In the wake of the first round of the Future of Financial Advice (FOFA) draft legislation, the Labor government, through loyal disciple Bill Shorten, has seemingly strengthened its ties with the industry superannuation sector.
Shorten put more than a few noses out of joint when he used data from Rice Warner Actuaries to help make the point that the government’s opt-in reforms would not be costly to the industry.
Independent researcher Investment Trends gained feedback from the retail advice sector and uncovered that opt-in, in its view, would cost around $250 per client. The government found otherwise.
Interestingly, however, when the government released its reasons for pushing opt-in, the figure it used was not only significantly lower at $11, it was believed to be research commissioned by the Industry Superannuation Network (ISN).
If this connection is true, then it would be very interesting to understand why such a decision was made.
Why would Shorten choose research commissioned by the industry super fund sector, particularly when he continues to refute claims of bias towards that very sector?
Also, where is the balanced view? Where is the independent research and subsequent government backing for the retail advisory sector regarding remuneration arrangements for super funds?
Perhaps the second tranche of FOFA will address that in intra-fund advice.
Or perhaps the government will hand ASIC the reins when it completes its consultation with industry over scaled advice.
Time will tell on that one.
Last week, the Association of Financial Advisers (AFA) took issue with Shorten’s use of opt-in research.
“The use of the research in the government’s FOFA media release, without attribution to ISN, is appalling,” AFA president Brad Fox said.
“It is misleading and partisan.”
Interestingly, those within the superannuation sector aren’t too pleased with the government keeping company with ISN either.
A few days later, the Corporate Super Specialist Alliance (CSSA) found issue with the government’s close ties with ISN, labelling its call for a fee to be paid by super fund members to gain access to personal advice as a case of “double standards”.
“This is possibly the most patent demonstration of double standards we have seen to date in the FOFA debate,” CSSA president Douglas Latto said.
“Personal financial advice is exactly that, highly personal. Why should all members of a super fund subsidise the personal financial plans of a few?
“Making the situation worse, the collective fee will not, as it is now in the corporate super environment, be tailored to suit the needs of individual employers and their employees, but by the trustees of the fund at a standard level for all members.
“The government, in its paternalistic fashion, has again decided what is good for you: in their view, one size fits all.”
Roll on tranche two of FOFA.
