Speaking to ifa at the launch of the company’s Perth office yesterday, SSFS managing director Michael Monaghan said SSFS has a vertically integrated model and and its planners are “part of the organisation”.
But he pointed out that SSFS differs from more ‘independent’ financial planning organisations in that 95 per cent of its clients belong to one of the four closed defined benefit schemes in State Super.
In addition, most SSFS clients are in pension phase and have relatively low account balances, which differs from the often “quite high” fees charged by some of the fee-for-service players in the industry, he said.
“If we were dealing with the same segment then we might have a different approach,” he said.
In addition to advising on the State Super definined benefit schemes, SSFS has its own in-house products that cost around 65 basis points on average, he said.
But SSFS does have clients ‘walk in off the street’, and there is every chance that they will be advised to remain in their current superannuation fund, said Mr Monaghan.
“If they were in a good quality fund – and most funds are reasonably good quality – we would suggest that they stay there, typically,” he said.
Most of SSFS’s revenue comes from comprehensive advice fees, which are charged as a percentage of assets – 75 basis points up to balances of $1 million, said Mr Monaghan.
Because a vast majority of SSFS’s clients are retired, the firm is looking to embrace technology to engage with the younger generations, he said.
“Technology is going to disrupt our industry massively, and we want to participate in that – we’re not going to be a victim of it,” he said.
The new Perth office currently has five planners (all recruited in from WA), and Mr Monaghan said SSFS plans to open another office in the area when the numbers hit 15 to 16.
Be interesting to see how the ssfs clients react when they realise ssfs run two retirement products – one pre April 2013 – with grandfathered inbuilt no opt out advisers fees -,average cost 1.4 per cent pa and the current one – where the fees are split 0.75 per cent adviser fee – opt in and 0.7 per cent admin and mer
There clients have a choice to move of the old grand fathered product and join the new product where they can opt out of adviser fee if they aren’t getting value- could put the 50 million profit ssfs generate annually under some pressure
Fron researching the ssfs product – there are actually two products
One pre April 2013 called the allocated pension – where fees average 1.4per cent per annum and the product is grand fathered under Fofa
The post Fofa product (post April 2013) has the adviser fee split out as Michael explains at 0.6 admin / mer and 0.75 adviser fee
My question would be do the 45,000 clients and approx 10 billion Fum that generate the ssfs 50 million annual profit in the pre April product know they can opt out of their 0.75 per cent adviser fee if they aren’t getting value and join the new prodcut without advice attached and pay 0.6 – I doubt it
I think percentage based fees for advice is fine if you are managing a portfolio ongoing…what I don’t like is the way industry super teamed up with publications like Professional Planner to bag the way advisers charged and suggested we should all be on hourly or fixed remuneration and yet SSFS is charging like most advisers do….OMG look at the one page “compare the pair ad” in the Nov issue of Professional Planner everybody (p50.
One rule one and other rule for Independents.
Most of them have defined benefits, Considering client has very little choice, what is the advice they are paying for. Very unlikely you would recommend to roll out of defined benefit scheme of the 4 which are closed!!. 75BPS seems expensive fee, to advice a client to remain in a defined benefits funds. My last review we need to show all the research we do for the strategy will recommend and ensure we have completed review on alternative Strategies including products to ensure we meet the best interest. No issue as we have been doing this from day dot. i actually welcomed the auditors request & justified all time will spend on research we do. I still cannot understand how groups like this can get away with this type of advice
Let me get this correct: “75 basis points up to blances of $1m” = $7,500. OK, so FOFA has fixed commission type advice right? Glad that SSFS is putting it’s members first Mr Monaghan…