Make super commission-free: ISN

by |
Self-managed super fund owners are the most confident across the superannuation sector they have saved enough for retirement.

A recent report on Australians’ changing attitude to wealth, debt and superannuation by Roy Morgan Research shows only one in four Australians with superannuation feel they have planned enough to be financially secure in the future.

The highest proportion of superannuation savers confident of their future financial stability were SMSF owners, with 54.7% saying they had planned enough.

People’s desire to take control of their own retirement income is reflected in the growth of the SMSF industry, SMSF Professionals’ Association of Australia (SPAA) chief executive Andrea Slattery said. SMSF assets have recently grown to $531.5 billion.

Members of industry super funds are the least likely to believe they have planned enough, with only 23.3% confident in their financial future.

Industry Super Fund chief executive David Whiteley puts that down to industry super fund members typically being younger, so not as engaged with their retirement savings as typically older SMSF owners are.

He said industry super fund members’ confidence will increase as they get more free advice from super funds.

“It’s a service, so the approach we take if somebody is compelled to save for their retirement, the very least we can do is provide them with advice on how to do that. That’s a basic service and it certainly doesn’t justify a commission or an ongoing commission fee which financial planners like to extract from people’s super.”

Whiteley said there are three things which will increase people’s superannuation balance for when they retire. Firstly, ensure low income earners super rebate is retained; secondly, ensure the super guarantee increases to 12%; and thirdly – stop financial planners getting commission.

“We need to ensure people aren’t paying sales commissions and incentives to financial planners. We need to make sure superannuation is commission-free, and that will add tens of thousands of dollars to people’s superannuation savings.”

Super fund members may be unconfident they have saved enough for retirement, but Whiteley said “what we do know” is their confidence exceeds that of members of super funds run by banks.

“The one thing people know about industry super funds is it is only run to benefit and profits its members…They can have the confidence that all profits are going into their pockets for their retirement.”
  • Craig Yates on 9/12/2013 11:31:27 AM

    Industry Fund Services (IFS) is the appointed provider of financial services to industry super fund and union members and is wholly owned by a number of industry super funds.
    The current FSG states that fees can be charged from $295 to $2850, but can be higher depending on the complexity of the advice provided. They also state that "our advisers are paid a fixed salary and do not receive commissions that could potentially undermine the quality of the advice provided".
    They then state they "operate on a fee for service basis".So, if an adviser is paid a fixed
    salary and if the cost of that adviser's salary component for providing advice to a member was say $1000, but the member was charged a fee for service of $2850, where does the difference end up ?
    The base fee charged is stated as $295, but does not state that this is per hour.However, if this is the hourly fee charged and the adviser was working a 40 hour week,this would result in a weekly salary of $11,800 or over a 48 week working year, an annual salary of $566,400!
    Interestingly,throughout the FSG, it states that commissions are not received, however it also states that "any commissions payable to IFS are rebated or waived".
    It also states that "Issuers of certain products may pay ongoing commissions. This commission can vary depending on the product and manager and is calculated in a range of between 0% and 1.1% on the balance in your account. IFS will either waive the receipt of commission, or credit it to you."
    So, David Whiteley, please explain that IFS do accept commissions and then credit it to the member ??
    Also qualify that if in fact IFS do accept commissions, over what time frame does it take to credit the commission to the members account and how clearly is this credit identified to the member in terms of commission amount received and amount credited.
    In addition, it is my understanding that David Whiteley was previously calling for a total ban of commissions including insurance products.The FSG for Industry Fund Services clearly states that upfront commission of between 0% & 121% is received by IFS for the placement of insurance.It also states that IFS will either waive the receipt of the commission or credit it to you.So we need to know, that if IFS receive 121% commission, do they credit 121% of the premium cost to the member, so in fact the member is actually making a 21% profit if the insurance premium cost is actually 100%? How is this credit clearly identified on their statement and how long does it take to credit the full commission amount? Doesn't receiving commission from providing advice conflict the advice, but it is still ok to receive it but as long as you give it back there is no conflict?

  • Keith L. on 6/12/2013 11:26:05 AM

    David Whiteley can carp as much as he likes and make as many lame excuses as he can invent as to why the Roy Morgan Research of Consumer Brand Rankings Table of 20 Super funds (as reported by Wealth Professional on 6th December 2013), found Industry funds occupying 9 of the 10 last places.

    I suspect the electronic media will be induced by the threat of withdrawal of advertising to not make any significant mention of this finding.

    The rankings were derived from nine separate measures which makes it impossible to blame a mere membership age demography for what can only be described as a truly abysmal performance.

