AFA slams Industry Super Network claims

The Association of Financial Advisers (AFA) has rejected claims by the Industry Super Network that financial advisers are putting an “indefensible drag” on Australia’s retirement savings, and questioned whether industry funds really operate in the best interests of their members.

The Industry Super Network’s latest submission to the Cooper Review referred to research that stated retail super funds were paying $1.8 billion a year in direct payments of commissions to financial advisers and planners, and that $13 million is being drained from Australia’s retirement savings pool every day due to the current system of commission payments to financial advisers.

AFA chief executive Richard Klipin said the claim is another blatant attempt by the Industry Super Network to influence the political agenda, as they did during the Ripoll Inquiry.

“Their fixation on commissions is clouding the real issues surrounding Australia’s superannuation system and putting constructive reform at serious risk,” Klipin said.

AFA national president Jim Taggart said the industry funds sector needs to understand that the enemy of superannuation is inertia, and not commissions, and it is inertia that has benefitted industry funds the most.

“The fact is that many employees move into a job and are placed into a default industry fund, a fund that has been chosen for them,” Taggart said.

Klipin said industry funds must stop purporting to hold the high moral ground and work with rather than against the rest of the superannuation industry to improve retirement outcomes for all Australians.

“People need to trust super as a policy that will benefit them in retirement — constant carping by a sector of the industry with its own vested interests only detracts from this,” he said.

Taggart also questioned the network’s advertising campaigns, which he said do “nothing more than relentlessly sledge their competitors”.

“The even bigger question is how are their multi-million dollar advertising campaigns and their extensive industry research being funded?” he added.

The AFA stated that the real issues of concern are ensuring people have enough superannuation to enjoy a comfortable retirement, are making the right investment decisions, have adequate comprehensive insurance, and can access financial advice.

Klipin stated industry funds should focus on what’s in the best interest of their members, yet questioned their ability to due so as all they offer their members is one product.

“And that product is their own superannuation fund,” Klipin said.