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Podcast Transcript

Episode 101, Season 1

How they provide scaled Intrafund advice to super members with Duncan McPherson


Duncan McPherson (00:00):

I worry about with code of ethics, the Royal Commission, and how we make advice, keep it accessible. We see that in the UK, we saw the, certainly access to advice diminished. That would be a bad thing, especially given the size and importance of the Australian superannuation.

Fraser Jack (00:23):

Hello and welcome to the Goals Based Advice Podcast, where I have conversations with pioneers of the new world of financial advice. I’m your host, Fraser Jack, I want to thank you so much for tuning in today. I’d also like to thank you our supporting partner, Advice Intelligence, for powering this podcast. If you’re enjoying this podcast, then please help me spread the word by introducing it to your colleagues.

Fraser Jack (00:44):

In this episode, I chat with the CEO of Link Advice, Duncan McPherson. Now, Link Advice is a major provider of the intra-fund advice for many and let’s face it, most of the industry supper based super funds. They provide digital intra-fund advice, as well as telephone based scale advice to their members, and Duncan explains just how they operate and where they fit into the profession as a whole, and discussed how they would work alongside the planning community.

Fraser Jack (01:13):

We also chatted about the need for both ongoing relationship advice, as well as transactional advice for different clients at different stages of their lives. We also chat about how the FASEA code of conduct affects their business and ideas around general advice and behavioral finance. He also talked about the advisor platform they’re releasing shortly, and if you’re interested in discovering just how a highly scaled advice practice runs, then this episode is a must. Hitting play now on my chat with Duncan McPherson.

Fraser Jack (01:49):

Welcome to the show Duncan.

Duncan McPherson (01:50):

Thanks Fraser. Thanks for inviting me.

Fraser Jack (01:51):

Now tell us about your business.

Duncan McPherson (01:54):

Our business, Link Advice. We’re part of the Link Group companies. It’s interesting when I say that, a lot of people I mention are owned by Link Group actually don’t know who Link Group are. Link is probably known as a shareholder registry but also an administrator superannuation fund. We work very closely with corporate and industry superannuation funds. Link administers funds like Aussie Super, Cbus, HESTA, REST, and a lot of others. Our advice business supports that. We’re quite a diverse advice business.

Duncan McPherson (02:30):

We have a digital advice, which we’ve built. I’ve got some developers in my team which provides digital intra-fund advice to members of superannuation funds. We run a telephone advice business where superannuation funds will outsource their personal intra-fund advice to us and we work very closely with the contact centers to be able to help people with advice needs.

Duncan McPherson (02:58):

We’ve got a team of around about 18 there today. That’s growing rapidly. We’ve also got a licensee services business, which is your traditional licensee model. So, a bit like in the broader marketplace where you license advisors. We only license employed advisors of corporate industry superannuation funds. And we’re just building a new service proposition which we’re calling the Advisor Platform, and what we’re doing is we’re working with a number of funds because the appetite for them to work with advisors is very high.

Duncan McPherson (03:37):

Advisors need access to information, which we’ve got being the Link Group, but funds are very cautious at the moment with APRA and ASIC around sole purpose test, and their duty of care around the quality of advice. So we’re building a service proposition that enables advisors to access that data, but also provide a compliance service to the trustees of the funds to be able to help meet their obligations under APRA and ASIC for best interest and sole purpose test. That’s the other thing we’re working on.

Fraser Jack (04:10):

Oh, is that all?

Duncan McPherson (04:11):

Yeah, look, it’s a great little business. It’s a great little ... It’s been around for quite some time. It started off in ‘94, a group called Money Solutions, and that was more education. And then we started giving intra-fund advice not long after it was introduced in the early 2000s. Yeah, it’s a great little business. It’s a little bit different to the traditional, but a nice little business.

Fraser Jack (04:32):

Yeah, fair enough. How long have you been there?

Duncan McPherson (04:36):

Well, I was running a business called Advisor Network which was operating in the same network, and we had digital and licensee services, and Link acquired us about two and a half years ago. Including that probably four or five years. I was with MLC before that, so probably just over four and a half years in the role. Whilst it has changed in that period of time.

Fraser Jack (05:00):

How did you fall into this industry like everyone else does?

Duncan McPherson (05:05):

It’s interesting. I’m a Perth boy so I started off with GIO Financial Planning, as an advisor. I remember it wasn’t FSR, I forgot it was, but it’s when they first introduced customer advice records. You didn’t have to do a financial plan, they came after, and then came [inaudible 00:05:27] advice, so they were a four page triple [inaudible 00:05:32] document you hand filled out.

Duncan McPherson (05:35):

I came in just with that, and also the introduction of education standards, so had to do DFP one to eight. Started off, I think I said ‘94, so I was 24. It was a while ago now. Moved through into management roles, spent a bit of time in South Australia with GIO, but trouble seemed to follow me, so GIO collapsed, we got bought out by AMP. AMP had some governance issues back in the early 2000s with the change of CEO, and then moved to Garvan MLC. Spent probably 12 years at Garvan MLC and I ran the Perth licensee services area. So, Garvan, Apogee, Pembroke, helping the advisors with their business.

