Speaking at the Australian Retirement Trust’s (ART) investment panel for financial advisers, Anne Fuchs, the fund’s head of advice, revealed that the fund is set to shortly begin work on a new advice offering for its members.
In the final report of the Quality of Advice Review (QAR), lead reviewer Michelle Levy proposed that banks, superannuation funds, and insurers should be permitted to offer limited advice without being bound by the best interest duty. Instead, the QAR lead proposed the introduction of a good advice duty that would attach to personalised financial advice offered by the institutions, and greater flexibility in intra-fund advice.
Although ART does not plan to position itself in the comprehensive advice market, Ms Fuchs does believe the fund is set to play a key role in the democratisation of advice.
“We believe in open architecture advice. We believe advice is a very individual experience,” Ms Fuchs told ifa.
“Superannuation has had traditionally a very paternalistic approach to advice. You can only come to us and it’s comprehensive advice and we think actually, the way of the future, with that spirit of democratisation is we just give them [consumers] options, so they can consume it how they want to consume it,” she noted.
Ms Fuchs explained that ART will shortly announce its “end-to-end digital advice platform” — encompassing calculators, DIY advice through and human-led intra-fund advice — and is aiming to launch it in the market by the end of next year.
“That [the platform] we believe needs to be able to create a member experience, which is why it’s going to be a single platform,” Ms Fuchs said.
“So, if it gets too hard and you [the member] are doing a DIY experience, you can put your hand up and say ‘can I have an adviser now’ and they screen share and talk to you.”
The head of advice emphasised that ART acknowledges the significance of advisers and intends to incorporate the services of real advisers into its platform offering. At present, ART has 60 advisers providing simple advice to members over the phone.
“The reality is the trustees need to be able to discharge their obligations thoroughly and to do that, comprehensive advice is a big part of that because people will have other income sources, other assets. That’s why comprehensive advice is needed,” Ms Fuchs said.
Despite this, she emphasised that ART is not in favour of vertical integration.
“We can’t scale that, it would cost us a fortune, and it’s not in the spirit of FOFA. It’s vertically integrated and we’re not pro vertical integration in that sense.
“I know a lot of people would say intra-fund advice is vertically integrated, my response to that would be that our intra-fund advice service to members is a member service, it’s not a profit making … It doesn’t acquire market share, it’s not used to grow, it’s used to serve and to help members retire,” Ms Fuchs said.
According to her, ART’s endorsement of intra-fund advice stems from its goal to offer support to members in line with the original purpose of super.
“Who is helping the woman who is 61 years old, who has been an aged care worked and has $80,000 in her super and she is tired? All she wants is to work out how she can retire and all she’s got is her ART account. Where does she go? We should be able to help her in the spirit of what super was set to achieve and that’s why we believe in intra-fund advice.”
As for the platform’s potential kick-off date, Ms Fuchs said the fund hoped to have it implemented by the end of next year.
“We’re just working out the sequence of it in line with Michelle Levy.”
ART has experienced rapid expansion in the past year, and now boasts a membership of approximately 2.2 million individuals.
If the government was serious about making the industry more professional no product should be allowed to provide advice / have an adviser attached to them. The process in of itself creates inherent bias. They have regulated the industry so heavily now that this would make the current advice process contradictory. Logic seems to go out the window when industry funds have the mic.
QAR is an open invitation for the total control of superannuation by the industry (union) funds.
Members are paying fees for advice whether they avail themselves of the service or not.
Yet advisers are burdened with a massive cost impost and associated waste of time having unnecessary and in many cases unwanted review meetings with clients to satisfy the fee for service fantasy that doesn’t apply to industry funds.
“I know a lot of people would say intra-fund advice is vertically integrated, my response to that would be that our intra-fund service to members is a member service, it’s not a profit making… It doesn’t acquire market share, it’s not used to grow, it’s used to serve and to help members retire,” Ms Fuchs said…………….Huh? Recommending your own product does just that Ms Fuchs. You might like to have your marketing people come up with some alternative spin.
All members will think its good advice till they realise that their is also great advice somewhere else. Are they giving members advice on CEntrelink? How far does this elastic stretch? Aged Care considerations? How do you unwind a Market linked income streram if it turns out to be not fit for purpose for the clients complete circumstances? It will end in tears.
I’m not following. Are they saying external Financial Planners on the FAR can establish real time view and amend (portal) access for ART members who authorise this?
No. Their internal advisers
Didn’t an adviser get banned for 4 years this week for providing “staged” or piece meal advice?
Bring on the spin doctor. Democratisation of advice? Really? Well if your not in favour of democracy then you must want dictatorships! I have no problem if they want to offer intra-fund advice. Just don’t call it advice and don’t dress it up as advice. It is effectively product information that lets the member know what they can do within the product that is ART. That might be entirely appropriate for someone, but its not impartial and I can’t believe the advice would ever include a recommendation to move away from ART. So if you want to argue that its not vertical integration because it doesn’t grow market share, you’re splitting hairs. It helps protect your market share by ensuring they don’t get competing advice. Its all predicated on the FP profession moving away from the best interest duty. Again, I don’t believe this is entirely bad. But advice offered in that circumstance is not part of the profession, it is part of an industry.
May I ask, how the Profit for Members Fund is going to fund the additional personnel, that will be needed to provide the comprehensive advice or do the screen sharing with the clients? Will there be some form of clear non biased comparison tool in place for the member to utilise that will point out all fees associated with any options contained within the ART suite and other “Profit for Members” funds as well as clearly highlighting all the options available? Will the platform advise members correctly on how to transfer ownership of existing insurances held with unrelated life providers such as TAL, AIA, Zurich etc, and if so how will this be costed? Will the new platform created and provide the client with a free, prior and informed engagement letter, clearly highlighting the costs to the client and where those cost will come from and to whom they will become payable to? Oh the ethical dilemmas’ of the provision of advice not just the Corporations Act requirements?
Having had the recent displeasure of dealing with ART for a new client that had a fund there and not being able to get a breakdown of the underlying portfolio investment allocations from adviser services, but low and behold I found it myself on their website. So wish you all the luck in the world Ms Fuchs.
I love the way these industry funds pretend they are now more adviser friendly so that we use them more often instead of retail funds & then white ant the adviser by enticing clients to use their in house advice process instead. Where’s the ethics in that?
She is first class. One of the industry’s best spin merchants. The industry fund machine, coexistence with the unions and this government is our unfortunate destiny. Forget being a profession….
You should ask an adviser who regularly recommends said industry fund whether their clients leave for basic intrafund advice. If you have a solid value proposition then you have nothing to fear from super funds, other advisers, robo advice or indeed talk back radio.
I’m confused, didn’t another adviser get banned today for ‘layering’ advice – something call centre staff at ISF’s & automatic consolidation enabled by the ATO have allowed for a decade – resulting in 1000’s of Australians losing default insurance. This ‘end to end’ solution will enable more of the same. Sigh
Not necessarily, could lead to more Australians being engaged with their respective super funds leading to better outcomes in retirement.
What if they dont get to retirement due to illness or injury
reminder – advisers offer advice – people can take or leave it if they want..
Engagement does not = increased retirement outcomes, fund failures and there’s a lot, review the ASFA heatmap, combined with longevity products to meet the retirement income covenant means these sales tactics (not advice, sale – why robo in the us has contracted not grown) will mean more poor outcomes. Engagement = sales, not enhanced retirement outcomes
It could also lead to a lot more Australians making the wrong financial decisions regarding their super and insurances.
the decision is theirs.. not yours.. you cant dictate that they have to take insurance.. its up to them.