Industry superannuation fund Cbus is planning a national roll-out of its financial advice partnership with the Financial Planning Association of Australia (FPA).
The program currently remains in its pilot phase after being implemented in a limited capacity from January this year, as reported by Professional Planner: FPA to advise Cbus members. It will soon be available to Cbus members in New South Wales, Victoria, Western Australia and the Australian Capital Territory.
David Atkin, chief executive of Cbus, says the program will be extended beyond its current coverage area of South Australia, Queensland, Northern Territory and Tasmania in the months ahead. Speaking on the sidelines of a superannuation awards event hosted by Conexus Financial, publisher of Professional Planner, he says he has been extremely happy with the referral partnership.
Atkin highlights the fact that Cbus was among the first industry funds to provide members with access to holistic financial planning, beyond the limited intra-fund advice already available through in-house channels.
However, he acknowledges the process has not been without its challenges, particularly in helping ensure members aren’t inappropriately advised to swap into other superannuation products, such as those on bank-aligned financial planners’ approved product lists (APLs).
But according to John Bacon, general manager of professional standards at FPA, plenty of checks and balances were in place to ensure this did not happen. He says FPA members were selected to participate according to their location and “their ability to advise on the Cbus product.”
Under the terms of the pilot program, only FPA members who are part of the professional practitioner group were eligible. These practices must have a 75 per cent rate of FPA membership among their planners, and 50 per cent or more need to have a Certified Financial Planner (CFP) designation.
According to Bacon there were around 25 FPA members participating in the pilot program. With the national roll-out, the number of potentially eligible members would climb to approximately 250.
Research breaks down barriers
Bacon explains the program also received a good response from its institutionally-aligned members. A number of these successfully lobbied their licensees for the required changes to their APLs in order to take part.
This was helped along by the increased research recognition of Cbus, something Atkin also noted, referring to the ‘recommended’ rating it received from ratings house Lonsec in March this year.
“As an initial review process by a retail ratings house, somewhat unfamiliar with the industry fund model, this is an outstanding first up rating for Cbus,” Atkin said at the time.
“Importantly financial planners and advisers who in the past overlooked or have been critical of industry funds now have the opportunity to have their questions answered.”
As Bacon explains, from the advice licensee point of view, “they’re not interested in putting them on [their APL] unless they pass muster, and part of that is getting ratings and research on the particular fund”.
He says this is something he’s long been concerned about, from the perspective of its members and their clients.
“They’re often in a position where they’d like to be able to consider industry funds as an alternative for their clients,” he says.
“There have been barriers to them being able to do that, because of the availability of information they can fit into the advice process.
“Certainly, in the past that’s been an issue for planners being able to advise on products. One thing Cbus has done is embrace that issue and work through some solutions around that.”
Not so selective
According to Bacon it is “typically your high street financial planning practice in a regional centre servicing these clients in rural and regional Australia. And they’re not in a position of saying ‘well, no we’re part of an institution and we’re not interested in people in industry super funds’”.
“They’re recognising that they need to be able to advise across those barriers, and I think we’re seeing greater flexibility from that, and support from licensees to be able to do that,” he says.
“There’s been a lot of history [of debate between] industry super funds and retail funds…we are just saying we can cut through that and work for the benefit of clients that need advice.
Though Cbus has not yet committed to a specific timeframe for extending the program to its members in other states and territories, Bacon suggests there could be an announcement “in the next month or so about the next stage in the exercise”.