Fraser Jack (06:27):

So you’ve been working with advisors a long time.

Duncan McPherson (06:29):

Yeah, been a long time. It was only until I moved to Sydney five and a half years ago, and then left MLC after 12 months that I got into the new venture. Yeah, my heartland has always been in the advisor market, and learned a lot of what I believe in through doing that and being involved with those advisors.

Fraser Jack (06:52):

Yeah, great. Now, you mentioned the group before, team of 18. Is that mostly telephone based advisors?

Duncan McPherson (07:00):

It is all telephone. It’s all telephone. Intra-fund and scaled advice.

Fraser Jack (07:04):

Yep. Obviously intra-fund’s a bit of a hot topic at the moment. There’s a lot of stuff coming out with a report, I think ASIC just recently released a report talking about intra-fund advice. Let’s go back a step for those people that aren’t really across intra-fund advice. How does it work and where does it fit in the market?

Duncan McPherson (07:20):

Well, it was introduced by government so there was a report in 2010 that ASIC did, based upon investment trends research. It basically said that Australians actually would prefer piece by piece advice more than holistic advice. Out of that, over the years was born intra-fund advice. And basically intra-fund advice is the ability to give advice on the superannuation fund by the superannuation fund, paid for by the superannuation fund.

Duncan McPherson (07:51):

Types of advice you can give are the investment choice within a superannuation fund, insurance within the superannuation fund, and contributions within the superannuation fund. It’s relatively uncomplicated advice and I’d say judging by what I read and conversations I have, it’s largely misunderstood. It’s a really interesting piece of advice, and the people we speak to are ... It’s really great. I listen to our advisors on the phone and they operate under exactly the same regulatory requirements as someone giving comprehensive self-managed super fund advice.

Duncan McPherson (08:36):

They are all doing their, if they haven’t already met the FASEA education standards, they will all be doing it. They’re all doing the exam, they’re all abiding by the code of ethics when it comes into play. So, and their next job will be with a, probably a self-employed advisor business.

Duncan McPherson (08:59):

That’s something that really excites me, is I think we’re going to be able to bring a lot of young people into the industry. We’ve got some guys in their 20s who are just brilliant at what they do. What I love about what they do is their first appointment they do in a day, their seventh appointment they do in a day has to be the same as their first. I listen to them on the phone.

Duncan McPherson (09:24):

The person on the phone would not know that they’ve been having a long day and they do a fabulous job of breaking down complex concepts into something really simple for someone to understand.

Fraser Jack (09:37):

This is a really interesting concept, isn’t it? As you said, they’re fully licensed planners, they’re just doing a very specific niche job in that the people that are ringing up and speaking and generally they’re inbound calls, aren’t they?

Duncan McPherson (09:52):

No, we actually have a ... Because we’re with contact center, the contact center will identify whether someone has a personal advice need. And then they’ll book it in our diary, so they’re all outbound, and we call them, it’s all ... It’s very well structured. We also, because inevitably we come across situations where in the best interests of the member, they should talk to someone else who can provide broader advice. We make those introductions, and make appointments in other advisor’s diaries and pass the information on where we can. They are all outbound.

Fraser Jack (10:31):

Okay, so the first part if scoping then, scoping to say, “Is it just advice on the fund that you’ve [inaudible 00:10:38] or do you want to-

Duncan McPherson (10:38):

Yes, that’s right.

Fraser Jack (10:39):

Yeah, and then so you refer that out if it’s not-

Duncan McPherson (10:42):


Fraser Jack (10:42):

Yeah, great.

Duncan McPherson (10:43):

Absolutely. We probably find 7-10% of the calls we make will get referred to an advisor who can provide advice on a broader range of topics. It’s a really interesting mix of people. They are all members of superannuation funds. We just had a look at some numbers, the typical person is a 59 year old male with about $350,000 in super.

Duncan McPherson (11:14):

But it’s a whole range of people, and from young to old, to low balances, to we’ve had people with million dollar plus and we’ve gone, “No, no, no. You should go talk to an advisor.” “No, I just want you to help me with this.” It’s a very fine line for us, and compliance is very important to us. Not only because I’m [inaudible 00:11:40] and responsible manager, but I want to provide a safe environment for my advisors and the member as well.

Duncan McPherson (11:46):

We record all the conversations and do compliance checks, plus the statements of advice have to go out, so it ratifies what we talk about. It’s quite a mature business model in that respect.

Fraser Jack (12:00):

Yeah. Now, I’m really interested, because this is a fairly non-understood business model in most advisor’s worlds, where they’re operating, and a heavy relationship style business. Your business is more transactional in nature.

Duncan McPherson (12:17):

Yeah, absolutely. Point in time, because by definition of intra-fund advice, it cannot be ongoing.

