In a statement responding to the finding by ratings agency SuperRatings that industry funds have “again outperformed master trusts funds over all periods”, ISN chief David Whiteley said non intra-fund advisers should take heed.
“Under new laws, financial planners are required to act in the best interests of their clients,” he said.
“Given that fund performance is one of the most important factors in choosing a super fund, industry super funds should come out on top in the recommendations of financial advisers to their clients.
“In the seven- and 10-year periods, industry super funds have performed particularly well – which is most important given the long-term nature of superannuation.”
Until the industry is consistent on asset allocation definitions, it is impossible to say whom is outperforming whom on a risk adjusted basis.
Take AustralianSuper as an example. SuperRatings & Chant West continue to categorise AustralianSuper’s Balanced Fund in the SR50 Balanced (60-76) Index when comparing funds because that is how AustralianSuper classify themselves. If you take a closer look at the asset allocation of AustralianSuper’s Balanced Fund however, it is 18% in Cash & Fixed Interest, and the rest (82%) is in Equities, Property & Infrastructure, and Private Equity. The high allocation to growth assets, and the lack of transparency around their property / infrastructure / PE valuations leaves at lot to be desired.
The point of all this is that until ASIC mandates clear guidelines around what is a Moderate, Balanced, Growth, etc, fund, it is impossible to compare most retail funds with Industry Funds!
If this is the blanket advice from ISN regarding best interest duty, I would have thought nothing short of an immediate audit by ASIC of every industry fund adviser is required.
If fund performance is one of the most important factors in choosing a super fund David why don’t your constituent members recommend the use of only the best performing industry fund?
Why do they only recommend themselves and tell their members that they are the best when that is not true only 1 can be the best in different asset allocations?
Clarification for a fund member asking pertinent questions just get flim flam i.e. look at our website or PDS. No transparency and no continuous risk assessment cannot be in the clients best interest. As our clients investment advisers under client best interest transparency is key. Surprisingly fees are deducted for Industry Fund Financial Planners. How are IFFP any different to other aligned planners of large financial institutions? Oh that right go to my 1st point.
If that union hack whitely thinks industry funds are in the best interests of clients , then he surely has little understanding of the managed funds industry . The fact is 70% of managed funds do not match up to index over 5 year rolling periods , and around 95% over rolling 10 year periods .Advisers who realise this refuse to sell managed funds full stop . Thats why SMF’and ETF’s are the fastest growing sectors in our industry
Hmmm…..client has review by financial adviser. Adviser recommends he maintain his industry fund but switch risk profile to growth from default balanced. Fund only processes switches at the end of the month. just missed out, has to wait another month. Market goes up by 300 points in two week period. Woops, missed that too. Client’s best interest? NOT THAT FUND. Also applies the other way around with a reduction of risk, and sharemarket drop.
When ISN an numerous other Funds going to come clean on its unlisted funds and secret comms (sorry hidden fees) paid to union owners. This is not in the members Best Interest. The so called “Not for Profit” should be translated into “not for the profit of members but for profit of our union owners”.
David Whiteley is a disgrace to any free thinking individual. ISN is leading the race to the bottom
This is like saying no matter what question you ask the answer is always a lemon. These surveys are based on standard retail offerings. Corporate Super Specialist Advisers will negotiate better admin fees, lower insurance premiums (differences in premiums are often greater than between fees)and generally tailor the solution to the needs of the clients. This often results in retail funds being more suitable (and, yes, in the best interests of the client). Whitely seems to think that the rules that now apply to financial planners, that he has been instrumental in instigating, do not have to apply to the funds that he represents. Why bother to ‘know your client’, just recommend an industry fund. Did I interpret this correctly? True colours indeed.
David,
In the commercial world you need to get your business right first (client service, planner service and systems are some important components too),and then more people will use the product you are promoting.
Greg Cook.
Are retail funds on the recommended list of Industry Fund financial planners?
In this competitive world many retail funds offer lower fees than industry funds, with a greater choice of investment options (that are liquid and valued daily) that have outperformed all their peers.
Past performance is not always indicative of future performance – look at the MTAA fund as an example.
You cannot have your cake and eat it too! Industry Funds have spent millions maligning the planning industry. A super provider must also be assessed on service and, given they eschew planners, upon the quality of their intra fund advice. An example comes to mind, I recently advised an industry fund member who at 64 had never received any notice suggesting eligibility to consider TTR and was still in accumulation and paying tax on quite large fund earnings.
If they expect to be recommended by planners they must change their tune and embrace the industry. This may mean offerring a wholesale version through planners and collecting and remitting fees for service to planners where disclosed to, acknowledged and requested by members.
What rubbish. Given most self employed FPs don’t advise to an ‘average client’, comparing average returns is meaningless and in the hands of the ISN a dangerous and misleading set of numbers. ISN lack transparency on investment, fees, union stakeholdings etc. I for one don’t want my clients to fund the next plush office for the CFMEU, AMWU or heaven for bid the extra curricular activities of the Health Services Union. Whiteley is just another spruiker whose days are numbered. Unfortunately he cant help himself or realise the crowd has moved on.
On average perhaps should be included in that statement. And is it over all asset allocations?
Hello
We actually do have an Industry fund on recommended list and use it.
Is the SMSF strategy on the recommended list of strategies of the Industry Funds? I am happy to run the training course to show when this is in the best interests of clients……
Fortunate to be independent