Another industry superannuation fund is expected to roll out a member-advice program similar to the one kicked off by Cbus and the Financial Planning Association (FPA) earlier this year.
A program to make select FPA-member financial planners available to Cbus members has been run as a pilot program since January and launched nationally on September 1, as first reported by Professional Planner.
“This arrangement is not exclusive. And yes, I can see, and would like to see, another one join. That would be healthy,” says Tom Reddacliff, FPA’s general manager of member growth and marketing.
“Though I think they should comment for themselves, [Cbus] would welcome that if it occurred. They’re also very comfortable it’s not exclusive,” he says, without confirming another deal is in the pipeline or who might be involved.
The tie-up between Cbus and the FPA helps overcome a major sticking point between Industry Super Australia (ISA) and financial planners external to the group. Concerns around switching of fund members by financial planners operating under approved product lists that don’t include industry funds discourages many from referring members to planners outside its own Industry Fund Financial Planning network.
“You have had this divide between the financial planning community and industry funds, and the comment made from planners is that ‘we do not know enough about the industry funds, so we cannot recommend them,’” says David Atkin, Cbus chief executive.
Through the program, planners around the country will have “deep knowledge of the fund and they will be in a position to recommend Cbus if they feel that is the best product for their clients.” This will add considerable depth to the availability of financial planning for members, which was previously only offered in Australia’s major cities.
Countering the SMSF threat
The move is part of a broader Cbus member retention strategy, which also includes the roll-out of a new member direct self managed super fund (SMSF) platform. According to Atkins, members moving to SMSFs is an ongoing problem for Cbus and the industry, but this attrition has now “plateaued” thanks partly to the product-led response.
“We are now seeing good progress on retention, members coming into decision making mode in retirement are now staying with Cbus and we are having really good success,” he says.
High member demand for scaled advice
Another aspect Atkins sees as key is that the majority of Cbus members want scaled rather than holistic financial planning.
“Most members do not need full financial planning, most members’ advice needs can be dealt with through the fund and the advice team employed through the fund, but there is about 10 per cent who do, and the FPA program gives us the ability to refer our members to planners who have agreed to the Cbus program.”
However, he concedes that there will be instances where members’ needs are best met by rolling out of Cbus.
“As long as we can see that is being done in an appropriate way, we are fine with that, we just want to make sure that members get personalised advice that meets their needs and it gives them full information about what is out there, including Cbus.”
Due diligence
This retention strategy is also backed up by a formal process driven by the FPA.
“The first two plans are vetted here, through the FPA, we actually check that as part of the process and quality control,” Reddacliff says.
“Probably the key thing is that the whole thing is strictly underpinned by the best interest test. There has been the occasional…example where it was in the best interest of the client that they moved, depending on their circumstances.”
Another important aspect of the partnership is extensive communication between senior figures at the FPA and Cbus, with Reddacliff indicating they are in touch every two to three days.
“There’s also a phone hook up between Cbus and the planners, so there’s direct communication…they’re hearing directly how the advisers are finding the program.”
