While advisers and their licensees place most of their compliance eggs in the SOA basket, the real focus should remain on more robust client discovery and documentation processes according to Assured Support’s Ben Moffatt.
Asset managers have quickly ascertained the region’s growing appetite for alternative investments will not abate any time soon, but liquidity and gate provisions will need to improve.
Advisers in the lurch as Clearview ‘terminates’ $1.5B WealthFoundations retirement product
Clearview has taken a big step in its wealth exit plans and terminated the administration contract for its Clearview Retirement Plan suite, including the WealthFoundations (Super and Pension) and WealthSolutions (Superannuation and Retirement Income) products which have around 12,000 investors combined.
As part of the termination, the WealthFoundations product will be wound up by the end of FY25 and migrated to investment platform provider HUB24’s via a Successful Fund Transfer (SFT).
The move is part of Clearview’s broader plan to cut its ties to wealth management – due to “a lack of scale and growth opportunities” – and focus on life insurance. Clearview sold its financial advice business to Centrepoint in November 2021, acquiring a 24.5 per cent stake in Centrepoint in the process, the bulk of which was then passed on to COG Financial Services in 2023.
At the ASX-listed group’s AGM earlier this month, managing director Nadine Gooderick said 2025 would be Clearview’s “bridge” year as it exits from wealth.
Foggy picture
The future management of the WealthFoundations product suite is unclear.
According to Clearview, the trustee for the Clearview Retirement Plan, Equity Trustee Superannuation Limited (ETSL), has chosen HUB24 Super as the “successor fund” to which WealthFoundations will be migrated.
“The Trustee has made this decision based on their view and acting in the best interest of members,” Clearview stated.
No indication has been given regarding who will manage the roughly $1.5 billion worth of assets within WealthFoundations. HUB24, as an investment platform provider, has no direct investment team, which makes the choice an incongruous one according to Newcastle adviser Jason Poole.
“This isn’t the core business of HUB24, they’re a platform provider so it makes no sense,” Poole tells The Inside Adviser. “It’s like a power plant being run by a battery. HUB24 doesn’t generate, it just stores.”
A HUB24 representative confirmed that while it has been selected as the destination for the assets, the platform provider “is not involved in investment selection or investment management for WealthFoundations clients”.
There are other concerns for advisers and investors, with the potential for capital gains tax high on the list. As the HUB24 Super Fund’s ‘Discover’ portfolio menu doesn’t map with the products held within the WealthFoundations product suite, they will need to be sold down.
In two separate FAQ sheets, Clearview advised firstly that the trustee will apply for CGT Tax Relief, then that the trustee “will provide detail once the asset transfer arrangements are agreed”. The trustee is understood to be working with a “transition manager” to manage buy/sell spread risk when the assets are realised.
One of the features of WealthFoundations – a built-in ‘floor’ on the amount paid out for life insurance claims against market losses called the Foundation Assurance benefit (FAB) – will also be abandoned as part of the transfer. “FAB is a unique though seldomly triggered feature that will not be available after the SFT,” Clearview stated.
It’s understood that roughly half the WealthFoundations investors are unadvised.
Adviser control
For advisers, the WealthFoundations termination serves as a reminder that while trustees provide a valuable service in terms of product oversight and governance, they can also pull the rug out at any time.
Trustees have the right – often the obligation – to move a product from one provider to another. The strategies and priorities of providers can shift over the lifecycle of long-life products like retirement funds; WealthFoundations itself was previously handled by Colonial First State before it came to Clearview.
But it does present agency risk for advisers, who would prefer clients perceived them to be in control of their investment portfolio. If they recommend a managed fund or model portfolio, having that product then switched to a different manager not only undermines their decision-making nous, but forces them to make a further call; divest or trust a new manager.
“It’s hugely disruptive,” says Poole, who has roughly 40 or so clients invested in WealthFoundations. “We’re the representatives of this product to the client, now I’ve got to either explain a switch to a new manager, or go and divest and reinvest across portfolios. There’s a lot of work involved, it’s a big impost.”
Clearview – which declined several requests for comment – will hold an online webinar for advisers on December 5, then write to members of the fund in January 2025.
The fund transfer is scheduled to be completed by March, 2025.
