well here is something new for you then…they aren’t cheap anymore since ASIC has forced them to fully disclose all fees and costs. I just looked at the PDS for one particular industry fund: the admin fee, investment fee and ICR add up to 1.55% plus $78 pa. A retail fund, wrap or SMSF (depending on balance) combined with cheap index funds can be implemented for 50-70% less. And this is before the impact of the protecting your super legislation has been fully felt, so get ready for more fee rises.
And just a little heads up for the industry fund fan club. You might want to watch out with that big allocation to unlisted assets. We have had a 25 year period of almost uninterrupted interest rate declines, which have given these investments a big tailwind. But the party is now over. Interest rates are now at (or very close to) rock bottom. The only way from here is up, and with interest rate rises, you will see a massive headwind for those investments for many years to come. So before you arrogantly dismiss the comments from experienced financial planners on this site, maybe you should do a little bit of homework to find out how unlisted assets are valued and what happens when the risk-free rate moves from say, 1% to 4%. I’ll give you a hint. It aint pretty.
I won’t start on the poor insurance claims experiences, or the reports of incorrect information/advice my clients have received over the phone by their so-called ‘advisers’, because I am sure you have heard all of this before. Best of luck with your industry fund.
What’s this got to do with Boomers? I’m 35 an 100% agree with him. How is it fair that members can be charged for advice they don’t receive and yet many retail advisers are having their books audited from the last 10 years in a witch hunt for this very thing.
Each one of your quotes are true, except the ‘Balanced Fund’ quote. Some industry fund ‘Balanced Funds’ are more like 85% growth.
A current job advertisement on seek today for a Monitoring and Assurance Manager at Hostplus reads in part as follows:
“An understanding of superannuation or financial services would be highly regarded, but is not essential.”
Fantastic!
When you read the ASIC guidelines, it reads: The intra-fund advice may be provided by you directly or by another person acting as your employee or under an arrangement with you. (No mention of qualifications whatsoever) https://asic.gov.au/regulatory-resources/superannuation-funds/superannuation-guidance-relief-and-legislative-instruments/giving-and-collectively-charging-for-intra-fund-advice/
[quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner. [/quote][quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner. [/quote]
Jo – you are kidding right? Treading carefully, being oh so politically correct, not upsetting the apple cart and being ‘nice’ is exactly what got us into this problem in the first place.
This is not a schoolyard, regardless of how you perceive yourself and operation, this is ruthless big business with hundreds of millions of future revenue on the line. Whether you like it or not the Industry Funds and Unions are approaching it exactly that way and their end goal does not include the likes of you being in existence anymore unless you’re in their employ. If you wish to still be in business or employed by a non-Industry Fund organisation in future, then shake the trees as hard as you effing can and bang those drums or else simply go silently into the night.
Ok boomer.
Very original snowflake.
Well said.9
Hear hear – about time, we all should be haranguing our local MP’s as stridently as the zealots at Choice or ISA screech to the media and the politicians
[quote=Anonanimal]Yeah but there’s no way you can justify putting someone in a retail fund when Industry funds are cheaper and better performing.[/quote]
Wrong. And as such assume you are not an adviser.
Oh really what fund is better, perhaps only your fund which lets you charge fees to the super account.
Bt panorama? The one they spent almost a billion dollars on to give it away for less than $300.
All research shows the value is created on the non retail side. Yeah there are outliers but they are anomalies. Bulk of Australians should just ditch the retail fund
The LNP should do everything and anything to slam Industry/Union Funds. I think maybe they don’t have the fight in them.
They tried and launched an independent inquiry. Unfortunately the results were not as pretty as they wanted. https://www.pc.gov.au/inquiries/completed/superannuation/assessment/report/
Can’t beat them in performance or fees, so you beg the government to cripple the industry funds for you. Sad!
Anoanimal – I am glad you are not my holistic adviser..!
Holistic lol. Just remember which industry has to pay back billions of dollars for services paid for but never delivered.
Every big bank, every dealer group, I’m sure almost every licensee
.
If Industry funds are all just for the members, then why do they use lots of members money to sponsor Rugby League teams? It all seems a little lopsided to me…They use unfair tactics when comparing funds which are far from true comparisons – unlisted assets – these only get re-valued when they think it is a good toime to re-value them and then we all know what goes on with these valuations of commercial assets anyway – they are done on the lease value but do not take into account the discounts offered outside the lease.
It would be nice to see a level playing field !
anoanimal… given the saturation of TV, Radio & Sporting Team advertisements, I can understand how you can get caught up in the hysteria of all of their claims.. Perhaps next time you sit there glued to your tv watching the industry fund ads.. perhaps pay a little more attention to the rushed disclaimer at the end.. whilst some may have outperformed, I can guarantee that may have under performed. So the question to anoanimal.. which funds have outperformed compared to the retail equivalent? Is it the Balanced, High Growth, Conservative.. I guarantee that the bozo’s that talk about industry funds would have no idea. The industry fund ads is like a brain washing campaign.. where the gullible follow in their droves for the promised land.
