Garry Weaven: Sparking the choice debate
In the debate that raged between industry and retail funds through the year, Industry Fund Services chair Garry Weaven managed to keep the argument focused on comparative costs and dollar returns delivered by each type of superannuation fund, and sell the benefits of industry funds to consumers at the same time.
“With an industry super fund, everyone can access low fees and strong performance, because industry super funds are run only to profit their members,” he said during the year.
The retail funds’ counter-argument followed that while fees and charges were important, features and services were the critical elements in assessing the “value proposition” of any new fund consumers might be considering.
But while Weaven conceded that fees represented only one aspect consumers should consider, he continued to promote the message that lower management fees on industry superannuation funds meant members would be better off in the long-term than their peers who had invested their super in retail funds.
Weaven presented research from Sydney-based research house, SuperRatings, to illustrate his point, and used the figures as the basis for the IFS advertising campaign ‘Compare the Pair’ and ‘A Lifetime of Difference’, which projected an accumulated retirement benefit based solely on fund performance relating to fees, and including no investment component in the return.
The IFS campaign met with criticism from the retail fund camp, with an analysis report prepared by research house Chant West suggesting it was based on “misleading” figures. Weaven was quick to defend the industry funds, and suggested that, in fact, it was the Chant West report that was “deliberately misleading”.
Separately, the Australian Securities and Investments Commission (ASIC) raised concerns that the IFS advertisements might confuse consumers and forced their advertisements to be amended soon after they went to air.
Trail commissions were the subject of another prong of Weaven’s attack. He claimed this form of commission “erodes [members’] hard earned retirement savings”.
Weaven also accused planners and accountants of failing to recommend industry super funds because they did not pay trail commissions to financial advisers.
“If there is cause for concern regarding commissions paid on managed funds, that concern is magnified when it comes to superannuation, where commissions can persist over a working life-time,” he said.
Love him or hate him, Weaven brought the choice of fund issue firmly under the spotlight, and perhaps even highlighted the regulatory change to Australian consumers known for their super apathy.
His comments regarding the planning community may have been met with derision, but they certainly made an impact.
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