Charging for super advice
The introduction of choice of fund is set to increase the scrutiny of adviser remuneration, with many superannuation industry figures calling on planners to adopt fee-for-service arrangements.
Institute of Superannuation Trustees (IST) chief executive Susan Ryan says the body is “totally opposed to commission arrangements because it’s never clear to the client exactly what they’re up for with a trailing commission”.
“Fee-for-service is much more transparent for both the financial planner and client if the planner is able to say to the client ‘I’ll be charging you X-amount, and that’s it’.”
Ryan says planners charging a fee for service would “probably choose an hourly rate” over a flat fee but that the IST would “much prefer” the latter arrangement.
SuperRatings managing director Jeff Bresnahan says “fee-for-service under choice would go a long way to helping to avoid fund mis-selling by advisers”.
“If a planner is paid an agreed fee then they lose a lot of the conflict of interest to put clients in an inappropriate fund, which might pay a higher commission than another fund.”
But, Investment and Financial Services Association (IFSA) chief executive Richard Gilbert says there is some “unnecessary confusion” over commissions under choice.
“It is unnecessary [that advisers switch to fee-for-service] in that the essential outcome for planners from selling some industry fund products that don’t pay planner commission is no different to them receiving a commission,” he says.
“If you go into industry fund literature you’ll find that individuals can often get advice from planners and then have the fee deducted from their superannuation fund.
“I would suggest there’s not a big difference between that type of remuneration and a commission,” Gilbert says.
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