Will FOFA changes undermine intrafund advice?
Actuarial consultancy Rice Warner has claimed proposed changes to the Future of Financial Advice legislation may make it more difficult for funds to deliver financial advice to members cost-effectively.
In an analysis published on its website this week, the consultancy pointed to intra-fund advice as being "a clear and present opportunity within the superannuation industry".
It said that, at present, all members pay the same fee, so those who access advice provided by the fund are subsidised by those who do not. It said that appropriate advice, matched to the needs of the member, nurtured and protected savings and built member loyalty at the same time as leading to better engagement.
"Superannuation funds fought hard for the right to offer so called ‘intra-fund' advice as either general advice or single issue advice to members, and continue to seek better ways to deliver this to their members," it said. "It is part of the engagement ‘kit bag' deployed by funds that enables them to stay close to members, guiding savers on basic principles related to their superannuation account."
The analysis said that intra-fund advice was not holistic advice and that, by its nature, was restricted only to specific advice pertaining to a member's superannuation account.
"Funds cannot digress to offer broader advice services on, for example, products that may lie outside of the member's fund, or a full-blown financial plan requiring a ‘know the client' needs analysis."
"In any event, intra-fund advice is a useful channel by which funds can guide members on basic questions like contribution levels or their risk insurance needs," the Rice Warner analysis said, while questioning whether funds were doing enough to thoroughly exploit the engagement benefits of the limited intra-fund approach.
It said recent research conducted for Women in Super suggested otherwise, with women and men not saving enough and the advice services offered by funds not being utilised by members.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
