Super funds falling short on advice offerings

Issues when seeking face-to-face financial advice is the number one unresolved problem most superannuation fund members have when engaging with their funds, and funds’ advice offerings were amongst the most poorly-rated services offered to members.

These were two of the findings of Investment Trends’ 2019 Super Fund Member Sentiment and Communications Report, which also revealed that three-quarters of members interacted with their fund in some way over the last year, including by reading the annual statement (39 per cent), visiting their fund’s website (28 per cent), and reading regular communications (28 per cent).

There was appetite to engage with funds at a deeper level however, with members trying but proving unsuccessful in their attempts to do so. In addition to the issues found with getting in-person financial advice, the most commonly unresolved member issues amongst the activities observed in the study, which drew on the views of more than 9,000 super fund members, were help comparing super funds to other funds, accessing super through mobile devises, and accessing seminars or education content.

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“The most commonly unaddressed super-related activities were also those perceived as the most difficult to conduct,” Investment Trends senior analyst, King Loong Choi, said. “Given members’ significant appetite for advice and education, super funds must improve their access to the services most sought after by their members.”

Advice again came under scrutiny when respondents were asked what their funds did well in terms of member engagement, with advice offerings and seminars and educational materials rated as poorest. Websites and the quality of annual statements were considered the best. Among the funds to gain the highest member satisfaction ratings, ESSSuper, UniSuper and Cbus led the pack.

Further, the report found that superannuation fund loyalty was on the rise, with members more likely to stay with their fund when they change jobs than previously. Of super fund members who changed job in the last three years, 63 per cent said they remained with their fund rather than changing to their new employer’s default. This was up from 54 per cent in 2017.

“When changing jobs, more Australians are making a conscious decision to stay with their current super fund instead of passively accepting their new employer’s default option,” Choi said.

“Increased marketing efforts by industry super funds and recent rumblings from the Royal Commission have further raised consciousness around superannuation, prompting more Australians to move from casual to mindful stewards of their own super.”

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"Among the funds to gain the highest member satisfaction ratings, ESSSuper, UniSuper and Cbus led the pack."
When are we going to see some for-profit funds get into the good performance lists? It cannot be that hard.

@Hedware, the article is about advice offerings and NOT performance. While a high performance fund is of benefit to an individual for their retirement, that does help them make better financial decisions and/or make them aware of other important considerations. However, the industry funds that you believe are better performers mainly offer conflicted intra-fund advice that is biased and has a “carve-out” from having to meet the best interests obligations required by other financial planners under legislation. This type of advice is NOT basic and can include:

- Transition to retirement strategies to minimise tax
- Investment decisions
- Wealth creation strategies including cash flow allocations
- Risk management with insurance advice
- Estate planning with different types of nominations

Even Hayne himself said that intra-fund provisions were being interpreted incorrectly by ALL superannuation funds and it should be significantly scaled back. I’m happy to provide the actual references in the RC if you are not across this recommendation. However, the industry super funds will not be taken to task while ASIC turns a blind eye to how intra-fund advice is gamed to make it quasi full advice without the risks and/or compliance oversights.

People get much more satisfaction if the funds in which they have invested as doing well. They are not making their level of satisfaction on funds letterhead.
I am confused about this continual hang-up on intra-fund advice via industry funds posted here by many posters. (I have to say that I don't know the nitty gritty on industry funds intra-fund advice as I don't have any interest in industry funds.)
Today I attended a briefing by a large for-profit fund and was briefed about its offerings, settings, etc in a manner that could be easily construed as intra-fund advice. I asked a financial advisor colleague at the seminar if she thought it was intra-fund advice and she said yes and confirmed that it was basically similar to that handed out by industry funds except this one had coffee and biscuits. Now I also get this sort of information directly from various for-profit funds.

Seems to me that posters here complaining about intra-fund advice within industry funds are overlooking the same practice in retail funds.
Your list is a good one and financial advisors and accountants provide many more services particularly at changes of legislation and regulations. I dont think funds of whatever colour should be doing the work of financial advisors. How many times do we here of people having all their money in the one fund, investment, bank, etc and so very exposed to collapse, liquidation, corruption, market conditions, etc.
So restrict intra-fund advice to the basics and encourage people to use independent financial advisors.

Hedware, I don't think anyone is saying intra fund advice is an issue isolated to union (aka "Industry") funds. The reason people are angry about it is because the union fund PR machine cranks out all this deceptive tripe about being better than everyone else, and the lazy media happily regurgitate it as fact. Union funds are just as conflicted and dishonest as the others if not more so. They are just more hypocritical. Union funds are AMP 2.0.

Thanks. Okay then we agree on this infra-fund advice business. Hope some of the other posters get a bit more in touch with the reality of intra-fund advice. Beats me why intra-fund advice has anything to do with fund performance.

