The Commonwealth Bank – via CFS – joins the likes of ANZ, Westpac (through BT) and ING DIRECT in targeting the largely disengaged ‘default’ superannuation market.
BT was the first to market with a life stage retail offering in 2007 with BT Super for Life. ING DIRECT rolled out its Living Super product in September 2012, and ANZ’s Smart Choice Super was launched three months later.
Like BT and ANZ, CBA’s Essential Super offers a life stage fund, which automatically adjusts the client’s asset allocation as they grow older.
ING DIRECT does not have a life stage fund, but it does offer what it calls “the first balanced fund [available] to all Australians with no admin or management fees” – although 50 per cent of the fund is allocated to cash.
CFS executive general manager Linda Elkins said Essential Super is targeted at consumers who “don’t need or can’t afford advice”.
CBA has trained 3,400 of its branch staff to discuss the product with customers who already have transaction accounts with the bank, she added.
While CFS superannuation products have traditionally been sold to clients through the advice channel (either CBA-aligned or IFAs), Ms Elkins was quick to point out that Essential Super did not represent a threat to financial planners.
“We see our relationship with financial advisers remaining exactly the same – we don’t see any change,” she said.
In fact, the bank will use its analytics technology to offer clients advice about their superannuation at key points in their lives – such as paying off a mortgage or having a child, said Ms Elkins.
When it comes to fees, the Essential Super life stage fund will cost consumers $60 a year in administration fees and 80 basis points per annum in management costs.
In comparison, the ANZ life stage fund has an administration fee of $50 per year and a management fee of 50 basis points; and BT’s Super For Life has an administration fee of $60 a year and a management fee of 99 basis points.
ING DIRECT’s Living Super has no management or administration fees associated with its ‘balanced’ fund, which has an asset allocation of 50 per cent cash, 30 per cent Australian shares, 10 per cent international shares and 10 per cent hedged international shares.
