Brighter Super has ended legacy arrangements preventing financial advisers from charging fees to client super accounts.
The fund is the result of a re-brand and merger between industry funds LGIAsuper and Energy Super, which further acquired the retail Suncorp SPSL Master Trust.
The fund’s head of advice, Steven O’Donoghue, tells Professional Planner the fund is using that integrated retail fund knowledge to improve its service to the advice community.
“Any of our 260,000 members will be able to have an external member charge a fee,” O’Donoghue says. “They’ve got to register with us, and we have to vet them, like a normal registration process.”
There is currently a 2 per cent cap for ongoing service fees based on the member’s account balance, but O’Donoghue says the fund is “exploring that”.
“The challenge for external advisers or advisers in general is they know their regulatory environment via ASIC, but under APRA, super funds have their own sole purpose test expectations,” O’Donoghue says.
“That’s where a lot of those fee caps come in. We’re trying to be an easy-to-deal-with industry fund, but this is all new for Brighter Super.”
Re-investment into the advice business is part of the completion of the merger process.
“We’re not trying to be a retail fund, but we’re not trying to be an industry fund,” O’Donoghue says. “We’re trying to be in-between.”
O’Donoghue says the combined fund has all the bells and whistles a retail fund typically has, like advice portals, data feeds and the ability for advice fees to be debited.
“But we’re doing it as an industry fund,” O’Donoghue says. “A lot of the other industry funds… some of them aren’t investing in this at all and others are to various different degrees. We think we’re unique because we’ve done this within a nine-month period; we haven’t taken years to do it.”
O’Donoghue says wants to the fund to be advice-led, in respect to the fact members will choose to either get advice internally or externally.
If a member does go the external route, O’Donoghue says the fund wants to make sure that relationship is respected.
“If an existing member calls up, we will refer that member back to their existing listed adviser like a retail fund would,” O’Donoghue says.
“If they don’t have an adviser, we will obviously be able to facilitate advice internally or match them with an external [adviser]. That’s our proposition.”
With the aim for future mergers, the fund is well-placed to exceed the $30 billion fund threshold for fund APRA expects.
Although O’Donoghue notes that when reading between the lines, the regulator expects funds to hit the $50 billion mark. APRA chair Margaret Cole noted in her speech last year at the Investment Magazine Chair Forum this is where members were benefitting from lower fees.
“As a $30 billion fund, not a $100 billion fund, we’re doing pretty well,” O’Donoghue says.
“It’s not secret we want to do another merger to get to that $60 billion mark. We want to be in that boutique landscape where we can provide that personalised service without being a bigger fund. That’s the three-year plan.”
Coming from both worlds, O’Donoghue says he can bridge the gap between retail and industry funds.
“The external advice community has always been a little sceptical of industry funds and that stems all the way from the compare the pair ads,” O’Donoghue says.
“The reality is since FoFA, everyone’s bound by the same rules, they’re bound by the same code of ethics.”
The internal advice proposition for Brighter Super will have everything from general advice to full comprehensive advice, but O’Donoghue says it’s “mostly linked” to the existing product being Brighter Super.
“But if a member comes in and they want to talk about BT Wrap, the internal advice team can do it, but we aren’t by design trying to be a retail independent type of adviser because most of our members are existing members in the product.”
Division of labour
O’Donoghue says the fund can provide roughly 80 per cent of the advice a member wants, but when it comes to facilitating SMSFs, direct shares or aged care (as examples), the fund would prefer to triage that to an external adviser.
“Like all super funds, existing members are typically calling their existing fund because we know the product well,” O’Donoghue says.
“We still have a fee for service model. A lot of the external advice community think super funds just do subsidized advice – some do – but whilst we do for general and single-issue advice needs we also have a fee for service model where members will pay for comprehensive advice.”
O’Donoghue says the fund recognises the impetus to make sure members understand the value of advice.
“If they want to go see someone they know and trust for any reason, we want to establish a relationship,” O’Donoghue says.
“We know an advised member is going to have a better retirement than a non-advised member, typically.”