Compare the pair of sole purpose tests

26 March 2018

Outsider knows that all financial planners will be gratified to have heard that Industry Super Australia has joined with research and consultancy outfit SuperRatings to update the so-called ‘compare the pair’ advertising campaign.

Unless you’ve been living under a rock for the past decade or so, you’ll know that the ‘compare the pair’ advertising campaign played a significant role in removing commissions from the financial planning industry and in driving the Future of Financial Advice legislation.

So how has the campaign changed, you ask? Well, ISA and SuperRatings have come up with a plan to compare the pair over the short, medium and long-term – that is three years, 10 years and 15 years – rather than the single year equation which ran for so long.

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Outsider is a little stunned at the boldness of the plan outlined by ISA chief executive, David Whiteley in circumstances where many of the chief executives of the superannuation funds which have paid for the advertising are being asked to front the Royal Commission into Misconduct in the Banking, Superannuation and Finance industry.

Outsider suspects that the Royal Commission may wish to compare its version of the sole purpose test against the version being relied upon by the ISA, but he is sure Mr Whiteley is more than up to the challenge of explaining how it all works.

 




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When we do our own compare the pair we come out front about 90% of the time over 1 year and the percentage gets higher over longer periods.
Of coarse we are comparing accounts with balances larger than the $150,000 used by the industry funds and we compare actual member statements of the industry fund person who is about to become a client to existing clients with similar account activity so we are not exactly comparing apples with apples because it is impossible to find someone with the exact same starting balance and the exact same account activity however we do take into consideration all fees including our Adviser Review Fee.
I would love to know why the ISA modelling only contains the 16 Industry SuperFunds? And what would have been the outcome if all Industry SuperFunds were included? I would also like to see funds closed to new members excluded from the 77 retail super funds and how the comparison would have panned out then.
I would also like to know the percentage of Financial Planners who use a typical Retail fund as it is my experience most use a platform to create a tailor made portfolio to suit the client which then gives significantly different outcomes.

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