ISA attacks $10b retail super drag

1 May 2018

The value of Australia’s superannuation system could have been improved by as much as $10 billion a year if bank-owned retail funds had performed as well as industry and public sector funds, according to new Industry Super Australia (ISA) research presented to the Productivity Commission (PC).

The research, undertaken for ISA by former Australian Prudential Regulation Authority (APRA) manager, Dr Wilson Sy has been presented to the PC as providing empirical proof that retail superannuation funds are acting as a drag on the broader industry.

In a covering explanation, ISA director of policy, Zachary May also pointed to other findings contained in Dr Sy’s research involving a case study of the Commonwealth Bank’s Wealth Management arm.

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“This study suggests that in addition to direct costs to CBA superannuation members such as declared investment fees, indirect costs (such as stockbroking commissions, margin lending and financial advice) are a significant source of profit for the corporation,” May said.

In the executive summary to his report, Sy claimed the inefficiency of the superannuation system could be attributed significantly to the consistent and persistent under-performance by an average of 2.1 or 1.7 per cent per annum (after all costs but before taxes) of the retail sector at 4.6 percent, compared to the industry sector at 6.7 percent or to the rest of the system at 6.3 percent.

“At March 2017, retail sector assets was $577 billion; if the retail sector had performed in line with the rest of the system, then the outcome of the whole system would have improved by about $10 billion per annum,” he claimed.

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once they are forced to move all old legacy policies into newer cheaper versions by the RC all of this constant comparison mismatch will go away.

You mean the ISA whose board members are predominantly uneducated Union officials? The ones that the Royal Commission in 2015, Commissioner Dyson Heydon termed as "louts, thugs, bullies, thieves, perjurers, those who threaten violence, errant fiduciaries and organisers of boycotts". The same ones accused of kick backs and incentives for employers who use their funds, undisclosed commissions, unreported million dollar payments from funds to Union parties and Labor political campaigns, opaque investments, mismatched asset valuations and returns reporting,.. you mean them?

Oh yes, their word carries a lot of credibility.

But perhaps only if you're the inept ASIC official who refuses to investigate or the current idiotic RC commissioner who never brought them into the obvious bank and planner witch hunt.

When are you idiots going to learn that the boards of industry super funds are 50:50 employer and employee representatives? How hard can it be to learn this?

Here is an example, One employer representative who is on the Australian Super is Innes Willox and he runs the business lobby group AIG - a group which is often taking it up to the unions. He is regarded as a strong contributor to the board of Australian Super and shares the success of AS in achieving good returns to the members.

One of the unanticipated result of the Heydon RC is that employers would found to be complicit in the union ways and means. That why that RC disappeared quickly in the dust.

The current RC has more dirt on the banking and finance advice industries already than the Heydon RC ever did.

You have no credibility if you think that the banks et al never made any political donations either overtly or covertly. Just ask around. Turnbull, Morrison and Dwyer run protection for them for so long stalling any RC.

Business is now worried about another RC into the wider business community and it is not hard to see why. Just one example, the farmers supplying to the grocery chains would welcome a RC into that industry.

Credit where credit's due, Hedware. A 50% mark at school is a pass, so on this basis, we can say "predominantly unedcated union officials". And now that there's a degree requirement, we can point to pass mark requirements at universities to back this up as well. Checkmate industry funds!

Clearly from the RC we can allege that 50% would be a difficult challenge for the financial planners illuminated. Henderson turned out to be very uneducated.
I would be after a financial planner who did much better than 50% - say at least Distinction level.
That said, there are good numbers of financial planners who have studied and keep studying as professionals do.

Comrade D Headware!! Wondered when your strident socialist voice would clamor to defend the Union funds! More dirt than Heydon RC, where Unions were literally and officially called corrupt, theives, liars, perjurers, violent bullies et al? Wonder how many white collar bank employees threatened violence unto others, but of course that's not as bad as making political donations. At least the vast majority of the non-socialist donations are declared and from knowing contributors. Can't really say the same about the sleazy underhanded 'fees' or 'sponsorship' that unbeknownst to ISA fund members is ripped out by the multi-millions and handed to the unions thugs or direct to campaigning for Labor (that current ad about big bad corporations taking advantage of poor little workers just before an election year really tugs at my heart strings as it's so genuine and not politically motivated at all!).

Bring on an RC into basically all big businesses and various professions, totally agree with you for once. However lets start with the biggest con job out there, the biggest single expenditure item on our ever increasing national deficit, the politicians themselves and the public servants as a whole.

JJ I am just helping you have a balanced view of the world of banking and finance and can't really give you a pass with your last post.
You seem to have selective memory. Try this one example to refresh it. In 2016 Operation Spicer into the Liberal Party slush fund Eight By Five (illegal political donations) saw a number of New South Wales Liberal MPs resign. There are many more incidents of undeclared donations by Nationals, Labor, Greens and One Nation that we know about.
In terms of the violence, sadly there are victims who ended up committing suicide or dying early because of financial mayhem caused by their white collar advisors. To some a pen was as deadly.

Heady, I see that you decided to debate my points of fact with name calling and your own personalized opinions? Great display of mental prowess bud :) What are you, in grade 2?

The part that made me literally laugh out loud though was when you then talked about 'credibility', and backed it up with 'just ask around'; that was pure gold. Clearly not in grade 2, that comment shows you must be a cab driver :)

There are certain funds on the slightly higher fee super platforms that are knocking the lights out. But you never hear about them.

The Industry funds have outperformed in recent rising markets but skewing their asset allocations to an ever more aggressive mix. Its a game of chicken, who will blink first but they darent back off due to risk of underperforming their peers. This will end in tears next serious market correction and the relative underperfomance of most retail funds will rapidly disapear.

That's what should be happening. Fees are paid to get the 'experts' to do better than the market indices.

Funds can't be in the top quartile all the time, and that is to be expected. Diversification is used to mitigate volatility.

But if those certain funds are knocking the lights out then why are they not better known? It is noticeable that funds don't publish their performance statistics as much as they once did.

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