Intra-fund advice is provided at a relatively low cost per member per year, according to a new report released by the Association of Superannuation Funds of Australia (ASFA), which found Australians preferred simple advice about super.
The report found the cost for super funds to provide intra-fund advice equates to $2.81 per member per year, with an average per member-per-year cost of just under $10.
ASFA developed the report in conjunction with Rice Warner, which surveyed 25 super funds, 19 of which are industry funds.
The bulk of the cost of scaled advice is covered by general administration fees charged to members by funds, or a combination of general administration fees and a specific fee for the service provided.
The survey also found Australians prefer simple advice about their superannuation, such as that provided by the current definition of intra-fund advice. ASFA chief executive officer Pauline Vamos said this type of advice was cost effective because it was limited to the very simple end of full financial advice.
While it does not replace full advisory services, it does enhance them, she added.
“This report reinforces why it’s important that intra-fund advice remains available to fund members,” Vamos said.
“It is an important element of our superannuation system, as it enables people to access affordable advice so they can make simple decisions about their accounts,” she added
According to Vamos, allowing funds to provide scaled intra-fund advice helps to reduce and share the cost, and allows more people to access this member service.
“But it must be limited, and this is why we welcomed the draft Future of Financial Advice legislation released last month, and applauded the Government for keeping the current definition of intra-fund advice intact.”