Is intra-fund advice a threat or an opportunity?

Whether intra-fund advice is a threat or an opportunity depends on how it is implemented and whose point of view you are considering.

The government’s aim for intra-fund advice is simple – make advice affordable and accessible to the large numbers of Australians who do not currently access advice. If this can be achieved it opens up enormous business opportunities for the advice industry. But it requires a low cost service with operational efficiency as well as relief from some of the legislative requirements that apply to full advice.

A major concern is that despite the good intentions, intra-fund advice may not serve the best interests of clients and instead may pose a threat to their financial security.

Intra-fund advice relies on the client asking a question and receiving information about the fund to answer that question. However, it is often the answers to questions that the client does not ask (or does not know to ask) that will provide the most value.

The delivery method of intra-fund advice is important for its success. If it is merely an information service provided by staff with low skill levels the outcome for clients is likely to be negative. This can devalue advice. Advice needs to be delivered through a system that allows access to skilled advisers with the ability to investigate beyond the question raised to help the client to implement financial solutions.

The limited advice under intra-fund rules should be confined to simple issues. Issues such as death benefit nominations, retirement planning and transition to retirement strategies are complex areas and it is dangerous to expand intra-fund advice into these areas. This expansion will pose a threat for clients.

If the rules around intra-fund advice allow a level playing field for advisers operating under any AFSL as well as those employed by the superannuation fund trustee, it can create an opportunity to build advice businesses.