Will ‘My Super’ takeoff?

As part of the recommendations of the Cooper Super review Julia Gillard has announced to a cheering rousing audience the release of My Super.

Apparently it’s what we all need and want because it does without all the ‘bells and whistles’ that we apparently don’t need.

Our in-touch pollies with the help of the Cooper Review understand all this will go swimmingly and without any risk of further alienating an already severely ‘grassed-off-with-super’ public.

Now before I go getting all cynical and sarcastic here, hear me out.

Our all knowing pollies certainly have their finger on the pulse of the public and their super. The groundswell of supporting evidence from the ‘grass roots’ and our unions have it that all the unsuspecting public care about is fees they pay on their super accounts. This seems to be driven by fundamental research from ummm… somewhere!

And the best super award goes to…

Treasury has done the numbers and the average punter will save or add an extra $40,000 to their super balance. Okay, no small number. But is it something we need? Is it something we want? And will thousands be lining up for it? Or is it something we just don’t care about?

It seems to me there’s not a day that goes by without hearing commission this…? Inquiry that…? Review this? At the expense of a handsome sum of our hard earned tax-paying dollars.

It seems the Labor Party is very efficient at wasting our money on inquiries and commissions and not spending our money maybe where it should be spent like say on infrastructure bottlenecks and placing a proper cost on polluters.

Like performance alone, cost is just one variable in the advice chain which is also why you should pay little attention to superannuation league tables.

And the list goes on…

Research from the FPA (Financial Planning Association) has highlighted the value and the importance of receiving financial advice rather than just checking league tables or focussing on cost alone.

Across eight different case studies all with different scenarios, differing financial needs and wants, it collectively found advice added a cool $1.7 million to the combined retirement benefit of the eight scenarios. This included even the most basic of advice.

Finding an intelligent adviser is rare and when you do they can offer an expansive list of services which might include:

• Advice on an effective self managed super funds strategy and portfolio construction and investment.
• Restrictions and rules regarding placing property or your business into your SMSF.
• When and why would you set up a Testamentary Trust as part of your will.
• Planning for retirement. Owning property versus shares in a retirement income, etc.
• Wealth creation with tax advantages – margin lending, tips and traps.
• Tips and strategies for reducing your annual tax bill.
• CGT small business concessions and planning now to avoid paying it when you sell your business sometime in the future.
• Using life Insurance (and trauma/TPD cover) to fund the purchase of a partner’s share of the business.
• Effective negative gearing techniques.
• How to value a business your planning to investing in. Which lead to:
• Effective direct share picking techniques.

Or it could be something simple like:

• I’m interested in investing how do I start? (or for your kids education)
• Investing for dividends.
• Derivatives – futures, hedging, calls and put options etc.
• How do I use effective techniques for raising capital after the GFC?
• How do I set up a first home saver account?
• Strategies for investing in our ‘crab’ market.
• Strategies for utilising the Government co-contribution.
• Putting in place a strategy to make the transition to retirement work for you.
• How much life cover should I really have?
• Should I put my insurance in my super? The effect on my end balance and strategies if I decide to do so.

Okay, you get my point, but I could go on – there’s much, much more!

Then on top of that there are some advisers with specialist investment qualifications who offer an individually tailored portfolio construction with direct shares included in their clients’ superannuation, whose performance cannot be and never will be compared in ‘league tables’.
Their benchmark beating investment returns for your super will render most cost arguments nil and void, period.

The Intelligent Adviser takeaway

The Simple Super or ‘My Super’ argument might be good for those of us still with our superannuation L-plates on, but as far as reducing costs and increasing competition their argument is baseless.

If you have read any of my previous posts you’ll know there’s a hell of a lot more to financial planners and advisers than just ‘investments’ and ‘markets’.

As long as there is a level playing field (sorry to say but there isn’t one at the moment) the market has always been known to be the best mechanism for reducing costs without the interference from government (ask any good economics professor) for the hundreds of millions of dollars of our superannuation money.

If you’ve got no assets and about 10 small balances of about $1,000 with a multitude of different super accounts it may well work for you.

Please tell us your thoughts and experiences below.

Nick Christian is a Financial Adviser and planner and authorised representative of Millennium3 Financial Services.

The views and opinions expressed within this letter are those of the author and do not necessarily reflect those of Millennium3 Financial Services Pty Ltd.

The above is general in nature and should not be acted upon without seeking the advice of a professional licensed financial planner.