The future looks bleak for financial advisers who specialise in corporate super, with structural change quashing growth in the sector.

The Corporate Super Specialist Alliance (CSSA) predicts the number of corporate super specialists will steadily decline over the next three years, despite a wave of new opportunities for corporate super advisers.

According to a new report, the retail superannuation sector, which is a combination of retail employer-sponsored super and personal super, is set hit $2.5 trillion by 2030.

The Deloitte report – Dynamics of the Australian Superannuation System: the next 20 years 2013-2033 – forecasts retail employer sponsored assets will surpass $650 billion in the next 20 years from current levels of around $170 billion.

Furthermore, thousands of employers are about to hit the market in search of an alternative default fund once the government’s MySuper changes kick in from January 1, 2014.

Douglas Latto, CSSA president, said the demand and need for financial advice among employers and employees was high, especially given Australia’s ageing population. However, current regulation prohibits advisers from providing services to both employers and employees.

Under the Future of Financial Advice reform’s conflicted-remuneration rules, advisers who run a tender, recommend a default fund and provide general advice and services to an employer cannot then provide advice to individual members.

Grandfathering provisions are in place until July 1, 2017, after which advisers will have to choose which group they wish to service.

The Australian Securities and Investments Commission has also warned licensees they’ll be busted under the anti-avoidance legislation if they attempt to form referral partnerships with complementary businesses or set up a sister company as a way around the rules.

The CSSA has made a submission to treasury that would enable the ongoing provision of services to employers and is waiting to hear back.

“Corporate super specialists have historically provided access to advice and information to members, and helped them improve their life-insurance decisions and retirement-savings outcomes, but that will have to stop without a regulatory solution,” Latto said.

“This would have devastating consequences for the funds which now enjoy a range of services at the employer level, policy committee level, and individual and collective member level.”

He said corporate super specialists had a “chance of survival” in the new regime, but faced an uphill battle in regard to commanding reasonable fees, since FoFA had banned the payment of commissions on superannuation and investments.

“Fees are now set at a standardised rate by the (super) fund, unlike in the old world when a fee or commission was negotiated between the employer and the adviser,” he said.

“There isn’t an opportunity to negotiate, so even though we continue to provide the same high level of service, the fee may not be reflective of that work and could result in firms doing unprofitable business.”

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