High fees eroding super: ING Direct

Within its research, ING Direct found Australians paying high fees of around 2.33 per cent mean their final retirement savings are being “eroded” away.

“Super fees can range from [zero] to around 2.33 per cent. In dollar terms, this means that annual fees can range from $0 to $1,165 on a super balance of $50,000,” a statement from ING Direct said.

“Some of the top fee-paying Australians are paying around 2.33 per cent. The lowest fee-paying Australians are paying a median of 0.51 per cent,” it said.

Commenting on the findings, ING Direct head of third party distribution Mark Woolnough said if performance of the fund outweighs fees, investors are generally happy to pay.

“However our research has shown that high fees don’t necessarily guarantee higher returns and in fact can leave a significant hole in a client’s retirement nest egg,” Mr Woolnough said.

“Ultimately it comes down to value, and with the rise of passive investment strategies, high fees are becomingly increasingly difficult to justify.

“Through a simple review you could potentially save your clients hundreds of thousands in what is arguably one of the largest investments they will ever make. That’s adding real value,” he said.

ING Direct also found in the 10 years since 2004, average super fees have fallen by a total of 0.42 per cent for retail super funds and 0.23 per cent for industry funds.

“The reduction in fees has been accompanied by increased use of passive rather than active investment management.

“The percentage of assets passively managed by a representative basket of retail funds has risen from 24 per cent in 2011 to 46.6 per cent in 2013,” the statement said.