Industry superannuation funds can't “put their hand on their heart” and say a balanced default fund is appropriate for investors of all ages, says a Commonwealth Bank (CBA)/Colonial First State (CFS) executive.
The Commonwealth Bank yesterday launched its MySuper-compliant life-stage superannuation product Essential Super, which will be rolled out through bank branches from 1 July.
The fund adjusts its asset allocation depending on the age of the client using a 'life cycle' aproach, and is comparable to BT's Super For Life and ANZ's Smart Choice Super.
CFS general manager for product and investments Peter Chun says the life cycle approach differentiates Essential Super from industry funds, which are “by and large just relabelling their current balanced funds as their default MySuper products”.
“You can’t say that’s appropriate for someone aged 20 and someone aged 65,” he adds.
Retail organisations like CBA have an advantage over industry funds in that they have the freedom to start from scratch, says Mr Chun.
“The industry funds have [the problem] that all their existing members are in one fund, so it’s much harder for them to set up a new strategy,” he says.
CFS executive general manager Linda Elkins says Essential Super is aimed at young, disengaged Australians who do not want – or need – advice.
But she says customers will be offered the services of financial planners at significant junctures in their 'life cycle'.
Essential Super - which is not being marketed via the advice channel - does not represent a threat to financial planners, says Ms Elkins.
“We’ve even had some advisers say they might want to offer the product to the younger relatives of the people they’re advising,” says Ms Elkins.
“I think everyone understands that [Essential Super] is complementary to the current customers and system that we have – not 'instead of',” she says.
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