In its submission to the Senate economics references committee inquiry on improving consumer experiences, choice and outcomes in Australia’s retirement system, the Association of Superannuation Funds of Australia (ASFA) said that expanding intra-fund advice is in line with the role of the trustee to “provide their members with guidance and support in making informed choices about their retirement”.
“One element of this is trustees being able to give personalised, targeted advice to members with respect to their options and choices in retirement. If a fund does not have an Australian Financial Services Licence (AFSL) to provide personal financial advice or is not in a position to perform a full ‘fact find’ on the member and document the facts and advice in a statement of advice,” ASFA said in its submission.
“Given this, the government’s response to the Quality of Advice Review will be instrumental in facilitating trustees’ ability to assist their member in transitioning to retirement.”
One way to do this, it said, is through allowing super funds to provide their members with more advice as they transition to retirement.
“Intra-fund advice is less costly to deliver and can prove effective in enhancing members’ outcomes,” ASFA said.
“ASFA recommends that intra-fund advice should be expanded to cover transition to retirement, including the fund’s retirement income products and age pension entitlements.”
The submission also argued that the current regulatory regime around the provision of personal financial advice acts as a “material impediment to the uptake of retirement income stream products”.
“Trustees’ ability to provide guidance to members, including a personalised or targeted ‘nudge’, has been constrained by regulatory prohibitions and requirements with respect to the provision of financial advice,” ASFA said.
When announcing the final tranche of proposed changes on the back of the QAR, Financial Services Minister Stephen Jones addressed this need for super funds to be able to “nudge” members.
“It is difficult for funds to engage their members at scale in a meaningful way under the current rules,” Mr Jones said in December.
“But we want to lift engagement. So, we will create a specific permission within the current general advice framework to allow superannuation funds to prompt or ‘nudge’ members.
“This will allow funds to be proactive and encourage members to think about their financial situation. And to seek advice at important decision points that they might otherwise have missed.”
In its submission, ASFA noted the role this legislation will play in enabling greater communication between super funds and their members but said there are other impediments that need to be cleared up.
“Reforms to the regulation of the provision of financial advice, in response to the Quality of Advice Review, should see improvements in the ability of trustees to provide advice about, and to recommend, income stream products,” it said.
“The pension standards in the Superannuation Industry (Supervision) Regulations 1994 can act as an impediment to income stream product innovation. Further, the regulatory standards for the retention of capital/reserving required for some income streams with a longevity or market risk component can also act as an impediment.
“ASIC’s regulatory relief is needed for superannuation calculators and retirement estimates provided to those already in retirement and with respect to specific, as opposed to generic, products.”
I’m certain this type of speak from Jones will result in a healthy ” nudge ” in relation to the level of donations the Industry Super funds will make to their comrades in the Labor Party.
This is simply a case of ” you scratch my back, Ill scratch yours”.
To state that Jones has been a monumental disappointment is the understatement of the decade.
After reading all of the optimism pre and post QAR, it is clear that the advice Industry has been stitched up again by the Govt. and the regulators. The sole agenda of Labor and Jones is to help their ISF mates, and the QAR is just a side show to string us along in the hope that we will still vote for them next election.
Fair suck of the sauce bottle ASFA…
Shockingly bad policy – more evidence that Jones and Labor need to go next election. And yet he turns his nose up and jokes about why Advisers are crying foul over the ASIC Levy and the continuing red tape that is killing us.
How can this be added to Intra-Fund advice when there are major tax issues as well as the financial planning advice which need to be considered when providing advice on Transition to Retirement recommendations to clients.
You need to be a Registered Tax Agent or Registered Tax (Financial) Adviser to provide such advice which I would doubt those on Industry Super Fund call centres would have such authority.
As for them being able to advice members on Centrelink Age Pension rules that would be near impossible with the difficulties of the Social Security Act.
Please explain how the above would be in the Best interest of the member!
Rules are for Financial Planners – they are talking about Product Providers and they act in the best interest of the members (plural) which is the fund, which means retain and increase FUM for scale etc?
