Asked what is causing the leakage of retail and industry fund members into the SMSF sector, CareSuper chief executive Julie Lander pointed the finger squarely at external financial advisers.
“There are planners and accountants whose business models are set up to support [SMSFs] so if they get the ear of the client, that is the structure they will probably recommend, rather than saying ‘why don’t you stay with an industry fund’,” she told ifa.
“People only need to walk into a bank and be approached by a bank financial planner,” she added.
However, Ms Lander conceded that SMSFs were not unreasonable in all circumstances.
“I don’t say there should be no SMSFs – they are a legitimate vehicle for people with (a) a reasonable amount of money, and (b) the type of person who wants to get involved and who has the time and expertise, the know how to do it,” she said.
“But, there is a lot of people in them, who could just easily get the control they want and achieve what they want without having an SMSF.”
She also admitted that industry funds could be doing more to engage with members and stem the leakage.
“It is incumbent on us to communicate better and understand our membership base,” she said.
Pavel,
watch From little problems big problems grow
No Pavel, it’s you who are not understanding things. There is a difference between something being cheap and something being of value. Cost is relative to the benefit provided.
Some people drive a hyundai, some drive a mercedes, it’s a choice in open market.
If everyone has to drive a trabant then go live in a communist dictatorship somewhere (Shorten and his union buddies are trying).
So Jason, I assume that would be immediately after every adviser shows the client the Storm Financial scrapbook?? Yes, I know, about as accurate and logical as your suggestion.
Nice try Pavel, but your response seems a bit defensive, bordering shrill. Perhaps you should go back to reading your comics.
A interesting story but a sad story on a client with terminal cancer and has a Hesta Super and Life policy through it last night on CH 9 ACA. You guessed it Hesta do not want to help the client one bit before she dies. So little to No advice when taking out the fund and policy. Nothing really about commisions or price. I wonder if she had received proper advice from a good adviser she would have had a trauma payout and more than likely a terminal illness payout and live her dying days in piece. We will see more of this as ISNs now have more power but less technical skills and compassion. From Little problems, Big Problems Grow hey. Every adviser should show their clients the story.
Pavel, it was HESTA and it’s true, move out of dreamland
Thanks for the belly laughs Wildcat!
Risk insurance CHEAPER at full commission, rack rate, via an adviser that ISFs pooled rates…love to see evidence of that!
And who pockets the premium savings these scale-driven group policies realise…surprise, surprise, its the fund member – as it rightfully should be!
Anyway, Lots more I could say to debunk a lot of the other drivel being blogged around this post, but that would take away from the sheer comedy…this is better than the comics!
Not often I agree with comments from Industry Fund CEO’s but this one has some fact.
I have seen many SMSF’s that should not be in this type of structure and the poor old Individual Trustees (Members) do not have a clue what they are actually doing.
I would also comment that it is likely that most of the “push” for SMSF’s are coming from Accounting Practices, as it involves extra fees being brought into the Practice.
John and Sam, wow advertising does work, so does hidden commissions. I’m not talking about the ones to financial planners, I’m talking about the unions. Returns are quoted after taking out expenses, which includes the $100M’s advertising campaigns! Risk insurance is often cheaper in retail offer on FULL commission to an adviser. Now a fund will get group rates which are cheaper than retail, where does the rest of the premium paid go I wonder Hmmmm.
And noone talks about the super administration company owned by the ETU which, you guessed it! is employed by the industry recommended fund by the ETU. Dividend in 2009 $5M
Ms Landers should value planners and accountants, cause if the truth came out she’d have no money left to manage!
As a non aliigned advisor i tried to maintain clients in Industry based fund where is in the best interest for the client, but they donot want to deal with you constanly have to to relodge client authorisation, they make it dificult.
It is really easy to blame some one else when your business model is not meeting the needs of some of your clients.
As a SMSF adviser, I will recommend Industry funds if that suits the client, but the issue is that the Board of Care Super, or any other fund is not thinking about the individual client needs when making decisions. I do, so SMSF is a personal strategy able to improve the outcome for my clients.
Not a cookie cutter approach the Industry funds use.
HMMMM!!!. I wonder how millions going to the union movement fits within the sole purpose test or even if the members know this is occurring. As to Julies’ remarks, this is still a free country where individuals make their own decisions. Free markets allow this action. Your service offer is obviously inferior to client needs- pick up your act or stay quiet. It’s your organisational fault NOT planners and accountants who offer superior strategies and outcomes.
