Demand for personal advice outstrips intra-fund offerings

Several super fund experts at an Australian Superannuation Funds of Australia (ASFA) briefing in Melbourne have questioned the relevance of intra-fund advice, claiming the public demand for personal advice was greater than that for intra-fund advice.

The chief executive of Health Super, Chris Clausen, told the audience that its financial planning subsidiary had instituted a program that offered advice beyond the boundaries of “limited advice”, but it was proving more popular than the resources Health Super could devote to it.

“We have a pilot of limited advice through [our wholly owned financial advice business], but it’s not limited to ‘limited advice’, and we’re finding that the take up is very strong.

“Certainly the demand that we’ve got at the moment in our fund surpasses the resources we can put out at the moment,” he said.

ASFA chief executive Pauline Vamos said that the current member demand for limited advice was being provided by most super funds under their personal advice licence, rather than the intra-fund advice relief, in case the original limited advice moves into more comprehensive advice.

That advice was proving far more costly than intra-fund advice, she said.

“If in the end under Superstream we provide intra-fund advice, then very few members want that, and most advice would be provided outside of Mysuper, which means it would have to be paid for separately [from the current bundled administration fee].

“There are some arguments that say it’s good, because advice is expensive and should be user-paid, but other funds are saying you’re never going to get huge take-up of intra-fund advice so it can be part of the administration fee,” she said.

Andrew Boal, managing director of Towers Watson, suggested that super funds should not be forced to gain a personal advice licence to provide simple intra-fund advice under MySuper.

“Why this personal advice licence to give this simple intra-fund advice?” he asked.

“We’re moving into a world very rapidly where online advice is happening around us, yet we’re trying to tag it too much to these licenses,” he said.