Fraser Jack (12:21):

Yep, and so a lot of planners just don’t understand how you can then deliver such advice at the price range and all those sort of things, because I mean, essentially there’s a lot of cost associated for most financial advisors to provide advice. You’re providing advice intra-fund, these decisions and we sort of spoke about this before, but a lot of the clients that you’re seeing are clients that aren’t yet ready for full relationship advice.

Duncan McPherson (12:50):

Oh, absolutely. I remember someone saying to me, “I can’t believe it that that person didn’t understand what a rate of return was. What a ment.” I said to that person, “I don’t believe that you don’t believe that.” We’re talking to people who we’ve got to remember that money is a highly anxious topic for people. There’s an interesting piece of research called Financial Planner Anxiety, and it’s not about financial planners’ anxiety, it’s the anxiety of people who are going to see financial planners.

Duncan McPherson (13:25):

It’s written by a professor out of UWA, Professor Gerrans, and in collaboration with someone out of I think it’s Cleveland. They talk about people’s reluctance to fully disclose their circumstances for fear of judgment. They kind of, they’re not always honest with you, and it’s not because they’re dishonest people. It’s because they are intimidated, they are very anxious by that engagement.

Duncan McPherson (13:54):

That’s why I think the digital advice and the telephone advice is such an important part on the development of financial planning, because people can go into digital advice, it’s intra-fund, it’s pretty robust, like actuaries are all over it, and it’s got a good algorithm, but it allows them to play around a little bit. They can get advice, they can get a Statement of Advice off that, they can then go off and implement it with their fund.

Duncan McPherson (14:20):

But if they don’t understand it, they can turn the computer off and run off, or if they’re on the phone and they’re not following it or getting intimated, they can hang the phone up. I think it’s a really important medium for us to give people that opportunity to talk to someone, get advice in a very uncomplicated way, and if we do our job properly, those people will do more with their superannuation. In doing that, they’ll gain confidence and then we have high aspirations that a lot of those people will then go and seek further advice on a broader range of topics.

Duncan McPherson (15:03):

We’ve helped build that competence and confidence in people to engage further in the advice process. We’re strong advocates of it.

Fraser Jack (15:14):

Yeah, I can definitely relate to it, and I think everybody out there can relate to the client coming in and sort of saying some things that they think that maybe you want to hear also, and just on the surface type stuff, until you really dig down into that relationship with them. But that’s a really interesting point. It’s about having an experience in a safe place, where they can get a small piece of advice or a transactional piece of advice, go away and ... Now, do they go back to their fund to do the transactions?

Duncan McPherson (15:45):


Fraser Jack (15:45):

You don’t take care of any of that?

Duncan McPherson (15:47):

No, no, no. But what’s really interesting, what’s really interesting with this, this is a hypothesis because I haven’t got the, haven’t been able to do the research to validate it. But we know the implications of the advice we give. What I mean by that is we can follow, because it’s a fund, it’s self-contained, we can see what members’ behavior is after advice.

Duncan McPherson (16:13):

What’s really interesting is the engagement levels post-advice. They might get investment choice advice, which is a large part of what we do. But then we’ll see them making contributions. We’ll see them consolidate their super. We haven’t even, it’s intra-fund, we don’t talk about super consolidation. But the hypothesis is that they seek a bit of advice, we provide them with simple terms, move from investment option A to investment option B, because of your risk profile says this.

Duncan McPherson (16:49):

Then we see the other activities, so they’ve gained a little bit of confidence and trust and they then go and do other things. We see that a lot with members that join a fund. There’s quite a noticeable trend where they’ll join the fund. Within the first three months, they’ll then consolidate their super into the fund, and then the next month we’ll get a call and then there’ll be an advice discussion.

Duncan McPherson (17:19):

And then we’ll talk to them about whatever their need is, whether it be investment choice or we’ll try and understand their needs and get them to the right spot. We think there’s a real correlation to further engagement and that’s great, because if they make more contributions, that’s great for them. They will make the most out of what they can.

Fraser Jack (17:43):

Yeah, fantastic. That’s a really interesting point, where I guess what I was hearing you say then was really that member then takes control, and starts to take ownership in their super.

Duncan McPherson (17:53):

There’s a fair amount of research around this, that if we can help people make, do something, they then reach a level of confidence and trust with that provider and they’ll do more. Look, I’m not a researcher, but there seems to be evidence that people will do that. I reckon that’s great. You think about, “Wow, if we can just help people do that,” and then make it really easy for them. Because we know how important superannuation is.

Fraser Jack (18:27):

A lot of accumulation style clients, like younger years?

Duncan McPherson (18:32):

No. It’s actually, our main people are 50+. Most of our people are 50+. We do some scaled advice in retirement. That does get a little bit more difficult, because then we’re starting to deal with more complex issues and super consolidation and other things. That does become more difficult, but the other interesting argument that floats around this topic is around general advice, which is at the forefront of a lot of people’s minds, but this all has a part to play. We certainly, we don’t try to leave people without providing them some sort of service.

