RI Advice Industry and Employer Super Fund Standards

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1 RI Advice Industry and Employer Super Fund Standards Version Document owner Approved by Date of approval Next review date June 2013 ANZ Global Wealth CIO Research Advice Product & Investment Committee (APIC) March 2013 June 2014

review date June 2013 ANZ Global Wealth CIO Research

2 TABLE OF CONTENTS 1. Summary Date of Effect Types of Funds Requirements When Automatic approvals do not apply New Exposure Management and Administration Supervision and Governance of the Process Sample Scenarios... 6

When Automatic approvals do not apply... 5 6. New Exposure... 5 7.

3 1. Summary The Industry and Employer Super Fund Standards provide guidelines for the recommendation of Industry, Public Sector and Corporate Sector Super Funds made by financial advisers providing advice under an ANZ Wealth Aligned Dealer Group (ADG) license. The overarching objectives of this paper are to (i) provide a clear framework that ensures product suitability for the client and (ii) improve the efficiency and administration of approvals. The Industry and Employer Super Fund Standards introduce s for certain client circumstances. In most cases, this will be straightforward, for example: no choice of super fund or Insurance cannot be obtained in a product within the Approved Product List (APL). Examples of these circumstances and how s apply are provided in Section 9 - Sample Scenarios. s are valid only when all of the following conditions are met: (i) (ii) (iii) the strategy is an existing allocation, the recommendation is made based on suitability and appropriateness for the client, and the strategy satisfies the minimum research rating. Further details are outlined in Section 4 of this document. 2. Date of Effect The Industry and Employer Super Fund Standards is effective as of 1 st August Types of Funds The Industry and Employer Super Fund Standards cover Industry, Public Sector and Corporate Sector funds. A brief description of each is provided below. Industry Super Funds Industry Super Funds were originally established for employees in a particular industry or occupation. For example, HESTA Industry Super for Health & Community Services and CBUS for the Construction and Building Industry. Today most industry super funds are public-offer funds (open to all potential investors). Public Sector Super Funds Government and Public Sector Super Funds have been established for public sector and government employees (federal and state). Examples include Q Super for the Queensland Public Service Sector and Super SA for South Australia. Corporate Super Funds Corporate Super Funds are established for employees of a company. These funds are often nonpublic offer funds and are open only to the employees of the company.

The overarching objectives of this paper are to (i) provide a clear framework that ensures product suitability for the client and (ii) improve the efficiency and administration of approvals.

4 4. Requirements The Industry and Employer Super Fund Standards introduce s for certain client circumstances. s are valid only when all three of the following conditions are met: (i) (ii) (iii) the strategy is an existing allocation, the recommendation is made based on suitability and appropriateness for the client and the strategy satisfies the minimum research rating hurdle. Further details are outlined below. Advisers must log all automatic approvals via the non-approved product request process for the respective Aligned Dealer Group (ADG). When recommending the non-apl product, the advice document must include the relevant disclaimer for the respective ADG. Existing Exposure / Accounts Existing exposure is where a client is already invested in a non-apl super fund. Automatic Approvals are only valid if it is an existing exposure. For new accounts, Advisers must seek via the non-approved product request process. In assessing requests, the ANZ CIO Research Team will ensure Advisers have considered the suitability and appropriateness of a product for the client. Suitability and Appropriateness Advisers must be able to demonstrate that the product recommended is suitable and appropriate for the client when submitting s. Advisers can use the ChantWest comparator tool (or an equivalent and approved alternative) to assist in product research. Rating hurdle Non-APL super products must satisfy the minimum research rating of 4 Apples from ChantWest or a B+ rating from Mercer in order to qualify for s. This includes individual strategies and pre-mixed multi-manager solutions. External research ratings can be sourced from the following links:

client and the strategy satisfies the minimum research rating hurdle. Further details are outlined below.

