Intrafund advice ‘dependent’ on product, IOOF chief warns

Speaking to the House of Representatives standing committee of economics, IOOF chief Renato Mota said one of the challenges facing the advice sector is affordability, describing it as an issue that “occupies a lot of … time and thinking”.

The committee chair and Liberal MP Tim Wilson had asked Mr Mota to give his views on intrafund advice, particularly if there was a “level playing field” with industry super funds.

“I think one of the reasons funds have looked to build intrafund or benefit from intrafund, is looking to deliver pieces of advice in an affordable manner. I certainly advocate for the intent,” Mr Mota said.

“What our preference would be to see that ability or access to that model be agnostic of product. Our preferred model would be to have the ability to scale down advice and actually have more affordable advice, but not necessarily be dependent on the product structure to be able to do that.

“At the moment, intrafund advice is dependent on advice being given within the product.”

The committee also spoke to Industry Fund Services, a financial advice services provider to industry super funds and union members.

The group is a subsidiary of Industry Super Holdings, which is in turn owned by 27 industry super funds, including AustralianSuper, HESTA, Hostplus and Cbus.

It has 105 advisers working under its license, with 85 employed across super funds.

Adrian Gervasoni, executive manager of advice solutions at Industry Fund Services, said he believes there is a role for limited advice under an intrafund model.

“I know that some in the industry have thought that the advent of the best interests duty and the Code of Ethics might see the end of limited scope or intrafund advice but we believe there’s absolutely a place for it,” Mr Gervasoni said.

“We’ve got the benefit of licensing advisers that sit in a limited scope and in holistic advice. And so it comes down to appropriate scoping and understanding when you need to decline providing advice because the right thing for that member would be to seek holistic advice that addresses their broader [needs].”

Industry Fund Services chief executive Catherine Bowtell told the House committee around nine out of 10 of the advisers’ clients are fund members, “overwhelmingly” at retirement or pre-retirement.

Earlier in the proceedings, Ms Bowtell had declared her group aims to make a balance between managing product bias and conflicts of interest against providing fund members access to affordable advice, which she called a “chronic problem in the Australian community”.

She is also a director at IFM Investors and the Royal Women’s Hospital as well as chair at Industry Super Holdings-owned media outlet The New Daily.