Such an important article Bec, and clearly explained. Being advised to move to a platform was exactly what happened to me earlier this year. I had a smallish super balance and very straightforward needs. Given this was the biggest financial decision of my life, I took a step back when my instincts told me this wasn't the best option for me, so I paid for advice from an existing fund. Such an expensive exercise but so important. Ended up staying with a fund and allocated pension, simple and not reliant on one person.
It's so important that people vet their financial advisors, and also understand what good financial advice actually looks like. Otherwise you may not be receiving objective recommendations.
An important article and seems like a corrupt practice to me. Makes me realise that my financial advisor recommending I stay with my super fund means she truly was working for me and not herself.
Hi Beck, a very topical article. Over 2 years ago I engaged an Advisor who was recommended by a friend. At the time my brother and I were dealing with winding up our parents estate which involved their property being part of a family trust. We had made the decision to sell the property before engaging with the Advisor, and sort advice on how to minimise capital gains and dissolve the family trust. At the same time I sort advice on the best “solution” for my super and retirement strategy, with a goal to retire within what I originally anticipated would be 3 years away. Consequently accepted the advice to roll my existing industry super, my share of the RAD refund from our mothers aged care facility and the proceeds of the property sale into a SMSF. It was a substantial amount, and a tax effective result over the last two years, all along while maximizing my confessional contributions. Costs of setting it up and initial advice wasn’t cheap, over $14K. I lost about $80K in the super transfer due untimely market downturn. And I am totally bewildered at the weighting I have in 5 underperforming stocks in the healthcare sector. So a bit disillusioned the exercise has not been as beneficial as what it could have been. Now the ongoing cost of this advice has dramatically reduced my disposable income, to the point where I feel trapped in to working longer than expected, while paying 1.085% monthly, as well as an annual wealth management package fee to the advisor. To the point where I am considering getting alternative advice, to determine if this pathway is the best option and the cost of unraveling. It is a bit daunting and depressing. I now categorize Advisors along with, car salesman, real estate salesman and HR people, who are perceived to be working in your interests, but in reality satisfying themselves as the priority.
Bec, such an important article… Several of my friends have been burnt with this, moved into a complex platform they don’t understand with hidden fees to the advising firm and in all but one case, worse returns over the last 5 years than any of the to 5 not for profit funds. The tragedy here is that many people need advice, but the often $7000-$10000 cost and the ongoing advice fees when they have simple situations is almost criminal in the way it fleeces money from people.
After reading your article I looked into the performance of last 6 years with an advisor on a platform. It turns out that my returns were well below that of industry superfunds due the the nature of layers of fees within the platform and the 1% taken by my advisor to manage it. I sacked my financial adviser and consolidated my entire account to an industry superfund.
Well done Bec you hit the nail on the head about advisers thriving on building a complexity shroud around investing and superannuation and always wanting to move your perfectly good super to one where they can trap you and charge fees indefinitely. When I asked why would I want to move my government backed super fund GESB and my gold state super where it can earn a guaranteed rate of inflation plus two percent to a platform they work with he got upset and told me it's the way of the world and that they are not here for the love of mankind they are here to run a business and make money needless to say never saw that adviser again. That is a real problem and that was from a supposedly reputable adviser. Nobody will look after your own money like you would yourself.
This article makes a number of useful points, but it is let down by a series of inaccuracies.
The key to getting a great retirement plan is understanding the scope of what you are seeking and the nature of the advice relationship.
Any retirement plan must consider the portfolio that will underpin the financial outcomes. This necessarily entails evaluating the appropriateness of the current fund(s) and, where appropriate, recommending an alternative investment or account within the current fund or another fund.
But if you think this means that this doesn’t involve “benchmark[ing] your existing super fund against alternatives, or tell[ing] you your current fund is performing well and you should stay”, then you haven’t read what the law says.
The adviser must (s961(e) of the Corporations Act) “investigate, consider, and evaluate a reasonable range of financial products and strategies that might achieve the client's objectives and meet their needs”
ASIC sets out what it expects in RG175:
When the outcome is a recommendation to switch funds or investment options, the adviser must investigate the existing product to determine whether it meets the client's relevant circumstances — not just the recommended product.
