Data published on Wednesday by the Australian Prudential Regulation Authority (APRA) shows that advice fees made up around 11 per cent of super funds’ overall $10.83 billion expenditure during the 2022–23 financial year.
Across all categories of advice spending, super funds spent $1.31 billion for the period. Of this number, $1.19 billion was categorised as “financial planning payments to externals” – which includes any expenses incurred for the provision of financial planning payments to external companies or individuals, i.e. not employed by the Registrable Superannuation Entity (RSE) licensee.
A far more modest figure of $43.5 million was attributed to “financial planners expenses” incurred for the provision of financial planners employed by the RSE licensee, while the remaining $73.6 million went to intra-fund advice expenses.
AMP was the top spender in terms of advice fees through Wealth Personal Superannuation and Pension Fund and AMP Super Fund, spending $294 million and $29 million, respectively. The former was entirely allocated to external advisers, while AMP Super Fund’s spending included just under $2 million on intra-fund advice.
This was followed by Macquarie Superannuation Plan’s $213 million, HUB24 Super Fund’s $173 million, and Netwealth Superannuation Master Fund’s $145 million, all of which were also attributed solely to external advisers.
Australian Retirement Trust’s $17.7 million was the largest intra-fund advice spend, followed by HESTA’s 12.4 million, and Aware Super’s $10.7 million.
The data release follows APRA deputy chair Margaret Cole having spoken at the AFR Super & Wealth Summit 2024 on Tuesday, calling scrutiny of fund expenses a “priority frontier” for the regulator amid “growing concerns” about spending behaviour – though this was largely focused on super funds with high discretionary spending on items like travel, entertainment, and conferences.
Fund expenditure will be reviewed and scrutinised with intensity, Cole said, as APRA intensifies its focus on trustees’ compliance with the best financial interests duty introduced by the 2021 Your Future, Your Super reforms.
According to Cole, APRA’s reviews have already uncovered questionable spending, with some trustees lacking the documentation to justify certain expenses. Despite three years under this duty, she said, adherence remains inconsistent.
Cole said that APRA has sifted through over 42,000 lines of data from the 2023 financial year alone to spot outliers and potential misuse.
“Following the evidence”, the prudential regulator identified unusually large or questionable expenditures, prompting follow-ups with trustees and, in cases of serious concern, enforcement action.
As APRA’s data collection grows, now exceeding 50,000 entries for FY24, the regulator anticipates uncovering even more areas of concern.
“As one of my colleagues puts it, we lifted up one rock and found a significant number of concerns,” Cole said.
“Given the sheer scale of the collections, our decision to intensify our scrutiny of expenditure does not mean we plan to review every single expenditure item reported.”
APRA last week signalled it will closely scrutinise trustee expenses where member benefit isn’t immediately evident or reasonably justified. Key areas of focus include discretionary spending on travel, entertainment, and conferences, as well as outliers in spending size and payments to specific types of vendors.
If APRA want to call these Real Adviser fees as Super Funds expenditure, then they should be paid for via the same as Intra Fund sales as a Collective charge / Hidden Commission, to All members.
Or maybe there is no need to have the Adviser Fee Consent & Adviser Fee Disclosure statements done, as they relate to people using their OWN super savings to pay for Real Advice. The Super Funds are NOT paying 1c of this Real Advice.
Can’t have it both ways ASIC, APRA & Industry Super. Oh but you sure try too spin crap at every angle.
Unfortunately there are a lot of financial advisers that are price gauging purely just because they can, their clients trust them and think it is normal. We still have a lot of financial advisers that are ripping off the public and that is a fact. APRA are reporting how much money is going out to advice fees which is great but again financial advisers are not dumb they just start charging outside of super, some are purely thieves and hide behind the cost of providing advice, it’s white collar crime at its best
Please provide the factual evidence, not just state it is a ‘fact’!
“We still have a lot of financial advisers that are ripping off the public and that is a fact”. Would you please provide evidence supporting your statement.
Can you change the title of this article – this isn’t right.
The clients gave permission for the fee to be charged – i.e. they purchased financial advice using their super…..
