ISA claims performance reinforces product and advice separation
Industry Super Australia (ISA) has claimed the outperformance of industry funds compared with retail funds demonstrated the need for product and advice to be separated to avoid the selling of underperforming superannuation funds.
Using data drawn from SuperRatings ISA stated that balanced funds offered by industry super funds outperformed similar funds offered by the retail sector over one, three, five, seven and 10 year rolling periods, based on median returns to 30 June, 2014.
According to SuperRatings data used by ISA the median industry fund returns 13.25 per cent over one year and 9.5 per cent over three years, compared with 12.66 per cent and 9.06 per cent for the index median and 11.74 per cent and 8.52 per cent for retail median funds.
ISA chief executive David Whiteley stated that the median balanced retail super fund had not outperformed the index median fund and linked this performance to the need for product and advice to be separated at the retail sector. Whiteley however did not discuss the issue of limited product advice available to members of industry funds.
"The data starkly demonstrates the need for financial advice to be free of the sales incentives paid to financial advisers and other bank employees, to ensure that bonuses and incentives cannot be paid to recommend underperforming bank-owned products.
Whiteley also stated that the data suggested there was a need for a quality filter in deciding which funds should be chosen as workplace default funds.
"The super nest eggs of individuals and Australia's national savings system as whole need adequate consumer protections to ensure superannuation delivers to members and the economy," he said.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
