Australian Retirement Trust views external planners as the primary vehicle for advice for the fund’s members.
During the fund’s annual adviser lunch in Sydney, ART head of advice Anne Fuchs said the fund does not believe it can service all its members internally.
“We value the partnership that we share with you enormously, we will never be providing comprehensive advice to our 2.2 million members, it will be impossible to do without scale,” Fuchs said.
The lunch also celebrated the anniversary between the merger of QSuper and Sunsuper, which happened a year ago and created the second largest super fund in Australia.
The fund is adding further scale with three other mergers being explored this year.
“Lots of our members have simple advice needs and we consult those over the phone, but a large percentage of our members have other assets outside of super and age pension needs – this is where you come in,” Fuchs said.
When it came to how the fund is continuing to expand the services it offers planners, Fuchs pointed to investment in the fund’s Adviser Online service which gives access to client information and investment research reports to advisers, as well the consolidated client reporting function which will soon be accessible.
“There will be more investment in advice because we need to make it easier for you to manage your client’s portfolios and accounts,” she said.
Fuchs noted the joint advocacy work the fund has done along with AustralianSuper, highlighting the intention both funds have to a strong voice to the regulators and government for the financial advice profession.
“We want to it to be easy and simple for you to be able to charge for your professional services to our members,” Fuchs said.
“Clarifying things like the sole purpose test will help enormously with that. We’ll continue to advocate for the profession because you do great work for our members.”
As part of the Sunsuper/QSuper merger, ART added advice fee caps including an initial fee cap of $1500 along with annual fees capped at 2.5 per cent or $8800 per annum.
The caps are highly conditional and factor in the member’s balance – the account must be above $25,000 and can’t drop below $6000 after fees.
Fuchs touted the benefits seen by women in the current advice fee regime.
“Being a proud feminist, I can say we’ve had a 130 per cent increase in women getting financial advice and we’ve seen women who get advice in the fund catching up to their male counterparts in retirement,” Fuchs said.
Like a fox
Asked about whether the fund would invest directly in advice practices or licensees, ART head of private corporate assets Elizabeth Kumaru said it’s not a primary focus for the fund’s underlying managers.
“Our external managers have, in some respected invested in financial companies,” Kumaru said. “Interestingly, it’s primarily come from private debt on the distressed side.”
Regarding the difference in valuations of advice businesses in the US, which were viewed higher, Fuchs noted the US regulatory system lags behind where Australia is.
“The United States has a long way to go in respect to their regulatory climate in terms of acting in the best interests,” Fuchs said. “In the United States it’s very pre-FoFA [in] the regulatory regime which they operate.”
Asked whether ART would follow suit of Hostplus and offer options for SMSF investors, Fuchs implied it wasn’t on the funds radar.
“When we think about making decisions that are in the members best financial interest, we have to get a two year pay back when we spend member’s money in terms of a return in investment,” Fuchs said.
Fuchs instead pointed to demand for creating a “best of breed” retirement income product.
“There are more widely used opportunities… I recognise there has been some uptake [for SMSFs via APRA-regulated funds] but the business case as we’ve looked at so far, it would be hard to get that two-year pay back,” Fuchs said.
