16/07/2009 - 00:00

Advisers cry foul on super advice

16/07/2009 - 00:00

Bookmark

Save articles for future reference.

FINANCIAL planners are the sole dissenting voice regarding a federal government move to allow superannuation funds to provide members with personal advice.

Advisers cry foul on super advice

FINANCIAL planners are the sole dissenting voice regarding a federal government move to allow superannuation funds to provide members with personal advice.

The decision, branded by the Financial Planning Association as an "ideological move", has attracted widespread support from the commercial funds management sector.

The change gives greater legal protection to suitably licensed super funds in order to give limited personal advice to members on their fund, such as insurance options and asset allocation. It is seen as a threat to advisers' traditional income streams, although there are also concerns over the quality and independence of advice that super funds can provide.

Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said the decision was good news for advisers, as it would expose new clients to the value of advice and potentially lead them to seek a full financial plan.

ASFA represents both industry and commercial sector super funds. The heavily commercial sector-influenced Investment and Financial Services Association also welcomed the decision.

Michelle Dolin, chief executive of Western Australian super fund GESB, said the decision would help members who needed simple advice, especially during times of market uncertainty.

"Members have been saying for a long time full advice is not for them," she said.

The reform came out of the government's Financial Services Working Group, which was set up in May last year and chaired by the (then) Superannuation and Corporate Law Minister Nick Sherry, who has long been regarded as a critic of financial planners.

Those with a seat at the working group were required to sign confidentiality agreements, described by one insider as a way to avoid a drawn-out process. The participant said the solution came from within the Australian Securities and Investments Commission.

"The important thing was everyone had the same view; people needed to get access to help and do it cheaply," the participant said.

Simple advice is expected to cost hundreds of dollars - taken out of a retirement account - rather than the thousands of dollars it costs to get a plan from an adviser required to comply with the onerous Financial Services Reform Act.

Financial planner Rick Maggi, managing director of Perth-based Westmount Securities, said the model was a "band-aid solution".

"Limited advice will lull superannuation members into a false sense of security, believing that their adviser is actually looking after their best interests when, in reality, no-one is minding the store," Mr Maggi said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options