Dealer groups battle for TWU planning tender

TWU Super, the $2.2 billion transport workers industry fund, is sourcing proposals from three financial planning dealer groups to provide financial advice to its members.

“We are in the middle of the tender process. We invited three firms to submit their provision of financial planning services to [TWU] members,” Bill McMillin, TWU Super chief executive officer and fund secretary, said. “It will be strictly outsourced. We are reviewing these tenders and talking to referees, and fine-tuning what we want to finish up with,” he said. The three dealer groups involved in the tender are: Industry Funds Financial Planning, Mercer Financial Planning and Money Solutions. Deloitte is running the tender. “It was only these three that could offer the service that we’re looking for. Part of the issue with funds like ours not paying commissions means that there are not a lot of people in the financial planning industry looking at us.” McMillin expected the successful financial planning model to consist of three major components: a call centre to deal with basic questions about financial planning, a secondary service to handle more acute questions, and a referral service to arrange face-to-face financial planning appointments with the outsourced provider. “Now the call-centre is becoming crucial; it identifies the extent to which members need advice.” Advisers to TWU members would be remunerated on a fee-for-service basis, McMillin said, but whether these payments would be made on an hourly basis – in alignment with the ‘purist’ fee-for-service view – or based on clients’ assets under advice, had not been determined. Some industry funds, such as SunSuper, have built in-house financial planning capabilities. By outsourcing the service, TWU Super does not have to commit resources to training and compliance. “But whatever we do will be monitored,” McMillin said. “We’ll look at what the experience was.” “I can understand why [funds] want to do it in-house. But our aim is to outsource as much as we can. The starting point is to outsource and get the service to our members, [and] let other people worry about staffing and compliance. It may be the case that in a few years we’ll open up our own in-house financial planning service.” Superannuation funds have debated how to provide financial advice to members since at least 2000. Choice of fund legislation, passed in 2005, has driven many funds outsource or implement financial advice services. Until now, TWU has run free seminars hosted by planners with Mercer FP and IFFP for members. “In a competitive environment a lot of funds will be offering advice,” McMillin said. TWU aims to finalise the tender by early December.