Duncan McPherson (19:19):

If we have to provide them with a piece of structured general advice that then we fulfill it with further information for them to go and do more research on, we think that’s a really good alternative in the event that it becomes too complex where we position going to get advice ... Some people just don’t want to go get advice. As much as we might say, “No, you should” they just don’t want to go get it. We try and provide that sort of safe environment for everyone.

Fraser Jack (19:47):

Yeah, the general advice thing is an interesting one, isn’t it? I’ve always thought of it as general strategy information and general product information and we lose the word advice out of it, because to me, that’s the most misleading part, the fact it says general.

Duncan McPherson (20:03):

We’re looking at doing something now, doing a little bit in that space. We’ll call it general information. It’ll still fall in the same, we still have to do exactly the same things, but we agree. I’ve got a couple of friends who are behavioral psychologist type people, and I just ping them a note and said, “Guys, how do we change the general advice warnings so people actually understand it?” Their responses weren’t helpful, but it’s just something we’ve got to continue to do.

Duncan McPherson (20:32):

At the end of the day, what I worry about is access to advice. The market has been in a hugely volatile space for the last well, after the GFC in ‘08 it was pretty volatile, then went really well, and then we’ve had all the last few years. I really worry about access to advice and diversity of advice. I think we’ve got to take those challenges very seriously.

Fraser Jack (21:01):

Absolutely. In the ecosystem, if we summarize that last sort of chat, in the ecosystem you’re looking after a lot of the clients that could be going to get advice, giving them a little bit of confidence, dipping their toe in the water if you like, going them through a process where they learn something out of it, or they get some experience in that, and then likely to be once they get to a bit more complex advice, you refer them onto somebody else or they might go see somebody else?

Duncan McPherson (21:28):

Absolutely. And for people to be able to set goals in retirement, they’ve got to understand what they’re doing. Australia’s financial literacy is pretty poor. Actually, it’s very poor. There’s three questions, they call them big three literacy questions, which are used globally. They talk about, they’re just simple questions like, “If you’ve got $100 and you’re earning 2% interest, how much money will you have after 12 months? More than 102? Less than 102? 102? Don’t know? Don’t want to answer?”

Duncan McPherson (22:07):

Most Australians fail all three. We rank the worst out of the 16 nations that take part in this. So, we’ve got to get this literacy right and make it easy for people to gain that knowledge and then we can start helping them to the next level and giving them some confidence. That’s the role we play in the broader market space.

Fraser Jack (22:32):

Yeah, well the superannuation space is of course a hugely growing sector and industry, and certainly the industry funds are a big sector. You look at the future, patterns and growth for industry funds, it’s certainly looking at exploding in that space. That probably places your business in a good position.

Duncan McPherson (22:51):

Oh, look, it does. I must admit, the move from where I was before into this market space has been really interesting. The decisions are very easy in an industry fund, in my perspective. If we do this, is a member better off? It’s the only answer. They have to. The only question they have to answer. And then they make decisions. I know it’s more complicated than that, and I don’t want to get into this one does it this way. But if they have a genuine interest as advisors do, in their clients’ interest.

Duncan McPherson (23:34):

When you sit down and have a conversation with a fund and say, “Hey, this is what’s happens. This is what we think we need to do,” they’re very much thinking about it from, “Well, how’s that impacting on the member?” I think that’s been really refreshing, and there’s lots of research around the growth of industry funds and that’s not really my specialty but the people we speak to trust their fund, and we give intra-fund advice when we’re speaking to those members, and they look to them.

Duncan McPherson (24:10):

It’s nice, because then we just need to talk to them about what do they need to do to make the most of it? It’s a really nice conversation.

Fraser Jack (24:17):

Yeah, it’s a good conversation, not having to talk about the brand and the product.

Duncan McPherson (24:22):

Yeah, that’s right. That’s right. I think we’ve got as an industry, a little bit of we’re getting used to, we’ve had the vertical integrations, the discussion is still going on. That’s going to dominate a lot of discussions for a long period of time, and that’s okay. But if there’s a member who’s trusted in their fund, the fund’s well performing, it’s not expensive, I think that we can ... There are other important things, and it’s kind of like this argument that you hear in investment management space around picking different asset classes or different shares, and portfolios, where it isn’t most of the return coming from the way you blend the assets, it’s the asset allocation more than the picking of the assets. So let’s move on from some of that, and let’s concentrate on the member and how they make the most of what they’ve got, and they’re confident in.

Fraser Jack (25:15):

Yeah, I like what you said before too about you’re helping them in this point in time, do what they need to do, and move on, which is great. Now, the code’s obviously a big talking point coming in, you’re obviously across all this and been working with your own submission into different pieces of the code. What are your thoughts on the code?

Duncan McPherson (25:34):

It’s certainly emotional. A bit like the Royal Commission, our business is a little bit removed from it. We operate under that environment, but we don’t have ongoing service clients. Therefore, some of the recommendations around that, and we don’t, because we’re intra-fund predominately, we don’t have that fee challenge. But the thing that’s probably, and I’ve raised this concern once or twice, the thing that I worry about with a code of ethics is access to advice.

