On Monday 4 February, the Industry Super Network (ISN) and Industry Fund Services (IFS) hosted their inaugural Financial Advice in Super Symposium in Melbourne.
While key topics included the impact of regulation on the financial advice sector and the shift towards greater professionalism, the overarching theme was the evolving role that financial advice plays in superannuation – and this theme was very clearly under the microscope at the event.
The retail advice sector and industry super funds have been very publicly at loggerheads for some time. Advertising campaigns run by ISN and related body Industry Funds Management – including the long-running “compare the pair” campaign – have been a particular bone of contention with their attacks on financial planning remuneration structures, namely commissions.
Planning bodies have returned serve over issues such as a perceived lack of transparency, particularly over how members’ administration fees are used, as well as supposed union influence, conflicts of interest among board members and an unlevel playing field in the provision of advice.
Regulatory change is in the process of closing the gap between industry and retail fund offerings, while the introduction of scaled advice provisions is doing the same on the advice front.
A key step was the move by industry fund giant Australian Super, which in 2011 announced an arrangement with financial planning dealer groups – including Matrix Planning Solutions and MLC’s Godfrey Pembroke – that would see the groups provide advice services to Australian Super members on a commission-free basis.
Another key moment came towards the end of Future of Financial Advice negotiations when the ISN and Financial Planning Association (FPA) came together and presented a united proposal to Financial Services Minister Bill Shorten.
Under the agreement the bodies found middle ground on the contentious two-year opt-in proposal: the FPA agreed to support it on the proviso that it came with an exemption for planners bound by a code of professional conduct that obviated the need to comply, while the ISN backed the FPA’s demands that the terms ‘financial planner’ and ‘financial adviser’ be enshrined in law.
The Melbourne symposium showed just how far the relationship between the two bodies (which were barely on speaking terms a year ago) has developed, with FPA chief executive Mark Rantall invited to speak and received warmly by the industry funds crowd.
Perhaps ISN chief executive David Whitely put it best, referring to prior friction between the two bodies: “What we found with the FPA was that when we took a moment from fighting each other and spoke to each other for a few minutes, when we listened to each other, we were actually saying the same thing.”
According to Mr Whitely, the two bodies shared a desire to see clients receive the best possible service and the best possible outcomes, and for the financial planning industry to be viewed as a profession by the public. A key part of this for both Mr Whitely and Mr Rantall was the removal of commissions.
Former FPA chief executive Jo-Anne Bloch also spoke in her role as Mercer’s financial advice leader. While not criticising the planning sector directly, she spoke in glowing terms of the manner in which the not-for-profit sector had led the way in providing targeted, low-cost advice.
In perhaps another sign of an increasingly warm relationship between the sectors, she joked that last time she spoke to an industry funds audience she had been booed off stage. Her successor at the FPA certainly received no such treatment on this occasion.
Mr Rantall’s speech was also telling: when he asked the delegates for a show of hands as to how many Certified Financial Planners were in attendance, easily one third of the room raised their hands.
A quick scan of the delegates list reveals the room consisted almost entirely of industry and public offer super fund representatives – AustralianSuper, Hostplus, First State Super, Australian Catholic Super, HESTA, CareSuper, LUCRF and TWUSUPER dominated the list, with SuperPartners perhaps most heavily represented.
That there were so many FPA members in the audience highlights the fact that there needs to be a dialogue between the planning and industry super sectors, because the overlap will only continue to increase.