5 5. When s do not apply s do not apply in scenarios where any one of the three requirements outlined in Section 4 is not met. In these instances, Advisers must consult with the ANZ CIO Research Team and seek a via the non-approved product request process. In such cases, the CIO Research Team will assess the request on a case-by-case basis. The assessment criterion includes but is not limited to the following: Product suitability Asset allocation of the Fund Underlying Investment Managers Resources of Investment Team and Consultant Size of the Fund / Funds under Management (FUM) 6. New Exposure / Accounts s are not valid for new accounts in non-apl super products. In these instances, Advisers should seek a via the non-approved product request process. 7. Management and Administration Advisers must submit s via the non-approved product request process. For RI Advice, all requests must be submitted via XPlan with the option for Automatic Approvals selected. s are valid only when all of the three requirements outlined in Section 4 are met. When all three conditions are satisfied, approvals will be automatic and do not require verbal or electronic confirmation by the ANZ CIO Research Team. Approvals will be valid for an 18-month period. When recommending the non-apl product, the advice document must include the relevant disclaimer for the respective ADG. For requests that do not qualify for s, the service delivery standard is 48-hours for straightforward requests and up to 72-hours for more complex situations.

In such cases, the CIO Research Team will assess the request on a case-by-case basis.

6 8. Supervision and Governance of the Process The Professional Standards and Advice Assurance regime will be updated to reflect these guidelines. If the necessary Standard or has not been obtained for a non-approved product, this will be identified during the compliance review. Similarly, if a Standard or has been obtained for the non-apl product but the underlying rationale does not align with reasons articulated in the advice document, this will also be identified during the compliance review. Advice that does not satisfy the requirements outlined in this paper may result in advice not being covered by the Licensee s Professional Indemnity Insurance. In such instances, the adviser may be liable in full for any successful claims made. The Advice Assurance Team will be reviewing the appropriate use of non-apl requests and s, as well as assessing whether product suitability has been considered by the Adviser. s will be monitored by the Licensee Management Team and the ANZ CIO Research Team to ensure sufficient details have been provided. If the Licensee Management Team or ANZ CIO Research Team determines that information provided by the Adviser is insufficient, the relevant will be cancelled. 9. Sample Scenarios This section details a number of scenarios where s and s may apply. Where s are accepted, it is assumed that the three requirements outlined in Section 4 have been satisfied and the Adviser is fully compliant as part of the recommendation. Scenario 1 Best Interest The client currently holds REST Super and seeks superannuation advice. The Adviser recommends the client to (i) retain REST Super and (ii) retain the existing conservative option. Scenario 2 Choice of Super The client is currently invested in SA Super and does not have choice of super. The Adviser recommends the client salary sacrifice into the super fund.

Similarly, if a Standard or has been obtained for the non-apl product but the underlying rationale does not align with reasons articulated in the advice document, this will also be identified during

7 Scenario 3 Super and Insurance The client currently holds Legal Super and AMP Super and seeks superannuation and insurance advice. The Adviser recommends the client to (i) retain Legal Super, (ii) rollover AMP Super into Legal Super, and (iii) increase insurance cover within Legal Super. Insurance N/A* Scenario 4 Client Directed The client currently holds Cbus Super and has specifically instructed the Adviser to retain Cbus. The Adviser recommends (i) switching the investment option to Balanced and (ii) increasing Life cover within Cbus. Insurance N/A* Scenario 5 Insurance only The client currently holds Hesta Super and does not want advice on superannuation. Client only seeks insurance advice. The Adviser recommends income protection cover within Hesta Super. Investment N/A Insurance N/A* Scenario 6 New Client The client does not have any super accounts. The Adviser recommends opening a new account in Australian Super (an industry super fund) due to specific features available. Investment *For the Insurance component if it is within the Scope of Advice - the approval from the Insurance Research manager may require supporting documents (for example the Chant West report / Midwinter Comparison Request (CR) / SOA insert) and any other relevant input.

Insurance N/A* Scenario 4 Client Directed The client currently holds Cbus Super and has specifically instructed the Adviser to retain Cbus.

Superannuation Industry Fee Comparison Report

Superannuation Industry Fee Comparison Report Report May 2008 Disclaimer Chant West Financial Services Pty Limited (ABN 75 077 595 316) 1997-2008. Unless otherwise permitted by an agreement between you and Chant West, you may only use this document