Duncan McPherson (26:15):

I understand there’s, and quite rightly so, a lot of anxiety from a large part of the financial planning industry on standards three and seven, and I’m very sympathetic towards that, but it’s probably not an area that I’ve spent as much time thinking about. I worry about with the code of ethics, the Royal Commission, and how we make advice, keep it accessible. We see that in the UK, we saw the certainly access to advice diminished.

Duncan McPherson (26:49):

That would be a bad thing, especially given the size and importance of the Australian superannuation industry. For me, when we’ve looked at the code of ethics, we’ve tried to take a very dispassionate view, and I think that the blend of black letter law versus a code of ethics is causing a lot of angst and where does one start and one stop? I’ve had questions asked of me, do I still operate in the code of ethics if someone’s giving general advice?

Duncan McPherson (27:23):

I said, well, they’re not captured under the code of ethics, but they’re a person who’s captured on the ... They’re a whole person, so of course they are. They should be operating under the one principle, whatever they do. I’m more worried about standards two and six, which is around best interest. I find the disinterested person test very compelling. But there’s a school of thought that if we’re talking to someone in an intra-fund perspective, and they want investment choice advice, and we identify that there’s something else going on in their life that they should get a broader advice service, and we position it, and we say, “You should go see an advisor because your partner’s been made redundant” or, “Your debt situation’s this” or whatever the case might be.

Duncan McPherson (28:21):

And if that member says to us, “Look, yeah, you’re probably right, leave it with me, but let’s continue on with my investment choice” there’s a school of thought that we should not proceed with that investment choice.

Fraser Jack (28:34):

Yeah. It’s a crazy situation, isn’t it? Because we know that you can recommend somebody goes and sees a specialist or whatever it might be, but they don’t always do it unless you make them or follow it up. It’s interesting. I’m also, this thing about the understanding of advice is going to be huge I think as well, once as we said, the three and seven have played themselves out, around the scenario of how do we then go back in years to come and prove that the clients understood the information?

Duncan McPherson (29:07):

Yeah look, Fraser, it’s a really interesting one. We’re lucky, we’ve got phone calls. That’s still not perfect, right? We reiterate that, and we can replay tone and the phone call and say, “Oh yeah, that person.” But that doesn’t really worry me. It’s more a case of do they actually understand it? Because if they do, how good’s that? They know what they’ve done, they’re confident with it.

Fraser Jack (29:33):

Do you make those phone calls accessible to the clients?

Duncan McPherson (29:38):

Never been asked. The funds, yes. This year, as an example, so we’ve participated in the ASIC surveillance, as an licensee, four times. Because four of our clients who are on that list, so therefore we applied four times. But also we’ve had four or five of our clients have instigated their own internal audits by, and outsourced it to one of the Big Four accounting firms of their advice business.

Duncan McPherson (30:08):

We went through those audits as well, and they listened to the phone calls. It’s been really interesting. It’s by no means perfect, but it does allow us to review them, be able to identify compliance things we need to address, processes we need to change, training we need to do, members we need to call back if need be and say, “Hey look, we don’t think you understood.” It’s not a perfect system, but it is a system in place.

Fraser Jack (30:38):

Yeah, I’m really big on the idea of recording calls, whether it’s phone or video and going through that explanation with the clients when you’re giving the, especially the strategy information and saying, “Okay, do you understand how that works and why you’re doing it?” And getting that feedback from them, and being able to record that, and even giving them a copy and just saying, “Look,” because I’ve had conversations around the paper SOA and the concept that a lot of people want a paper version of the Statement of Advice and to me, it’s generally because they didn’t quite understand it, or we’ve trained them to get a paper version. It’s usually one of those two.

Duncan McPherson (31:15):

Yeah. Look, I think that’s our next big challenge, is statements of advice are still written by advisors. The people we’re speaking to are not advisors, and therefore it doesn’t necessarily meet in the middle, in their knowledge. I think we’ve got to, behavioral economics is going to be a big part to play in that, and how do we use better language? But to your point around understanding, the thing that I’m really excited about for what I think we can do in this industry is listen to our advisors on the phone and how they have to explain a concept.

Duncan McPherson (31:54):

And then when they go to their next career, next stage of their career, which a lot of them want to do face-to-face advice, they’re going to be really well prepared. I’ve spoken to lots of people, they’ve had to communicate over the phone which is very difficult to communicate effectively.

Fraser Jack (32:11):

Yeah, so this is an interesting, I’ll touch on this as well, there’s a pathway here for planners that want to get in. There’s a professional year, obviously, now, and then after that as a pathway to get into financial advice through something like what you’re doing.

Duncan McPherson (32:24):

Oh, absolutely. We see the professional year as, we haven’t done anyone on professional year yet, because, for a number of reasons. Next year we’ll put a couple people through professional year and I’d love to do some scholarships and graduate programs as well, because I think that we’ve got a really nice little ecosystem that can bring people into financial planning. We have, I won’t mention his name because he’d hate it, but we’ve got an advisor who’s 65 at the other end of his career.