No one is interested in details of what Financial Planners say – Financial Planners are not relevant at this point in the debate?
Continuing with the FAAA and expecting a different result is….?
Don’t use logic please. All you need to do is follow the self interest and you will see what will end up happening.
Seriously – year after year of Conflict of interest this and conflict that – consumer detriment this and potential consumer detriment that, Conflicted renumeration this and conflicted renumeration that, all leading to increased Education this, more education in that, Ethics this and more ethics for that – all now looking very much like propaganda? Any wonder the cost of advise has increased?
But wait, forget all of that, lets say “Intra-fund advice is less costly to deliver and can prove effective in enhancing members’ outcomes,”.
I agree with the sentiment of most of the comments here, I sense we have and are going to be slowly worn down on these issue, weight of industry funds is unstoppable. At 15,600 advisors our numbers make us impediment. Jones will have moved on in a re-shuffle.
Exactly right, Jones will be gone in a trail of dust and carnage, elevated and no longer responsible for the “hot mess”. Another successful stitch-up from Canberra.
When the Fed Govt removes the Annual Fee Renewal Consent form red tape that doesn’t exist in any other nation on earth, then they can do what they like, quite frankly. Then it will be back to the bad old days again, with the big industry super funds becoming the new Tied Agency vertically integrated product salesforce. It has nothing to do with advice, but directing more donations to the Labor Party, as revealed by NSW Senator Andrew Bragg.
ASFA ideal outcome is that their members can provide all types of personal advice including Centrelink.
They can charge all fund members fees for the availability of access to advice regardless of whether the member has used the service. Their staff, will be regarded as “qualified advisers”. Furthermore they can restrict members being able to receive advice from an outside adviser by refusing to allow a member to have this advisers fee deducted from their account.
The final outcome and objective of this govt is the elimination of the independent adviser network.
They will not be satisfied until all matters to do with superannuation money is controlled absolutely by a trade union fund.
Seems accurate.
Wow unbelievable. So a (properly) qualified adviser would have to review clients cashflow and current super contributions, check to see if there is a financial benefit for the strategy, advice on how much to salary sacrifice, how much to draw as a pension, review existing super fund and the new pension fund, with alternative funds, disclose all fees, put in alternative strategies, update projections of how tracking towards retirement. And that is just limiting the advice to cashflow, super and pension, may also include debt (paying off quicker), life insurance, estate planning (death nominations). So looking at 20-40 SOA, whilst intra fund advice would be a one pager. It is time for FAAA to stand up for advisers and say that this cannot be allowed, it is too complex for intra fund advice.
Probably won’t even need a one pager for intrafund advice, easier to do it over the phone. FAAA won’t do anything based on their track record.
What evidence is there that the existing intra fund advice works? There was 1 asic report which indicates less than 50% of industry super advice met clients best interests. Despicable sales push at the cost of Australians retirement savings and the ability to seek real advice
No it shouldn’t!
That is tax advice, Super contribution advice, Retirement planning and quite likely Age Pension Advice.
Who are they kidding?
“But we want to lift engagement. So, we will create a specific permission within the current general advice framework to allow superannuation funds to prompt or ‘nudge’ members.”
Yes we know this MP Jones, when Canberra wants a carve out in the prescriptive and onerous Financial Services Legislation, they wave a magic wand and fix it to suit their agenda.
However, if Financial Advisers have been holding out forever for meaningful reform, well that’s too bad because it doesn’t win any votes.
And this is exactly why our Country is controlled by every vote and dollar that flows through corrupt Canberra.
Thanks for nothing Jones and the QAR.
Perhaps AIOFP is the way forward – at least see the end of some political careers? Jane Hume would be my current pick – and the FAAA?
No, Jane Hume, just a huge no – the architect of the current FDS red tape and lackey to FryzeAdvisers.
Where is the QAR relief ?
Where is it ?
Plenty relief….
… if you are anyone but a financial adviser!