Retail fund Colonial First State recorded a sharp increase in its total advice expenditure, which tripled to $300 million in the 12 months to June 2024. CFS said the increase was caused by advice fees, which related to individual members deciding to pay a financial adviser they have engaged by choice.
Across the entire industry, funds spent $1.7 billion on advice – including intrafund and financial planners – a 30 per cent rise on the year before.
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The regulator has been stepping up its scrutiny of super funds’ expenses bills and whether money is being spent in the best financial interests of members. APRA’s increased focus on expenditure has come as the Australian Securities and Investments Commission has also warned funds to lift their investment in technology to provide better member services.
In a letter to trustees in October, APRA warned it would prioritise scrutiny of discretionary spending on travel, entertainment and conferences and payments to organisations where the benefit to members is not immediately apparent.
“Members rely on you to invest their money prudently and to make investment decisions based on timely and reliable information on asset valuations,” Cole said at the forum.
Industry funds, predominantly Cbus, which draws members from the construction industry, poured almost $4 million into the disgraced CFMEU, which was placed into administration after the reporting period for the data.
Aware Super said its expenses were in the best financial interest of members, and its advertising and marketing expenditure were aimed at increasing the fund’s brand awareness and attracting new members.
“This growth [of members and funds under management] drives economies of scale which reduces operating costs per member, helps lower fees and delivers better services and outcomes to our members,” a spokesman said.
A Hostplus spokesman said its sponsorships of rugby, football and soccer clubs reflected its member base, which are “heavy consumers” of sports, adding the fund had strict governance arrangements to ensure all marketing spending was in the members’ best financial interests.
Colonial First State said its advice spend in 2024 was significantly higher on the previous year “due to payments that were made in that year relating to historical advice remediation”.
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Super Consumers Australia chief executive Xavier O’Halloran said the data showed funds’ expenditure on advice grew substantially.
“We want to make sure APRA is scrutinising the funds,” O’Halloran said. “We’d really expect to see, as the superannuation industry grows, it takes advantage of some of that scale and drive down costs where they can.”
Association of Superannuation Funds Australia chief executive Mary Delahunty said the growth in expenses partly reflected the significant resources funds had been pouring into their services. She pointed to higher regulatory costs and a 30 per cent rise in funds’ financial advice expenses.
“Financial advice from a superannuation fund is an important way of providing low-cost or no-cost critical information to account holders. Funds putting more money into this area of need is a good outcome.”
A spokesman for ART said it had been spending on marketing to help raise awareness for its relatively new brand, which emerged following a merger between QSuper and Sunsuper. He also noted the fund’s assets under management climbed 17 per cent in the 2024 financial year, while member accounts rose 6.7 per cent.
″Our research shows us that members who engage early with their super are more likely to have better retirement outcomes,” the spokesman said, adding there had been an almost 50 per cent increase in members logging into their super accounts last year.
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