[quote name=”edward”]#26 Sam – are you an Australian Super employee?[/quote]
No Edward. I’ve worked for AXA, then AMP (by default) and now MLC/NAB. I have $300k in Australian super. Wanted investment choice and decent insurance. To tell you the truth I’m not sure if the insurance is decent. I don’t believe in paying for active manager fees and dislike managed funds full stop, hence my requirement for a share service.
Dry your eyes Princess, its called competition in a (relatively) free market. Is having the field tilted to your advantage not enough, you need industry funds made compulsory so you can grow fat and lazy.
#26 Sam – are you an Australian Super employee?
I don’t agree with the car analogies. Australian Super for example has a good share option now. Sure it might be a bit clunky but I’m not looking to day trade. For the price it is perfect for what I want to do – hold shares for the long term. Horses for courses.
Of course, no industry fund ever suggested that the member roll the rest of their super into the industry fund!
Comparing a SMSF to an industry fund is like comparing a Mercedes Benz to a push bike. They are both designed to do the same basic function, but if you want the features of the former, you won’t put up with the latter for very long.
It’s not a conspiracy Julie, it’s called healthy competition. Get used to it.
well well well, it looks like the joint ISF and Labor movement against financial planners has now backfired. ISF’s spent years slamming advisers about “commission free super” and now there’s a mass exodus into the SMSF sector so ISFs are crapping themselves. YTD I have rolled out over $3 Million from industry funds into SMSF and will continue this quest vigorously.
Retail Super Funds – you will get no sympathy from me.
I am going to industry. Rolling from expensive, time-consuming, inflexible, DIY to an industry fund that allows me to buy shares. Cost wise, the decimal point moves one place in the right direction, huge saving. no more bothersome paperwork .audit done, tax too.
The problem the industry funds have is in part, inertia. They are very slow to adopt good products. Several implement them poorly. Done well, a competent industry fund should be taking business from the DIY industry. Those few industry funds who have their act together fail to promote themselves.
The small number of industry funds, who are smart enough to introduce direct share ownership should promote themselves as a group. Perhaps, now that investment advisers are supposed to act in the best interests of their clients, the industry funds with share ownership will lift their game further. Regarding the car analogy,competent industry fund = golf R. DIY fund =1970s Alfa (the rust shows eventually)
Unlisted property assets , using members moneys to pay board members who pay the salaries to unions. While being paid by the union. No service and …. David Whitley.
best interest test = Immediate sell on all industry funds
It’s very easy to take a swing at others, when the inherent issue may be with the business model. Industry Funds receive generally legislated or mandated flows of contributions into their funds, leading to an increase in FUM. Engaging, servicing & educating these people are a whole another matter. Professional advisers on the other hand are appointed by the clients to look after the clients interests & provide appropriate advice in line with the clients determined financial goals & objectives
Funny you mention that Fedup…I had one industry fund tell me they don’t talk to financial advisers and the member would have to phone. That was just to get a blank WDL form emailed to me as client needed some urgent funds for living expenses. She was a little old lady and of poor hearing. You try to help their members and get treated like you’re a FUM snatcher.
In 2012, Australian Super paid $4,521,000 to the ACTU in 2011, they paid $3,907,000. So when industry funds talk about not paying commissions to financial advisers, they conveniently burying the truth in their financial reports (see page 27) as to where the true commissions are being paid to.
What would you expect! The Industry funds have had an all out attack on Retail Funds and Financial planners. The Industry funds generally provide terrible service and actively hinder financial planners. Even in a system that we now have, no sane planner would recommend a client used an Industry Fund except for in rare situations, as the risk of them stuffing a strategy due to hindrance is huge. I currently have a client that had pre approved transfer of existing cover to a retail super (which the client requested) After the months taken to rollover the account balance, the pre approved cover was no longer valid and lapsed. This is a risk in having an industry fund is that they dont do as asked in a timely manner. Work with planners, not against them and they may find things change.
What a baby –
Industry super funds have no (r) no advice offering edveryone becomes a passasenger on a non responsive – non transparent entity and this woman wonders why people dont want a part of that- the clients are self directed – they do not want a patriarchal approach to how they should manage their hard earned retirement savings – no real surprise that a client wants input in investment decisions.
Personally I think more people with a greater understanding of whats happening in the brotherhood of industry funds would be good for everyone.
Now the industry funds attack the SMSF market. When will they understand that their business model is designed to capture members who fail to make any decision for themselves and are mostly members by default. When those members acquire knowledge and understanding, usually with greater invested value, they gravitate to a more personal and accessible service. It is what they want. No amount of carping will change that. If you don’t like it, change your model (eg Aussie Super) – oh then you won’t be able to bitch about the retail funds either. Industry funds have a legitimate place, but that is not devaluing our industry with self interest rhetoric.
