Super regulation has created distrust from members

The increasing complexity and regulation surrounding superannuation has created distrust in members and has led to them wanting more control over their super investments, according to an adviser.

Synectic Group financial adviser, PJ Cameron, said there was growing distrust from super members despite regulation aiming to increase transparency as the level of detail was overwhelming. Cameron said member were wondering if they could trust their super fund to act in their best interest.

He noted that there might not have been distrust prior to the Your Future, Your Super performance test but the focus on fees put people in a position where they wanted to make sure they were not getting ripped off.

Super funds, he said could provide more technology-based options to win back some of that trust.

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“There's definitely interest in people taking more control over their super investments. So, if they can unbundle a little bit of the fund that they're in, and their investment decisions that can be quite attractive,” he said.

“As their assets growth they’re definitely more interested in the more technology facing options like the wraps such as Netwealth, HUB24, Praemium or something similar to BT panorama.

“Members are definitely looking to switch but they also want an independent streak where they want more control, transparency, and to feel that they are not being taken advantage of.”

Cameron also said that including trustee directed products in its performance test next year was regulatory overreach and it would lead to benchmark hugging and members got lost in the entire picture.

“Active management is about genuinely being able to think different, make decisions in the best interests of the client rather than the fund and not underperforming,” he said.

“I actually think the client gets lost in the whole piece because the fund is now worrying about itself, against its peers, and they're not actually thinking about their members as much.”

He said the performance test mandated a fear-based risk management approaching where the cost of losing against the benchmark was significantly greater than the benefit of exceeding the benchmark.

“A lot of the mandates that fund managers used to get from the institutional side are being taken away because they're too benchmark unaware,” Cameron said.

“So much about finding a good manager is about someone that's actually going to manage assets in a way that requires a bit of courage to think a little bit differently, to look for opportunities that the market hasn't.

“If they're going to actively manage the fund that's what you want them to do.”