IN THIS EDITION - May 2019
A word from Cath
This year IFS celebrates 25 years since its inception. IFS’s success has been based on the simple premise that the aggregated skill, scale and resources of the industry funds can be harnessed for the advantage of fund members.
During the past 25 years we have developed deep expertise in delivering a wide range of services for our clients and shareholders.
- IFS gave birth to IFM Investors, Frontier and Industry Super Australia. We established the first collectively owned pension – IRIS, and established products for fund members to invest outside super.
- We pioneered commission free financial advice – a model that was vindicated in the recent Royal Commission.
- We developed bespoke insurance products for super fund trustees and their members.
- We have re-united hundreds of thousands of members with their lost super and continue to offer the only cross fund matching programme for smaller inactive accounts.
- We have collected unpaid super on behalf of millions of ordinary Australians.
On any measure, IFS stands proud as part of the growth and success of the industry super fund sector. Of course, not all strategic alliances succeed. International research suggests that the drivers of success are clarity of purpose and roles amongst the alliance partners, and trust between the participants. That’s why IFS works every day to ensure that we are known for our integrity, and our ability to partner with our funds as they grow and change.
Our 25th year is not only a time for celebration and reflection, it’s also a time to re-commit to our strategic purpose – to ensure there is a deep alignment with our client’s and shareholders values and goals, a sense of being mutually invested in each other’s success, and a single-minded focus on ordinary working Australians who are the members we serve.
Finally, it’s a time to pay tribute to the people who make up the IFS family – our past and current directors and our hardworking and talented staff who have diligently and faithfully implemented the vision of the founders and deserve the credit for much of IFS’ success.
On that note, I’m delighted to congratulate Natalie Lister, Finance Manager here at IFS for being selected by Women In Super (WIS) and Monash Business School for the ‘Your Leadership Voice Scholarship’ at Monash University Business School. You can read more about Natalie’s experience and this wonderful opportunity.
I hope you enjoy this edition of IFS Update. As usual your feedback or questions are welcome.
IFS Chief Executive
Celebrating 25 years supporting industry fund members
25 years ago, a group of people set up IFS in La Trobe Street, Melbourne. They came together with a mission to be different.
At that time the finance sector was focused on what it could get from customers. Instead, they wanted to see what they could do for customers - industry fund members. That ethos still sits at the heart of IFS today.
A force in driving change and setting the standard for super
In our early years, we incubated successful organisations like IFM Investors, Frontier and ISA.
We pioneered new products and broke new ground championing commission-free financial advice. We also created AUSfund to protect inactive small accounts from being run down, and we put resources into recovering unpaid super. These actions have all helped change the way people think about industry super.
Aligned to and valued by industry funds
IFS started at a time when industry funds had limited scale, limited skills, and limited cash. By providing services collectively funds could support their members and keep fees low.
Today many funds now have their own internal capabilities, so we focus where we have the greatest impact.
1. Reuniting members with their super
The problem of multiple unintended super accounts often results in lost accounts and erosion of super. Through AUSfund we’re reuniting members with their lost and inactive super, preventing erosion and increasing active account balances.
2. Recovering unpaid super
We’re actively working with funds, employers and the ATO to ensure that ordinary working people get the super they’re entitled to.
3. Delivering ethical advice
The Royal Commission has put the spotlight on financial advice. IFS advisers have always strived to provide advice that members can trust. With the new FASEA regime, we’re working closely with industry funds to ensure licensees and advisers are FASEA ready.
4. Developing solutions to complement super
Through ifsinvest we’re giving industry fund members flexibility and control in managing their non-super savings, so they stay in good hands. ifsinvest products are designed around the same low-cost model that underpins industry super.
We’re also delivering other value-added services for funds that need support, including insurance brokerage and consulting to ensure best outcomes for members.
“We’re proud to have played our part helping working Australians save for a more secure future.”
Our success over 25 years is a product of the vision, dedication and efforts of many amazing people and the support of our partners.
The world is changing all the time. The IFS of 25 years ago looked very different to the IFS today, and we know that the IFS of the future will look different again. What won’t change is our unwavering focus on making our industry fund partners and their members always front and centre of everything we do.
The new standards for financial advisers impact industry super
The FASEA regime came into play in January this year to raise the education, training and ethical standards of financial advisers. As well as impacting advisers, FASEA has implications for licensees and funds.
