Inside UniSuper’s intra-fund advice strategy

Advisers in UniSuper’s intra-fund advice team have never been so busy, according to Jack McCartney, UniSuper’s financial advice chief.

At a time when adviser numbers across the industry have been contracting – with new government mandated education standards being ushered in, the cost to be an authorised representative going up and incumbent advice business models being challenged – UniSuper is among the few groups in the country to still adding advisers to its ranks.

And it’s within UniSuper’s intra-fund advice business where McCartney says he’s seeing the most demand for his advisers’ time, a strategy he says has helped UniSuper’s funds to record inflows of late.

UniSuper doesn’t currently offer its products on the menus of lists outside of its own digital and salaried-advice channels, like some other industry superannuation funds such as Australian Super and other funds, which are experiencing strong inflows from advisers in the ‘for-profit’ segment via platform and approved product lists.

McCartney says Unisuper has looked seriously at working with the broader financial advice community to make its product available; it’s a path the group may go down in coming years, but for now he says UniSuper is focusing on developing its own salaried adviser channel.

Inflows into UniSuper’s funds are up, which is a product mostly of the fund’s intra-fund advice strategy, McCartney says.

“They’re all flat out,” McCartney says of the 33 ‘super consultants’ and an additional 9 phone-based advisers UniSuper currently employs who are dedicated to providing intra-fund advice. In all, UniSuper has 101 salaried advisers in its network including 13 ‘personal advisers’ who provide advice on a single topic and 46 private client advisers.

Of the $85 million UniSuper manages, $15 billion of that is advised by UniSuper’s salaried advisers at the end of February this year, up from $14.4 billion in December last year and $13.2 billion in June last year.

Inflows in the last year have been generated mostly by new accounts rolling over from other funds and as a result of windups of SMSFs, McCartney says, pointing to a “tipping point” about 18 months ago when “more money started coming in than going out of SMSFs,” a trend he says he expects will continue.

In addition to growing inflows above what contributions and market return naturally provide, McCartney points out UniSuper is growing the portion of clients already in pension phase. Since June last year the proportion of UniSuper’s members in pension phase grew from 16.9 per cent to 18.6 per cent, McCartney points out.

“People are disenchanted, they are more aware financially, they are more aware of performance. A lot of the people who we talk to just want to roll over into UniSuper, they have usually made up their mind. Our advisers aren’t really looking for that business, people are just coming in,” he says.

UniSuper over the last six-years has grown its penetration of advised members in tertiary institutions from 6 per cent of to 19 per cent, a proportion McCartney reckons it can “double again”.

Intra-fund advisers will sit down get to know individuals, do a fact find, actually prepare a statement of advice present it personally, McCartney describes. This will cost the member $280 and can be deducted straight from the fund.

The intra-fund edge

Intra-fund advice has become a highly contentious area for many advisers, particularly in light of Hayne’s recommendations and Treasurer Josh Frydenberg’s subsequent plan to ban the deduction of any fee from a MySuper account other than for intra fund advice.

The industry’s unscrupulous practice of deducting fees from super as part of the broader fee-for-no-service scandal highlighted by Hayne has brought into sharp focus the rules around intra-fund advice outlined in section 99F of the Superannuation Industry (Supervision) Act 1993 and the subsequent ASIC regulatory guidance relating to intra-fund advice.

‘Intra-fund’ refers to the type of advice a superannuation trustee can provide to members where the cost of the advice is borne by all members, but it excludes personal advice and a series of other advice scenarios as outlined in the SIS act.

“You have to be careful what is personal and what is intra fund advice, you can’t subsidise personal advice that’s very clear and we have to keep track of that carefully,” McCartney notes, which he highlights is particularly important for funds like UniSuper which has separate personal and general/infra-fund advice offerings.

He also adds that intra-fund can cover a lot of things, including personal one-on-one conversations, seminars, information session, marketing and everything in between.

At a time when advice and wealth businesses are increasingly segmenting their target market into higher net worth categories to deliver a full service advice offering that is costing more, “a good intra-fund advice model is more important than ever”, McCartney says, noting that millions of Australians that fall out of advisers’ target markets will increasingly be in need of advice.