Duncan McPherson (32:56):

And the mentoring he gives the younger guys is just outstanding. We’ve got some people who are going to want to move on in the next, they’re going to work with us for a few years, and they’re going to move on. And we will happily work with them to go to that next step. Whether it’s with another fund that we work with, or into the broader marketplace, because I reckon they’ll be, they’ll add a lot of value to our industry over a very short period of time.

Fraser Jack (33:26):

Yeah. There’s a lot of obviously you’ve come so far in such a short space of time yourselves, what are you working on next?

Duncan McPherson (33:35):

Look, the big thing for us is how do we help funds engage with advisors? They all want to. I say all, pretty much all. There’s a degree of nervousness around that following APRA and ASIC’s letters to funds in April around sole purpose test. But what we’re working on with this advisor platform, we’re really excited by. Because what we’re actually doing is we are helping facilitate a market and a market of connecting people who want advice, and they want to talk to their fund, and then their fund will say, “Look, I haven’t got anyone that lives in that location, but I can refer you to this advisor.”

Duncan McPherson (34:24):

I think that’s really exciting. I think that’s something that a number of funds are very keen on. I have a look at the numbers of the third party authorities that we get in the Link Group. I think it’s in the last four months, I think there have been something like 22 odd thousand third party authorities come into the Link Group.

Fraser Jack (34:50):


Duncan McPherson (34:52):

And we’ve got to provide a safe environment for that connection. I do get a little disheartened when I read some of the commentary around industry funds and advisors. You could be mistaken for thinking there’s a complete mismatch, where in fact it’s quite the opposite.

Fraser Jack (35:14):

Yeah, I think we’re both across the relationship in the past has been publicly attacking.

Duncan McPherson (35:23):


Fraser Jack (35:23):

So I think there’s a lot of, there’s that still about, and it’s about building that bridge I guess and getting back to-

Duncan McPherson (35:31):

I think that’s right. I think that’s right. And everyone’s got a role to play, but what I do know is there are lots of members of superannuation funds who want advice. The people I speak to in industry superannuation funds are pretty agnostic. They’re saying, “Well, if they need to see someone, let’s make sure they get to see the right person.” Whether that be telephone or digital, one of their own advisors, or if someone’s got broader range of needs, then let’s find someone for them to talk to.

Fraser Jack (36:03):

Yep. Tell me a bit more about the advice platform, or the advisor platform.

Duncan McPherson (36:08):

It’s three parts of it that we’re building out. There’s the automation part which allows advisors to submit a request into their fund that will provide an eight page member account profile, so they can do a Statement of Advice. We’re working with funds to implement that. The funds have got to make a ... We can’t just send it out. We operate on-

Fraser Jack (36:31):

It’s a bit like the open data type.

Duncan McPherson (36:33):

Yeah, that’s right. We work for the trustees, so the trustee’s got to tell us what to do in that respect. But that elevates that ease of working with a fund, so therefore we don’t have to wait on the phone, which is good for everyone. They get everything they need to do their Statement of Advice. They then present the Statement of Advice and then they would, if they’re part of the advisor portal of that fund, they can then submit a form which would attach that member to them, like they would with any other platform.

Duncan McPherson (37:06):

The big question is, and that is not within my control is the fees. We would administer any fee request but the funds, a lot of funds are very concerned around sole purpose test, and their ability to meet, to be able to cross the t’s and dot the i’s on that. They’ve got to work through how they do that sole purpose test from an APRA perspective. They want to make sure they’ve got their processes right because they’ve got an obligation to.

Duncan McPherson (37:36):

That’s probably the third part, which is the advice compliance part that we will work with funds on to ... Some funds are talking about creating a panel of advisors, so what’s the criteria? We do some due diligence on there, having the compliance reports, have a look at their CPD, their registrars, all those sorts of things. Have a look at their advice to make sure, because the question mark is around duty of care for funds, and they take that very seriously.

Duncan McPherson (38:10):

We’re building out that model as we speak and working with some funds on that. Everyone has different view on ... Trustee boards take a lot of responsibility so they’ll take their time to do it and I would too, and we just want to be able to provide that support.

Fraser Jack (38:30):

Yep. Now last time we chatted there was an article that came out recently, getting stuck into intra-fund, and in particular around calling it fee for no service. I thought I might give you an opportunity to talk about that, if you’d like to.

Duncan McPherson (38:48):

Yeah, I probably won’t talk directly to that, but I think that really highlights the knowledge around intra-fund advice and what it is. Because there was another, there’s been a number of senating estimates over the last few weeks and one came out that the Royal Commission got it wrong, intra-fund advice is personal advice. Well, it says that in the legislation, that it’s personal advice, so it’s never been a question for me.

Duncan McPherson (39:21):

Today, intra-fund advice has a particular definition and it has a particular legislative charging model that allows it to be spread out over all the members of the fund through collective charging. I’m not going to comment on the relative pros and cons of that, apart from the fact it’s in place, and what we’re doing with that is everyone’s got access to it. We’re talking to thousands of people. We’re not talking to hundreds. We’re talking to thousands.

