Adrian Gervasoni

Critics worried about an expanded role for super funds in financial advice after the Quality of Advice Review overestimate the appetite most funds have for advice, according to an industry super movement executive.

The QAR sought to address the accessibility and affordability of advice, and while red tape reduction would reduce the cost of advice, Minister of Financial Services Stephen Jones has sought to give more freedom for super funds to give advice.

Adrian Gervasoni, the executive manager for advice solutions at Industry Fund Services, a licensee owned by 15 industry super funds, said the reality is not everyone in the advice industry wants to serve mass market nor should they have to.

“This focus on making advice accessible and affordable, I’m still looking for who really wants to solve for that,” Gervasoni said at the closing session of the Professional Planner Licensee Summit last month.

“There’s an expectation that super funds will,” Gervasoni said “I can tell you there’s a small number of them that are genuinely interested in it. The others will be brought in kicking and screaming.”

Gervasoni noted the cynicism some advisers have towards super funds, particularly industry funds, but said building relationships on both sides can generate more productive communication and less animosity.

“I find there’s more interesting conversations that goes on when you develop a bit of trust with someone one on one and particularly the firm I work for,” Gervasoni said.

He added he often fields “pointed questions” from these groups which he is happy to encourage and have the conversation.

“If there’s someone concerned with industry funds and how they provide advice, ask the question and pick up the phone and ring, don’t use the comment section in Money Management or other things to vent,” Gervasoni said.

“It might make you feel good for two minutes, but nothing actually comes of that. But genuinely, you should be cynical, you should be concerned – product manufacturers and advice have a unique relationship. It’s somewhat necessary but it’s also easily conflicted.”

Eyes to the future

Renato Mota

Insignia Financial CEO Renato Mota said the QAR response acknowledge the important of retirement being a critical life event and it has been problematic trying to have comprehensive retirement conversation about super.

“At the moment, we currently produce 700* digital SOAs a month but that could be significantly enhanced if we could have a more comprehensive retirement conversation,” Mota said.

However, Australian Retirement Trust general manager for advice Anne Fuchs said the fund’s advice proposition isn’t to make profit or acquire market share with their advice services.

She said the fund has over 180,000 members over 60 years old who need retirement planning services, but only 65-80 planners and 20 other support staff providing education services.

“At the moment, when we determine it’s complicated, we’re sending them to external financial advisers to deal with,” Fuchs said. She had previously noted the fund prefers external advisers for advice delivery.

“We need to keep the costs low for our members. We’re investing in a technology platform at the moment that will go from calculators to DIY. That calculator will be the engine that is the virtual retirement income statement that meets the obligations of the covenant, through to an adviser-led intrafund experience and we have to keep it as simple as possible.”

‘Appropriately unlevel’

One of the other concerns about super funds giving more advice is the education standard required for the provider, but during day one of the Summit, Financial Advice Association policy general manager Phil Anderson said the priority was making sure the standard is fit for purpose.

“If the playing field is now going to be somewhat unlevel, at least it’s going to be appropriately unlevel and not skewed too much in favour of one side rather than the other,” Anderson said.

“Advisers are going be anxious this. We all know that and read about it in the blog comments, but the end outcome is the clients who are less likely to go to an adviser will access this pathway through their super fund.”

Anderson said this would engage super fund members into advice, making them interested in seeing an independent adviser down the track.

“We have a long way to go in how this is going to play out, but obviously the minister expects a lot more advice to be provided by the super funds,” Anderson said.

Anderson noted the minister made it clear the legislation wasn’t going to be written around technology and that it would still be required to comply with the same framework.

Shrimski (left), Henderson and Anderson

Advice Intelligence founder and CEO Jacqui Henderson said the digital advice provider had no issue with that.

“At the end of the day digital advice is a delivery mechanism of advice and it’s staying within the same safe parameters,” Henderson said.

“Whether or not it’s a hybrid of a human and technology delivering advice or roboadvice, you build those [regulatory] parameters within the technology. We’ve done that already… [but] it will lessen the complexity of our tech simplify things.”

Noting there’s details yet to be worked out, Vanguard Australia managing director Daniel Shrimski said the types of advice a super fund is wanting to give is different to what independent advisers currently prefer offering.

He added ideally it would be a two-way referral process depending on the complexity of the needs.

“That full service financial adviser providing that whole of wealth view to the client where’s there more complexity… that’s not what we believe what a super fund is going to be able to provide if things play out as we expect,” he said.

“The good super funds are going to refer business to financial advisers where the complexity grows and requires it. Financial advisers referring back the other way to super funds where maybe it’s a client that doesn’t need that full-service option – that referral model will hopefully works both ways.”

*This article was edited on 17 July 2023 to amend a quote from Renato Mota. Insignia Financial produces 700 Statements of Advice a month, not 7000.

Article was edited on 12 December 2023 to correct Adrian Gervasoni’s title to executive manager of advice solutions at IFS.

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