At least one major industry superannuation fund has been directly charging members for the provision of intrafund advice.
Amid complaints from some financial advisers about the nature of intrafund advice and how it is funded by superannuation funds, UniSuper has told a key Parliamentary Committee that it actually charged members a fee, although the fee might not cover the actual cost.
“… our members are charged a fee for the delivery of intrafund advice services,” the fund has told the House of Representatives Standing Committee on Economics.
“While there is no legal obligation to charge members for intrafund advice, we believe it is important that those who receive the service pay for the advice they receive. There is no legal requirement for these charges to cover the cost in part or in full of delivering these services and the service is paid for through a combination of explicit personal charges as well as collective charging,” it said.
The fund revealed that it had 12 advisers specifically allocated to the provision of intrafund advice and that the revenue generated by them from that activity in 2019/20 was $808,272.
UniSuper also revealed that like all companies providing financial advice it was confronted by the need to hold professional indemnity (PI) insurance but that this was wrapped up in the cost of its broad range of insurances.
“Our financial lines’ insurance policies include a combined policy for directors’ and officers’ liability, professional indemnity (PI) and financial institutions’ crime insurance,” it said.
“Cover for our financial planning activities is embedded within the PI component of cover. Over the years, we have sought advice from an insurance broker to split the premium across items covered. We have been told splitting is highly subjective and that it would be highly unlikely to obtain standalone PI cover for financial advisers for less than what we pay for the combined policy,” UniSuper said.
“We have not disclosed the premium for the policy on the basis that we are required to keep this information confidential.”