  • James Smith on 6/12/2013 9:35:20 AM

    Why does Whiteley get such a free reign with the journalists ? Are they so ignorant that they cannot see through his agenda ? Why don't they hold him accountable and drill him on his ( and other industry fund CEOs ) salary and bonus structures that reward them for attracting more FUM. Why don't they look into the industry fund track record of giving 'advice' and 'service' and point out the obvious hole in Whitely's argument that the industry funds simply do not have adequate people to provide advice and they have an appalling service track record . It really is disappointing that our media supports a movement that is intent on misleading the public and destroying jobs by arguing against the need for the advice industry.

  • Investor on 6/12/2013 8:42:21 AM

    More idiotic comments from Mr Whiteley. There are no commissions you moron! I’m still not sure if these guys are legitimately stupid or liars. Probably both!

  • Les Hayward on 6/12/2013 1:32:16 AM

    This bloke is unbelievable , industry funds don't pay commission as he well knows and FOFA has banned then in retail funds so why do people still give this bloke oxygen !!!!

  • Simon on 5/12/2013 6:22:49 PM

    I have just helped a new client with her Industry Super Insurance claim and the result was dismal. The client over the last 7 years experienced a pay increase from $50K p.a. to over $230K p.a. as her career took off. The Industry Fund was happily accepting her ever increasing SG contributions however no one at the Fund picked up on her IP cover which was still sitting at $850 per month. This client, if paying either a commission to an adviser or a Fee for Service, would more than likely have had an adequate amount of IP insurance to reflect her current salary. The Industry Fund, after a waiting period of 90 days, paid out a tad over $5,500 for her 6 months off work due to an illness instead of nearly $100K she would have received with me as her adviser. I am sure David Whiteley will come up with some excuse however he can make all of the excuses he wants. The fact remains the same, clients do not know what they don’t know and it is up to us financial planners to educate and protect them because in this instance, an Industry Fund failed with this particular members needs. Luckily, she did not lose her home. So much for the benefits of being with an Industry Fund! Yes you may have more super at the end of the day based on your biased advertisements on TV however what about the journey along the way. You lose your home through lost income but you will have more super when you retire in 20 years. A fat lot of good that is in the present day. Industry Super Funds need to seriously get their act together and start looking at protecting their members along the journey and stop harassing our industry. You are nothing but a BULLY David Whiteley.

  • carl on 5/12/2013 5:50:38 PM

    Is this guy still relevant? He keeps talking about commission. When is he going to be asked about the service. One of his industry funds does not entertain hardship provisions so a Cancer patient, reasonably young with a little child who has very little money in her super and could use it immediately to make things a little better for her and her child is denied the privilege of having that money. Great one, Whiteley!!!

  • Free advice on 5/12/2013 5:12:41 PM

    Are those quotes for real or has Mr Whitely been mis-quoted??
    'He said industry super fund members’ confidence will increase as they get more free advice from super funds'.
    How do Industry funds recoup the cost of paying the planner that they employ to only offer limited advice about their funds? Does the planner get paid an hourly rate or flat salary to provide this 'no conflict advice' ?
    How do the ISF executives get paid the large salaries that they all their advice is free? Im sure its not and is paid from monthly fees and MER's which is another name for asset based fee.
    'Super fund members may be unconfident they have saved enough for retirement, but Whiteley said “what we do know” is their confidence exceeds that of members of super funds run by banks'. How do you know this Mr Whitely? Although not a bank advisor myself i do know the bank advisors certainly have more choice on their APL's than ISF advisors.
    'That’s a basic service and it certainly doesn’t justify a commission or an ongoing commission fee which financial planners like to extract from people’s super.”

    Im sure that ISF's all have an MER which is an asset based fee that they charge all members so how does the member with $300k feel about subsidizing the member with $3k?

    Smoke and mirrors i think!!

  • alleycat on 5/12/2013 5:02:27 PM

    Rubbish !!
    The ISA funds tout how good they are. When you pay little for no advice, you can expect very little in return. One particular industry has returned 18.42% over the past 12 months and 6.09% compound over the past 5 years. They claim they are the best fund for 2014 and yet it's still 2013 the last time I looked.
    Step back and look at wholesale offering by a financial planner over current 1 year and 5 year compound returns. One global fund 36.33%/ 11.81%. One Australian share fund 34.32%/14.48%. One Australian Property Fund
    14.36%/8.0%. One Australian Fixed interest Fund 5.16%/6.34%.

    With the benefit of hindsight, why would anyone want to be in an industry fund when they can have access to wholesale returns like these.
    Mr Whitely you have no idea!!!