Very poor reporting. There needs to be a separation in amounts paid to external advisers at the members request, versus internal expenditure on conflicted bias salespeople employed to flog product under the guise of Advice. Absolutely redundant to combined to two together. Expected better from ifa journalists because if you can’t get it right main stream media will further bastardise it for cheap headlines at the cost of real advisers.
Out of which most advisers are paying well over $100,000 pa in operating costs, and tens of thousands for ASIC Levys & Fees. If ASIC slashed their levys, & eliminated the Annual Fee Renewal Forms (red tape that doesn’t exist in any other nation on earth) advisers could cut these fees for clients instantly.
Wishful thinking I’m afraid.
Has Margaret Cole read the Institute of Public Affairs 2017 report titled the “Rivers of Gold…How the Trade Union Movement is Funded by Industry Super” ?
If she has or if she chooses to, I suspect the tens and tens of millions of members monies that are meant to be paid to Industry Fund Directors, find their way to Labor Party and Trade Union related entities every single year.
The Labor Party and the Trade Union movement rely on Industry Super as a cash flow business model.
Look at the significant level of funding that Cbus transfers to the ” highly trustworthy and responsible ” CFMEU every year and its obvious there are some very serious issues with the transfer of monies which are in principle and in law prescribed for the sole use of members retirement funding.
Institute of Public Affairs lol
The members spent this money on advice.. not the funds!
How much “membership/admin fees” paid by industry funds members a year?
If anyone uses an electronic calculator, the average per financial adviser may be around $80,000 gross before business expenses, financial adviser levy and CSLR levy, where these levies are on an increasing trend (ASIC IFM 2023-24 $48.4 million & CSLR $50 million). Net of business expenses is probably less than $50,000 a year net income before income tax. If all financial advisers resigned and took up a job to teach in schools, their income would increase to over $80,000 and no business expenses. Secondly, has APRA done the analysis regarding its June 2023 Superannuation Practice Guide SPG530 which restrains financial advisers to adviser at least 50% into Balanced diversified funds which dumbs down returns on clients who have life expectancies of 20, 30, 40, years as their investment duration and are under superannuated to be financially independent by the time they reach 60 and wish to retire? What has been the APRA SPG530 guideline suboptimal returns enforced by Trustees on financial advisers? Every financial adviser should download SPG530 and search for the term, advice? It has no coordination with ASIC RG244. Is there a conflict between the APRA guideline and an ASIC regulatory guideline that was derived from the Corporations ACT? Does APRA care about this conflict?
Also, $1.3b is only 00.0325% as an average fee on $3.9 TRILLION IN ASSETS I think, correct me if I am wrong please.
Data doesn’t include advice fees or brokerage from non-super platform products/SMSF. Total would be over twice the stated figure.
Ok so maybe total Real Advice fees = 0.1% pa or so of $3.9 Trillion Super?
An extraordinary low and worrying figure.
Whilst ASIC, APRA, Govt & Industry Super keep the 20+ years of demonising Advice going.
The same ASIC, Govts & Banks too are allowing lots more, $3 Billion pa to be scammed from Aussies. And a lot of that is because Canberra has made Advice too hard and too costly.
The framing here is absurd—super funds didn’t “spend” this money; Australians did, choosing to invest in financial advice to safeguard their retirement. This article follows a familiar narrative that paints advice fees as “costs” that “erode balances,” benefitting those who want to discourage Australians from accessing independent financial guidance. The real question: who benefits from pushing Australians away from professional independent financial advice?
Spot on Peter. There is a huge difference between professional advice fees a client chooses to pay from their own account to improve their financial position, and “marketing” expenses union super funds choose to pay from all members’ accounts for the entertainment of union officals.
Sounds like they have an agenda?
Total superannuation assets were $3.9 trillion at the end of the June 2024 quarter, increasing by 0.4 per cent over the quarter.
how much was spent with lawyers
There are 15,500 advisers in Australia, assume each one has about 100 ongoing fee clients, divide $1.3Billion by 1,550,000 clients, it equals fees of about $840 per annum. Extremely modest costs!
I find it hard to believe any financial adviser charges $840, it is more like $8,400 plus extra payments if they give extra advice, criminal and over charging