It has been two years since the Fund launched its in-fund preservation, phased retirement and in-fund living annuity options for members.
We have seen a positive uptake from members and the numbers in these options are continually increasing. The feedback received from supporting intermediaries is also positive, with them recognising that these in-fund options provides members with a number of benefits – in particular the competitive pricing structure.
Although it is not a requirement for members to seek financial advice when taking up one of these options, in reality members still find the need to do so. One concern experienced with the current fee arrangement is that it does not cater for any initial consulting fees to advisers. There is an argument to be made that although the member remains in-fund, appropriate financial advice is still required to ensure that it is the best option for the member.
Following this feedback, the trustees have agreed to allow an initial advice fee of up to 0.50% (Excl. Vat) of AUM on the in-fund options. The ongoing advice fee has also been increased to allow a maximum advice fee of up to 0.75% p.a. (Excl. Vat) of AUM. This new fee arrangement allows room for the adviser to provide appropriate advice to our members and still receive a fair remuneration for services rendered. The overall fees paid by members remain very competitive when compared to similar retail product offerings where advice fees can be as high as 3% (Excl. Vat) of AUM for initial fees and 1% p.a. (Excl. Vat) of AUM for ongoing fees.
Advice fees to advisers are only payable upon written instruction by the member. The onus remains on the adviser to demonstrate to members the value their financial advice will add.