The adviser must consider the benefits and disadvantages of the existing fund, and such advice will generally be appropriate only if it is reasonable to conclude that the net benefits of the new product are superior to those of the existing one.
This review would necessarily include items that influence the net financial outcome over a lifetime, such as fees, long-term past performance, taxes, the ability to manage sequence-of-returns risk, how mutual ownership risk is managed, and exposure to unlisted assets. For many non-quantitative matters, such as service levels, the availability and design of an app, or the way information is communicated, will also be important.
None of this can be contracted out by choosing a narrower scope.
The argument that “You’re choosing an ongoing investment management relationship, and that’s a different proposition altogether.” Fails to understand the nature of a super fund.
A super fund is a bundle of services, including investment management (or more correctly, portfolio management), which establishes how the funds are to be invested (asset allocation). This is often done in conjunction with asset consultants – likely the same ones your adviser uses. This is not optional – everyone needs it. A handful of SMSF investors do it themselves with mixed results – the median SMSF underperformed the median APRA fund.
It also includes Trustee services – licensing, compliance, custody, customer service, and accounting. There are just 63 of these licensed in the country.
It also includes fund management, which involves selecting and managing individual shares, bonds, and other assets to be held. This is usually done by external managers. Most funds outsource most of this activity, often to the same managers that your adviser will select.
Hostplus, like many funds, does not manage any assets in-house – just 29 of its 360 staff are involved in investment management. The Commonwealth Superannuation Corporation is legally barred from doing so.
Your choice, therefore, comes down to whether you buy these three services from a single provider or elect to unbundle them and adopt a best-of-breed approach.
Unbundling involves choosing a super fund (called an IDPS or wrap) where the trustee takes investment instructions from you or your adviser. Your adviser will provide investment advice, and the funds will be invested with professional fund managers.
Unbundling will result in lower taxes during accumulation and a better ability to manage the sequence of returns risk in retirement. Together, these alone can deliver a higher safe withdrawal in retirement.
Neither is right for everyone. But if you choose a bundled solution, be aware of the true costs involved.
But the notion that you need to choose between investment management and a strategy is fundamentally flawed.
Hi Vince, Lovely to see you're reading. The reality is that many people think they are buying strategy when they come for advice - they don't realise its usually an ongoing investment relationship until much later, after they've spent the money. All I want is for people to understand that all the propositions now are linked to investment management, and most people don't understand this. Transparent info on how things work should be good for everyone. It's more common than ever for advice + investment management to happen on a platform; or a member to seek advice via a fund friendly adviser if they want to stay in the superfund system. It's not an argument. It's how things work. I even remember you telling me when we met recently that most of your financial clients are ongoing - and on platform 😉
I think consumers should be aware of the choice to get advice that's super-friendly an stay with super; or choose advice + platform; or actively seek properly strategic advice from an adviser that is deliberately willing to provide that service without moving to platform (which many will admit isn't desirable for them).
For others reading - Vince is an adviser. We love advice - we love super and we love platforms. We also love transparency, people understanding how things work and making active, informed decisions.
You continue to peddle this false dichotomy - that somehow the choice is between "staying in the super system" and choosing an unbundled option and/or getting strategy advice. This simply doesn't exist. You are not being helpful by perpetuating this.
Investor-directed portfolio services, superwraps or platforms are very much part of the super system. They are run by many of the same RSE license holders; in fact, 7 of the top 20 super fund trustees are IDPS trustees. This is hardly a niche sector.
So a retiree choosing an investor-directed option is still a member of an APRA-regulated super fund with all of the benefits that entails. It comes with the added benefits of lower taxes during accumulation and a better ability to manage the sequence-of-returns risk in retirement, and consequently is likely to deliver a higher retirement income (all else being equal). Of course, for some, the additional costs (especially for balances under $70,000) may outweigh the benefits. For others, this option will be cheaper due to capped admin fees on most platforms. For everyone, there is a solution that fits.
If by "Super Friendly" you mean a professional who is willing to compromise on outcome solely to allow a client to remain in an unsuitable fund or one that is likely to deliver a lower retirement income, then you are doing your audience a disservice. No adviser worth their salt should accept such an assignment, and it is likely to be in breach of the law.
