Industry funds set their sights on planning arms
Members seeking advice about their superannuation are driving industry funds to form their own financial planning arms.
SunSuper is to form a financial planning arm to provide investment advice to its 500,000 members, says chief executive officer Don Luke.
Speaking at the Conference of Major Superannuation Funds (CMSF) in Queensland, Luke says investor education is pushing funds to offer financial advice.
"Investor education is essential," he says. "Investment choice has changed the way our members talk to us."
"We see loads of great products offered to our members, but they end up making poor choices."
Victorian Superannuation Board chief executive officer Bob Welsh says most funds have very nervous investors and that is leading to the need for advisers.
"People don't know about superannuation and we need a process to educate these investors," he says.
"If we are able to educate these members, then they will be empowered to make investment decisions."
Luke believes that if the fund gives the members good advice, it makes them feel they own their superannuation.
"We need to give people a feel for investment, risk and construction of their portfolio," he says.
SunSuper has a call centre with 35 staff taking questions about the $1.5 billion of funds it has.
Each member has about $4000 in their superannuation account.
The call centre staff had been instructed not to give advice, but a majority of the calls from members wanted just that, Luke says.
"The members wanted advice, but we didn't give it," he says. "So, being gutless, we went to the members and asked whether we should get into financial planning.
"The members, however, didn't know the difference between advice and education, so we had to explain why people should consider independent financial advice."
The new financial planning arm will advise members to use SunSuper products initially, but will also offer advice on other products in the future. The service will be on a fee-for-service basis, but the SunSuper board is still looking at whether it should be a profit centre.
"The financial planning arm has to be self-funding," Luke says.
The call centre will be retained as it will have a number of proper authority holders based there. Luke says the fund is using Virgin Direct call centres as a model. The Internet will also play a role in providing education to members and will be linked to the financial planning arm.
Luke says industry superannuation funds will be forced into educating and providing advice.
"We have very little choice, we have to provide financial planning for our members," Luke says.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
