Financial planning is really about… consolidating your super

Consolidating super is almost always a good idea. Please remember, though, when advising clients to do so, that you need to meet the rules for recommending the disposal of a financial product. These rules are not onerous, and they essentially boil down to the adviser being able to show that disposing of the financial product was in the client’s best interests. Reducing the management fees that apply to multiple funds is typically in the client’s best interests.

When recommending that a super fund be closed, please take note of any and all default insurances that would be lost due to the change. Sometimes it can be worth leaving a small amount in various funds to finance multiple sets of default insurances.

That done, all that remains is for the advice to be communicated…

Adviser tip – here is how you might suggest it

Can you see these paragraphs in your next SOA:

Your super benefits are currently divided between a number of different super funds. We have compared these funds, and this comparison demonstrates that the funds are comparable in terms of management strategy, costs and likely future performance.

Each of the funds charges a management fee, a large portion of which is fixed for each fund. This means that, if you were to combine some or all of your super benefits into one single fund, the overall cost of managing your benefits will be reduced.

For this reason, we recommend that you close the ______ fund and roll your benefits into the ______.

The Dover Group