As this magazine goes to print, super funds are facing their worst returns in 20 years.
According to the latest data from SuperRatings, the average balanced option in a super fund has fallen 6.4 per cent since June 2007.
As panic sets in, super funds are gearing up to reinforce the traditional view that superannuation is a long-term investment.
At a lunch held by the Australian Institute of Superannuation Trustees last month, Hostplus marketer Melissa Birks offered an optimistic view: that now is probably the best time for super funds to really engage their members.
Bad times may indeed jolt people out of their apathy to super as they look for explanations behind their negative returns. For some it will be their first time.
It may also be a time for some soul searching and in particular looking at the perennial debate about fees.
As members take a cold hard look at their super returns, they will look at fees not just market volatility as a factor eating away at their retirement savings.
There is no doubt the most vocal advocate for fee-for-service is Industry Super Network’s David Whiteley.
As a representative of industry funds, Whiteley has consistently called for other areas in the industry to mirror the fee-for-service model that has already been embedded in industry funds.
It seems that financial planners new to the industry are moving toward the practice.
According to Investment Trends’ Andrew Knox, planners with less than 10 years’ experience seem to be driving the trend towards more fee-for-service revenue.
Former FPA chair and Hewisons and Associates chief executive John Hewison has also weighed into the debate, calling on ASIC and the FPA to ban commissions paid to advisers.
Hewison believes adviser commissions were behind financial disasters such as Fincorp and Westpoint, which cost many people millions of dollars from their retirement savings.
Super balances may be feeling the heat at the moment, but its compulsory nature continues to breathe life into the sector. Ensuring it remains viable will be a responsibility for both the regulator and the profession.
