Super funds suffer adviser losses ahead of expanded advisory role

Super funds suffered the second-largest exodus of advisers last year amid the government’s decision to allow funds to expand their advisory powers.

Superannuation funds lost 5.17 per cent of their adviser cohort in 2023, according to Wealth Data.

Funds kicked off the year with a total of 754 advisers, which dropped by 39 to 715 as at 31 December.

Regarding losses in 2023, funds were preceded only by accounting limited advice, which is restricted to SMSFs, with a loss of 8.63 per cent.

Wealth Data also looked at new entrants to the advice profession in 2023, revealing that they recruited only 11 new advisers, which remained at the year’s end, or 1.54 per cent of their current advisers.

This came as a surprise given the government’s perceived leniency towards superannuation funds, with the announcement last year that the government intends to create a new class of financial advice providers – to be termed “qualified advisers”.

The government’s announcement essentially means that superannuation funds, banks, and insurers have the ability to give customers personal advice and unwinds some of the tough rules imposed by the Hayne royal commission.

However, as recommended by the Quality of Advice Review (QAR) – recommendation 3 – this new class of advisers will not be able to charge a fee or receive a commission relating to the advice they provide.

“We must give consumers what they actually need,” Financial Services Minister Stephen Jones said at the time.

He also assured that the government intends to establish safeguards by ensuring the new class of financial advice providers meets additional standards that were not originally recommended by the QAR.

Moreover, he noted that in order to ensure that some of the bigger institutions don’t revert to their old ways, these new advice providers will, alongside their professional peers, be subject to the same standard under a modernised best interests duty, while limitations are placed on the scope of advice they can offer.

“Australians must be protected from bad products, bad advice, and bad marketing. And this has been the objective of much of the necessary change over the last decade,” the minister said.

“Financial advice has become subject to greater and greater regulation to prevent the worst. And to shift the advice industry away from being a sales force towards being a professional. We’re not going to reverse that course.”

The minister is yet to reveal what these protections are, but an announcement is expected in the first quarter of this year.

However, it’s interesting to see that while funds are said to be overjoyed with the government’s decisions, in 2023 they shed a substantial number of advisers.