The board and senior management of $115 billion industry fund UniSuper have signed off on a strategy that frames financial advice as equally important to the fund’s mission statement as investing prudently on their members’ behalf.
A UniSuper spokesperson has confirmed chief executive Peter Chun and the fund’s board of directors have accepted a proposal that advice be considered a “core competency” as it meets the government’s expectations to help members transition to retirement under the retirement income covenant legislated by the previous Coalition government.
The strategy followed a review by UniSuper head of advice and education Andrew Gregory, a former executive in NAB’s MLC business who joined the fund a year ago.
“The starting point [of my strategy] was a huge privilege that advice matters,” Gregory tells Investment Magazine. “We see advice sitting alongside the investment proposition. [The board and management] know that, without advice, it’s difficult to deliver on things like the covenant.”
The revelation follows the findings of the 2023 Retirement Conference, a joint initiative of the Conexus Institute and Conexus Financial (publisher of Investment Magazine) in Canberra earlier this month. Reflecting on the annual forum, researchers David Bell and Geoff Warren of the institute concluded that finding a “scalable mechanism” through which funds can direct members to retirement solutions (which may invariably mean providing advice under the law) was a “pressing national policy challenge”.
Gregory says the fund’s origins in the universities sector means full-scale advice is a more natural fit than it is for other funds, with a membership that has the ability and propensity to pay the going rates, which range from $3000 to $6500 for a comprehensive plan.
“The nature of our business is one where advice and education is highly valued, if you think about the heritage coming out of education and research,” he says. Some of the fund’s complexities, such as continuing to operate a defined benefit product, have also lent themselves to comprehensive advice, he adds.
‘They can be fiduciaries’
The comments also come amid a national debate about super funds providing more advice amid the government’s response to the Quality of Advice Review. Gregory acknowledges the idea of funds providing impartial advice is controversial, but says his experience at UniSuper so far has convinced him it can be done.
“I’ve been really pleasantly surprised with the discretion that they’ve afforded the advice business,” he stresses. “They can be professionals. They can be fiduciaries. We’re not under any obligations or pressure.”
“It’s something that really matters to me… that I do have a home for advice professionals and can allow them to be able to use their judgment.”
He says the advice business maintains an independent APL, with a range of rival APRA-regulated super funds represented, both industry and retail. He also says UniSuper advisers are “absolutely” willing and able to advise members to leave the fund if necessary, describing them as a “strong, honest friend” that can hold the fund to account and provide feedback on what competitors may be doing better.
Gregory says he wants hybrid financial advice to form part of the fund’s advice strategy, but has so far resisted putting too many eggs in the pure digital advice basket. While some other funds have incorporated digital or robo-advice into their processes, Gregory says he is not rushing. Indeed, he suspects some competitors may wish they had “slowed down” before selecting a partner and beginning to integrate.
“I don’t want to pursue a vendor strategy,” he says.
“Before I go and engage in an external digital advice provider, I need to make sure I’m really clear on what the funds business requirements are. Otherwise, we run the risk of following their strategy and sort of fitting in because it feels convenient.”