In a response to the interim report of the Financial System Inquiry, QSuper said the super fund industry is moving towards more tailored solutions, so the way funds are measured must also change.
The submission criticised the approach of using league tables of investment performance, stating it has “done little to foster true innovation as funds face market risk as they deviate from peers”.
“QSuper contends that a focus on short-term returns does not aid members to either achieve or understand whether they are on track for a retirement income to achieve the security and certainty they aspire to receive when they stop work,” said the submission.
QSuper argued a better approach would be to hold funds to account on the basis of consistently meeting stated investment objectives targeted towards the goal of generating an adequate retirement outcome.
“This could take the form of an index where fund trustees are compared on the basis of a “confidence index’ or “reliability guide” that measures the success of a fund achieving its investment objectives,” said QSuper.
“This approach would negate the importance of a 'headline' return number that is often used in marketing product to members.”
The submission also recommended extending this approach to financial advisers and firms.
“Rankings could be applied based on the quality of advice provided based on the achievement of agreed objectives with their clients,” said QSuper.
“This would provide consumers with the ability to select advisers based on a reliability score.”
QSuper said the poor results reported by ASIC in the regulator's recent shadow shopping exercise justify the need for such a system.
