Focusing on choice issues

The underlying theme of this year’s Association of Superannuation Funds of Australia (ASFA) national conference in Melbourne is ‘Commonwealth’, but by ASFA’s own admission much of the interest will be focused on the issues that have been generated by the new choice of superannuation fund environment.

The ASFA conference is being held as the industry superannuation funds and a number of the master trusts continue their advertising campaigns aimed at retaining and recruiting members, while two start-ups — Virgin Super and Maxsuper — ruffle feathers among not only the existing superannuation funds and master trusts, but also the financial planning community.

Reflecting the underlying tensions being felt within the superannuation industry, ASFA four weeks before the conference pointed to a debate to be held on the second day between the principals of the four agencies who make a practice of rating Australia’s major superannuation funds and master trusts — Jeff Bresnahan from SuperRatings, Warren Chant from Chant West, Alex Dunnin from Intech and Wayne Walker from Rice Walker.

In the words of the ASFA media release, “sparks are sure to fly” as the four principals give their views and then their methodologies are assessed by ASFA’s Principal Researcher, Ross Clare.

“The criteria and features utilised by the ratings agencies can be controversial, and choice of fund raises the stakes for consumers and the industry alike,” the ASFA promotional material said.

What makes the debate really interesting, however, is that Chant and Bresnahan are being seen as holding some of the opposing views reflected in the approaches adopted by the Investment and Financial Services Association (IFSA) and Industry Fund Services.

Chant made those views clear at the IFSA national conference in August when he suggested that the “net benefit to members” calculation being utilised by the industry superannuation funds could be misleading — something that prompted the executive chair of Industry Fund Services, Garry Weaven, to threaten to refer Chant’s claims to the Australian Securities and Investments Commission.

Bresnahan is expected to have to defend the “net benefit to members” methodology because the industry fund advertisements are largely based on data compiled by SuperRatings.

What delegates to the conference are likely to find interesting is Clare’s independent assessment of their methodologies, particularly in circumstances where he has signalled that he will be pointing out their strengths and weaknesses.