Intra-fund advice ‘fit for purpose’: FPA

FPA head of policy and standards Ben Marshan told ifa that while the charging of fees to all super fund members to subsidise intra-fund advice services was “a separate issue”, there was no difference in terms of advisers’ legal obligations regardless of who they worked for.

“In-house super fund financial planners operate under the same regulatory environment and comply with the same FASEA standards as all other financial planners,” Mr Marshan said.

“So from that perspective intra-fund advice itself is fit for purpose – there is no difference in compliance with professional standards, laws and regulations, even if the charging model could be reconsidered.”

The FPA’s policy paper, ‘Affordable Advice, Sustainable Profession’, released last month following member consultation, recommended that advice fee regulations be amended to ensure “a single set of rules” across all types of super accounts when it came to fee disclosure, renewal and authorisation.

“The rules should apply equally to all superannuation funds, accounts and investment choices,” recommendation 5.4 of the paper states.

“A single set of rules would ensure that no incentive is created for people to hold a particular investment choice, account or fund simply as it allows access to financial advice.”

Mr Marshan said the recommendation was in line with historic FPA policy, which encouraged advice fees to be paid up front rather than subsidised.

“The FPA Code of Professional Practice was updated in 2009 with our remuneration policy, which states consumers should pay for the advice they receive, not product providers,” he said.

“However, we also believe intra-fund advice is a great way for consumers to experience the benefits of a professional advice relationship and see the benefits of moving to an advice relationship with a holistic financial planner given the limitations of intra-fund advice.”

While calling for changes to fee rules, the association’s policy paper highlighted the importance of retaining super as a method by which consumers could pay for advice, saying it could reduce up-front costs by as much as 40 per cent.

“Superannuation should remain an option for all Australians when seeking financial advice on their superannuation and preparation for retirement,” the paper stated.

“In many cases ... clients do not have alternative cash flow outside of superannuation from which they can pay for financial advice upfront.”