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Industry funds – explore the option

Industry funds can reap many benefits for their members. However, for those seeking superannuation advice from a financial planner, the option might not even be on the table!

According to Peter Switzer, founder of Switzer Financial Services, many financial planning organisations don’t recommend an industry super fund, simply because “they don’t pay commissions to planners, like many non-industry funds, and that has kept the former on the outer”. Furthermore, a lot of these funds don’t have the administration backbone to allow planners ease of use.

“Funds are not well setup to help planners trying to service their clients. We have time delays and even neglect from industry fund back offices and that’s because they underfund their administration,” Switzer adds. “A planner can’t waste one hour on the phone on a queue. Industry funds are not geared up to help advisers.”

When it comes to your super, measured decisions need to be made in choosing a fund. And these decisions should be based on performance and the services offered, so before making any rash super decisions, do your homework! Disclaimer and small print aside, ensure you investigate different funds’ performance for the most suitable to your superannuation situation and your privacy needs.

For employees in specific industries, such as hospitality or medicine, industry funds can be a convenient and beneficial means of accumulating your super. In fact, of the top 10 balanced Australian super funds listed in the SuperRatings league tables released in February 2010, eight of these were industry funds.

David Whiteley, Industry Super Network’s chief executive, argues the case that industry superfunds perform consistently better than their retail fund counterparts. He notes that there is a consistent two per cent difference between industry super funds and retail funds, in terms of the results yielded over the long-term. He sees this as a result of retail funds charging higher fee structures and the payment of commissions and other incentives to financial planners.

“Currently, the commissions and fees paid by retail fund members cost an aggregate $13 million a day. This is made up of $5 million per day lost through commissions and $8 million per day in lost earnings from underperforming retail funds,” says Whiteley.

This is something that needs to be curbed, he says.

“Clearly we need a system that protects the needs of consumers, including a requirement for financial planners to act in the best interest of their clients and a ban on conflicted forms of planner remuneration, including commissions and percentage-based fees,” he argues.

When considering your superannuation options, be sure to explore all possible avenues – sites such as SuperRatings help in comparing different options. Do your research and, if consulting with a financial planner, ask the important questions, regarding superfund choice and commission structure. If it suits your circumstances, ensure they explore the potentially attractive option of joining one of the superannuation industry funds.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, July 07, 2010

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