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Fee caps guidance

21 February 2019

We hope the following Q&As clarify the reasons for the new caps and the process to implement them.

Why new advice fee caps?

We are introducing financial advice fee caps in an effort to ensure that financial advice remains affordable and sustainable for our members, and in their best interests.

What are the new advice fee caps?

Under the caps, initial fees will be limited to a flat dollar-based fee which is the lower of $4,000  or 2% of the member's balance (excluding GST and only payable once every three years except in the instance of a significant life event requiring a new SoA). The cap for ongoing fees will be limited to a flat dollar-based fee which is the lower of $6,000 or 1% of the member's balance.

When will the new caps take effect?

Sunday 24 February for all new fee requests. Friday 8 March will be the last day for processing advice fees using the existing fee guidelines. If the advice fee is subject to a rollover in, then these must be funded no later than Wednesday 6 March. See timetable below for more detail.  

Why is Sunsuper making this change?

The Financial Services Royal Commission (FSRC) has reinforced the real value that financial advisers can add to our members’ super savings and retirement lifestyle. In light of the FSRC’s findings, the Sunsuper trustee has reviewed what it means to act in the best interest of our members under superannuation law. This is now reflected in the new advice fee model.  

What are the obligations of the Sunsuper trustee in managing advice fee requests?

The Sunsuper trustee’s obligation to perform its duties and exercise its powers in the best interests of members is prescribed in the Superannuation Industry (Supervision) Act 1993 (SIS Act). The SIS Act requires the trustee to determine whether advice provided meets the sole purpose test before approving payment of an advice fee from the member’s Sunsuper account.  In meeting this fiduciary obligation, the Sunsuper trustee considers a range of issues, including the scope of advice and whether a member’s balance is likely to be unnecessarily eroded by the advice fees. The best interests consideration under superannuation law is broadly expressed and not described in the same detailed manner as for the best interests obligations that apply to financial advice services.

What areas of advice does the Sunsuper trustee believe meet the sole purpose test to enable a fee to be deducted?

The Sunsuper trustee has determined that advice in regards to the following areas of a member’s Sunsuper account meet the sole purpose test: 
  • Contributions to Sunsuper, including as a result of cash flow analysis to determine ability to contribute
  • Investment strategy within the Sunsuper account,
  • Consolidation into the Sunsuper account,
  • Sunsuper Transition to Retirement Income Account establishment and income payments, 
  • Sunsuper Income Account establishment and income payments,
  • Retirement planning as it relates to Sunsuper accounts,
  • Estate planning to the extent of beneficiary nomination within Sunsuper Accumulation and Income accounts,
  • Insurance within Sunsuper,
  • Current and future Sunsuper account benefits as they relate to disability or terminal illness claims and the resultant future income needs of the member.
  • What happens to ongoing fee arrangements already in place?

    Sunsuper’s new advice fee caps will not impact any ongoing advice fee payment arrangements currently in place. That is, ongoing arrangements will continue for the duration of the existing agreement. At time of review, any new advice fee requests will need to meet Sunsuper’s updated advice fee guidelines.

    When and why would Sunsuper move to 12-month ongoing advice fee arrangements?

    We have noted Recommendation 2.1 in the FSRC final report for an annual renewal arrangement for ongoing advice fee arrangements. We will continue to monitor legislative changes in relation to the term of ongoing advice fee arrangements and issue a communication when a date can be confirmed. 

    What about Advice Fee Request forms that Sunsuper has received by Friday 22 February?

    If we receive an Advice Fee Request form on or before 5.00pm AEST on Friday 22 February 2019, the fee request will be processed under Sunsuper’s current advice fee guidelines. Note: If the receipt of additional funds (i.e. rollover or contribution) is required to debit the advice fee from the member’s account, that rollover must be received and credited to the member account by 5.00pm AEST on Wednesday 6 March 2018. If the necessary additional funds are not received by this date, the fee request will be processed under the new advice fee caps.

    What about members with balances under $50k?

    We will not automatically authorise the payment of an initial/one-off advice fee for members with a balance below $50,000. We may make exception approvals for initial/one-off fees on balances below $50,000. These will be capped at a maximum of 2% (excluding GST) of the member’s current Sunsuper balance. Advisers will need to provide a copy of the client’s Statement of Advice with their application for an exception to be approved. We will not approve the payment of ongoing advice fees for members with a balance below $50,000.

    What is the timetable for full implementation of the new advice fee caps? 

    Friday 22 February (5:00pm AEST): Final date for advisers to lodge fee requests to be processed under Sunsuper’s existing advice fee guidelines. We will process these requests over the following 2 weeks. Where the request is pending additional funds prior to the advice fee payment being made (i.e. a rollover or contribution into Sunsuper), we will require these funds to be in the members Sunsuper account by COB Wednesday 6 March.
  • Sunday 24 February: New advice fee model launched for all new fee requests.
  • Wednesday 6 March (5:00pm AEST): Final date for any additional funds to be credited to the member’s Sunsuper account to enable an advice fee to be processed by Friday 8 March using the exiting fee guidelines.
  • Friday 8 March (5:00pm AEST): Last day for processing of advice fees using the old fee guidelines.
  • Monday 11 March: Any fee requests using the old fee guidelines still outstanding will be re-assessed using the new advice fee model. We will notify all advisers with outstanding fees at this point.
  • What if advisers still have questions about the new fee caps? 

    If you have any remaining questions about the new fee caps, please speak with your local Sunsuper Business Development Manager:

    Mark Stubbings: Manager, Retail Distribution - 0408 727 366 .
    Lauren Matthews: VIC Business Development Manager, 0438 024 781
    Gerard Bailey: NSW Business Development Manager, 0417 461 056
    Charles Black: QLD Business Development Manager, 0448 219 129
    William Burke: QLD Business Development Manager, 0447 928 460
    Alessandra Bertora: QLD Business Development Manager, 0418149682
    Glen McKimmie: WA, NSW, NQ & TAS Business Development Specialist, 0417 461 426
    Ryan Murphy: VIC, SA & NT Business Development Specialist, 0419 295 838