The call by the Federal Government and the Industry Super Network (ISN) for a collective fee to be paid by super fund members to give them access to personal financial advice is a blatant demonstration of double standards, according to the Corporate Super Specialist Alliance (CSSA).
A collective fee is a fee paid by all members of a super fund so that they have access to a range of benefits.
CSSA President, Douglas Latto said that while on the one hand, the Government and ISN have expressed ‘strong principles’ around opt-in on the grounds that people should not have to pay for advice they may never receive, on the other they are campaigning for personal, individual financial advice, which some super fund members may never access, to be paid for via a collective fee.
“This is possibly the most patent demonstration of double standards we have seen to date in the FoFA debate,” Mr 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?”
Mr Latto said the Government intends to make it possible for super fund members to access personal financial advice which will be paid for via a collective fee, by introducing an intra-fund advice fee into both MySuper and other corporate super funds (to be known as choice funds).
“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,” Mr Latto said. “The Government, in its paternalistic fashion, has again decided what is good for you: in their view, one size fits all.”
In servicing corporate super fund members, CSSA members currently negotiate a collective fee with individual employers. The fee is usually applied equitably to all members. In exchange, CSSA members provide a range of services to members, including:
- Negotiating better terms and conditions with super funds
- Monitoring the super fund on a continuous basis, correcting the many errors that occur and overcoming administrative issues
- Playing a member advocacy role in negotiating lower fees
- Helping the fund with its group risk requirements; negotiating better features and lower life insurance premiums for members and helping members with life insurance claims
- Conducting financial literacy and education seminars, personal on-site meetings and distributing newsletters in the work place.
“If a member of a corporate super fund wants personal financial advice, tailored to suit their individual needs, we believe he or she should pay for it,” Mr Latto said. “It is hard to see a better world for super fund members in any proposal that has them subsidising the personal financial plans of others and which legitimises the Government’s double standards and conflicted principles.”