Xavier O’Halloran (left) and Adrian Gervasoni

Super funds are generally assumed to be in the box seat when it comes to providing accessible and affordable advice to their members. As fiduciaries for the retirement savings of most adult Australians, it seems natural that they should also be the providers of advice, particularly around retirement issues.

But funds are hamstrung by intrafund advice regulations that impede their ability to deliver advice that considers many relevant aspects of a member’s financial circumstances.

A lack of access to advice has been highlighted frequently by the Minister for Financial Services Stephen Jones who recognises super funds are required on one hand to deliver the best retirement outcomes for members, particularly through the Retirement Income Covenant, but on the other hand can’t effectively give members the advice that should be part of that solution.

Jones says there are around five million Australians currently in or nearing retirement. Getting advice to so many people is a big task and is unlikely to be achieved to everyone’s satisfaction.

The Quality of Advice Review has described an alternative regulatory environment that could make it easier for funds to deliver advice to members by expanding the definition of “personal advice” and allowing funds to use “non-relevant providers” (people who are not financial advisers) to deliver that advice to fund members.

On face value, the protections available to individuals who receive advice from a super fund might seem similar to the protections available to consumers of advice from financial advisers.

After all, even if an individual providing personal advice through a super fund isn’t a financial adviser, they operate in a regulatory environment that requires the fund to act in its members’ best interests.

But not everyone is sold.

“That doesn’t do it for me, to be honest,” Super Consumers Australia director Xavier O’Halloran tells Professional Planner.

“Also, the best interests duty is different. The best interest duty for financial advisers is to an individual. They’re literally acting in your best interest when they’re thinking about the product that’s appropriate, when they’re thinking about your overall strategy and engagement.”

O’Halloran says the best interest duty for super funds is to act in the best interest of members – and members as a whole.

“You can justify a lot within that kind of definition,” O’Halloran says.

“You can justify collectively charging, for example. Even when people aren’t using a service, you can just file a cross-subsidisation. It’s a very different duty, and there have been areas where that has not worked out in the past.”

O’Halloran points to life insurance, where a product could have been cheaper for members overall because “they had this restrictive definition that applied to this small percentage of members, but it meant if you’re a casual or part-timer, you got a really bad policy”.