Lander you are a joke! All the care and respect you show for your members AND they dont want to stay with your hidden costs, payments to unions $30M advertising & funding Labour election campaigns BOO FRIKKIN HOO!
This is SO typical of unionists they want EVERYTHING for the sub-standard work they do!
If Industry and Retail base funds discontinued to pay commissions and bribes to financial planners then more members would continue to use their services. However, when members realise that they save a lot of money by operating their own self managed super fund, where all the costs are disclosed, they naturally opt for this option.
Perhaps the industry funds should consider their internal tax management so that the clients interests are put before their own, perhaps heed their own advice from their advertising campaigns slaughtering their own industry then and only then do they have a right to complain about the push towards SMSF’s. In the meantime industry associations continue to accept funding from industry funds whilst they continue to criticise their own industry. How many industry bodies tolerate that? You wonder why the govt wants to over regulate our industry when the industry funds have been asking for it to happen every time they advertise and criticise their own industry!!
Industry Fund = 1965 VW Beatle
SMSF = Aston Martin DB9
Please Julie, you must learn to accept this and move on.
surprise, surprise – sounds like ISF’s are on the back foot after spending all their kitty on ‘commission trashing’. You can give it but you can’t take it – not such a level playing field now is it?
Julie, you are collecting $31,904,000 pa in Fees. It doesn’t cost $31,904,000 to run a call centre! Where the money going? Who’s really getting ripped off here? What the secret dividend being paid to the union movement?
There are also things called service, transparency, up to date reporting, and helping the adviser help the client. These are all things the ISN believes are not necessary.
BINGO! you have have it, investors want personal engagement with trusted advisers. Not impersonal call centre service providers who don’t care about their clients investments. Julie our investors WANT Control of thier own future. They want to reduce their contributions tax via owning direct shares, they want to buy direct property because they want the stability in their super funds, they want personal service, they want tax effective strategies personally tailored to their circumstances. They are all things you can not do. Your job is to provide a platform, a conduit for investors to accumulate super, thats it, period, Stop whinging. Considering the huge leg up Industry Funds have had by being exempted from many of the FOFA protocols, its just amazing that ISN are so greedy wanting more. Just remind us again where all the ISN fees go to?
Next our Industry Fund friends will complain that the weather is too cold. They have been handed Inflows on a Silver Platter by the Labour Government, Advisers are competing on an uneven playing field to the Industry Funds but yet Industry Funds are still not happy. Advisers and Accountants still have the relationship with the client, which will always win over the Industry Funds. You will receive no sympathy from me Ms Lander.
Rather than pointing the finger at the external advisers, perhaps the spotlight should be more focussed on the actual performances being achieved by a lot of the industry & retail funds. That is the reason people are choosing to go down the SMSF route – because they feel that even with a small amount of external assitance, they can achieve a result that is at least equal to the results being deleivered by the industry & retail funds. And after all, self interest is the best motivator to guarantee performance.
Maybe Julie should get her mates in the Labor government i.e. Shorten and his recent replacement as Financial Services minister, to introduce a further Act centred on making the SMSF sector as difficult to work in as they have the ifa sector!! If they can screw that sector up also, it will, no doubt, release more funds for the ISN and their members to pump into advertising, sponsorship and the ALP election coffers.
You make it sound like migrating from an Industry fund is a bad thing? As a financial adviser absolutely where I deem it a functional tool, I will definitely propose a Self Managed fund over an Industry fund as long as the client is willing to accept the responsibility and costs.
Industry fund = Hyundai, SMSF = Rolls Royce
Or maybe it’s because your ISN leader and various politicians have created such a mess in the super industry that members have decided to do it themselves, not to mention that property gearing in Australia is a favorite pastime. I had one on my desk the other day from the accountant recommending SMSF for property reasons and tax benefits to client. Nothing wrong with it as such….but that’s what we’re up against. You’ll also see more SMSF as advisers decided that normal managed super funds are a honeypot for David Whitelys FoFA objectives. That’s what happens when dodgy policy is launched…it distorts the market.
Accept it and move on….that’s what us advisers keep getting told LOL
Another day another industry fund expert telling people what they should do… Go back to the trough and eat another free lunch and leave us to acttually educate clients….
IT’s about choice, most clients response to why do you want an SMSF cause im sick of the bad returns anf fees from my fund… yes that is industry funds…..