It is little wonder AustralianSuper turned to Michelle Levy, one of Australia’s leading financial services lawyers, to help navigate its push into financial advice. As chair of the Morrison government’s Quality of Advice Review, with decades of experience of private practice in superannuation law, no-one is more qualified to assist the megafund in avoiding the pitfalls that have trapped many a financial institution in the past.

AustralianSuper is often viewed as tribal in its approach to business and policy, as the largest and most powerful of the core group of industry super funds headquartered in Melbourne’s Lonsdale Street. 

So it deserves credit for reaching across the aisle to a longtime Allens partner and key confidante of Westpac and the Financial Services Council (although Levy did describe herself as “a bit of a leftie” at the inaugural Professional Planner Advice Policy Summit last year).

It deserves credit also for taking a bold step in establishing AustralianSuper Advice and seeking to roll out a form of personalised advice to its 3.6 million members, as foreshadowed by Professional Planner sister title Retirement Magazine in May. 

There is plenty of scepticism about the ability of large not-for-profit super funds to provide reliable, quality, personal advice at scale, and avoid the obvious conflicts of interest in the process. The raised eyebrows are understandable given the mistakes made in the past and the critiques of the intra-fund advice model from consumer groups and others. 

Given the fund is now in competitive outflow, with adviser-facing wealth platforms picking off some of its largest members as they approach or enter retirement, some critics will also question just how altruistic the motivations may be. Controlling the advice end of the chain may prove a trusty retention tool, notwithstanding the liability and paperwork that comes with it. 

But nonetheless, with just 10 per cent of the population receiving personal advice, and at a time when financial anxiety and illiteracy is high, it is arguably in the public interest that they try. 

This is especially the case given that the Albanese government’s Delivering Better Financial Outcomes legislation, which would remove legal impediments and risks of funds providing personal advice, has been indefinitely delayed by the Shield and First Guardian disaster. 

Granted, the risk around such a move is ameliorated somewhat by the fact that both ASIC and APRA have been encouraging funds to provide more advice, in order to fulfil their obligations under the Retirement Income Covenant and prevent consumers from seeking unlicensed advice from finfluencers and AI bots.

But even with that latent endorsement – and Levy’s esteemed legal counsel – AustralianSuper will find itself walking a tightrope at a time when scrutiny of super is mounting.

In particular, in lieu of reform, the fund will presumably need to provide a cumbersome Statement of Advice for each piece of personalised advice it provides to members. It will also need to satisfy the notorious safe harbour steps in the best interests duty under the law, which, to this columnist’s knowledge, has not been achieved by any institution at scale in the post-royal commission era. 

‘Influence machine’

It is understood that AustralianSuper believes it can progress its financial advice project while remaining compliant with the current legal framework. Of course, it could hardly give any suggestion to the contrary, which would effectively be an admission of intent to break the law.

But it is likely the mega-fund is also signalling its bullishness on the dormant law reform package coming back to life. In his most recent public foray, Assistant Treasurer and Minister for Financial Services Daniel Mulino told the Investment Magazine Insurance in Super Summit he supported the “intent” of DBFO but could not commit to legislating the package.

However, senior government sources say there is a window of opportunity for the reform agenda to be resuscitated after the government has completed its response to the Shield and First Guardian incident, culminating in Mulino’s National Press Club address next week. 

And given at least one industry fund executive has described AustralianSuper as an “influence machine” – with a slew of experienced politicos on its trustee board, including former Prime Minister Paul Keating’s chief of staff Don Russell, former ACTU president Michele O’Neil and former foreign minister Alexander Downer’s chief of staff Innes Willox – it is likely the fund has heard the same.

To that end, AustralianSuper’s bold new project should provide some comfort to those who support efforts to wind back red tape and simplify financial advice. Without DBFO, Levy faces a task almost as challenging as leading the review that preceded it.