Referrals from many of the big funds usually come with an expectation that this is what should happen - either explicitly or implicitly. Certainly, the flow of future referrals will dry up very quickly should you recommend anything else. This is why we don't accept referrals from many of the major funds.
If you mean an adviser who, having reviewed a client's existing fund as part of a retirement strategy and concluded it is the best option for the client, recommends they stay there, then that is simply what the law requires. If you know of any that fail to do this, then you should report them to ASIC.
For some, staying in their current fund may be the better option. Others may choose familiarity over optimisation. That's why it's called personal finance - because it's personal.
There is no conflict between strategy development and the choice of solution or underlying portfolio. All retirement plans must be underpinned by a portfolio that generates sustainable income. This requires compliance, portfolio construction and investment management. A retiree can choose to bundle these together and buy them from a single provider, or unbundle them. In both cases, they are free to roll over to another option if they no longer believe it is right for them. There are no exit fees, and for retirees, no capital gains tax implications. They are not exiting the super system.
An adviser must not advise a client to move funds unless there is a clear benefit that aligns with their goals and exceeds any disadvantages.
And just to correct your comment about our business. We do not have ongoing advice fees. All retirement advice is a fixed-fee service with a fixed scope of work. When we construct a portfolio (as distinct from recommending a prepackaged fund option), we provide ongoing portfolio management for a fee and manage these portfolios on one of several platforms, depending on the client's needs and the source of the funds.
Vince, I am always flabbergasted at how concerned you get about me teaching consumers how things work, transparently. I have no bone to pick with your business or any other unless you're operating opaquely or ripping consumers off. Nor with platforms - in fact I deeply respect their offering. I just want the proposition of advice + investment management better understood so it isn't so much of a surprise to everyday people - which as you can see in the comments and all over social media, it is a mystery to most.
It shouldn't be so poorly understood, or so overwhelmingly one-sided. Your comments reinforce what I'm saying - that consumers who want to stay within the realm of traditional super funds should assume they won't have that recommended by most advisers as they run a business alternative to this - offering ongoing portfolio management - as you call it. This is by its very nature an alternative to having your conventional superfund provide the same service. And while many would, others would not be doing so for the circa 0.7% in admin cost that a fund offers, or for similar performance. That is very personal as you say...
Platforms are regulated by ASIC too, as you can see in today's media. But the offering is distinctly different. A member of a superfund is a clearly different proposition to someone investing via an ongoing investment relationship with an adviser, managed on a platform.
Consumers should understand their choices. I'm not suggesting you have to offer all the options. And I'm not suggesting they need to walk into every advice office and get that.
I am just suggesting that they go looking for the different options available knowing the evolved state of the market, assess what they need and want their ongoing service to be, and seek an appropriate service provider for their needs.
Well, it looks like we are on a unity ticket on education and transparency.
You are muddying the waters by creating this divide between bundled and unbundled. They are simply two roads to the one destination. If this leads even one consumer to limit their options based on a mistaken message that one is inherently better or worse, then the world is a worse place. I'm sure that's not what you intended, but that is the effect.
Consumers can be assured they will receive advice that is in their best interests, whether that's a bundled or unbundled solution.
I just think advice and ongoing investment management are becoming a joined up service because advisers find its a great way to deliver the businesses they want to run. That's not a bad thing - it's just something noone is talking about. I pledge to make it fairly understood. I do think a lot of people trot off to get advice who don't want ongoing investment management today and the advice sector would be a lot better off for some good expectation management about what they do offer and where they are a practice that specialises in this manner - many do when you speak to them one on one, we're just not educating on it at scale because it's an industry of smaller businesses without a lot of media reach
The bit you are missing is - everyone needs to buy investment management, even if they think they don't. They are already buying it from their super fund. It's just not split out transparently.
This is not a choice between buying and not buying. The only question is who they choose to buy it from.
You can choose to buy it from the people who provide the rest of your super fund components in a single transaction, or you can buy it from your adviser in a series of related transactions.
What do you think the 29 people in investment at Hostplus are doing when they don't manage a cent in-house?
