Reflecting on the 2014 fiscal year, the M&A consultant and director of Connect Financial Services Brokers said a greater number of small business and client-facing professionals should be appointed to executive posts in the superannuation sector.
“To be taken seriously, management in the superannuation industry, fund management and industry funds should at the very least have had some experience sitting in front of a client or running a self-employed planning practice if they are to give commentary about advice or dispensing lectures to the industry,” Mr Tynan said.
The lack of client-facing experiences means that “industry funds in the next few years will have a huge task to implement advice into their service provision models”, he suggested.
In addition, he said the industry funds’ “clever marketing campaign” against product commissions in the financial advice market has been “simplistic” and should be read with a “buyer beware” warning by consumers, adding that “lower costs do not always lead to greater benefits”.
Meanwhile, the business broker described the past 12 months for the financial advice market as a year of “continuing evolution that will result in a future of consolidated advice driven by regulation, vertical integration and the need to control Australia’s ever expanding retirement assets”.
He anticipated, however, that increasingly the major institutions will be more comfortable operating in the general advice space providing “proprietary product” advice, while the non-aligned sector will remain more “affordable” and will largely administer “personal holistic high touch advice”.
ISF’s only offering is ‘product’. Apart from Pavel most recognise the importance of advice over product. The attempts of ISF to get the focus on the only thing they provide, ‘a product’ is a diversion away from majority of things they cant provide, advice being the most important.
Back on topic to anyones knowledge has ISA every “compared the pair” between what a advise clients accumulated in super versus what a non-advise industry fund member does? The “compare the pair” advertising seems to me to completely miss the point on advice. To me advice is about developing an actual plan that can be measured and tracked. It inevitable leads to much stronger engagement in the retiement process than would generally be received by treating all your members as “defaults”. I acknowledge Aust Super’s efforts in this regards but their prolific member funded messaging via ISA’s prime time TV campaigns may be doing more harm than actual good. Comments welcome.
pavel, this is not what I’m suggesting at all. My point being is that they don’t have a secret formula for investment success, as can be seen by doing an attribution analysis of the other asset classes. Aust Super via FWC have effectively created a closed shop for 80% if all modern award contributions. They will not be pushed as hard if they can maintain the status quo. There can be no doubt what so every that open competition creates innovation and efficiency.
Denial, so let me check Ive got this right; because ISFs have a capacity to invest in asset classes that a proven to provide a good risk adjusted long term return, which I thought one would consider to be aligned with the client’s interests, and retail funds cant achieve that same advantage because they need to address higher liquidity risk, we should change the playing field to bring everyone down to the lowest common denominator? Hmmm, forgive me for not getting on that band wagon.
Interesting conversation
This whole “general advice” or “proprietary product advice” thing is wrong. There is no way a call centre employee or bank officer without an advice qualification should be talking to clients about the suitability of products. Case in point, I recently saw an instance where an unqualified employee churned a clients account based pension into her organisations super fund. The result……….the client lost most of his disability support pension. Not to mention the thousands of people who are losing valuable insurance benefits when being flipped into alternative super funds.
Ad, I suspect you know the answer already. Irrespective, their default fund’s (balanced) outpeformance has simply been a factor of being able to take much larger long term illiquid bets. This is only made possible by receiving guaranteed net flows via SG contribution from their dominance in modern awards. Clearly they don’t want the FWC model to become an open shop otherwise they’ll have to compete on a level playing field in terms of asset allocation. It’d be good thing for all super members if they do open up the process to competition.
Underperformance of single asset classes is a factor of not have an advantage over rest of market.
On another topic when do you think Aust Super will start to disclose their fees on a gross basis like most of market rather than net?
@Denial….got to laugh at the ISA taking the high moral ground when 80% of one of the biggest funds sit in their default option. According to minutes of the Senate Committee discussing FOFA they still get charged for Advice which for Australian Super alone amounted to $19,300,000. Must have a pretty plush call center. HeHe!
How do industry funds perform well at their default balanced level yet continually their specific Australian and International share options underperform? Start doing some long term performance comparisons & makes one wonder.
ISA like Aust Super admittedly have good products but effectively they’re a one trick ponies given +80% members are in the default balanced fund (now MySuper). They are now lobbying hard to default their +60 clients into the pension phase for a reason. Alas this provided confirmation that they themselves are acknowledging their model is also flawed as they can’t get engagement or properly cater for pending changes like the increase in age pension age or preservation age. Remember most ISA members rely on the age pension for a substantial part of the post retirement income. FOFA has reset the goal posts (and yes even if technical drafting amendments get up) and the advice industry has never had a better opportunity to prove itself.
@advicespecialist……sometimes we think we are on our own too. But here’s the biggest unfair of the lot….if we organize our fees from a platform then our us ones is worth 50% more to sell than just getting advice fees! Go figure. The clients respect your respecting them far more with straight up fees and are happy to stay and pay for the long haul with holistic advice. Any change is a generation away.
It doesn’t matter what happens, what changes come in, the FPA will find a way to screw it up for all stakeholders in their pursuit of self preservation. Once they see themselves being not needed again, they will lobby our clueless polies to change the rules again.
WHAT is going on?!?!
Since WHEN did ISF, or MLC, or CBA, or AMP, or even SMSF become our product?!?!
OUR product is, always has, and always will be, ADVICE.
We have clients who have each of the above – that WE recommended. They pay us a fee for that advice. Sometimes we get paid via the product, sometimes we get via credit card, sometimes we get paid via bpay, and sometimes by cheque.
In turn clients are ECSTATIC that there is someone there to help THEM. Who has THEIR best interests at heart.
Since when – and quite frankly, why – has this become a turf war on product???
Is it just me or am I on my own here…
Those who can, do!
Those who can’t provide “advice” at Industry Fund level and get angry and are jealous of those of us who are professional and client focused, as they will never reach that level.
Those who are trying,learning and are good at ISF will make a difference, but are not the ones raging against advice!
Fortunately major commercial institutions are not anti advice nor have they waged a campaign with members money against advice. Advice IFS know they cannot provide at any competent level. Advice that is the biggest threat to their existence, an existence sustained by ignorance and apathy of which they wish to sustain.
AJD, jeez, you are right…good thing we have the CBA and other product sales factories to save the public from these ISFs!
The best minds at most levels, be it managerial or practitioner would hardly be attracted to the single minded, single product, generic advise model of ISF. I suppose at practitioner level if you can’t make it in the commercial world this could be your place providing advice to a captive audience for a subsidised rate made possible only by the unknowing generosity of ISF members who don’t use the service. ISF has a product model only and they are fast realising with the outflows of larger balances to SMSF it will take a tinsy bit more than an expensive ad campaign solely focused on product. A product that in most cases doesn’t stand up to scrutiny or transparency. Advise is where it’s at and ISF are a long long way behind.
Pavel, You mean like Alan Bond and Christopher Skase – another pearl of wisdom from you! LOL
The best coaches did play the game BTW, check the stats!
Self-serving and narrow-minded.
Why is it some of the world’s best spots coaches are as successful as they are , but never played their sport professionally?
Why are some of the best business minds self-taught and never went near a Uni?
In my experience, I’d take a strategic minded and savvy general manager who can get the best from people over a so-called ‘expert’ practitioner every day.