Industry funds face advice challenge

Reflecting on the 2014 fiscal year, the M&A consultant and director of Connect Financial Services Brokers said a greater number of small business and client-facing professionals should be appointed to executive posts in the superannuation sector.

“To be taken seriously, management in the superannuation industry, fund management and industry funds should at the very least have had some experience sitting in front of a client or running a self-employed planning practice if they are to give commentary about advice or dispensing lectures to the industry,” Mr Tynan said.

The lack of client-facing experiences means that “industry funds in the next few years will have a huge task to implement advice into their service provision models”, he suggested.

In addition, he said the industry funds’ “clever marketing campaign” against product commissions in the financial advice market has been “simplistic” and should be read with a “buyer beware” warning by consumers, adding that “lower costs do not always lead to greater benefits”.

Meanwhile, the business broker described the past 12 months for the financial advice market as a year of “continuing evolution that will result in a future of consolidated advice driven by regulation, vertical integration and the need to control Australia’s ever expanding retirement assets”.

He anticipated, however, that increasingly the major institutions will be more comfortable operating in the general advice space providing “proprietary product” advice, while the non-aligned sector will remain more “affordable” and will largely administer “personal holistic high touch advice”.