Ok Boomer. Say hi to Alan Jones for me.
Industry funds include a lot of non market valued assets. The reported performance is about as reliable as the old school life companies balance sheets.
The performance of the funds management side is not the issue here. The issue is that all members are paying for advice to be provided to some members.
Either it is wrong for a service to be funded in perpetuity over the longer term by a recurrent income stream so that individual members can access at need if/when they want to, or it is not.
These trail income streams serve the same purpose, Whatever you call them and whoever receives them. There is a vast number of Australian superannuants who can only afford advice if they enter into a long term service contract with a payment by the month installment scheme of some sort. So either deny a large number of people access to advice or provide a uniform basis of funding such advice.
Please don’t ask a lawyer for advice. I can just see the next royal commission with a Kenneth Hayne clone saying he is horrified that somehow a system has been set up where poor unsuspecting industry fund members are being made to pay for a service they are not using.
Biannual means “twice a year,” whereas biennial means “occurring every two years.”
many thanks.
The intra-fund advice issue shows you what you can get away with if you have a good reputation. Especially if your competitors have a bad reputation.
Yes, particularly when the Melbourne Club hide what is going on & spend zillions on TV adverts creating the perception they have a “good” reputation, when in reality they have finally been forced by ASIC to disclose their hidden advice fee arrangements. ASIC now insist on the removal of advice fees or intra-fund advice costs as a line item (in the fees & costs of super products) and require it to be included in the disclosure of fund administration fees. But not thoroughly investigated by the Haynes RC – just given the big tick…lol
Well done Steve but as we all know, your common sense and factual information mean nothing, zilch, zero unless you have a degree and are a member of the FPA or AFA. Oh you have these possibly? Sorry, still means nothing.
Keep paying your members fees, keep studying, keep busy! In fact so busy with compliance you won’t have time to rock the boat and question anything, just focus on being compliant and keep paying the fees ok. Feel free to pass these cost on but just make sure their buried in the soa disclosures.
Welcome to financial planning, the joke that is now your industry.
Anyone laughing yet?
I have never been a member of the FPA nor any other industry body since I discovered (33 years ago!) that they are more about self-interest and personal aggrandisement than they are about helping sort out problems. Stay independent. Get your own AFSL and look after your clients and you’ll succeed. It’s not a recipe for riches but it is one for satisfaction and respect from those who actually matter.
perhaps a royal commission into Intrafund Advice will reveal the disgusting deals that have been done. As for the Barefoot Investor, mush of his “advice”would not stack up against the BID obligations – just a bloody rort.
Yes, Mr Pape is also strangely silent about how HostPlus & his other recommended funds pay intra-fund advice fees.
Scott Pape…hahahahahahahhahahahhahahahahah .
The Barefaced Investor.
I don’t reckon he would would be walking around his farm without shoes that he bought with all the money he made through flogging general advice through his books.
He’s the younger version of Clitheroe…….
…and in his recent column he was spruiking Vanguard…seems the check from Hostplus was probably delayed…
Yeah but there’s no way you can justify putting someone in a retail fund when Industry funds are cheaper and better performing.
Actually, there are a number of new choice funds that are lower cost than Industry funds. Plus $13,200 pa in ongoing fees for a $1.6 million super account in the CBUS Growth fund is not cheap. Would almost qualify for ASIC’s warning sheet they sent around for SMSFs.
Hi Anon – Australian Super Member Direct option. There’s a $395 pa portfolio admin fee, and then buy and sell brokerage – no other fees apart from the inbuilt fees in the ETF’s.
You can use that to do your little vanguard etf portfolios.
no they are not, I can find cheaper retail funds than industry funds and use a vanguard for better performance, it is the choice of whether a customers needs are for more holistic advice. the point is industry funds members pay a commission for no review service. stick with it sunshine. maybe you should get an education beyond the tv …
The picture is much more nuanced. The best retail accounts charge lower fees than many industry funds. Going through an industry fund PDS and adding up 5-7 different types of fees that add up to 1.5% is fun. With a good retail account and ETFs you can offer something similar *including* advice.
Industry funds are developing more and more bad habits, including rising fees, big rises in insurance premiums, inappropriate asset allocations for most 60 year olds, going more and more into illiquid investments, having multiple different types of conflict issues with board members and so on.
Comparatively they are still the good guys but if financial planners clean up their act, they will be exposed and the consumer will benefit.
time to jump onto the low fee brutally competitive retail escalator now….
