Better access to advice via super funds may help address the advice gap for lower balance clients, but whether this will trickle out to the SMSF sector over time is still unknown, delegates to the SMSF Association National Conference heard.
The government response to the Quality of Advice Review will open the door for super funds to give more advice with the specific parameters yet to be defined.
In a discussion during the Thought Leadership Breakfast to kick off the national conference last Wednesday morning in Brisbane, the panel discussed the benefits of increased access to advice and how this would transition over time from simple advice to low balance clients to more complex needs handled by holistic advisers.
But when asked by Heffron managing director Meg Heffron whether APRA-fund advisers would move members to SMSFs, KPGM partner Linda Elkins said it wouldn’t be the case.
“No, what I do see is… the Quality of Advice Review legislation is not with us yet so we’re speculating but that wouldn’t be the way,” Elkins said.
“I wouldn’t imagine the boundaries of that kind of advice wouldn’t include giving that advice, but advisers associated with an APRA-regulated fund, independent advisers increasingly working with the members of super funds, absolutely would give that advice if that is in the best interests of the members.
“That could go both ways because some people who might be in an SMSF now might think I prefer an APRA-regulated fund or vice versa. If we get the participation level to rise everybody wins.”
‘Gradient’ of advice
Elkins, formerly CFS executive general manager before her role at KPMG, said super fund call operators are facing the same issues as accounts where they are “terrified to answer the question that might be advice when it’s just a simple question”.
“What you’re going to see is this gradient of advice,” Elkins said.
“Filling the gap means that we allow answering basic and simple questions in the safe regulatory environment, both with consumer protection and clear rules for the people giving the advice. That’s where we’re going to see the most change.”
Elkins said where there would be the most change from the QAR is from people the “lower level” of advice that covers basics needs but those clients would later need complex needs dealt with by a human adviser.
“The more likely they ultimately are to move up to the continuum to where they do get holistic advice from an independent adviser,” Elkins said adding this where the interplay between SMSFs and APRA-regulated funds will lie in the future.
Unexpected guests
In attendance of the breakfast was Brighter Super chief executive Kate Farrar, whose fund was the result of a merger between industry funds LGIAsuper merged with Energy Super in July 2021, with Suncorp Super also merging in June 2023 which added a proportion of advised members.
“We now have 27 per cent of our membership advised, largely independently,” Farrar said, later adding that 24 per cent of members are advised by independent advisers with the other 3 per cent under via internal advice.
“We’ve done lots of work to uplift our ability to support independent financial advisers and that will continue into the future.”
The lead up to integrating Suncorp Super meant the fund had worked to better improve integration with external advisers. In May last year the fund told Professional Planner it would end legacy arrangements preventing advisers from charging fees to client super accounts.
But Farrar noted the fund had only 5 per cent of members in retirement with more expected in the future.
“It is increasing important that we get it right and we probably haven’t [in the APRA-regulated] sector,” Farrar said.
