Treasury's recent comments on financial advice fee structures have attracted mixed views from Australia's planning community.
Earlier this month, Treasury retail investor division general manager Sue Vroombout told the Parliamentary Joint Committee (PJC) hearing on MySuper, that the Future of Financial Advice (FOFA) reforms did not prevent advisers from structuring charges in a way that reflected the intra-fund advice fee model used by superannuation funds.
Of the industry participants who spoke with InvestorDaily, some said the government is turning a blind eye to superannuation funds' intra-fund advice models, while others said calling an advice fee an administration fee has no appeal whatsoever.
"From a government's perspective, this is the worst example of hypocrisy I have ever seen," Professional Investment Services group managing director Grahame Evans said.
"Superannuation funds can charge a collective fee to members who may not want advice and probably don't even know they can get it."
Wealth Enhancers chief executive Finn Kelly said the Melbourne-based advice firm charges a retainer, or ongoing, fee so clients can call when they feel the need to do so without worrying about an extra charge.
Kelly said he supports the intra-fund advice mechanism because it encourages fund members to get advice, but he does not support the lack of clarity.
"Why call it an admin fee if it's not an admin fee? It's an advice fee," he said.
"That's the reason for this whole FOFA debate. The clients are still paying the same amount [under the financial advice fee structure]. It's just a matter of increasing their understanding of what they're actually paying for."
FPA policy and government relations general manager Dante De Gori said the advice body has taken objection to the intra-fund advice fee model, due to the inclusion of personal advice in the intra-fund model without the transparency around how funds charge for that advice.
"What we're saying is that, about infra-fund advice irrespective of whether that advice is personal, general or factual, that fee is not differentiated, and the member doesn't have a choice of agreeing to pay for it or not," De Gori said.
However, Association of Financial Advisers chief executive Richard Klipin said the industry body's members would await FOFA in it its final form.
"While Treasury's clarification is welcome, we're obviously going to assess all of the FOFA changes once the legislation comes out and look at where the opportunities reside," Klipin said.
"There's no doubt that we're all interested in more Australians getting more advice, and it may well be that the intra-fund-style relief will be there for advisers, super funds and others to take advantage of, as long as it's in the best interest of the client."
