When CHOICE member and survey respondent Andrew Maloney contacted AMP to open a super fund 16 years ago, he was told he needed to go through an adviser. During those subsequent 16 years, despite four of his eight chosen investment funds losing about half their value during that time, Andrew’s allocated adviser never once contacted him, yet continued to collect commissions and fees.
“I’ve slowly learnt that Australia’s biggest super provider doesn’t do much,” Andrew says. “Neither does the agent they force you to use. In the end, everyone is by default selfmanaging their super, so you may as well set up a self-managed fund. Compared with AMP, if my self-managed investment strategy was to bury my super in the backyard, I’d still be better off.”
Based on Andrew’s original instructions, each year AMP “rebalanced” his investments, transferring money from the performing funds to the losing ones. “It may have been hard to predict performance, but after watching four funds lose money year after year, why didn’t AMP stop using these managers and recommend its customers take money out of them? I don’t understand what the financial adviser is getting paid for.”
Andrew contacted AMP in June to confirm the total contributions he’d made and their long-term investment performance, but was told records only went back seven years, of which just five could be disclosed to customers. AMP couldn’t even tell him his total contributions. When Andrew questioned his fees, which are 3.5% of the value of each contribution and management fees of about 2% per annum of his fund’s total value, he was told he could negotiate them with his adviser – until the customer service representative told him he no longer had one.
“The lesson is, you need to manage your own super,” says Andrew. “Start by doing it properly and open a self-managed fund. I’ll put the money into an index fund, or start digging holes in the backyard.”
AMP told CHOICE it cannot “un-choose” the auto-rebalancing option without the client’s instruction. It clarified that Andrew was provided with incorrect information, and has an adviser working at Horizons Financial Planning, which is part of AMP. “It’s unfortunate that the adviser was not in contact with Andrew,” an AMP spokesperson said. “We can understand his frustration, and we would like to contact Andrew to help him out if he agrees.”
AMP no longer pays commissions to advisers for new super products arranged; however, this does not apply to clients' existing products.