Australia’s retail fund and industry fund sectors are likely to converge more closely in the coming years, according to the chief executives of the Industry Super Network (ISN) and the FPA.
At the Financial Services Council conference earlier this month, Financial Services and Superannuation Minister Bill Shorten told delegates that there will be greater collaboration between the two sectors over the next five years.
“It is likely that over time, industry super funds will be included on recommended lists and financial planners acting in their client’s best interest will recommend clients either continue to be members of their industry fund or join an industry fund,” ISN chief executive David Whiteley told InvestorDaily.
“That’s something that we will see because what you’ll find is that over time a financial planner acting in their clients’ best interest will be utterly agnostic as to whether a super fund is a retail fund or an industry fund,” he said.
“That’s certainly what’s been articulated by the Financial Planning Association.”
The key dividing line was the underlying philosophical differences that separate the industry fund sector from retail fund sector, Whiteley said.
“There are obvious and profound philosophical differences between the two sectors; the starkest being the line in the sand between one part being for-profit and the other being not-for-profit.
“That doesn’t mean that on a range of regulatory issues the two sectors don’t hold the same view, but it also doesn’t mean that there aren’t going to be disagreements. We need to maturely recognise that the two sectors are able to agree and come together on some issues and on others, they are not.”
Whiteley said collaborations between the retail and industry sector are not often reported, despite them agreeing on increasing the superannuation guarantee and supporting the low income earner’s rebate.
“There have been an extraordinary number of occasions where we hold the same position on a particular issue and there are other areas around technical regulatory issues where you’ll find retail funds and industry funds hold the same views.”
“The only obstacle is implementation.”
The industry is experiencing the transitional change to comply with the Future of Financial Advice reforms and, therefore, the legal requirement of the best interest duty is what will drive much of the behavioural change, he said.
FPA chief executive Mark Rantall said the common denominator between the two sectors is for consumers to receive the right advice.
“At the end of the day, what’s important here is that a professional financial planner should be product agnostic and provide advice within the best interest of their client.
“There are many financial planners who operate within or in conjunction with industry super funds as they do with retail superannuation funds as well.”
Rantall said MySuper will transition the convergence of both sectors over time.
“At the end of the day, both sectors are providing a service to the community and it’s clear that everybody will come from their own position but the financial planner is in a unique position to stand away from that and solely focus on protecting their clients.
“How the commercial machinations of the market evolve out of that, provided clients aren’t disadvantaged, I think they will find their own position over time.”
He said the FPA’s focus is to ensure that its financial planners are operating within a professional framework that leads them to providing the best advice possible.
