The application allows users to compare the asset allocations of up to five fund options and benchmark them against Lonsec’s own strategic and dynamic asset allocations. It aims to give advisers a clear view of where funds are allocated and whether it is the right fit for their client.
Available on Lonsec investment research platform iRate, the tool is powered by SuperRatings, based on a survey of the Australian superannuation product market.
Lonsec has aimed to address a challenge for advisers in terms of how asset types are categorised across options in different super funds. Two super funds may present a ‘balanced’ option that may have significantly different asset allocations, leading to diverging outcomes, the researcher said.
“Failing to understand an investment option’s asset allocation can mean there is a risk that the option does not meet the licensee’s policies and guidelines, resulting in potential non-compliance,” Lonsec noted.
Lonsec chief executive Charlie Haynes said advisers should understand where superannuation products allocate funds rather than relying on labels to make recommendations.
“Super funds use labels like ‘growth’ or ‘defensive’ to characterise an investment option’s asset allocation, but often these don’t tell the full story,” Mr Haynes said.
“Understanding the underlying asset allocation, how it aligns to a client’s risk profile and how it compares to peers is essential for financial advisers who have a duty to act in their clients’ best interests.
“It’s not our job to tell advisers which asset allocation is most suitable for their clients, but we can make sure they have access to all the information they need to make a fully informed recommendation.”
wow this is ground breaking stuff