Retirement

Super funds are offering less and less advice services, despite members making clear that they need it more than ever. Fund advice has a relatively attractive price point, SuperRatings’ Kirby Rappell explained, but funds are struggling to explain its value.

The meteoric rise of industry funds has earned them a rightful place at the top of the superannuation food chain. But their standing is not a given, and the failures are starting to mount.

Retirement’s approach requires a profound change in how investors approach markets and construct portfolios, including arranging their income needs around three distinct periods of retired life, the financial advice firm’s founders said.

A joint review conducted by ASIC and APRA was scathing of funds’ collective attempts to meet their new legal obligation to help fund members plan for retirement, and urged them to “address, with urgency, the gaps in their approach”.

There are a range of factors that will determine the fees a member will pay. The difference could have a dramatic effect on the final balance of a retiree’s nest egg.

While the focus of the advice industry groups has very much been around making the day to day lives of those in the industry easier, the likes of the AFCA, Vanguard and several law firms have offered insight into the impact on the consumer.

2022 has marked just the fifth financial year of negative returns since the SG became compulsory in 1992. This should not be a surprising result.

The term “hold on for dear life” came to explain the events of 2020 and 2021, as did “buy the dip.” For those beginning investing for the first time their experience couldn’t have been more positive.

Bringing oversight to a multi-trillion dollar sector was important, but the regulations are far from perfect, with many suggesting they effectively direct industry funds toward an indexed approach, or alternatively, don’t appreciate the nuances of investing for the very long-term.

As share markets fall, superannuation research houses are predicting a negative financial year for both balanced and growth superannuation funds.

“We are at a critical crossroad, with an aging population, and the “Great Australian Wealth Transfer” at our doorstep” explained Lifespan Financial Planning CEO Eugene Ardino in an open letter to Scott Morrison and Anthony Albanese on the eve of the Federal Election.

A bounce in share markets in March supported superannuation fund performance in the first quarter of 2022. However, with inflation concerns mounting, global share markets remain volatile, including the hard-hit US share market, which is likely to dent superannuation returns for the current financial year.