A great article, Bec and all good, sensible advice. I would add one other 'gotcha' that ties into what you've written.
I'm still working well past the 'not-working age' - I refuse to use THAT word (retired!) - but earlier discussion with advisors (prior to money changing hands) almost all seemed to be selling the concept of maximising funds growth in Accumulation mode. However, when asked how to best manage drawdown in Pension mode, like managing sequencing risks etc, none offered any real or practical way forward.
Perhaps these advisors were all 'young' and had little, or no concept of how to draw down on your 'pot' once the monthly salary bank deposits stop ! Simply no lived experience.
Many more tales to offer, but best to sign off while I'm ahead !
Yes we suffered same fate. Ignored it and our SMSF has exceeded all the benchmarks they set with their new platform and complicated asset mix. As a member of super guide, and with a husband who was portfolio manager for 30 years, we are able to keep on top of both investment and compliance with a good accountant and just moved to pension phase. What we do need however, is a succession strategy for how to manage an SMSF pension once it becomes too much in old age. I dont trust financial planners as a result of our experience.
Thank you Bec for such an important message. This perspective is one that clients will seldom hear, so thank you for articulating this so clearly for people who aren't in the industry and who don't have specialist knowledge of how the system works. Navigating system complexity - especially when we aren't familiar with how the advice landscape looks and when a high degree of trust is involved - is a tall order!
Thanks. I’m in a large industry fund, still working at 67. Just wanted to set up a RIS and called them . I had to make an appointment for a call back. The person then referred me to an adviser who told me what I already knew but didn’t help with the RIS. Still in accumulation. I think there is a desire to make things complicated rather than just assist the customer. They saw my money as an opportunity for them.
Yes I got burnt with this - not with my super but I was working overseas and had some money in an international bank in rolling term deposits. I was convinced to move to a platform for a variety of reasons and not only lost a chunk in fees, I also would have had a better return if I’d stayed with my original term deposit - the eventual return from the platform investment being half that promised.
Such an important article Bec, and clearly explained. Being advised to move to a platform was exactly what happened to me earlier this year. I had a smallish super balance and very straightforward needs. Given this was the biggest financial decision of my life, I took a step back when my instincts told me this wasn't the best option for me, so I paid for advice from an existing fund. Such an expensive exercise but so important. Ended up staying with a fund and allocated pension, simple and not reliant on one person.
It's so important that people vet their financial advisors, and also understand what good financial advice actually looks like. Otherwise you may not be receiving objective recommendations.
An important article and seems like a corrupt practice to me. Makes me realise that my financial advisor recommending I stay with my super fund means she truly was working for me and not herself.
Hi Beck, a very topical article. Over 2 years ago I engaged an Advisor who was recommended by a friend. At the time my brother and I were dealing with winding up our parents estate which involved their property being part of a family trust. We had made the decision to sell the property before engaging with the Advisor, and sort advice on how to minimise capital gains and dissolve the family trust. At the same time I sort advice on the best “solution” for my super and retirement strategy, with a goal to retire within what I originally anticipated would be 3 years away. Consequently accepted the advice to roll my existing industry super, my share of the RAD refund from our mothers aged care facility and the proceeds of the property sale into a SMSF. It was a substantial amount, and a tax effective result over the last two years, all along while maximizing my confessional contributions. Costs of setting it up and initial advice wasn’t cheap, over $14K. I lost about $80K in the super transfer due untimely market downturn. And I am totally bewildered at the weighting I have in 5 underperforming stocks in the healthcare sector. So a bit disillusioned the exercise has not been as beneficial as what it could have been. Now the ongoing cost of this advice has dramatically reduced my disposable income, to the point where I feel trapped in to working longer than expected, while paying 1.085% monthly, as well as an annual wealth management package fee to the advisor. To the point where I am considering getting alternative advice, to determine if this pathway is the best option and the cost of unraveling. It is a bit daunting and depressing. I now categorize Advisors along with, car salesman, real estate salesman and HR people, who are perceived to be working in your interests, but in reality satisfying themselves as the priority.
Even though I consider myself reasonably ‘superannuation’ literate, this is a very helpful article! Thankyou Bec…..always a wealth of information!
