Industry funds become corporate super advice turnkey

The industry funds’ financial planning footprint is expanding as a result of key outsourcing decisions being made by corporate superannuation funds.

Superannuation outsourcing tender consultants confirmed to Money Management that industry funds emerged as the preferred outsource option for corporate superannuation funds in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Planning Industry, including for the provision of financial planning services.

In many instances the financial planning beneficiaries were not just Industry Funds Financial Services but those self-licensed financial planners who had made it onto the panels approved by the winning industry superannuation funds.

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The continuing trend towards corporate funds selection industry funds for outsource arrangements was confirmed by both Deloitte and actuarial consultancy, the Heron Partnership, with Deloitte superannuation partner, Russell Mason, saying it reflected the evidence which was heard during the Royal Commission.

Heron Partnership managing director, Chris Butler also confirmed that industry funds were tending to be the front-runners in the outsourcing tender stakes, with some corporate fund trustees specifying which retail fund providers should not be included in the tender process.

Former Workplace Super Specialists (WSSA) chief executive, Douglas Latto said there was no doubt that industry funds had become front-runners but said it was not just based on what had been heard during the Royal Commission but also on investment performance.

“Investment performance is pretty important and ultimately tends to trump administration,” he said.

The discussion around the success of industry funds in winning corporate superannuation outsourcing mandates came at the same time as the Australian Securities and Investments Commission (ASIC) announced that it had selected AustralianSuper as the default fund for its new employees.

ASIC made the default fund selection in line with it having been removed from coverage by the Public Service Act.

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Yep, let's up all our 'balanced' profiles to 90/10 splits and retain 'unlisted' irregularly valued assets on our books or better still record 'building cost' via union approved contractors for our property valuation, not 'market value' for property so we can all say how amazing our performance has been.

Hopefully the new ministers will begin enforcing Trustee obligations to the full extent of the law, with some of the dodgy brothers coming up with these bs schemes taking a personal tumble.

Union involvement in super funds has to be totally extricated to avoid these corrupt practices and utter conflict of interests

What is the objection to unlisted investments? Private commercial companies exist. Unlisted property funds exist. Start up companies are unlisted. Currency transactions are unlisted. Too many unlisted vehicles to list them all. Even the Future Fund invests in unlisted assets and that is being chaired by a well known conservative.

Plenty of rich people invest in unlisted assets. Plenty of very rich people invest in unlisted assets. None of the people on the top 100 richest list would make it given your belief that unlisted assets are somehow illegal or unfair.

The issue is one or two of the large Industry Funds are exercising restrain of Trade by denying advisers the ability to invoice fund members who wish to come to you for advice. I am delighted to advise that CARE SUPER now permits all advisers to invoice for advice. I would suggest those Industry Funds who are acting under intrafund advice arrangements, & have a tied agency advice structure in place, are going to start to lose some business pretty soon, because of their refusal to allow external invoicing of their members.

Yet again you raise a strawman argument and don't address the actual point the poster is making. Ho hum boring.

I am sure I know who Hedware is. If I say who it is my comment will be blocked as it has been in the past. Maybe this will get blocked too.

Seriously, even ASIC believes the rubbish performance comparisons. On a like for like asset allocation basis industry funds don't outperform anyone. Put your money in a Vanguard index option with matching risk profile (which would need to be High Growth) and you'll end up beating them. How long is this myth of industry fund out performance going to be allowed to continue.

I have noticed that Lonsec have downgraded Hostplus's default Balanced option to Investment Grade because of the inherent risk in such a large exposure to unlisted assets. At least someone understands what's really going on.

Well said Brett, totally agree

ASICs decision to award AustralianSuper it's default fund needs a parliamentary inquiry, actually. There are other Industry funds that have far superior insurance coverage, for starters.

ASIC needs a full parliamentary inquiry full stop!

If you jump onto Morningstar, it is easy to find numerous funds that thrash some of the leading Industry Funds. The reason they are "leading" is because in reality they are very high growth funds that exercise smoothed returns, being compared against more moderate balanced funds. The industry provided comparison tables are a total scam.

Exactly. This is because the specialist super comparison "research companies" make most of their money from licence fees paid by the union funds to use those "independent ratings" in their marketing collateral. Comparing a 90% growth asset fund to a 50% growth asset fund in the same so called "balanced" category is not apples to apples. It's misleading and deceptive.

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