Much of the focus has been on the educational standards, but it is the ethical standards, and the regimes to enforce them, that has potential to revolutionise advice. These will be keenly felt by those who see advice as a means of product distribution, but they also affect those who offer advice as a service to improve members’ financial futures.
The ethical standards specifically target individual advisers, holding them to a best interest duty to their clients. From April 2020, all advisers will be monitored. An adviser who doesn’t act in the spirit of a fiduciary will not be compliant, even if they meet their obligations under the Corporations Act. Advisers who don’t meet the standards may find they are no longer able to practise.
The potential impacts for industry super sit across three areas.
- As the client’s fiduciary, advisers are required to recommend products most suited to their client’s needs and not just a product offered by their fund. This reinforces the practice whereby in-house advisers may need to make recommendations away from their fund.
- The ethical standards have been designed for complex advice and don’t contemplate intrafund and limited advice. This will put added pressure on funds’ ability to offer high quality, cost effective advice to their members.
- While the focus is on the individual adviser, any breach will be registered by ASIC and publicly available. So, a breach by an adviser can have a brand impact on licensees and funds including reputational damage.
To operate in this new environment, funds need a good licensee with the right infrastructure. Culture is critical as is having strong risk management, and the tools, systems and processes needed to run advice.
Even though there is still some uncertainty as to how some parts of the standards will play out, it is essential to act now and there a number of steps that funds need to take.
Contact Chris Joiner, Executive Manager Advice Solutions on 03 9657 4305 or email@example.com.
What's new in AUSfund
There’s been a lot going on in super this year and AUSfund is no exception with three key developments since our last newsletter.
1. ERF merger
The eligible rollover fund sector shrank from 8 funds to 7 in April with the successful transfer of Aon ERF into AUSfund. Just under 20,000 members were transferred and these former Aon ERF members are now significantly better off due to the differences in fees and performance between the two funds.
2. Cross Fund Matching
AUSfund along with participating industry funds is getting a jump start on the ATO, ahead of their October deadline, with a massive account clean-up through cross fund matching.
Twelve industry funds have now signed up to participate in one or both of two large cross fund matching exercises that will run during the remainder of the year. The first kicks off next month. We're expecting up to half a million members to be transferred into AUSfund to be washed through the program during the next 6 weeks, and a similar number in October after the new law takes effect.
We are currently in the process of working through implementation with participating funds including the member journey and associated communications. AUSfund is already seeing an upswing in enquiries as a result of participating funds communicating with their members about how the laws will affect them and to advise them of the fund’s efforts to consolidate their accounts.
3. Fee reductions
In April, AUSfund also reduced its fees to short-term members by changing the flat fee to a pro-rata fee. This means that members who claim their funds quickly after being transferred into AUSfund, or whose account is successfully cross fund matched with an active account will only be charged for the number of days they are in the fund.
All the accounts currently being onboarded for the cross fund matching exercise commencing in June will benefit from this change to fees.
Contact Kate Brown, Product Manager, AUSfund at firstname.lastname@example.org
It’s been an exciting time for IFS Finance Manager Natalie Lister. Natalie has won the first Women in Super VIC and Monash Business School "Your Leadership Voice" scholarship valued at $10,000.
“I was absolutely thrilled, shocked and nervous at the same time.” Listening to Natalie, even days after she received the good news, you could still hear the excitement in her voice. And who wouldn’t be excited about being part of a standout program for women. The intense 5-month course is designed to help women step up as leaders with training and support to build skills in critical areas.
Natalie joined IFS after working for a large accounting firm straight from university and has been part of our team for over 15 years. She’s a busy full-time working mum and step-mum to six children. While adding value and mentoring other women in the industry were strong drivers in applying for the scholarship, Natalie was also personally motivated.
“I’m doing it for my children as well as myself. It’s important to me that my children - especially my daughters - are financially independent. It shows my children how my hard work and dedication has paid off and been recognised. Winning the scholarship makes me so proud and proves how far I have come."
Natalie receives her scholarship from WIS.
From left to right: Sandra Buckley, CEO of Women in Super; Katie Frazer, Deputy Chair of the VIC Women in Super Committee; Natalie Lister, IFS; and Mel Birks, Chair of VIC Women in Super Committee.
(Image source: WIS)
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