Bec, such an important article… Several of my friends have been burnt with this, moved into a complex platform they don’t understand with hidden fees to the advising firm and in all but one case, worse returns over the last 5 years than any of the to 5 not for profit funds. The tragedy here is that many people need advice, but the often $7000-$10000 cost and the ongoing advice fees when they have simple situations is almost criminal in the way it fleeces money from people.
After reading your article I looked into the performance of last 6 years with an advisor on a platform. It turns out that my returns were well below that of industry superfunds due the the nature of layers of fees within the platform and the 1% taken by my advisor to manage it. I sacked my financial adviser and consolidated my entire account to an industry superfund.
Well done Bec you hit the nail on the head about advisers thriving on building a complexity shroud around investing and superannuation and always wanting to move your perfectly good super to one where they can trap you and charge fees indefinitely. When I asked why would I want to move my government backed super fund GESB and my gold state super where it can earn a guaranteed rate of inflation plus two percent to a platform they work with he got upset and told me it's the way of the world and that they are not here for the love of mankind they are here to run a business and make money needless to say never saw that adviser again. That is a real problem and that was from a supposedly reputable adviser. Nobody will look after your own money like you would yourself.
This article makes a number of useful points, but it is let down by a series of inaccuracies.
The key to getting a great retirement plan is understanding the scope of what you are seeking and the nature of the advice relationship.
Any retirement plan must consider the portfolio that will underpin the financial outcomes. This necessarily entails evaluating the appropriateness of the current fund(s) and, where appropriate, recommending an alternative investment or account within the current fund or another fund.
But if you think this means that this doesn’t involve “benchmark[ing] your existing super fund against alternatives, or tell[ing] you your current fund is performing well and you should stay”, then you haven’t read what the law says.
The adviser must (s961(e) of the Corporations Act) “investigate, consider, and evaluate a reasonable range of financial products and strategies that might achieve the client's objectives and meet their needs”
ASIC sets out what it expects in RG175:
When the outcome is a recommendation to switch funds or investment options, the adviser must investigate the existing product to determine whether it meets the client's relevant circumstances — not just the recommended product.
The adviser must consider the benefits and disadvantages of the existing fund, and such advice will generally be appropriate only if it is reasonable to conclude that the net benefits of the new product are superior to those of the existing one.
This review would necessarily include items that influence the net financial outcome over a lifetime, such as fees, long-term past performance, taxes, the ability to manage sequence-of-returns risk, how mutual ownership risk is managed, and exposure to unlisted assets. For many non-quantitative matters, such as service levels, the availability and design of an app, or the way information is communicated, will also be important.
None of this can be contracted out by choosing a narrower scope.
The argument that “You’re choosing an ongoing investment management relationship, and that’s a different proposition altogether.” Fails to understand the nature of a super fund.
A super fund is a bundle of services, including investment management (or more correctly, portfolio management), which establishes how the funds are to be invested (asset allocation). This is often done in conjunction with asset consultants – likely the same ones your adviser uses. This is not optional – everyone needs it. A handful of SMSF investors do it themselves with mixed results – the median SMSF underperformed the median APRA fund.
It also includes Trustee services – licensing, compliance, custody, customer service, and accounting. There are just 63 of these licensed in the country.
It also includes fund management, which involves selecting and managing individual shares, bonds, and other assets to be held. This is usually done by external managers. Most funds outsource most of this activity, often to the same managers that your adviser will select.
Hostplus, like many funds, does not manage any assets in-house – just 29 of its 360 staff are involved in investment management. The Commonwealth Superannuation Corporation is legally barred from doing so.
Your choice, therefore, comes down to whether you buy these three services from a single provider or elect to unbundle them and adopt a best-of-breed approach.
Unbundling involves choosing a super fund (called an IDPS or wrap) where the trustee takes investment instructions from you or your adviser. Your adviser will provide investment advice, and the funds will be invested with professional fund managers.
Unbundling will result in lower taxes during accumulation and a better ability to manage the sequence of returns risk in retirement. Together, these alone can deliver a higher safe withdrawal in retirement.
