We have recently been approved by AustralianSuper to give advice to their clients. Unlike nearly every other financial institution AustralianSuper have a rigorous vetting process that must be completed by Financial Advice providers. This ensures that their members only have access to high calibre advisers who are diligent and provide high quality advice.
If you are a member of Australian we are able to review your fund and give you advice about how to get the most out of it. You can authorise AustralianSuper to pay your fee out of your super account provided that you will have more than $15,000 in the account after the fee is paid and the fee is fair & reasonable for you.
The higher your balance the more likely it is that you will benefit from this arrangement. If you have a balance of at least $100,000 an investment review is highly recommended.
About the Fund
AustralianSuper is the largest industry superannuation fund in Australia. It holds 2.3 million member accounts with approximately $200 billion of funds invested. This is 6% of the total pool of superannuation assets.
The trustee of the fund is AustralianSuper Pty Ltd. It is described as a non-profit however it is a normal private company that pays income tax on profits the same as any trading company. It has 6 A class shares issued to the Australian Council of Trade Unions representing fund members and 6 B class shares issued to the Australian Industry Group representing Employers. The constitution of the company effectively prevents any change to the ownership structure. The shareholders appoint the directors who run the fund.
The Trustee company generates revenue by charging fees to the members of the fund. This was a total of $554,692,000 in the 2020 financial year. The company has not made a profit in the last 2 financial years and does not pay dividends. The balance sheet currently has a small amount of negative equity.
There has been controversy because the fund promotes itself as being run only for members and not paying profits or dividends to shareholders. However the shareholders were paid $211,000 each for advertising and marketing. They were also paid director fees for their employees sitting on the board. A total of $693,000 was paid to unions related to the fund.
Approximately $5 million was spent on marketing through Industry Super Australia Pty Ltd.
The fund has a limited range of investment options with 6 diversified funds, 5 sector funds along with access to listed shares and exchange traded funds (ETFs). The diversified funds have relatively low fees but the other options are more expensive.
The Diversified Funds performance has been poor over the last 18 months due to overweight positions in Direct Property and Infrastructure whilst being underweight to Australian shares.
In the past these positions allowed the fund to keep fees & volatility low whilst generating above average returns. Going forward that under-performance may persist.
Dislcosure of performance on the website is poor which makes it hard to compare the investment options. Like most funds they use selective time periods & benchmarks that give the most favourable comparision.
The fund offers Death Cover, Total Permanent Disablement and Income Protection to members. Insurance is provided by TAL Life limited through a group cover arrangement. An easy to use online quoting tool is available on the website.
Premiums seem to be generally slightly more expensive than most other providers. We can do comparisons with other providers to ensure that you are getting value for money.
The fund offers two options for obtaining financial advice. There are inhouse advisers employed by Industry Fund Services and external self-employed advisers licensed by unrelated companies. Advisers must be approved by AustralianSuper and only a limited number are available. It is possible to search for advisers on the website.
Basic General advice is provided for free. Perparation of detailed personal advice is charged to the member account. If you are given a Statement of Advice you will be quoted a fee for it in advice. The maximum fee charged is 2.5% of the member account or $5,500 whichever is less. Members can pay for financial advice directly to the adviser using their own personal funds if they wish.
The advice given to you must meet the legislative Best interests Duty requirements and be prepared in accordance with the FASEA code of ethics. This means that the Adviser must collect sufficient relevant information from you before preparing the advice and give consideration to appropriate alternative options before they make a recommendation to you.