ASIC COO Warren Day has called on Australians to actively engage with their super in order to set themselves up for retirement.
In a recent interview with the ABC, Mr Day stated that retirement outcomes depended significantly on when individuals begin planning and whether they have accumulated enough wealth during their working life.
“While super is not the only source of retirement savings – the money may also come from investments, government benefits and your home, if you downsize – it is the only significant asset for many Australians,” he said.
“So, it’s important people actively manage their super and check the performance of their fund.”
The median balanced super fund ended the 2021-22 financial year down 3.3 per cent, the third lowest return since the introduction of the super guarantee in 1992. The country’s largest super fund, AustralianSuper, also reported a negative return for its balanced option.
However, Mr Day suggested that individuals should look beyond just the past financial year when considering the performance of their super.
“You may consider switching funds if your fund is consistently underperforming – but you should take a long-term view,” said Mr Day.
“Super fund returns will most likely be lower this financial year after high returns last year, you need to consider performance over a number of years to get an accurate picture.”
He said that members of MySuper products should check the performance of their fund using the Your Super comparison tool from the ATO, which incorporates the findings of APRA’s annual performance test.
The test was due to be expanded beyond MySuper products this year before the federal government earlier this month announced a review of Your Future, Your Super laws and a pause of the extension.
Mr Day also encouraged individuals to make sure they are in the right investment option for their risk tolerance, which would likely be impacted by how close they are to retirement.
“Think about how much investment risk you’re comfortable with. A higher growth option will have higher risk and experience more volatile returns over the short term,” he said.
“But it will usually achieve higher returns over the long term. A conservative option, like cash or bonds, will offer lower risk but lower returns over the long term.”
Surprise – ASIC contradict themselves again with the left hand having no idea what the right is doing.
ASIC recently banned an Adviser for 3 years for actively managing their client’s Super and risk tolerance over time not in the traditional sense but by constructing a strategy whereby they’d commence with an asset allocation suitable to their current growth & accumulator characteristics; and each year the % of growth assets would slightly reduce and defensive increase until retirement providing them with the most appropriate and suitable to their needs and stages in life. The strategy of course allowed for alterations should they be warranted/necessary/desired. The client scored on a risk profile between Balanced and Growth but stated a preference for higher returns and that they were comfortable with slightly higher risks/volatility as a result.
ASIC’s issue? The commencing % split between Growth & Defensive assets in this Adviser’s recommendations were identical to an incredibly large Industry Fund’s “Balanced” account meaning it was actually a Growth portfolio. ASIC felt the growth allocation was too aggressive and that the Industry Fund was a more suitable and conservative approach for the client. After much debate with an ASIC analyst & delegate, a ruling was made against the Adviser as apparently ASIC’s issue was that the Industry Fund was named “Balanced” regardless of the underlying asset allocations being between a Growth & High Growth profile. The fact the client would likely have been left in this “Balanced” (but high-growth) allocation for most of their remaining years and therefore at the mercy of a 90% growth asset exposure compared to a portfolio that over time reduced itself to a true Balanced portfolio didn’t come into it. To ASIC “Balanced” = Balanced. Whereas an Adviser constructed portfolio was being judged on the underlying figures in Day 1 only, rather than a name. Over time of course, and particularly with market movements it would be easy for the Adviser to show that their recommendation was indeed the more prudent and appropriate. Though ASIC don’t really care if a consumer loses money, as long as if they were Balanced on a risk profile questionnaire, their investment was called Balanced as well.
Facts & practicalities to them don’t matter and never have. They’re undereducated, inexperienced, unqualified and inappropriate for the positions many of them hold. Though they’re the ones causing detriment to clients and advisers alike with their opinions.
At the same time ASIC say they want people to be engaged with their Super, both ASIC and the ATO now think it’s their job to grill SMSF members about moronic minor details of running a SMSF and trying to scare them off having an SMSF.
[b]Oh that’s right ASIC & ATO, what you really mean is that you want people to be engaged with their Super BUT ONLY IF IT IS FROM YOUR BEST BUDDIES AT INDUSTRY SUPER. [/b]
What a conflicted self serving bunch of Canberra Bubble bumbling socialist bureaucrats.
How about instead of giving meaningless advice (with a general advice warning), ASIC concentrate on making it easier for qualified advisers to help people with this stuff.
This just shows that asic think they know more about advice than we do. A quick look at the money smart website also proves that. Are you a regulator or a competitor? Why is asic telling people to go to the fund instead of get advice? Why is a coo of a regulator talking to members about investment choices? What are they doing in that ivory tower? The culture at asic really shines out in this article
My AFSL would consider what Warren Day has said to be advice. I hope he has the appropriate accreditation.
I hope he provided a general advice warning…
Seems to be a ruling class attitude with ASIC – perhaps the rules don’t apply?
“Think about how much investment risk you’re comfortable with. A higher growth option will have higher risk and experience more volatile returns over the short term,”
A comment that illustrates how out-of-touch ASIC is. If the majority of Australians only investment is their super and they’re unengaged with it, how would they know how much risk they’re comfortable with? How would they know what investment even means? Their investment experience is probably limited to their kid investing in crypto.
Imagine if we had a network of professionals who could advise them and educate them as to what these things mean. Imagine we had a regulator that empowered this network instead of being focussed on dismantling the main recruiters of these for headlines.
What an embarrassing diatribe. Any wonder ASIC is such a joke.