riskinfo is giving advisers the opportunity to have their say in our latest poll on the provision of limited advice to superannuation fund members:
Do you agree that superannuation fund trustees should be allowed to provide limited, single issue, personal advice to their superannuation fund members?
This latest poll question follows the reaction generated by ASIC’s recent announcement that it will issue a class order relief that will allow superannuation trustees to provide limited personal advice to their fund members.
Already there has been a strong response to this move by ASIC, with superannuation and institutional associations in favour of allowing limited personal advice to super fund members, contrasted by adviser associations, who are strongly against this proposition (see last week’s article: Limited Advice in Super – Battle Lines Drawn).
The division of opinion between the associations reflects the interests and points of view of the members they represent.
One comment riskinfo has received is from an adviser who has recounted his experience with a similar arrangement that has been implemented in New Zealand:
In New Zealand “KiwiSaver providers” like ING for example can state which fund you are in, and how you can get a Government contribution, but they have to refer to an Adviser for anything more than that. They frustrate the clients by saying, “I cannot tell you what to do, you’d be better talking to an Adviser”.
It’s worked for Advisers and clients since July 2007. I hope that helps you folks over there.
Not sure whether it does, but perhaps we can learn from the experiences of others, even if the circumstances are not exactly the same.
The broad argument in favour of ASIC’s class order relief centres on the contention that many more Australians will have access to basic personal financial advice – ‘…a victory for common sense.’
Some advisers have expressed their opinion that there is room for limited personal advice to superannuation members by trustees, which may in fact generate more advice opportunities for planners:
Forcing super fund members to seek out an FPA or AFA member for some very simple and straight forward advice will only mean that more Australians will be deterred from obtaining any advice at all.
The argument against the class order relief is based around the issue of the superannuation fund trustee being able to offer limited advice without being aware of its members’ broader needs and circumstances. This is best summarised by AFA CEO Richard Klipin’s comment that:
“…it is not financial advice when the trustee does not have to know the member, does not have to understand the member’s needs and objectives, does not have to provide advice which takes into account the member’s entire financial situation, does not have to complete a risk profile on the member and when all the trustee has to offer in terms of investment is its own superannuation fund.”
Other arguments against the class order relief include the fact that super fund trustees may provide advice without necessarily being subject to the compliance regulations under which all financial advisers must operate.
So, have your say on this controversial issue. Make your vote count and add your own comments below. We will report the outcomes to you next week.
A simple 9 point test for “Intra-Fund Advice”.
Let us request a simple test that would be an example of what may result or in fact has already resulted from certain practices where it has been advised not to seek advice. Further, “intra-fund advice” may be biased as it is to be provided by a party (a trustee or employee) who is employed to bring members in :
1. Request each Fund that has advised people to roll their existing benefits in without advice or minimal “advice”, to provide a list of all members who recently joined and rolled in their benefits in to these Funds, to provide the following information:
2. List the members who moved their “membership” into these funds during the period of their “escalator” adverts, who have since died or become disabled.
3. Establish if they rolled their risk benefits from their previous funds.
4. Establish whether these members were warned of their potential loss of risk benefits that they had previously gained when they were insurable or through automatic acceptances.
5. Ask the dependents of these deceased members whether these members were made aware that they had forgone their benefits from their previous funds.
6. Ask the members who have since been disabled whether they were aware that they had forgone benefits from their previous funds.
7. Then ask each of the previous fund trustees what life, Tpd and Salary continuance benefits were in place under the old funds immediately prior to the transfers.
8. Establish whether these members and their beneficiaries were in a worse position after the transfers (in order to keep this test simple, leave out the fund balances or asset values in this exercise).
9. Appoint a firm of solicitors for a class action by the widows, widowers and orphans.
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