Law firm calls for super fund advice to be broadened
The role of superannuation funds in providing personal advice should be further extended to advice on maximising social security entitlements and transition to retirement.
In a recent submission to the Quality of Advice Review proposals paper, law firm Herbert Smith Freehills said it supported the proposals in relation to expanding the ability for superannuation trustees to provide advice to their members.
While the proposals paper has stated that the scope of this advice would be limited to advice about the member’s interest in the fund, the law firm said there would be merit in further broadening the scope of this proposed authorisation.
“To our minds, there is an opportunity for superannuation funds to play a broader role in improving retirement outcomes for their members by providing better access to personal advice about matters relating to, but not limited to, their superannuation interest,” the law firm stated.
“Further, in our view it is difficult for a trustee to provide ‘good advice’ without having the ability to holistically consider the financial situation, objectives and needs of the member.”
The law firm gave an example of members who are approaching retirement having access to affordable and scalable advice about maximising their social security entitlements which may involve increasing the amount they contribute to super.
“In our view, it would be reasonable and appropriate for trustees to be able to provide such advice. Equally, a member may require advice about transition to retirement or retirement income products, and it may be the case that a superannuation trustee providing ‘good advice’ would recommend a product offered by a different financial services provider such as a life insurer or an alternative superannuation trustee,” the submission explained.
“In our view, it is not clear whether such advice would fall within the ambit of being ‘about’ the member’s interest in the fund.”
The submission also stated that the current legal basis upon which adviser service fees are paid from super balances is currently flawed.
“In our view, the expectation that superannuation trustees monitor the performance of advice licensees is unreasonable and rooted in the concept that an adviser service fee is an expense of the fund,” it said.
“We propose that advisers be solely responsible for ensuring that the fees they deduct from a superannuation fund relate to the member’s interest in that Fund and that superannuation trustees be relieved of the burden of seeking to monitor the activities of advice licensees.”