Putting people ahead of profits a super idea
ONE of the main messages of industry super funds' advertising campaigns has been the demonising of financial planners. But not all financial advisers are driven by earning commissions at the expense of their clients. Australian Super has recognised this fact.
ONE of the main messages of industry super funds' advertising campaigns has been the demonising of financial planners. But not all financial advisers are driven by earning commissions at the expense of their clients. Australian Super has recognised this fact.Australian Super was formed when the Australian Retirement Fund and the Superannuation Trust of Australia merged in 2006. As a sign that this marriage was blessed, the Anglican Superannuation Fund moved its members into the new fund.Australian Super has continued to grow through other mergers and by continually trying to improve its services. It was named the 2011 superannuation fund of the year and has grown to be the largest industry fund.The 2011 APRA super analysis report, released in February this year, says Australia's four largest super funds are, in order of size, AMP/AXA, NAB/MLC, Westpac/BT and CBA/Colonial. Australian Super is fifth with more than $43 billion in members' funds.The size of a super fund tends to be more a reflection of past success rather than an indicator of future success. One of the best indicators is the amount of net cash flows into a fund. Australian Super was ranked No.1 in the APRA report with 2011 net cash inflows of $4.3 billion, almost twice the volume of fifth-rated AMP/AXA.The difference between Australian Super and the other large funds is how cash inflows are generated. Australian Super does not have the large sales force and distribution system of the predominantly bank-owned funds. These retail funds disguise their sales force as advisers that in the main receive upfront and trailing commissions by signing up members for them.Recognising that some advisers put the interests of their clients first, Australian Super in 2011 started a trial of accrediting financial planners, who had to prove their professionalism and sign a charter.It is no coincidence that Australian Super's adviser accreditation trial coincided with the federal government's push to improve the standard of financial advice with the introduction of FOFA (Future of Financial Advice). In signing the charter an adviser agrees to: Work in the members' best interests. Be strictly fee-for-service. Provide an upfront schedule of fees based on the complexity of the work. Require members to opt in annually. Consent to be audited on quality and cost of advice.Under the trial, Australian Super assessed about 250 advisers. Of that number 145 have become registered and only 75 have been accredited. Australian Super's board will decide in August whether to adopt fully the accreditation of financial planners.The fund recognises there are other areas where services can be improved. One slated for improvement is the pension service. Australian Super realises that nearly all improvements in the past have been made to the accumulation service and it is time to focus on the pension service.Anyone looking to get financial advice after July 1 now has a new question to ask a potential adviser: Are you an accredited planner with Australian Super?