  • Craig Yates on 5/12/2013 4:29:04 PM

    Industry super funds "extract" an annual Member Fee from every single member irrespective of whether they access any advice
    from the particular fund at all.
    Here we go again..."industry super funds are only run to benefit and profits its members" ??
    Really!! Why doesn't Mr Whiteley clearly explain how the profits from the initial $3 million dollars of members money used to establish The New Daily, is actually returning a profit to the members of the super funds that have tipped in the money when there is not predicted to be a profit from this venture within the first 5 years, if at all ?
    Secondly, I think it more than reasonable for David Whiteley to fully disclose his current and past remuneration packages in his role as CEO of Industry Super Funds so the members of these super funds represented by David Whiteley can determine whether the "fees" they have paid from their members monies in order to have him in that role have benefited them and their retirement savings ?
    Most industry super fund members in my experience are so disengaged they usually have no idea what they have got, how it works or what they can do!
    That's because if you pay nothing, you get's a simple recipe really.
    But of course, they are paying something...somewhere...aren't they.
    As far as industry super members actually knowing who David Whiteley is, they probably would answer "wasn't he that eccentric drug fuelled Australian artist that sold very expensive paintings"?
    So my guess is that the members of these funds are paying for David Whiteley's services, but possibly don't even know who he is!
    Perhaps he should send every member of the funds he represents a Financial Services Guide, clearly outlining the amount and type of remuneration he receives in addition to the services he is likely to provide in return for that remuneration.?
    What's an "incentive" David ??
    Is your remuneration made up of salary and a performance related bonus ?
    If so, is it an incentive for you to say and do things that may result in you achieving additional remuneration for say building or increasing overall member numbers of the super funds that are part of Industry Super Funds ?

  • Phil on 5/12/2013 4:16:24 PM

    'which financial planners like to extract from people’s super'.

    Such loaded language does nothing to help this industry.

  • James Smith on 5/12/2013 4:01:11 PM

    If only it was that simple. David Whitely would be well served by spending a week meeting his members one on one and discussing their super and financial plans. He will be introduced to behavioural and technical issues that will not only challenge him but also challenge how he will recruit people to fulfil that role and how he will retain and manage them. How much will that cost and how will he charge the members ? Also what will be the limitations of the advice, how will those limitations be made clear to the member so as not to mislead them and who will be responsible for that advice. Over to you Mr Whitely. Given you have failed to address the above issues to date ( clearly demonstrating your ignorance in the comments you have made in this article ) how does this fit with your promise to run your funds to benefit and profit your members ?

  • Fred Smith on 5/12/2013 4:00:53 PM

    I would like it if Whitely explains how the Industry Super Funds are able to provide "free" advice.

    I would also like to know why he feels it is inappropriate for advisers to be paid a % based fee, but it is perfectly acceptable to the funds to charge % based fees.

  • Stewart Hynes on 5/12/2013 4:00:01 PM

    It staggers me that the Chief Executive of ISF still has to 'play' the commissions game in the media. Please get your head out of the sand and get with the current model that most professional advisers use, i.e. we charge our clients "fees" upfront and ongoing "fees" that our clients acknowledge and are more than happy to pay. This is because we provide a "service" that our clients value. It's about time you refrain from having to have digs about professional advisers. Guess what I think that most if not all of your ISF Members would be far better off if they were allowed to engage professional advisers to assist them plan their journey along the long road to retirement, because I am not so sure that their current "free advice" from Industry Funds will cut it !!!!!!! Enough beating the chest on the us versus them really it's now very boring and in fact I don't think anyone is listening because professional advisers are far too busy looking after their clients.

  • Coastie on 5/12/2013 3:58:53 PM

    Hasnt Whitely got off the commissions band-wagon yet? Perhaps he should look at the conflicts of interest in his own back yard. I wonder how many ISF planners recommend anything bar an ISF? I bet none do! You cant tell me that an ISF is the best option for all clients that they see. And as for it being "free advice" im guessing that all the staff must work on a voluntary basis, otherwise someone's paying for it. If it hadn't caused so much damage in the professional adviser space, it would be laughable how the ISF's have managed to go full circle and be as conflicted as the industry they have so readily criticised.

  • Richard Moore on 5/12/2013 3:58:21 PM

    Perhaps David can explain why Industry Funds members "are typically younger" (than the rest of the universe of super fund members). I have always understood that the Baby Boom generation is the largest population demographic, and as they are only just retiring surely it follows they should be equally represented across all workforce and super membership sectors.
    Can David also explain who is actually paying, if the Industry Funds can give their members "free advice" and those very same funds are run "only to benefit and profit members." Somehow the numbers don't seem to add up. And a further explanation for the typical industry fund member that walks in my door with three to six different industry funds - would intra-fund advice from each of the funds produce a result other than recommend the others be consolidated to the particular fund that is giving the advice?

