When deciding on a superannuation fund, the words “don’t believe everything you see on TV” are important to remember. Advertising such as Industry Super Funds’ long-running ‘Compare the pair’ campaigns weigh up industry super funds against retail super funds, with industry super funds coming out on top. But in a 30-second TV spot, you’re definitely not getting the whole story. If you’re considering an industry super fund, there are a couple of reasons you should be careful.
So what is an Industry super fund?
Unions and industry associations developed industry superannuation funds to provide for their members for their retirement. It used to be that these funds were only for those people within the particular industry, but these days, many of them are available to anyone entitled to super.
Advice is worth the price
The first reason to be cautious when looking at industry super funds is the claim that, unlike retail funds, they charge no ‘adviser fees’, paying no commission to financial planners. What ads like ‘Compare the pair’ don’t address is return on investment. It’s true, some industry super funds perform well, but ultimately, it’s no good going with a fund with a no-fee structure if your returns are below average. Sometimes, you could be worse off than if you’d paid the fees and made more money.
It’s worth remembering – and not underestimating – what these adviser fees are for: expert advice.
If your financial adviser is any good, they should have a great understanding of the investments they’re recommending to you. If you skip this advice – and skip choosing the right investment options based on this advice – by going with an industry super fund, you and your portfolio are potentially missing out on some real long-term value. It may seem that this doesn’t make a lot of sense, but adviser fees can actually be a smart investor’s money well spent.
Even industry super funds see the potential benefits that advice gets you. As a result, and as restrictions have changed, industry super funds are offering ‘intra-fund advice’ and ‘scaled advice’ to try to keep financial planners out of the mix. But these limited forms of advice are just that, and they won’t be able to address your full financial picture. There’s simply no substitute for proper financial advice.
Reason number two to be careful of industry super funds is that you usually have more limited investment options – somewhere around five to 15 – than you do with a retail fund, which can have as many as 100 options. Industry super funds tend to work according to the belief that their members are financially similar and will invest in a similar small number of funds, which is why they often offer fewer choices. In contrast, financial advisers tend to use an individual-attention approach, customising an investment plan based on your individual goals and attitude towards risk. If you’re actively considering an industry super fund, you want to make sure you have enough selection to suit your wants, needs, and your views on risk.
Allied Investment Group advisers specialise in assisting clients take control of their finances so they can have more choices and security now and in retirement. Armed with this advice, you’ll be on your way to finding financial freedom and building wealth for the future. It’s never too late to start. Call 1300 886 149 to put your plan in motion.