Corporate super specialists have been the most negatively affected by the Future of Financial Advice (FOFA) reforms due largely to a misunderstanding about the services they offer.
Addressing the Association of Financial Advisers (AFA) conference on the Gold Coast, Corporate Super Specialist Alliance (CSSA) president Douglas Latto said that the general advice and services provided by CSSA members should fall under the definition of intra-fund advice with personal advice charged separately.
"This is in line with the 16-point agenda of changes to FOFA outlined by the current Government and would effectively remove personal advice," he said.
Latto said personal advice should always be provided on a user pays basis while intra-fund fees must have the same level of transparency in a post-fee disclosure statement environment.
Fully-disclosed intra-fund fees should then be adjustable at a workplace level and set by normal market forces.
Similarly, on the issue of conflicted remuneration arising when a corporate super specialist provides both product selection and ongoing service, the intra-fund fees could be negotiated with the employers and not set generically by the fund, irrespective of the services required, Latto said.
"The nexus between the two services would then be broken and the problem overcome," he said.
In his address, Latto also said he was concerned that the ban on commissions on group life with super had resulted in a market distortion.
"We believe that if commissions can be paid for when the group insurance is outside super, why is it not allowed when inside super?" he said.
"The amount of work is the same; there is no upfront commission with group and therefore no concerns about churning."
Latto said to ensure there is no payment if there are no services provided, it must be agreed at workplace level.
