Advisers still wary of industry funds

A recent Roy Morgan survey found that the number of clients switching to industry funds on the recommendation of professional financial advisers plummeted significantly over 2013.

Porte Financial Services director Robert Porte said that he agreed with the results, saying there is often difficulty in ascertaining the asset composition of industry funds.

“To be brutal on this issue, under no circumstances would I recommend an industry fund to a client, unless specifically requested to do so,” Mr Porte said.

“These funds are often regarded as providing cheap risk insurances, but this is also reflected in comprehensiveness and definitions. You get what you pay for.”

Mr Porte also added that the proportion of industry fund members exiting to start up their own self-managed super funds (SMSFs) would increase as a result of these deficiencies.

“Recent product changes have been introduced to mimic some SMSF benefits,” Mr Porte said.
“However, this will not arrest the haemorrhage.”

Gurney Financial Services director Tarnia Gurney agreed that she has her own reservations in recommending industry funds due to a lack of clarity in benefit payouts.

However Paramount Wealth Management principal Wayne Leggett said that if an industry fund ticks all correct boxes in fitting for a client’s needs, than there is “no reason a financial adviser could not recommend an industry super fund.”