It is not just industry fund PR that saying that in general industry funds are outperforming for-profit funds. There's independent bodies such as the Productivity Council coming to the same conclusion. The for-profit funds have made a case about false advertising and lost.

On a normal distribution curve there's more for-profit funds at the end of the tail than normal distribution should indicate. There's more not-for-profit funds at the head of the tail than there should be.

What irritates me is that we are paying high fees to for-profit funds and not getting the net returns to justify the high fees. We are paying high fees to experts who are obviously not expert. In percentage terms the fees we are paying here in Australia are higher that equivalents in other parts of the world.

You have regurgitated the tired old line that industry funds are union funds. Employer representatives on the boards of industry funds must get sick of being told they are on the boards of union funds and therefore are unionists. Have a look at the employer representatives on industry funds - some are members of IPA.

Employer representatives are not unionists. But most of them are union puppets. They've been overtaken by younger more capable people in the real world, and need to maintain their status via a token role. As long as they keep their mouth shut and do what they're told by their union masters, they'll cruise comfortably through to retirement.

Upon deciding that you probably do not have any basis for your conclusions, I did relay your conclusions to a couple of employer representatives on industry super boards. I have to say that they were not very complimentary about you and your belief - sorry.

At a cost!

@Hedware, if by “basic” you mean only non-personalised, factual information is provided to members then we are in full agreement!!!

Yes - agree with you.

Do your research Hedware. Superannuation is not all about Investments and Returns. There is this huge component called Insurance. Colonial First State have a non lapsing binding nomination and pay a deceased member's super and death benefits to the nomination and if no nomination pay to the Will. If a beneficiary is no longer dependent then the portion which was to be paid to that beneficiary is paid to the Will unlike Industry Funds who pay to whoever the Trustee seems to think should benefit no matter who is nominated. AMP have a benefactor form and pay to that nomination. It seems only Industry Funds feel the need to intervene in the deceased wishes. This is an area where Industry Funds must improve and advise their members that the option chosen leaves them open to their wishes not being carried out in the event of death. When my son started work there was only one option with REST, a non binding nomination. REST is the fund I have had first hand experience with in this regard and to have to deal with all of this at the time of burying your child is unbelievably hard and gut wrenching. Military Funds do the same as Industry Funds. Problem is SIS Legislation is open to interpretation and needs to be scrapped and started again. While you can talk about Returns and Investment categories this Insurance Cover is a huge part of the Superannuation Industry and not talked about at all. It has to change. Superannuation must be made part of your Estate and can only be challenged by a long term partner (and not just 2 years) and/or if children are involved. Some of the outcomes, according to a QC our solicitor spoke to, would be harder to prove if it had gone to court and yet a Trustee can determine a person can be financially dependent and be paid huge amounts of money (in the hundreds of thousands) when there was no marriage, no engagement, no formal recognition of a relationship, no children biological or step, no shared lease or mortgage, no shared bills, had no furniture in the house and was being paid Centrelink. All of this when the young man involved had Muscular Dystrophy and although a low income worker managed his money and didn't need any help with his personal needs and did his own housework and died mowing his lawn. REST never said that they had brought out a new option, a binding nomination. However, for this to be honoured by the Trustee the beneficiary must be dependent and the nomination not lapsed or again, the Trustee decides. Don't ever tell me Hedware that Industry Superannuation doesn't need change. Superannuation will be the biggest and probably the only asset of the generation working now. For it not to be part of an Estate is ludicrous. All parents beware. What happened to our family can happen to you. There was no back story here. We have to stand together and have Superannuation changed. Don't bother to reply Hedware, you are frustrating and at best and Industry Fund plant.

Under current laws, superannuation does not automatically form part of an estate - superannuation is held in trust similar to testamentary trusts. That's why it is important to nominate beneficiaries for your superannuation and insurance. Same for both retail and industry funds.

Today most superannuation funds either industry or retail allow their clients to set binding nominations. A fund's trustees should abide to the binding nomination but they dont have to being trustees. But they have less leeway if the deceased member has made a binding nomination that meets two conditions. Firstly, the intended beneficiaries have to be members of a prescribed set, and secondly the binding nomination has not expired (usually within three years).

In terms of the case you presented, then you possibly did not fit the prescribed set as a dependant. If there were no dependants to your son, then you may have qualified if you were a beneficiary through his estate.

Not sure how good the regulator is at handling complaints re trustees and binding nominations. I gather that beneficiaries of a binding nomination do not complain but the ones who do are the those who believe they missed out. Bit the same with Wills.

A de facto partner of more than two years has an entitlement that is rather easily defended and one that fund trustees, whether of a retail or industry fund, cannot overrule. That's the divorce law. You would need to get that changed and good luck with that.

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