Financial advisers have used responses to a Money Management survey to accuse industry funds of not doing enough to stop members making inappropriate investment switching decisions amidst the current market volatility.
Asked what they believed was the worst thing clients could possibly do amid the current market volatility, a number of respondents pointed to client confusion around industry superannuation funds which were labelled ‘balanced’ but were, in reality aggressive.
They claimed that, on top of this, members were switching to cash on the basis of intra-fund advice and effectively crystallising their losses.
One adviser said that selling and moving funds to cash or defensive assets in the current environment represented a serious mistake.
“They are crystallising losses, whereby, if invested correctly they will still get good dividends, that are much better than interest rates, from shares,” he said.
In fact, the overwhelming sentiment from advisers was that the last thing clients and superannuation fund members should be doing was switching to cash.
The comments from survey respondents came against the background of confirmation last week by industry fund UniSuper that more than $2 billion had been the subject of member switching the face of the current market volatility.