Speaking to the House of Representatives standing committee of economics, IOOF chief Renato Mota said one of the challenges facing the advice sector is affordability, describing it as an issue that “occupies a lot of … time and thinking”.
The committee chair and Liberal MP Tim Wilson had asked Mr Mota to give his views on intrafund advice, particularly if there was a “level playing field” with industry super funds.
“I think one of the reasons funds have looked to build intrafund or benefit from intrafund, is looking to deliver pieces of advice in an affordable manner. I certainly advocate for the intent,” Mr Mota said.
“What our preference would be to see that ability or access to that model be agnostic of product. Our preferred model would be to have the ability to scale down advice and actually have more affordable advice, but not necessarily be dependent on the product structure to be able to do that.
“At the moment, intrafund advice is dependent on advice being given within the product.”
The committee also spoke to Industry Fund Services, a financial advice services provider to industry super funds and union members.
The group is a subsidiary of Industry Super Holdings, which is in turn owned by 27 industry super funds, including AustralianSuper, HESTA, Hostplus and Cbus.
It has 105 advisers working under its license, with 85 employed across super funds.
Adrian Gervasoni, executive manager of advice solutions at Industry Fund Services, said he believes there is a role for limited advice under an intrafund model.
“I know that some in the industry have thought that the advent of the best interests duty and the Code of Ethics might see the end of limited scope or intrafund advice but we believe there’s absolutely a place for it,” Mr Gervasoni said.
“We’ve got the benefit of licensing advisers that sit in a limited scope and in holistic advice. And so it comes down to appropriate scoping and understanding when you need to decline providing advice because the right thing for that member would be to seek holistic advice that addresses their broader [needs].”
Industry Fund Services chief executive Catherine Bowtell told the House committee around nine out of 10 of the advisers’ clients are fund members, “overwhelmingly” at retirement or pre-retirement.
Earlier in the proceedings, Ms Bowtell had declared her group aims to make a balance between managing product bias and conflicts of interest against providing fund members access to affordable advice, which she called a “chronic problem in the Australian community”.
She is also a director at IFM Investors and the Royal Women’s Hospital as well as chair at Industry Super Holdings-owned media outlet The New Daily.
So i take it then that industry fund advisers don’t have to do yearly opt ins, or reviews even though the clients are all being charged fee’s
These Industry/Corporate Super Funds are charging ever-increasing fees to pay their growing number (over 1000) marketing reps (known as “Intrafund Advisers”) handsome salaries & BONUSES. These advisers are paid, without having to collect informed consent agreements or Opt-In fee authorisations from those ongoing fee paying super fund members. For retail advisers, it is illegal to receive such bonuses, without informed member consent.
The inconsistency here, which the big institutions are quietly covering up, is breathtaking. Plus the FPA are up to their neck in this. Retail adviser members in the FPA are being stitched up big time by the ongoing fee collecting wholesale adviser members & the Intrafund adviser members. All animals are equal, but some animals are more equal than others.
And Bowtell’s line about retirees & pre-retirees is shameful. Young families (aged 25 to 50) need active advice via Life Agents & advisers just as much as retirees, for a variety of reasons. What Bowtell is really saying is the Industry Funds need their bonus collecting Marketing Reps, to help retain their higher fee FUM clients. As an example the CBUS Growth fund charges a $1.6 million fund member over $13,800 in fees every year. Anyone retiree with half a brain would flee from some of these high fee Industry Funds at the first opportunity.
Enough is enough – just join another Adviser organisation who will fight to put a permanent end to this red-tape “Opt In” fee nonsense.
The first step is removing ‘advice’ from the descriptor as suggested two years ago.
This isn’t advice, it is product and generic information. The consumer should be under no illusion that they are receiving advice from a qualified advice giver subject to the best interest duty and FASEA Code.
Just rename it ‘generic product information’ and then call centres can fill their boots.
The playing field is about as level as the Himalayas.
This situation is out of control and the Govt is too gutless to tackle it.
Tim Wilson is repeatedly challenging it, but where is Jane Hume ?
The pure fact is that every single Industry Fund member pays a fee somewhere for the access to intra-fund advice, be it scaled or not.
This is a retainer fee for the right to access…..not in relation to the receipt of advice.
Cath Bowtell confirmed that 9 out of 10 members receiving intra-fund advice are either pre-retirement or at retirement age.
What happens to all those members who are not accessing any advice for 30-40 years in regard to the fees they are paying for the right to access ???
too right, how is a fund that charges fees monthly for intrafund advice to a 20 something able to get away with this if they don’t provide them with advice until they are in their 60s? Or never if they leave the fund before then, is there a refund? No. intrafund advice was, is and will be the IFS answer to real advice. You can’t tell me that 105 advisers is sufficient to service even the most basic needs of 2.3m Australian Super members (assuming all of the advisers only provide advice exclusively to Aus Super, which they don’t). There is no way that IFS and their advisers either service adequately or charge their members in a fair and transparent way.
I’m sick of large institutions speaking on behalf of our industry. They wouldn’t know the first thing about giving advice or what an actual client looked or smelled like.
So we blow up the self employed business models and raise the legal requirements for providing advice and then let the industry funds employ their own advisers and call it intra fund advice to avoid complying with the new legal requirements ?
You have the scope of the Hayne Royal Commission in one sentence. Don’t forget the banks marketing online via “general advice” in a few years.
Of course, scaled advice for industry funds advice and not for any other advisers. No conflict here, move right along
No barrier at all to big instos to single adviser practices offering intrafund advice. I think it’s more accurate to say such advice doesn’t fit or suit the model and fees of many for profit advice businesses.