Stuart Milne: Too much to choose from
A key theme in the FPA presentation on super choice by Stuart Milne, co-principal of consultancy Praxis Partners, is on representing choice as the “quasi deregulation of the superannuation industry”.
Milne draws a parallel between now and 10 years ago in the home loans market to illustrate the potential for investor confusion in the super market.
“If you wanted a home loan 10 years ago, you went to your bank manager, whereas today you go to a mortgage broker and they provide you with 400 different options.”
Milne’s presentation is a “look at what happened with choice in the four months we’ve had it and what’s going to happen in the future”.
It will also look at the “long road since choice was floated as an idea in 1996, and the fair few changes in industry that have occurred since then”.
A related theme in Milne’s presentation will be that consumers are “thoroughly confused” by the choice regime.
Milne believes the confusion stems partly from Australian consumers equating choice with choice of investment fund, when it is not about that at all.
“Consumers have had investment choice for a long time. They are looking at fund choice now, and not quite understanding what it actually means.
“Essentially, choice is about choosing a super fund, whereas investment choice is about making investment choices once you are already in a fund.”
He said the launch of choice in July had also inevitably led to investor confusion by putting dozens of new superannuation products in front of investors.
“We found that as people had more and more choice available to them they struggled with distinguishing between them.”
The amount of funds and the product similarities between them also raises the “interesting question of what are people basing their decisions on under choice”, he says.
“We basically get down to fees, investment performance and insurance, given that investment choice has been there for a long time.”
Milne also predicts more research being provided on super funds, with the hook up with van Eyk and Chant West an early example.
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