Do industry funds now have an advice advantage?
On the back of the Association of Financial Advisers’ (AFA’s) strong rebuttal of Industry Super Australia (ISA) calls for a rapid end to all grandfathered commissions, some advisers are warning that salaried industry fund advisers now have a significant advantage.
The advisers have told Money Management that the industry funds salaried advisers are at an advantage because they can provide intrafund advice without providing Fee Disclosure Statements or having to provide opt-in notices because they are not actually receiving fees but are being paid out of member funds.
At least some of the critics have suggested that the emerging regime makes the operations of many industry funds employing salaried advisers similar to the old “tied agency” models utilised by AMP Limited and National Mutual decades ago.
The issues around the status of industry fund financial advisers have been raised in the context of planner anger at suggestions by Industry Super Australia that Government proposals to rebate grandfathered commissions to clients would only incentivise advisers to recommend those clients stay in commission-based products.
The ISA claimed that “consumers will once again be left vulnerable to raids on their super accounts by financial advisers”.
Responding to the ISA claims, the AFA issued a point by point rebuttal with chief executive, Phil Kewin condemning the industry funds claim as totally false and insisting that there was absolutely no mechanism for such a situation to arise.
“We cannot see how the draft legislation and regulations that ban grandfathered commissions in any way allow the continued payment of conflicted remuneration beyond the date of banning,” the AFA rebuttal said.
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