In a hearing of the House economics committee on Thursday, committee chair and Liberal MP Tim Wilson pointed to an increase in advice revenue noted in Hostplus’ annual cost recovery statements, from $148,992 in 2015 to $1.27 million in 2020.
Hostplus group executive of member experience Paul Watson confirmed the increase, saying the fund had looked to more clearly differentiate between comprehensive and intra-fund advice services following the FOFA reforms.
“If i went back to 2015, we were providing a lot of simple episodic advice and not as much comprehensive advice as we are today, we also had one team that was providing advice across both limited and comprehensive advice,” Mr Watson said.
“The increase in fees over that period of time is a result of an increase in engagement and having members engage with [an] adviser in the pre-retirement and retirement phase to develop plans and recommendations for retirement, that is reflected in the cost recovery. That’s the increase in both number of SOAs and the fee for service attached to those.”
Mr Wilson also pointed to Hostplus’ adviser numbers declining from 10 to 7.74 over the five-year period, which Mr Watson said had been the result of an internal efficiency review.
“The drop in number which is two people – it’s 7.74 because we have a couple of people not working five day weeks – we had a planner in north Queensland and also a planner attached to the Gold Coast office, and we took the opportunity to consolidate those into the Brisbane office and have our planners travel to those locations to assist members as part of our efficiency review,” he said.
Mr Watson said the fund had seen a significant increase in member take-up of comprehensive advice over the five years, which was paid for on a fee-for-service basis and usually charged outside of super.
“Members have the opportunity to deduct from their account the part of the advice that relates solely to that interest – comprehensive advice can take into account a range of people’s interest outside their super, so the majority seek to pay for it from sources other than their Hostplus account,” Mr Watson said.
“Their adviser can also approach Hostplus in terms of having some of the cost met, but our experience has been that very few members wish to avail themselves of that service.”
It’s amazing how many people try to defend the behaviour of union funds by saying “it’s no different to AMP, IOOF, Dixons etc.”
But that’s the point!! Union funds are just as bad as the bad commercial providers, if not worse. But our biased regulators choose to completely ignore bad behaviour by union funds.
Gosh. The silence is deafening!
Which considering, “the elephant in the room” is paradoxical.
So, the advisers paid a salary by the fund are providing “comprehensive” advice to the members in a pre-retirement or retirement phase.??
Sure, this may include transition to retirement pension strategy/salary sacrifice/ personal contributions/ spouse contributions/nom of beneficiary/ insurance considerations/ etc etc but ALL of these recommendations put forward will be in relation to retaining the current accumulation or pension account within HostPlus.
How on this earth can this advice meet BID and NOT breach Standard 3 of the Code of Ethics in that the adviser has a direct conflict of interest regarding the product recommendation as the adviser is directly paid a salary from the product manufacturer ???
This is simply insane.
And the Govt decided that grandfathered commissions were deemed to be such an unacceptable conflict on every level they were banned, even though there was clear legal advice provided by the Australian Government Solicitor that advisers had a contractual right to receive the payments.
The reason for the legal advice provided to Bill Shorten was because the Govt knew they would be in breach of the Constitution and be under an obligation to pay compensation on just terms for the forced acquisition.
Instead, the current Govt simply determined they would just do it anyway and have let this type of behaviour referenced in this article to continue unabated and unscrutinised.
Absolutely disgraceful.
Was one of the questions taken on notice during the session yesterday something along the lines of?
How many advisers (non Hostplus) have approached Hostplus seeking a release of funds for the provision of comprehensive advice regarding a Hostplus member? From these applications, how many releases were approved?
I would love to see their definition of “comprehensive” advice.
Comprehensive advice? So are they comparing their product to other products and recommending the best solution for the client?
We all know this is just fund specific advice. Please don’t try to call it comprehensive.
How many AMP advisers recommend non AMP insurance or super? How many Dixon advisers recommend products that Dixons don’t own?
LOL, do you operate under an open APL?
Plenty of AMP advisers use non AMP insurance and super. Do some research.
It sounds like you’re saying union funds operate much the same way as AMP and Dixons. Why then aren’t regulators taking similar action against union funds?
Double standards all the way here. Industry superfunds can tap into members account balances for fee payments (excessive ones at that I suspect) yet I strongly doubt, as other comments before me have already stated, that the client’s Best Interest Duty is being satisfied by HostPlus advisers. I don’t blame the actual advisers either – they’re just doing what they’re told they can get away with but – how can this continue?
How can non-aligned advisers be hit time and time and time again with regulator sledgehammers, from every angle possible, yet this is allowed to openly play out with industry superfunds? Seriously?? How??
How = ASIC & Industry Super are best buddies and ASIC will never bust Industry super for anything.
Hidden commissions paying for Intra Fund Advice. All good.
Fees for No Service to majority of members, all good.
No Best Interest duty, all good.
No FARSEA Ethics compliance, all good.
WHAT AN ABSOLUTE JOKE IS THE CORRUPTION FROM ASIC.
Did you not read the bit about members paying for it directly and not through their super……
to the victor goes the spoils? Will a Hostplus adviser ever say a) you have far too much money, and far too much complexity for our crappy administrative and expensive super fund, you need to go to another adviser that is NOT pressured to deal with 40,000 Hostplus members everyday. . or b) You’re in North QLD and you need an ongoing relationship with an adviser in North QLD and besides I’m based in Brisbane dealing with 40,000 mermbers and won’t have time… Just how could a Hostplus adviser provide best interest advice ALL the time. Where I’m doing the reverse, saying my fee is too high or your circumstances are not complex enough and turning away clients and telling them to go to Hostplus and speak to their super fund.
If you only earned $1.2m in fees, with 8 advisers, plus other staff, plus licence costs and other advice costs, how could this be a profit making enterprise? In particular in the first years they were making $150,000 in fees with 10 advisers. That is a huge loss. This means members not seeking advice have subsidised those using the advisers to obtain comprehensive and conflicted advice. The advisers have, in effect, been subsidised by the product, which is trail commission. A lot for an ethics body to consider here.
sign me up to work as an adviser there – looks very cruisey!! 7.74 advisers and $1.26m is about $164k per adviser. At most places that wouldn’t cover salary and on-costs… hold on, cross subsidisation!
Of course norms because they are funded by Intra Fund hidden Advice commissions.
ASIC is fine with that for Industry Super ONLY.
Excuse me but how can you give comprehensive advice when you work for the product provider? I am extremely confused here. So a client who is a member of your industry fund comes in and says I need superannuation advice – do you refer them to set up their own fund if they are suited to this? Do you even compare other providers and like roll them into Australian super for example? Again, I know advice is strategy as well but how can you even suggest you give comprehensive advice. Load of BS if you ask me. If financial advisers have to follow the rules you should not be able to set up an in house financial planning service. I hope they all are having to do the degree and ethics subjects as well and not just sales pony’s for your product.
We got them all at the annual yearling pony sales….
“Excuse me but how can you give comprehensive advice when you work for the product provider?” AMP, IOOF, CBA, NAB, etc sound familiar.
Wow you got 7.74 advisors with how many clients, you are kidding me. I would love to see the advice especially showing best interest and comparing Superfund, being the choice of super funds.
I got an Idea set up SMSF and do property developments. ring a bell ???
Mr Watson do you know why clients don’t take it up as a adviser its next to impossible to deal with any industry based fund. You guys also need a royal commission
Amen to that! Hopefully that day comes sooner than later, well l overdue !
I deal with Sunsuper and they are proactively engaging with advisers, positive steps.