Tight Squeeze

Corporate superannuation advisers are currently stuck between a rock and a hard place.

They know (and CoreData has the proof) that the services they offer are highly valued by those who use them, and in fact are the sole avenue for accessing professional advice for many Australians.

Yet the Future of Financial Advice reforms (FoFA) could see a number of funds forced to remove these services if an insufficient number of employees choose to ‘opt-in’ and agree to pay a fee to continue receiving these services.

According to the Australian Prudential Regulation Authority (APRA), there is currently $60.3 billion held in corporate super funds in Australia.

Corporate superannuation advisers provide a range of services to members of corporate super funds, from one-on-one sessions through to seminars and newsletters.

It is not yet clear who the Government expects corporate super advisers to treat as their clients – the client themselves or the fund owner (employer).

But recent research by CoreData, carried out on behalf of the AFA and AIA, suggests that while the services provided are highly valued by members who use them, few would be willing to pay for professional advice outside their super fund if these services no longer existed.

Just over one quarter of corporate super fund members (28.9%) use the adviser provided by their corporate super fund as their primary source of financial advice.

A similar proportion (26.8%) use their own judgment and only 14.2% say their primary advice source is an adviser outside of their corporate super fund.

An overwhelming majority of members who have used the corporate super services offered through their fund say they find them valuable to some extent (89.2%), while four in five employers (81.1%) find the services offered to them as an employer or policy committee member to be ‘very’ or ‘extremely’ valuable.

Yet more than two in five members who use the advice services provided through their fund would not be likely to use an adviser if the service wasn’t provided through their super fund (44.1%).

This suggests that a considerable proportion of corporate super fund members would not have access to professional advice to guide their decision-making if insufficient numbers were to opt-in under FoFA.

Corporate super advisers are filling a gap in the market that would otherwise leave many people wanting when it comes to financial advice.

The key is to find a balance between consumer protection and bureaucracy, to ensure that more, rather than less, people have access to the benefits of financial advice.