The CEO of the AIOFP, Peter Johnston, reports on industry super funds – some home truths.

We are currently living in a weird world with paranoia around many conspiracy theories and one of those happens to be about Industry Super Funds and their relationship with the Unions and the ALP.

Here are some ‘home truths’ and facts as to why Industry Funds should be an attractive proposition to the independent advice community and not a threat – 

1. Industry Fund Boards comprise an equal number of employee representatives (nominated by Unions) and employer representatives (nominated by employer Associations) and the vast majority also have independent Board positions.
2. Industry Funds support both Union and employer Association events equally with sponsorship and Board sitting fees.
3. Industry Funds and their Directors are all closely monitored by APRA to ensure they are acting in the best interests of fund members – no exception.
4. Industry Fund Executives are under constant APRA pressure to adequately service their members (the retirement covenant is one example) and services such as national coverage of financial advice is a key issue. There is a definite trend by Industry Funds to outsource the independent advice piece to third parties.
5. Until 2013 when FOFA banned commissions, some Financial Advisers had been constantly taking Industry Fund members out of their product which understandably caused them to put in place barriers to stop the bleed. The barriers are gradually being removed as they get confidence dealing with independent Advisers.

We believe the AIOFP has the perfect business model giving third party referrers confidence with outsourcing their Advice function to us. Certified Financial Strategist (CFS) designated Advisers eliminating conflicts and mitigating risk, mandatory APL and strict compliance protocols has satisfied Coutts and Co, Next Rural and Industry Super Funds with our model.

A key objective of our service is to satisfy the large Industry Super Funds who currently only utilise large Dealer Group Advisers [due to the extra overlay of compliance] to use the AIOFP model. We have positioned the AIOFP to be that extra overlay to give comfort and confidence with our services.

We cannot deny that the Industry Funds won the “war” against the retail sector and now dominate the market, always room for improvement but they are far superior to the rubbish the Banks and AMP served up over the decades! Recent data from ASFA indicates Industry Funds have $1.3 trillion of FUA and 13.4 million individual accounts, the retail sector is around 50% of the size and diminishing.

On May 24^th the AIOFP Board will make a decision on the new pricing structure of the CERTIFIED FINANCIAL STRATEGIST [CFS] designation for members wanting to be involved with the new client opportunities program or just to hold the CFS designation. It is envisaged the program will commence in the first week of July.