Duncan McPherson (39:58):

It’s not a big cost to the fund, but these people are getting access to good quality advice that’s relevant to them. It’s like they get a service, they can call the contact center of any sort of service you take up. There’s a contact center that you can access and intra-fund advice is one of those sort of services that they’re allowed to provide. I suppose I look at it and seek to understand the value of it, of intra-fund advice, and how it can actually help people and progress them through the advice chain I think is the real opportunity for us as an industry as we settle over the next few years.

Duncan McPherson (40:43):

Because I think holistic advice is fantastic for the right people. Some people don’t want it, some people just want to get a little bit of a handle on their superannuation. Most people’s circumstance are pretty uncomplicated. They’ve got a mortgage, kids in school, and superannuation. Just make sure they’ve made the most of what they’ve got.

Fraser Jack (41:03):

Yes, certainly, they’re definitely the advantage in doing something rather than nothing, getting something set up and then having the choice of whether they just want to do something, and look, we’ll come back in a few more years, or whether they want that ongoing relationship. I think either way, they’re going to get a benefit out of it, and as you say, your data shows that they do.

Duncan McPherson (41:20):

And the thing is, if they have a good experience with us, they’ll come back again. And then if they come back again and have, get further advice in a year or two’s time, they are getting in a better position. One of the things that all, it’s been a problem with retirement in Australia for a long time is, and this is agnostic to whatever sort of fund it is, most of the members don’t know their fund has a retirement, an account based pension.

Duncan McPherson (41:49):

They withdraw their money, and they don’t apply for Centrelink straight away and we’ve got to stop that. That’s through elevating people’s knowledge and awareness, and then actually getting onto helping them set a goal. What’s their retirement goal? And then it’s going to get harder for these people with super coming in, with longevity products. If we don’t start warming people up now, in 10-15 years’ time, it’s not going to be a good place.

Fraser Jack (42:14):

So what are you doing in the way of financial literacy, working with the funds and sending information out, or?

Duncan McPherson (42:21):

Look, it’s not enough. We certainly support general advice and we do that. But I’m really torn with financial literacy. I think there’s a lot of learn by doing. Not reading or videos. I think digital advice and those sort of things have a real role to play for people to sit on the bus and play around with something. Whether they act or not is a different thing, so I look at digital advice and the measure of success for me is not ... I’ve got a number of measures of success.

Duncan McPherson (43:03):

One is the penetration of a fund, so how many people are using it? We have three advice stories, one around investment choice, one around contributions, and one around insurance, and how many stories do they complete? How many go to a Statement of Advice? It’s not just about the advice. If someone comes on and does a, “How much do I need in retirement story?” Three times before they produce a Statement of Advice, I reckon that’s pretty cool.

Duncan McPherson (43:32):

They’ve come on there, they’ve gone away, they’ve thought about it, they’ve come back again, they’ve built their knowledge up, and then they’ve produced that Statement of Advice and hopefully they act off it. I think the literacy thing, we’ve got to make access to information and advice in all its forms available to people, so they can engage with it and take advantage of it. I think that’s part of literacy.

Fraser Jack (43:55):

Yep, and gain confidence to continue with it.

Duncan McPherson (43:58):

Yeah, absolutely. Absolutely.

Fraser Jack (43:59):

Brilliant. Now, what are you working on for the next few years? Like, what’s the long term goal for you guys?

Duncan McPherson (44:06):

The long term goal, look, we see all forms of advice as being really important. We see telephone advice, the demand for telephone advice by superannuation fund members is growing. We see that as the really important. Ultimately, it’s pretty simple, is access. It’s just how do we help not ... How do we stop people falling through the cracks? How do we help prepare people for retirement?

Duncan McPherson (44:37):

We know that if people are making contributions, they are doing their beneficiary nominations, they are engaging with a fund, the probability of them starting a pension with that fund is higher. If we can help people, imagine if we could help people retire and apply for the age pension and get it all done pretty seamlessly. It’s a daunting prospect for a lot of Australians, and some of the research I ... Some of the anecdotes I’ve heard from one provider has said that, who deals with Centrelink, they said that most people that apply for the pension are around about 67.

Duncan McPherson (45:20):

But the average Australian retires at 63, and they say they do identify a lot of people have a lot of cash in their portfolio. Kind of the hypothesis is they’re retiring at 63, drawing all their money out, putting it in cash. They’re too scared to apply for the pension, or pride, or don’t understand it, and then one day they wake up and go, “Geeze, we’re running out of money, we better go and do something” and that’s pretty sad.

Fraser Jack (45:45):

It takes four years to work up the courage to go and deal with Centrelink.

Duncan McPherson (45:49):

Yeah. That’s a hypothesis. I’m not sure that’s ... We can’t have people do that. There’s a great system there, that allows them to move out of accumulation and decumulation, and we all as advisors, have a role to play in doing that. What we’re working on is how can we do that for people who would otherwise not go get advice? The most complicated advice I reckon you get is someone with 200 grand, 2 to 300 grand, you know? They’ve got to deal with part pension, they’ve got to deal with making ends meet, they’ve got to deal with superannuation.

