POWERED BY MOMENTUM MEDIA
Super funds ‘terrified’ of giving advice
The prospect of giving advice is “terrifying” for superannuation funds and greater clarity is needed to ensure super funds can fill the gap outside of comprehensive advice, according to a panel.
Speaking on a panel at the Household Capital Three Pillars Forum, asked by moderator Ali Moore if super funds were scared of giving anything that looked too much like advice, Ben Hillier, AMP general manager retirement solutions, said “of course” they were.
“There's been some high-profile cases where super funds have been wrapped over the knuckles for perhaps, for giving perhaps personal advice or what's been called personal advice when their intention was to make it more general,” Hillier said.
“Simply because they perhaps knew more about the client and perhaps the client may have had an expectation, or there's a possibility that the client had the expectation that personal information was taken into account.
“It really does terrify funds, and so we do see a lot of funds sitting on their hands doing quite limited, or certainly providing less, advice than they legally can provide.
“We do need greater clarity in the regulatory space to ensure that super funds can fill the gap between comprehensive advice, which absolutely should sit outside of super funds in most instances.”
Hillier said there was a “big gap” for people who just could not afford that type of advice or did not have complex needs.
“Just on a single topic, scaled advice as we call it, perhaps there's a different name for it, but I think, the regulatory support to narrow that scope and to provide the guidance that people are clamouring for,” Hillier said.
Jeremy Duffield, SuperEd and Retirement Essentials executive chair, said the “elephant in the room” in the Retirement Income Covenant paper was the failure to address advice which had been deferred to the Australian Securities Investment Commission (ASIC) review next year.
“That really is the big question: how are super funds going to provide advice?” Duffield said.
“The current regulations make it very difficult to know what the boundaries are and to provide an affordable form of advice in a safe harbour environment for super funds.”
Recommended for you
The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
36.96 3 y p.a(%)
3
GAM LSA Private Shares AU I
34.22 3 y p.a(%)
4
VanEck Video Gaming and eSports ETF (AU)
28.89 3 y p.a(%)
5
Plato Global Alpha A
28.83 3 y p.a(%)