Neither is right for everyone. But if you choose a bundled solution, be aware of the true costs involved.
But the notion that you need to choose between investment management and a strategy is fundamentally flawed.
Hi Vince, Lovely to see you're reading. The reality is that many people think they are buying strategy when they come for advice - they don't realise its usually an ongoing investment relationship until much later, after they've spent the money. All I want is for people to understand that all the propositions now are linked to investment management, and most people don't understand this. Transparent info on how things work should be good for everyone. It's more common than ever for advice + investment management to happen on a platform; or a member to seek advice via a fund friendly adviser if they want to stay in the superfund system. It's not an argument. It's how things work. I even remember you telling me when we met recently that most of your financial clients are ongoing - and on platform 😉
I think consumers should be aware of the choice to get advice that's super-friendly an stay with super; or choose advice + platform; or actively seek properly strategic advice from an adviser that is deliberately willing to provide that service without moving to platform (which many will admit isn't desirable for them).
For others reading - Vince is an adviser. We love advice - we love super and we love platforms. We also love transparency, people understanding how things work and making active, informed decisions.
You continue to peddle this false dichotomy - that somehow the choice is between "staying in the super system" and choosing an unbundled option and/or getting strategy advice. This simply doesn't exist. You are not being helpful by perpetuating this.
Investor-directed portfolio services, superwraps or platforms are very much part of the super system. They are run by many of the same RSE license holders; in fact, 7 of the top 20 super fund trustees are IDPS trustees. This is hardly a niche sector.
So a retiree choosing an investor-directed option is still a member of an APRA-regulated super fund with all of the benefits that entails. It comes with the added benefits of lower taxes during accumulation and a better ability to manage the sequence-of-returns risk in retirement, and consequently is likely to deliver a higher retirement income (all else being equal). Of course, for some, the additional costs (especially for balances under $70,000) may outweigh the benefits. For others, this option will be cheaper due to capped admin fees on most platforms. For everyone, there is a solution that fits.
If by "Super Friendly" you mean a professional who is willing to compromise on outcome solely to allow a client to remain in an unsuitable fund or one that is likely to deliver a lower retirement income, then you are doing your audience a disservice. No adviser worth their salt should accept such an assignment, and it is likely to be in breach of the law.
Referrals from many of the big funds usually come with an expectation that this is what should happen - either explicitly or implicitly. Certainly, the flow of future referrals will dry up very quickly should you recommend anything else. This is why we don't accept referrals from many of the major funds.
If you mean an adviser who, having reviewed a client's existing fund as part of a retirement strategy and concluded it is the best option for the client, recommends they stay there, then that is simply what the law requires. If you know of any that fail to do this, then you should report them to ASIC.
For some, staying in their current fund may be the better option. Others may choose familiarity over optimisation. That's why it's called personal finance - because it's personal.
There is no conflict between strategy development and the choice of solution or underlying portfolio. All retirement plans must be underpinned by a portfolio that generates sustainable income. This requires compliance, portfolio construction and investment management. A retiree can choose to bundle these together and buy them from a single provider, or unbundle them. In both cases, they are free to roll over to another option if they no longer believe it is right for them. There are no exit fees, and for retirees, no capital gains tax implications. They are not exiting the super system.
An adviser must not advise a client to move funds unless there is a clear benefit that aligns with their goals and exceeds any disadvantages.
And just to correct your comment about our business. We do not have ongoing advice fees. All retirement advice is a fixed-fee service with a fixed scope of work. When we construct a portfolio (as distinct from recommending a prepackaged fund option), we provide ongoing portfolio management for a fee and manage these portfolios on one of several platforms, depending on the client's needs and the source of the funds.
Vince, I am always flabbergasted at how concerned you get about me teaching consumers how things work, transparently. I have no bone to pick with your business or any other unless you're operating opaquely or ripping consumers off. Nor with platforms - in fact I deeply respect their offering. I just want the proposition of advice + investment management better understood so it isn't so much of a surprise to everyday people - which as you can see in the comments and all over social media, it is a mystery to most.
