CHOICE finds dissatisfaction with retail funds
Nearly a quarter of retail super fund investors are thinking of switching to other superannuation options, according to a CHOICE survey of more than 1400 of its members.
Whether it's dissatisfaction with fees, customer service or investment performance, 23% of retail fund members said they are considering a switch, compared to 9% of corporate fund clients, 7% of industry fund respondents and 4% of those in public sector funds.
"Ironically, a constant frustration with retail funds is the quality of financial advice members are receiving -- or lack of it," says CHOICE spokesman Christopher Zinn.
"One of our members said his fund tended to provide 'guarded advice' unless there was an extensive fee involved.
"He complained at getting 'off the shelf' advice rather than advice truly tailored for his circumstances and because most advisers work on a commission basis there's a suspicion they are more concerned with their own interests than that of their clients."
The CHOICE members' survey coincides with a recent report by the industry ratings firm SuperRatings which found super funds last year posted their worst performance since compulsory super was introduced in 1992.
According to the CHOICE survey, the highest rating super fund was State Super with an overall satisfaction score of 81.2%. Industry super funds had an average satisfaction rating of 68.7%, corporate funds averaged 68.4%, while the highest ranked retail fund was Colonial First State (59.6%).
The survey also found retail fund members are 28 times more likely than those in industry funds to have been introduced to their super fund by a financial adviser.
"Many advisers tend to recommend retail funds as their fees are often paid as sales or advice commissions," says Zinn.
"The current arrangements also encourage advisers to promote products that provide the biggest commissions, but we hope proposed financial advice reforms will go a long way to stamping out this bias."
CHOICE says the Cooper report into Australia's superannuation system will also address a number of key concerns, including the need for a low- cost default super option for consumers.