One of Australia’s largest superannuation funds has introduced new financial advice fee caps, due to come into effect for Australian Retirement Trust Super Savings and QSuper accounts from 15 August this year.
The change is aimed to benefit members, allowing them access to more affordable advice.
Commenting on the initiative, Australian Retirement Trust’s head of advice, Anne Fuchs, said the new advice fee structure has been made possible by the recent merger of QSuper and Sunsuper.
“Australian Retirement Trust’s increased size and strength has enabled the fund to further promote – both within the industry and wider community – the super fund’s belief that quality financial advice can change people’s lives for the better,” Ms Fuchs said.
“These new advice fee caps will be a key part of Australian Retirement Trust helping as many of our members as possible, including women, young people and others with lower account balances, access and benefit from quality financial advice,” she continued.
From 15 August 2022, Australian Retirement Trust advice fee caps (for Super Savings and QSuper accounts) will be:
- Maximum fee of:
- When a member commences a new advice relationship with a financial adviser, the financial adviser will be able to deduct an initial advice fee, up to, $1,500 (including GST) if the advice relates to superannuation. This initial fee will contribute to the costs associated with the preparation of an initial Statement of Advice upon entering a new advice relationship with a financial adviser.
- Members can authorise their financial adviser to deduct an advice fee up to a maximum of 2.5 per cent p.a. of their account balance, capped at $8,800 p.a. (including GST), to cover the associated costs of advice such as advice implementation, ongoing assistance with managing their account, ad hoc advice, and annual reviews. The cap will be applied for a rolling 12-month period and is applied to the sum of all advice fees paid.
- Minimum balance of:
- A member must hold a balance of $25,000 across all accounts and no individual account can drop below $6,000 (after any advice fee payment).
- Caps are applied across the total of all advice fees paid from a member’s account; there are no separate caps for different advice fees.
According to Ms Fuchs, the inclusion of a minimum balance requirement will ensure that members’ balances won’t be eroded by financial adviser advice fees.
“This is a great opportunity for Australian Retirement Trust members to pay for financial advice they need to make sure they get the most out of their super, without having to worry about funding it from their household budget, because we know the cost of living is challenging for many of our members.
“Likewise, financial advisers trust us to service them and their clients in an easy and timely way, with dedicated adviser servicing teams specifically trained to support advisers,” she said.
Ms Fuchs revealed that more than 4,000 financial advisers have registered with Australian Retirement Trust for their Super Savings account clients, and nearly 1,000 financial advisers are able to charge advice fees to their clients with QSuper accounts.
the issue is that apra fund have explicit obligation in SIS now to ensure any 3rd party payments are in the best financial interest of the members super savings. there is also ATO precedent about deduction of fees that do not relate to the superannuation being deducted from the super balance.
The alternative is for the APRA trustee to vett the advice prior to agreeing to pay any part of it.
The ultimate question is how much are we going to suggest is an appropriate amount to reduce a members super by. (remember all the comments about the negative impact on savings with the COVID early release payments)
The maximum ongoing fee of $8,800 p.a capped at 2.5% of balance works but they should stop trying to be funky with an upfront of $1,500 which is far too low in many instances. Just increase upfront to $5,500 maximum or 2.5% of balance whichever is lower.
Why do PRODUCT providers feel they have any place at all in dictating what their members do with regard to non-product matters? If a fee meets the sole purpose test, who are the product providers to judge the amount?
Not that worried though, had never heard of this mob until I saw this and will never use them now for sure.
This is of course about discouraging any member to seek initial advice from an adviser
independent of the fund itself through controlling price.
I assume therefore that the client could pay their initial advice fee of say $3500 split between $1500 from this fund and $2000 from their own pocket….even better of course if the $2000 is tax deductible , if they are not already in a tax free retirement status or unable to claim against any assessable income.
In addition, Life Insurance, Trauma Insurance and TPD Insurance premiums outside of super should all be tax deductible without the proceeds of a claim being assessable.
Income Protection should retain the tax deductible premium status and proceeds to remain assessable as it is replacing lost income.
This would assist in offsetting the premium cost of risk insurance without the concern of forgoing tens or potentially hundreds of thousands of dollars in tax in the event of a claim being paid.
In addition this would potentially take significant pressure off the social security system as more people would be financially independent in the event of unforeseen circumstances.
Too simple for a Govt to consider???
Come on Stephen Jones….you can do it if you really want to.
You’ve hit the nail on the head. They are trying to prevent upfront advice, because they know this is the type of advice which is most likely to result in a redemption. Ongoing advice is less likely to result in a redemption, so they don’t mind adviser’s charging a reasonable fee in this instance. It is a selfish, anti-financial advice stance, but not surprising based on past behaviours from these funds.
$1,500 plan fee? These guys simply keep getting it wrong and with close to $4m FUM with them I think it is time to move on from them. Makes no sense for the ongoing fee to be so high and the upfront fee so low other than to create an administrative burden that they do not understand for advisers.
They need to reassess their upfront limit. In what world is $1,500 a sufficient limit when the ongoing limit is $8,800? Should be more like a $5,000 limit not $1,500.
Its an additional allowance of $1,500 in the first year. so the total fee cap for the first 12 months (initial and ongoing) is $10,300 PER account.
$1,500 plan fee huh.