It shouldn't be so poorly understood, or so overwhelmingly one-sided. Your comments reinforce what I'm saying - that consumers who want to stay within the realm of traditional super funds should assume they won't have that recommended by most advisers as they run a business alternative to this - offering ongoing portfolio management - as you call it. This is by its very nature an alternative to having your conventional superfund provide the same service. And while many would, others would not be doing so for the circa 0.7% in admin cost that a fund offers, or for similar performance. That is very personal as you say...
Platforms are regulated by ASIC too, as you can see in today's media. But the offering is distinctly different. A member of a superfund is a clearly different proposition to someone investing via an ongoing investment relationship with an adviser, managed on a platform.
Consumers should understand their choices. I'm not suggesting you have to offer all the options. And I'm not suggesting they need to walk into every advice office and get that.
I am just suggesting that they go looking for the different options available knowing the evolved state of the market, assess what they need and want their ongoing service to be, and seek an appropriate service provider for their needs.
Well, it looks like we are on a unity ticket on education and transparency.
You are muddying the waters by creating this divide between bundled and unbundled. They are simply two roads to the one destination. If this leads even one consumer to limit their options based on a mistaken message that one is inherently better or worse, then the world is a worse place. I'm sure that's not what you intended, but that is the effect.
Consumers can be assured they will receive advice that is in their best interests, whether that's a bundled or unbundled solution.
I just think advice and ongoing investment management are becoming a joined up service because advisers find its a great way to deliver the businesses they want to run. That's not a bad thing - it's just something noone is talking about. I pledge to make it fairly understood. I do think a lot of people trot off to get advice who don't want ongoing investment management today and the advice sector would be a lot better off for some good expectation management about what they do offer and where they are a practice that specialises in this manner - many do when you speak to them one on one, we're just not educating on it at scale because it's an industry of smaller businesses without a lot of media reach
The bit you are missing is - everyone needs to buy investment management, even if they think they don't. They are already buying it from their super fund. It's just not split out transparently.
This is not a choice between buying and not buying. The only question is who they choose to buy it from.
You can choose to buy it from the people who provide the rest of your super fund components in a single transaction, or you can buy it from your adviser in a series of related transactions.
What do you think the 29 people in investment at Hostplus are doing when they don't manage a cent in-house?
A great article, Bec and all good, sensible advice. I would add one other 'gotcha' that ties into what you've written.
I'm still working well past the 'not-working age' - I refuse to use THAT word (retired!) - but earlier discussion with advisors (prior to money changing hands) almost all seemed to be selling the concept of maximising funds growth in Accumulation mode. However, when asked how to best manage drawdown in Pension mode, like managing sequencing risks etc, none offered any real or practical way forward.
Perhaps these advisors were all 'young' and had little, or no concept of how to draw down on your 'pot' once the monthly salary bank deposits stop ! Simply no lived experience.
Many more tales to offer, but best to sign off while I'm ahead !
Keep up the good work, Bec.
Yes we suffered same fate. Ignored it and our SMSF has exceeded all the benchmarks they set with their new platform and complicated asset mix. As a member of super guide, and with a husband who was portfolio manager for 30 years, we are able to keep on top of both investment and compliance with a good accountant and just moved to pension phase. What we do need however, is a succession strategy for how to manage an SMSF pension once it becomes too much in old age. I dont trust financial planners as a result of our experience.
Thank you Bec for such an important message. This perspective is one that clients will seldom hear, so thank you for articulating this so clearly for people who aren't in the industry and who don't have specialist knowledge of how the system works. Navigating system complexity - especially when we aren't familiar with how the advice landscape looks and when a high degree of trust is involved - is a tall order!
Thanks. I’m in a large industry fund, still working at 67. Just wanted to set up a RIS and called them . I had to make an appointment for a call back. The person then referred me to an adviser who told me what I already knew but didn’t help with the RIS. Still in accumulation. I think there is a desire to make things complicated rather than just assist the customer. They saw my money as an opportunity for them.
Yes I got burnt with this - not with my super but I was working overseas and had some money in an international bank in rolling term deposits. I was convinced to move to a platform for a variety of reasons and not only lost a chunk in fees, I also would have had a better return if I’d stayed with my original term deposit - the eventual return from the platform investment being half that promised.