Dealing with the industry funds isn’t as straightforward as it should be and will continue to be too difficult as long as funds treat planners with suspicion and distrust. Tim Rogers explains.
It would appear that one of Bill Shorten’s objectives as Minister for Financial Services and Superannuation, through the proposed Future of Financial Advice (FoFA) reforms, is to have more than the current one in five Australians seeking financial advice.
Unfortunately, however, none of the proposals will address the cheap shots and negative competition practices that persist between some members of the Industry Super Fund Network (ISN) and the financial planning profession.
Case in point is the recent Third-Party Authorisation Form brought to our attention by HESTA.
We have a number of clients in a range of industry super funds to whom we provide strategic super and insurance advice, using their existing fund where it meets the client’s needs. I read with interest Sandra Bowley’s Practitioner Perspective article (Professional Planner, March 2011), as I believe the number of professional financial planners advising their clients on industry super funds is indeed growing.
Sadly though, how those funds interact with us in our dealings with them varies from fund to fund. Some are forward-thinking and easy to deal with, while others make life unnecessarily hard for us at times. Where this happens, it will ultimately affect their members, as fee-for-advice firms such as ours will need to pass the associated increased costs through to clients via increased advice fees.
Of course, we always need to have an Information Release Authority form signed by the client whenever we deal with a third party to obtain information about that client, in order to protect the client’s privacy. We do this as a matter of process, and send it through to the provider before calling to obtain information. This is where HESTA’s new form comes into it.
HESTA, in their wisdom, have decided that they need their own specific form and now won’t accept anything else signed by the client. This is petty and ridiculous in the client’s eyes, but a requirement of HESTA nonetheless. We contacted HESTA to obtain their form for use with our mutual clients, only to find that they have included in it a sales pitch to clients who have already made their choice of financial planner and the advice they wish to seek.
Section 3 of the form in fact contains a declaration which the client must sign, which states among other things that the client is aware of the availability of additional insurance through HESTA, a HESTA Super Income Stream for retirement income, and a fixed-dollar advice fee for transition-to-retirement advice, with no ongoing advice fees (and one would therefore assume, no ongoing provision of advice).
Why this blatant advertising grab aimed at mutual clients for whom we are simply updating details as part of our ongoing process to ensure we retain the latest information on their circumstances?
We are yet to see any other product solution supplier produce a similar compulsory form for us to use with mutual clients. Sadly though, the declaration doesn’t advise the client that by signing this information release form, their financial planner is fulfilling a duty to the client to ensure they update the client’s current position so they can provide ongoing advice accordingly.
HESTA’s approach to this form is fairly crass, in my opinion. In fact it takes the mind back to an era we thought long gone, where the client was actively discouraged from cancelling or moving any contracts or policies and referred by the product provider to their army of tied agents to try to “advise” them of their options. A point to note: the financial planning profession has moved on.
We remain committed to working with industry super funds where the solution fits the client, and we have current clients under advice to prove that. It’s time that funds such as HESTA stop seeing professional financial planners as the opposition. I guess that, of course, depends upon whether the fund sees itself as a product solution provider or as a provider of advice to the client.
I realise that not all financial planners may embrace industry super funds, but it’s time for funds such as HESTA to stop alienating those who do, and to welcome us as alliance partners to provide our mutual clients with the best possible advice and product solutions.
Tim Rogers and Wealth Design (Australia) Pty Ltd t/as Wealth By Design are Authorised Representatives of Apogee Financial Planning Ltd.