Generally agree with you Anonymous, but don’t fall into the trap of comparing the fees for the Industry super fund balanced investment options with a retail fund with ETF’s. Just as you can go down the index fund option, you can do the same with Industry funds and have lower fees. Like for like, a default investment option in an Industry fund will have much lower fees than a default retail one.
Also on that note, it pisses me off that Hostplus and a few others provide an index option that is not a selection of index funds, but rather something that performs like an index fund. APRA should be all over this and stop this BS.
Have you actually done a comparison? lol and the funds aren’t better performing they use reserving to make it look like it is… There’s also LOTS of other benefits that I can’t begin to go in here but if you don’t know this are you really a good adviser?…
Of course they can show out performance when they deliberately compare 90% growth allocation with retail balanced funds with 65-70% growth. The executive salaries in industry funds are now similar to retail funds and they are employing internal advisers and deducting their costs out of earnings. This is not just salary but premise costs and marketing costs. The irony is the industry funds are demonstrating the hubris and lack of moral compass that got the retail funds into trouble. Clearly they cannot be trusted to self regulate. We know what happens next.
Have you actually seen a comparison of retail vs Industry after adjusting for asset allocation bias? I have.. See https://www.pc.gov.au/inquiries/completed/superannuation/assessment/report/
There is a 200-300 BPS average that seems to disappear in the retail sector.. Where does this go? We know now where IOOF money was going after RC. Suspect the other retails have been doing the same.
do some research, there are plenty of retail funds that offer more choice that are equivalently priced and often lower in price than industry funds
Name names
[quote=Jo]While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
this has to be the most insane comment of all time. do you understand how their funds achieve returns “which are all time high” have you looked at what the underlying assets are ? and what they call the investment options.
calling out things for what they are is not a choice, standard 12 requires we, “… in cooperation with peers, must uphold and promote the ethical standards of the profession and hold each other accountable for the protection of the public”
can you please let me know how their conduct demonstrates trustworthiness and honesty.
Yes. Did you look at the performance on the same asset allocation??
Not only did I look at the asset allocation. So did an independent parliamentary commission last year that was tasked to find the “lies” on performance from industry funds. They adjusted for asset allocation bias and found that, without question, industry funds have consistently outperformed, for a lower fee. Don’t give me the old bank slogan of “Compare the true asset allocation”. Read this report https://www.pc.gov.au/inquiries/completed/superannuation/assessment/report/superannuation-assessment-overview.pdf
There is probably a place for intra-fund general admin servicing (contact details, nominated beneficiary changes etc), but the problem is where personal advice is occuring under the guise of general advice, but paid for via Intra-Fund admin fees, that you cannot opt-out of. Intra-Fund is a FUM trailing service fee payment, simply under another name.
Well someone had to call out this nonsense. The double standards are anticompetitive and beyond belief. However the media are fickle. They have undoubtedly been complicit in the rise of industry funds, but they will soon turn on them when their favourite whipping boy, financial planners, has no meat left on its bones. There are so many examples of questionable behaviour, the media will feast for years. Here is one that irks me at the moment: Scott Pape’s favourite industry fund, HostPlus, currently has an investment option labelled ‘Balanced’ (it is the default option). The asset allocation includes a staggering 0% cash, 0% fixed interest and just 7% in credit. How can the regulators stand by and allow this? Do we need to have a crash for this risk taking behaviour and mis-labelling to be addressed? When financial planning as we know it today, has largely been killed off, the media will turn on these industry funds like a starved, feral dog.
What 95% Growth Assets isn’t a Balanced Fund ?
Imagine a Financial Adviser acting like this ASIC would ban and gaol.
Yet Industry Super get applauded for breaking the rules.
Try asking Hostplus how Property can be both a Defensive Asset and a Growth Asset and they provide zero information how this can be treated as both.
Check out the Credit too, high risk CDO style – GFC anyone ?
While I don’t disagree entirely that intra-fund advice will have its challenges managing conflicts of interest, in particular where the funds employ the advisers directly. I think bashing the industry funds in a time where the fees are at an all-time low, and performance at an all-time high, is not the right time. This is politically motivated and not in the best interest of our industry.
We should be focusing our energy on writing to ministers to improve accessibility of financial advice and help level the playing field by making all financial advice tax deductible. It is unfair that an accountants fee (who seemingly provide personal advice with less restrictions and red-tape) are able to offer their services as tax deductible, when we are not. The FPA has failed us – as they have been consistently putting this issue on the back-burner.
Well said Jo. FPA has been silent on tax deductibility for far too long. They have been too busy trying to shield their “star” advisers from Royal commission fallout.
Excellent work Steve Blizzard it was great to see your presentation in Adelaide at the AIOFP conference.
We have another example of the great hypocrisy around the laws and expectations in the Australian financial services landscape.
AIOFP…say no more…all credibility just went down the sink drain.