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Bank super fund fees not justified by performance

Bank-owned and retail superannuation funds charge between 117 per cent and 182 per cent more than not-for-profit funds and still underperform, according to industry funds-backed group, the Australian Institute of Superannuation Trustees (AIST).

Drawing on the findings of research it commissioned from SuperRatings, AIST said the findings shone a light on the long-term underperformance and the higher fee structure of retail Choice products, across nearly all asset classes.

AIST chief executive Eva Scheerlinck said this, in turn, gave rise to a “persistent drag on the retirement savings of thousands of working Australians” and needed more attention from the Productivity Commission and the regulators.

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“Due to poor disclosure and the difficulties involved in comparing super products, most members of these poor performing products are probably none the wiser,” she said.

Pointing to the significant disparity in fees between bank, retail and not-for-profit funds, the AIST claimed that using median fees, someone with $50,000 in a bank-owned and retail fund balanced option could be paying $248.50 a year more in fees.

“… and if they had $250,000, it could be $1,056.62 extra each year compared with a profit to member fund,” it said. “Little wonder the net returns from bank-owned and retail super fund returns are generally lower.”




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Some of the bank-owned funds are cheaper than most of the 'profit for member' funds too. But let's not talk about that... Maybe some advice may help?

And once again, what performance figures are they using...the same flawed figures used in the Compare the Pair ads? Hostplus's "Balanced" option with 98% allocated to growth assets versus a typical retail balanced option with 60%-65% in growth assets.

So, if the person with $250,000 paid an extra $1056.62 over a year as advice fees and as a result of those fees received guidance and direction on superannuation contribution strategy and types, nomination of beneficiary advice, assessment of current insurance cover or potential insurance needs and the provision of an overall better understanding of their superannuation and retirement position so they can make informed and educated decisions,
this is seen as being a waste of money and is repetitively reported in the manner above by much of the conflicted media.
There is a major lack of understanding regarding superannuation planning, so is it better to educated and reasonably knowledgeable and have someone providing advice that you understand or could save hundreds of thousands of dollars in the event of someones death or disablement, or is it better to simply have the lowest possible fee product available because that is seen as value ?
It is entirely wrong to ever think that cheapest represents value...it is a fools mistake.

Hilarious these AIST hypocrites are all the same ones that were named in the recently released 2017 APRA report as receiving the biggest trustee fee payouts (regardless of relative fund size or responsibilities) and wasted the most on advertising. Kettle black much?

Why do objective advisers feel a need to defend bank owned and retail super funds?

Why did the Industry Super Funds provide the Trade Unions, via directors' fees with $18,438,516 between 2013/14 and 2016/17 ?
Are they objective in their distribution of what is essentially being funded by their members ?

Admittedly it's a long time since I did these sort of equations, but I can't make them work when going from $50,000 to $250,000. Assuming a straight unknown % fee on both the $50K and $250K amounts, they're not very close when applied to the amounts given the published differential. They're a lot closer, however, if, instead of using 117% MORE, you use 117% OF (using the lower end of the quoted range). ie. $117 is not 117% MORE than $100, it is $117 OF $100. This is a trend I've noticed a lot in advertising of late. Be a shame if it has infected finance. Happy to be proven wrong by someone with more mathematical skill than I do, however.

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