Add a comment9 Comments

1. Matt | 17 March, 2010 at 01:42 PM
   Scott, do you really expect someone to waste their time summarising their super fund recommendation process to some random on the internet? You obviously are just waiting for your turn to speak again, so please respond to this comment with the point you obviously just couldn't wait to make.
2. Scott J | 15 March, 2010 at 03:17 PM
   Thanks JV. Respect is earned and should not be assumed and my points must have made sense as you picked up on the points I questioned. With regards to your question as to why a business that does not rely on FUM for asset based commissions would measure FUM would be a question about why any business sets any benchmark. I am not speaking for the Equipsuper model but benchmaks are generally set because they are measurable and can therefore indicate if a particular strategy is meeting expectations. With regards to my point about recomending the "in house" fund only, can you please outline your process for reccomending a super fund? What are your criteria for the best option and how often do you review this criteria and how much have your "best options" outperformed your peers or industry benchmarks?
3. Headache | 12 March, 2010 at 02:07 PM
   JV - Nice response ;)
4. JV | 12 March, 2010 at 11:12 AM
   This is what I love about the financial planning world - the camaraderie and mutual respect. Scott J, I find that the only way to deal with my astounding ignorance is to ask questions - much like the ones that I asked. This has clearly tickled your pro-industry instincts and led to these kneejerk comments, so I must apologise - I certainly didn't mean to offend your sensitivities with my words. But, to clarify, my question related to the idea of a '$100 million' FUM being a 'milestone' for the planning business - not the asset management arm of the industry fund. So, I ask again, why is the amount of FUM relevant to an advisory business? From what I can see, it's an illusory milestone, measured in the wrong terms and focussing on the wrong aspect of the advice process. The deeper question is why advisers discuss FUM at all. I can only see the two reasons that I stated. Your post, helpful though it was, didn't clear this up any. I understand the urge to preach and denigrate other comments can be overwhelming at times, but at least take the time to relate your response to the actual question. Oh, I also like your comment about industry planners not recommending other funds because they've not been requested by their clients. Is that how it's supposed to work? Because I was under the impression that we were meant to provide clients with their best options - not simply what they already know. As to the ownership of EquipSuper and IFFP, I'll wear that mistake - totally my error. But I suppose my point is - before you go blasting away with barely sensible posts relating points of, at best, marginal relevance, just take a deep breath and remember some basic rules of courtesy.
5. Scott J | 11 March, 2010 at 06:27 PM
   Greg, I will admot I am not suire of the exact arrangement between industry funds and IFM but I think you will find the relationship is more a collective to provide capital for pooled investment opportunities and IFM charge management fees no differently than a manager such as Colonial First State. There may be some dividend paid to the funds that hold units in these trusts which is simply ninvestment income back into the fund which adds to the overall income of the fund in the interest of members.As to questioning if this is appropriate, I guess it is the same as the FirstChoice platform using Colonial First State as a manager or Navigator using Portfolio Partners (if they are still related - I have not kept up to date with all the movement in this space) and so on. Industry funds do not solely use IFM for their investment management and use many of the managers who pay to be on the retail aproved product lists. With regards to the $1.50 per week Admin fee you are spot on. This is the admin fee. The investment management fees are in additiona and on top of the $1.50 per week and just like the retail world vary on the actual investment choice. Where insurance commissions are payable again it is generally treated as income to the fund and part of the return. Where an industry fund has a profit in most cases it is used to defray cost and allow for an admin fee of $1.50 a week only. This is a mutual concept where the profits are returned to the members as opposed to being hived off to share holders and in the form of commissions. It is pretty straight forward and I am sure Greg that if you and similar thinking individuls bothered to read an industry fund PDS and annual report you could see that it stcks up as puported.
6. Greg | 11 March, 2010 at 04:00 PM
   Thats easy-they earn their money from asset commission-and receive more of this for badged or inhouse investments such as their own infrastructure investments from their investment arm. Remember IFS members (ie the funds) own a share in their investment manager (.IFS) They then receive a healthy divident based upon their asset commission err sorry dirty word-fee that IFS charges to manage the FUM. Forget about the $1.50 per week-that is peanuts and largely irrelevent. They also receive insurance commission also into their profit margins.
7. Scott J | 11 March, 2010 at 02:22 PM
   JV and professional planner your ignorance is astounding. JV industry funds concern themselves with FUM because the more FUM, the greater they can squeeze the underlying investment managers on their fees they charge. This keeps the investment costs down for all the members. Also Equip Super planners are not employed by IFFP therefore to attach any supposed "holier than thou" connection to this article and the IFFP association is simply wrong. Professional Planner you will note that many industry funds (who do not use IFFP) may hold their own AFSL for their advice activities and employ their own planners. If you did any reserach you would also note that 2 out of the 3 Equip Super planners as per their site are CFP's. Are you? PP you are probably correct in that these planners have never reccomended another fund but I am sure that they have probably also had minimal requests from clients who have been long term members of their associated schemes to do so. I hope you do more research into the funds and products you reccomend and give more consideration to the strategies reccomend than you do to observations about the wider industry.
8. JV | 11 March, 2010 at 12:40 PM
   Why if FUM important to a 'commission free' industry fund? FUM should only be relevant to groups receiving commissions or charging percentage based fees - either of which would dilute the holier-than-thou IFFP message, I would have thought...
9. professional planner | 10 March, 2010 at 11:46 AM
   surprise, surprise, an industry fund saying financial planning is ok after all. no conflict of interest there. i wonder how many of their advisers have recommended shifting to another fund?