Industry funds’ planning motives questioned

Questions have been raised about the motives of industry superannuation funds offering financial planning services, with the industry defending itself against suggestions that in-house planning is being offered as a fund-gathering exercise.

A recent Money Management story outlining changes to the in-house financial planning offering of Club Plus Super drew suggestions that the service was motivated by the pursuit of funds under management (FUM), but fund chief executive Paul Cahill (pictured) refuted suggestions that inflows were a factor.

Cahill said planning services were offered as a member service rather than a revenue raising exercise, and in many cases members were advised to retain money in other well performing funds. Members are now assisted more effectively than under previous outsourcing arrangements, he added.

“We don’t make any more money out of doing it — we’re an industry fund. We’re not a commission-based organisation, we’re a flat-fee-based organisation where everything goes back to the member,” he said.

Boutique Financial Planning Principals’ Group president Claude Santucci said if an industry fund member saw an in-house adviser, the first thing the adviser would do is try to roll other accounts into the fund.

“I don’t have a problem with that except this is not a level playing field — I have to do a full SoA (Statement of Advice) to tell someone to move money from one super fund to another,” he said.

An in-house industry fund adviser could recommend a client roll their super into another fund without doing a full plan, and would also be limited to giving advice within the context of their fund, he said.

It came back to disclosure, and consumers needed to be aware that the advice they received from institutions was not free from bias, Santucci said.

Financial Planning Association chief executive Mark Rantall said there was a role for qualified financial planners providing comprehensive advice within super funds, but also expressed concern that there was not a level playing field in a legislative sense. He also did not support the expansion of intra-fund advice to more complex matters.

Australian Institute of Superannuation Trustees chief executive Fiona Reynolds said people expected to be able to receive retirement advice from their fund.

Often it is best for a member to consolidate their accounts, and there is no issue as long as they are informed of the various benefits and drawbacks, Reynolds said. She also refuted claims that in-house planners were only out to gather FUM and said they often recommended clients remain in external products.

LUCRF Super chief executive Greg Sword said industry funds gave clients advice as their industry fund and never claimed to be independent. Planning was offered as a service to members, and as long as the fund was honest with its members, it was not a concern if the fund also increased its FUM.