  • Had enough on 5/12/2013 3:54:46 PM

    When is a service fee not a commission? When it's an ISA one. Does it matter what it's called? If the cost is coming from the super fund, to fund staff providing financial advice the result is the same. Lets just get on with providing good quality advice and building the advice industry profile rather than bashing it all the time.

  • Mel on 5/12/2013 3:51:44 PM

    Is he living on the same planet as me? Pretty sure the legislation has made super commission free, and pretty sure Industry Super does NOT only profit its members!

  • John a on 5/12/2013 3:45:37 PM

    Dont you just love the below line from industry super funds ....
    "The one thing people know about industry super funds is it is only run to benefit and profits its members…They can have the confidence that all profits are going into their pockets for their retirement.”
    What a load of rubbish .... what about the non disclosed payments to unions, political parties, 'industry board members' (mates of mates) plus sponsoring football teams ... this list goes on. Do members really want their money to go there?

  • Daniel Boce on 5/12/2013 3:45:23 PM

    Can someone tell Whitely that the super funds created commissions, not planners. He should be saying, 'the retails funds should pay out the business loans that financial planners were forced to take out in order to buy a Financial Planning business off them. Then once this debt is cleared, the funds should remove the commission structure...he should then stop being such a decisive figure and produce a bit of lateral thought. As a man in his position should be doing a bit more then constantly throwing rocks at everyone.

  • James on 5/12/2013 3:45:16 PM

    It's a broken record.........Industry fund members get product advice from ISN not financial advice. At the end of the day advice has value and super is just a part of the whole equation. Whiteley (It seems) believes advice should be free and a Planners knowledge and experience is without value - he is entitled to his rather biased opinion but I must ask why are we still reading about "commissons" in a post FOFA environment?. Advisers aren't the problem David....product floggers such as yourself are.

  • JM on 5/12/2013 3:43:42 PM

    Uh Huh..So, who is paying for the "compare the pair" television promotions, and the salaries of the Super Fund employees & board members, if not the super fund members?..

  • Liam on 5/12/2013 3:40:54 PM

    Who pays the ISN Planners? Isn't it unfair that if you do not wish to have financial advice, your annual fees are subsidising the cost of those who do chose to use the ISN Planners?

    Would make sense for ISN to reduce their fees and only charge people for that advice when needed.

  • Des Tsagatos on 5/12/2013 3:39:16 PM

    David lives in fantasy land he believes that advice is counter productive, unnecessary and should not be paid for. Further he believes that the capital of an asset which benefits from advice should be so privileged as to not have to pay for the advice which helps it to grow. He also says that industry funds are there just for the members, my experience in dealing with industry funds is that industry funds consider their members interest as a human shield to protect their funds under management.

  • Concerned on 5/12/2013 3:37:01 PM

    Mr Whiteley is so confused. Charge ISN members an admin fee, but give them free advice. We all know what value is placed on free items. Look at his picture. Would you take advice from this man?

  • Tim - Perth on 5/12/2013 3:33:53 PM

    Oh Puleease! Can't they come up with anything new? I'll happily take no fees if I can just be provided with a high end six figure salary that doesn't have to be disclosed or justified, and I don't have to provide any service or advice, or fix up all the stuffups that Industry Funds perpetrate.
    Give me a break - the ISN is telling anyone who'll listen that we should be advising our clients to go into their funds but they're the only ones who should get paid? I'm over them and will happily bring out our 'shame file' on industry fund cockups to anyone who suggests they might be better off in one of them.

  • Mark on 5/12/2013 3:33:17 PM

    Yes, the industry super funds are only run for the profit of members, hmmmmm and the ALP and Union movement.

  • Merv Gay on 5/12/2013 3:26:48 PM

    Here's Whitely again fresh from La La Land...this time saying that people's confidence will increase as they receive more free advice from Industry Super Funds. So what he's saying is that the Industry funds are employing people to provide advice and not paying them. Perhaps the Unions should have a look at those funds - obviously employing "slave labour." Thought that went out with kids down mines David. Very shabby. Merv Gay

  • Tony on 5/12/2013 3:08:40 PM

    David "Free Advice" interesting concept I wonder how those financial planners providing that "free advice" are paid by ISN's - they obviously recieve a salary - therefore the advice isn't free!!!!

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions