Members can request that an advice fee (Initial/One-Off and/or Ongoing) is paid to their financial adviser for superannuation advice services that meet the sole purpose test requirements of the Superannuation Industry (Supervision) Act 1993.
This is available for members who receive personal advice within an advice document, from financial advisers that are registered with Sunsuper.
Payment of an advice fee from a member’s account is at Sunsuper’s discretion. These FAQs set out some of the principles where Sunsuper may exercise the discretion to pay an advice fee from a member’s account.
Payment of advice fees is subject to the Adviser Registration Terms and Conditions.
Who receives the payment?
Advice fees are paid to the financial adviser’s Licensee (the entity which holds the AFSL, hereafter referred to as the Licensee). The Sunsuper Superannuation Fund will provide the Licensee with a RCTI (Recipient Created Tax Invoice) for the GST inclusive amount of the advice fee. If the Licensee does not hold an ABN, at Sunsuper’s discretion the advice fee may be paid to a related entity (i.e. a Trust owned by the Licensee) if Sunsuper has been adequately directed by the Licensee.
Advice fees for financial advisers are paid to the Licensee on the 16th of the month, or as soon as possible thereafter.
How Sunsuper pays the advice fee?
The Sunsuper Superannuation Fund pays the advice fee agreed by a member, as set out in an Advice fee request, by debiting the GST inclusive amount from the member’s Sunsuper account balance.
What advice services can be paid for?
The advice services provided must have a direct, reasonable, and transparent connection to the member’s continued interest in the Sunsuper Superannuation Fund.
The Sunsuper Trustees have agreed that the following advice strategies fall within the Sole Purpose Test:
- Sunsuper contributions (including as a result of cash flow analysis to determine ability to contribute);
- Sunsuper investment strategy;
- Super consolidation to Sunsuper;
- Sunsuper transition to retirement;
- Sunsuper pension account establishment and income payments;
- Retirement planning as it relates to Sunsuper accounts;
- Estate planning to the extent of beneficiary nomination (binding death benefit nomination or reversionary pension nomination) within Sunsuper accumulation and pension accounts;
- Centrelink planning in relation to Sunsuper accounts;
- Insurance held within Sunsuper; and
- Current and future fund benefits as they relate to disability or terminal illness claims and the resultant future income needs of the member.
Examples of advice that cannot be paid under this arrangement:
- Any product or financial advice that is not related to the member’s Sunsuper Superannuation Fund account;
- Transferring any amount of the member’s account/s to any superannuation fund other than Sunsuper;
- Withdrawing funds from the member/s account for a non-superannuation purpose;
- Wealth creation;
- Investment strategies outside super;
- External insurance advice, paid for by the Sunsuper member via personal cashflow or rollover from Sunsuper.
- Estate planning (except nomination of beneficiary within Sunsuper);
- Cash flow management applied to budgeting, debt management and other forms of non-super savings;
- Super contributions to a Fund that is not Sunsuper;
- Choice of fund for any Superannuation Fund that is not the member’s Sunsuper Superannuation account;
- Debt management;
- Self-Managed Super Funds;
- Salary packaging (except salary sacrifice to Sunsuper); and
- Transactional assistance where a personal advice document is not provided.
This is not an exhaustive list, but rather provides guidance around Sunsuper’s obligations under the sole purpose test.
It is the legal obligation of the financial adviser and their Licensee to ensure personal advice services have been provided for the advice fee charged.
Advice fees are required to be apportioned between advice services that can be paid under this arrangement and advice services that cannot be paid under this arrangement. The amount of the advice fee for which payment is claimed from Sunsuper must be reasonable and the financial adviser must be able to support the apportionment if Sunsuper request further information.
Sunsuper reserves the right to decline payment of an advice fee, including discontinuing further payments of an Ongoing Fee for any reason and without giving any reason. Sunsuper also reserves the right to obtain a refund of advice fees deducted from a member account where the advice does not meet Sunsuper’s Sole Purpose Test obligations.
Conditions and rules of advice fee payments
An Advice fee request applies to the member identified in the form. Where a new Advice fee request is submitted for any member and is accepted by Sunsuper, any Advice fee request previously submitted for that member is superseded and replaced.
Advice fees cannot be paid under an Advice fee request where a member holds only a defined benefit or lifetime pension.
If payment of an advice fee would result in a members’ account balance falling below $6,000, advice fees will continue to be debited if the member holds another Sunsuper account that has sufficient balance. Please note that if the member holds another Sunsuper account under a different member number, Sunsuper would require a new Advice fee request form to deduct the advice fee from the additional account.
If the member holds no other account (under the same member number) with sufficient balance to meet the $6,000 minimum, the advice fee will cease.
The following conditions need to be met immediately prior to the payment of any advice fee:
- The Advice fee requested must not exceed the caps noted within this document and/or published on the Sunsuper website, and as amended from time to time.
- All required details in the Advice fee request form are completed.
- The financial adviser is registered with Sunsuper.
- The financial adviser holds a valid third party authority for the relevant member.
- Sunsuper has a completed Licensee RCTI & Banking Agreement in place with the financial adviser’s Licensee.
- The financial adviser is listed as an active financial adviser on ASIC’s financial adviser register, and is a current authorised representative in respect of the Licensee specified on the Advice fee request form.
- Sunsuper has confirmed the validity of any details provided that are verifiable from Sunsuper’s records and ASIC records.
- Sunsuper may require further details to confirm correct apportionment of the fee for the advice services provided. We will notify the financial adviser for more information if this is the case.
- Sunsuper may request, and be provided a copy of the members’ advice document in relation to the advice fee request at anytime. For clarity, this may be prior to payment, throughout the course of payment (i.e. ongoing) or after the payment of an advice fee.
- An advice document has been provided to the Sunsuper member prior to submitting the Advice Fee Request.
- The adviser listed on the Advice fee request form must be the same as the servicing adviser listed on the Statement of Advice provided to the member.
Change of Licensee
Sunsuper will pay advice fees (Initial/One-Off and/or Ongoing) to the Licensee named on the Advice fee request forms, until we become aware that the financial adviser has changed Licensee.
On becoming aware that the financial adviser has changed Licensee, Sunsuper will not pay any further amounts until we also receive notice from the Licensee from which the member is still receiving advice services.
Refer to “Change of AFS Licensee” in the Adviser Registration Terms and Conditions for more information.
Will the member receive any tax benefits for the advice fee paid?
Members have the ability to make pre-tax contributions to their Sunsuper account to pay for their advice fees which may provide a tax benefit for the members.
What are the advice fee guidelines?
- Sunsuper will publish advice fee guidelines on the Advice Fee Request form, and update these FAQ’s as required and amended from time to time.
- The Sunsuper Advice fee request form will capture the scope of advice.
- If the member’s balance is below $50,000, Sunsuper will not automatically authorise the payment of an initial advice fee.
- The upper cap for initial fees is the lower of $4,400 or 2.2% (inclusive of GST) of the member’s current Sunsuper balance.
- Initial fees will be restricted by only being payable once every 3 years.
- Sunsuper recognises instances where the initial fee requested will fall outside the above levels (i.e on balances under $50,000, or higher than $4,400 inclusive of GST) but still meet the Sole Purpose Test and be in the member’s best interests. In these instances, where the client’s advice document is provided to Sunsuper, a one off approval can be sought by the adviser and be determined in accordance with the advice fee exception guidelines.
- Sunsuper believes that fees above 2.2% (inclusive of GST) of a member’s balance create an issue of balance erosion. Sunsuper will not approve exceptions of greater than 2.2% (inclusive of GST) of a member’s account balance.
- For account balances over $200,000, Sunsuper will accept applications for approval as an exception, provided the fee does not exceed 2.2% (inclusive of GST) of the account balance and is lower than $6,600. Fees outside these limits will not be approved as an exception.
- To apply for an exception, Sunsuper will require a copy of the advice document, such as the Statement of Advice (SoA), to ensure Sunsuper continues to meet its Trustee obligations including the application of the Sole Purpose Test.
- Sunsuper will not pay ongoing advice fees for members with a balance below $50,000.
- The upper cap for ongoing fees is the lower of $6,600 p.a. or 1.1% p.a. (inclusive of GST) of the member’s current Sunsuper balance, and paid monthly for a maximum of 12 months.
- Sunsuper will not consider exceptions to the ongoing fee caps.
Please note Sunsuper are unable to pay ongoing advice fees retrospectively.
Requests outside the above initial fee guidelines:
- Advisers will need to provide a copy of the client’s Statement of Advice (SoA) with their application for an exception request.
- Exception approvals for initial fees on balances below $50,000 are capped at a maximum of 2.2% (inclusive of GST) of the member’s current Sunsuper balance.
- Exception approvals for initial fees are not available for balances between $50,000 and $200,000.
- Approval will need to be sought if a client needs further initial advice within 3 years of a previous initial fee request. This will require an application and approval.
- Approval will be subject to a material change in the member’s circumstances and the provision of the member’s advice document for review.
- A material change in the member’s circumstances may include, but is not limited to the following:
- Death of a spouse; or
- Substantial inheritance.
- If a member has an additional initial fee request in a three year period but with a different financial adviser to the previous initial fee, the material change rule is still applicable.
- If approval is sought for an initial advice fee on a balance of under $50,000, $6,000 must remain in the member’s account following the fee deduction.
Sunsuper has implemented a periodic review process for advice fee requests. From time to time, we will require copies of documents, such as, the Statement of Advice, Record of Advice and/or Ongoing Service Agreements for review.
In the event Sunsuper is not provided a copy of the requested advice document, Sunsuper may be required to request a refund of the advice fee paid.