Financial advice for $500: CFS inks deal with Viridian to offer low-cost advice

Members of the retail super fund will have access to Viridian advisers for personal advice at a much lower cost.

Colonial First State Superannuation CEO Kelly Power

Colonial First State has signed a deal with advice house Viridian Advisory to give its members access to low-cost personal financial advice.

CFS FirstChoice superannuation, pension and investment members will have access to Viridian’s 120-strong adviser network to get advice on issues such as investments, debt, super, pensions, retirement planning and Centrelink, for as little as $500.

It comes as funds move to get ahead of looming reforms which promise to shake up the advice and superannuation industries.

CFS FirstChoice members will pay $500 for each “modular block” of advice they receive, with any combination of blocks capped at $3000.

Full spectrum personal financial advice typically costs about $4000 upfront, and a further $5000 per year on average, with fees rising steadily in recent years amid rising costs for advisers and a shortage of professionals in the market.

The offering was geared towards those with one-off advice needs, or those looking for advice on a more ad hoc basis, CFS Super chief executive Kelly Power said.

“This is about helping members who want to talk about their retirement planning, who have retirement needs, but don’t necessarily require full financial advice. It’s about giving them access to that in an affordable way,” Ms Power told The Australian.

“The reality is that we have a large member base that cannot afford comprehensive advice. By introducing this new model, we are enabling our members to access affordable advice suited to their specific needs at a particular point in time,” Ms Power added.

“It’s still personal advice, but it’s scoped advice, topic by topic,” Ms Power said. With the average CFS member now in their mid-50s, the fund gets up to 4000 calls per month from members wanting advice as they move closer to retirement. A little under half its members are currently unadvised.

The Viridian tie-up comes after CFS in August launched a low-cost ($88) digital advice tool to meet very basic advice needs. At the other end of its advice offerings, the fund has agreements in place with independent financial advisers for members needing comprehensive advice.

The new arrangement plugged a gap in the middle for members who needed more than basic advice but not necessarily full-service, Ms Power said.

“We looked at a range of different options — we don’t have an AFSL, so we don’t provide advice ourselves. And we decided to extend our partnership model to offer this more affordable advice arrangement,” Ms Power said.

The super fund is also considering expanding the scoped advice approach to other licensees as demand for advice continues to grow among its members.

Like CFS, a number of funds have introduced low-cost digital advice tools to meet members’ basic advice needs. For more complex advice, most funds link their members with external financial advisers, while a minority, including the $140bn UniSuper, directly employ financial ­advisers.

The moves to give members access to some form of advice comes as the government looks to push ahead with its Delivering Better Financial Outcomes (DBFO) package in the biggest shake-up to the advice industry in a decade.

The first tranche of the DBFO package, which dealt with minor changes, including streamlining fee consent and clarifying the rules for deducting advice fees from super fund accounts, came into effect in July.

The second tranche, which the government says it wants to legislate before the 2025 election, tackles the bigger issues holding back advice, including repealing the requirement for complex (and costly) statements of advice, and expanding who can provide personal financial advice, to include super funds and other institutions.

Allowing super funds to give intra-fund advice, and to take into account a member’s broader financial situation, including household income and access to the age pension, is a crucial aspect of the second tranche reforms.

This second tranche will also introduce ‘‘nudges’’ so super funds can increase engagement with members at key decision points, including in the lead up to retirement.