Institute shoots at sharks
The Consumers' Institute gets stuck into superannuation providers and advisers.
Thursday, February 12th 1998, 12:00AM
The influential Consumers’ Institute magazine Consumer has come out with a hard hitting article rubbishing a number of superannuation schemes The article, "Superannuation sharks" says some of the products being offered by fund managers and life offices "have horrendouly complex fee structures, with built in penalties and clawbacks."
It also criticises the way some advisers are selling super schemes to the public.
The article singles out nine particular funds as being "super sharks", but it also names 10 funds its says are okay because they have flexible, low cost structures.
Interestingly two managers, Tower Retirement Investment and National Mutual have products in both lists.
One of the so-called "super sharks", Prudential, has told its advisers that the article is "not balanced and does not compare apples with apples."
The article illustrates that while there are a bunch of ‘new generation’ flexible superannuation schemes, there are a lot of the old, so-called dinosaur products with high fees still being sold.
It suggests advisers are selling these older products to the less sophisticated investors, and saving the others, which generate lower commissions, for the more investment-savvy people.
In total Consumer has identified seven problem areas with super schemes. They are:
- Enormous commissions
- Small savers pay very high fees in relation to their contributions
- Initial savings can have extremely high fees
- Performance assessment can mislead
- Results can be massaged
- Examples used in brochures can mislead
- Brochures contain idle boasts.
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