Duncan McPherson (46:33):

Imagine if we could just help those people who are quite often not thought of in the advice space. In retirement, we’re thinking people, when I was working with advisors, it was 3, 4, $500,000, but there are people with 200 grand who need help. It’d be cool to be able to provide that sort of support to those people as well, and make sure they’re okay.

Fraser Jack (46:58):

Yeah, I couldn’t agree more. All right. If you were at a barbecue, chatting to one of your friends and they ask you what tips to give them about finding an advisor, what would you say?

Duncan McPherson (47:10):

Look, it’s actually not anything to do with the advisor. There’s a connection people make and whether it’s over the phone or whether it’s face-to-face, but if they’re talking face-to-face, there’s nothing better than having a trusted professional by your side and I know that from personal experience. I think the trick for me is the honesty of it, and the transparency of people are the most important. It is the humility of people they’ve got to be looking for.

Duncan McPherson (47:46):

The way, I think language is a massive factor now, and people need ... The language we use needs to be really uncomplicated, and that allows a greater understanding. That’s got to be commensurate with your market, so if you’re dealing with a whole lot of investment bankers who are coming to see you for advice, you’re going to have a different language, but Australians are pretty straightforward.

Fraser Jack (48:14):

I think it goes back to that understanding conversation we had before, yeah.

Duncan McPherson (48:17):

Yeah. I think language is one of the biggest competitive advantages advisors will have over the next few years if they get it right.

Fraser Jack (48:23):

Yeah. What do you think advisors need to focus on in 2020?

Duncan McPherson (48:27):

Communication. Simple communication. Just as the good ones do, there’s a lot of noise on right now. There’s a natural and quite appropriate tendency to really put their head down and buckle down into their business. But I remember with the GFC, a lot of advisors, and it had some similar characteristics, a lot of other things were going on in their life. It was a really difficult time and I really felt for them, and they really knuckled down and focused in on their business.

Duncan McPherson (49:04):

And during the two year period after the GFC, the whole market changed. I mean, they lifted their head up again, the world had moved on. The iPad had come out. The asymmetrical nature of information had completely changed, so it’s a tough period. We’ve got to be able to balance what’s going on as an industry, but also make sure that’s going on with their clients and for us, it’s very much that talking to people, talking to lots of people, making sure they understand what we’re saying, and just communicate with people.

Fraser Jack (49:39):

Yep. The big question to you if you could go back and do it again, have a do-over, what would you go back and what would you tell yourself? What would you change?

Duncan McPherson (49:47):

You know, it’s probably not me. Sorry, I hope it doesn’t take too long, but I had to prepare for something the other day and I went back to, when I was at MLC there was this one morning, you wake up and the front of the page of the Fin Review was, “MLC boss calls for the end of commissions.” It was in May, 2006. I went back, I found his speech the other day and read it, and he said, “We’ve got to deal with the conflict of remuneration of this industry.” This is in 2006.

Duncan McPherson (50:20):

“We need to make sure we maintain the trust of our clients. We need to put them, their interests first. Because if we don’t, the regulator will come in and heavily regulate this business.” If I think back, geeze, wouldn’t it be good if we’d started those inroads back in 2006?

Fraser Jack (50:38):


Duncan McPherson (50:38):

And we’d be in a different place. But we didn’t, and I think the realization for me around, for me the do-over thing is imagine if we understood how we could help people with less money in super earlier, would have been really cool.

Fraser Jack (50:59):

Yep. Fantastic. Thank you. Now, if someone wants to continue this conversation with you or check out the advisor platform or whatever it might be, how can they get hold of you?

Duncan McPherson (51:07):

Well, on LinkedIn’s probably the best place. I’m on LinkedIn and happy to have conversations with people. I think this is a, I don’t see all the conversations go on in this industry, but I think there’s a really important one around advice and access, and advice fit for the person. I welcome those sort of things, so LinkedIn’s probably the best place to get me.

Fraser Jack (51:31):

Yeah, great. I’m also, I’m always up for a conversation about advice affordability. I think we can’t keep pushing costs up.

Duncan McPherson (51:38):

No, agreed. Agreed. Look, it’s hard. I’m not saying it’s easy, but we’ve got to keep plugging away at it.

Fraser Jack (51:46):

Fantastic. Thanks for making some time to chat with me, the Goals Based Advice Podcast. I really appreciate it.

Duncan McPherson (51:50):

Thanks Fraser.

Fraser Jack (51:51):

If you haven’t already, I’d love you to subscribe to the podcast on your podcast platform of choice. To continue the conversation, head over to our social media channels. We’ll catch you next time.



Disclaimer: This document is a transcription obtained through a third party. There is no claim to accuracy on the content provided in this document, and divergence from the audio file are to be expected. As a transcription, this is not a legal document in itself, and should not be considered binding to advice intelligence, but merely a convenience for reference.