The Financial Services and Superannuation Minister captivated the room with his commentary on the state of the advice sector as he saw it, as well as the big ticket Future of Financial Advice (FOFA) reforms – opt-in and the ban on risk commissions within superannuation.
While Shorten’s official speech to the packed room was eloquent and many truly believed he had the Australian public at heart when developing FOFA with Treasury, the question and answer session proved the Minister can still rev up a crowd.
Grown men stood visibly angry as they directed questions to Shorten. There were jeers and occasional whoops and even a public declaration of love for Paul Keating. In short, it was quite the event.
An adviser who asked a question of Shorten on the day and has since had time to reflect on the Minister’s reply contacted IFA with his thoughts.
“I listened intently to Bill Shorten at the latest AFA (Association of Financial Advisers) lunch, where he was the guest speaker. He was very articulate and I enjoyed his history lesson,” the adviser said.
“He was fair and open at question time and when the question was asked: ‘What reason can you give to outlawing commission on risk insurance in superannuation?’, his response was along the lines of: ‘There is not a lot of skill that you need to have to convince clients to buy insurance in a mandated product. So I don’t believe you should get paid for it.'”
The adviser said after considering Shorten’s response, he would detail the effort and hours it took to have a recent new client underwritten for death cover owned by his self-managed superannuation fund.
The adviser then went ahead and documented 24 tasks he undertook in underwriting the new client.
The tasks ranged from a pre-appointment email; the first appointment and travelling time; statement of advice (SOA); the second meeting and paperwork to complete the application; lodgement of the application; organising blood tests, electrocardiograms and medicals; discussions with the client; discussions with the underwriter; cancellation of the application and making sure the client received the refund; reapplying with a new SOA with another company for insurance; and lodgement of the new application, to name but a few.
The adviser’s total hours for the 24 tasks came to 26.25, more than a days work.
“Bill believes because the owner of this policy is the trustee of my client’s self-managed superannuation fund I should not get paid,” he said.
“Yes, there was other cover applied for in this case, which was outside superannuation. However, the effort and skill to get this client cover was no less.
“Bill believes that because superannuation is mandatory for employers to pay for their employees, up to 9 per cent per annum, there should be no compensation for the adviser who is organising insurance within the confines of superannuation.
“He does miss the point that [the] self-employed do not have the obligation to contribute 9 per cent to super and therefore [it is] not mandatory.”
The task and reflection left the adviser with a new question for Shorten: If this is such a concern, why did this government reduce the concessional contribution limit by half?
What are your thoughts?
