Serious Opinions

Everyone has an opinion about super and most of what is said is never good. In spite of that, surely everyone can acknowledge the fact that progressively Australia has built up a huge saving pool that is the envy of the developed world.

As a simple measure of what has been created and assuming we have close to $3 trillion in super spread over 12 million workers we have an average balance of $200,000 approximately.

Why Ignore Your Super?

Evidence suggests that all generations have persisted in not paying attention to their super soon enough. Our personal mismanagement of this serious asset will most likely cost every individual in Australia more than $100,000 of what they could have had with minimum effort when they originally started to work.  

Most people start to pay more attention to their super in mid-life and even then they continuously struggle to know what to do with it. The overall super system and then the misinformation that occurs makes it so difficult to know what to do.  

The base rationale around super seems to be that everyone involved in its management wants to make it as complicated and contested as possible. Arguably with the technology we have available, things should be a lot simpler but then there are so many vested interests in examining and managing your asset that maybe no one really wants the public to be either educated or informed.

Working Super To Your Advantage

To understand how best to manage your super, you would need an enormous amount of information in analysing the best options around product and then investment choice. There is a plethora of products available and every product makes promises around their service and their value. In essence, most working Australians are given a one size fits all solution.

If you had access to an online service which has the product analysis for you and has the ability to compare different solutions in informing you what is the best decision for your super, would you want to examine your past decisions and whether or not you have been super wise? 

Personal Scaled Advice

This is a service not promoted by the bigger players in the market because it is not a high enough margin for them. They all have a strong preference for delivering holistic financial planning. Even the regulations as developed by government fail to take account of which rules should apply for personal scaled advice as a truly affordable option.  

As a result, the rules for holistic financial planning are applied to anyone delivering holistic financial advice.

The Definition Of Personal Scaled Advice

This is sometimes referred to as limited advice. It is significantly less expensive than holistic financial planning because personal scaled advice can provide a valuable service which limits the advice to your super account as distinct from your whole financial situation.

The benefit of personal scaled advice can be enormous as all products present a proposition which in some ways is less than transparent. Any adviser presenting their service around individual super must possess certain skills around legislative knowledge, product expertise and then capability around asset management, in particular portfolio construction appropriate to the next two year market cycle. If approached on a manual basis, any adviser will know they have limited capacity to deal with their client base, peaking out somewhere around 1500 appointments a year. That assumes they have the appropriate resources in terms of support staff and processes.

From a client viewpoint, they will obtain valuable information about product choice around cost and functionality, contribution advice and then ongoing investment advice. If established correctly the client will know their goals and objectives, the parameters of performance and then their next two milestones, a definitive feature to monitor progress and even evaluate the performance of the advice as delivered.

Technology

The world has gone a long way in such a short time as far as the potential of technology goes.  All product providers do present a service but it is a product service and not a personal service.  So product providers have all developed a historical record of transactions against your super and therefore whatever your balance is at any point in time. While they all boast they will either optimise or maximise super, they do not have either the service passion or even the intention to be truly market competitive on service and value delivered.

SuperWiser has been developed to concentrate on service and does so because of its design and the fact that it is available 24/7 online.  Features included in the design are:

• Maintained controls around anything limited by legislation.
  
  
• Appropriate product data for 40 different product offerings.
  
  
• Comparison between your current strategy versus an improved strategy.
  
  
• Contribution advice.
  
  
• Investment portfolios for a range of portfolios suitable for the next market cycle.
  
  
• All documentation as required by law.
  
  
• Information to help you monitor your super’s performance against your goals and objectives.
  
  
• An implementation guidance service.
  
  
• All for the affordable price of $220 (inc GST).

The service from SuperWiser does not stop there as there is no ongoing service fee but there is a system that assists you in monitoring your super once we have helped you establish what you are trying to achieve.  SuperWiser will make contact with you when appropriate to adjust your strategy.

Contact Us To Discuss

Check out the SuperWiser website or call us with your questions on 1800 467 467.

Welcome To 2021

I am sure we are all delighted to see the back of 2020 but then again I am sure there are some challenges to be faced in 2021 of a possibly similar scale. With the start of a new year, it’s a good time to think about your super. 

Although, it’s not such a silly question to ask, is it mine? There is still a large proportion of the working population who do not really own their super as they give it very little attention. And with the government’s current regulatory program it does appear that the government is potentially indicating their future intention to own your asset.

So why is it important to pay attention to super? Here are a few opinions you should keep in mind.

• Anyone working full time and not paying attention to their super is essentially reducing their accumulation of asset by half at age forty.
  
  
• Time in the market is so financially powerful and yet most people don’t worry about their lack of attention to super for the first 20 years of their career.
  
  
• Just an extra 1% additional in your super for 25 years results in an increase in your projected income in retirement of over 20% per annum in today’s dollars for the first 20 years of retirement.

In short, someone else seems to be benefiting more from your super than you are. If you do not start paying attention to the management of your asset, I can assure you someone else is enjoying your benefits.

Is It Someone Else’s Fault?

Compulsory super was introduced in 1992 and the government has had numerous attempts at sorting out problems since. I suspect there will be ongoing regulation this year and next as different initiatives by the government play out:

• There exists an APRA heat map, intended to benchmark good versus dud funds but limited to MySuper.  Visit here if you want to read the information paper.
   
• The ATO has been given a budget to develop a product comparator tool for use by the public.  This initiative along with the existence of the APRA heat map might represent significant interference around super being a personal or a community asset.
  
  
• The government intends to staple a super product to an individual for their first job, in an effort to make sure employees do not end up with multiple super accounts.
  
  
• The government wants to have the right to act on their conclusions around the performance of product and, at present, if a particular product is underperforming on MySuper, the government can stop them accepting future contributions.

Personally I believe super is a personal asset and maybe, as a regulatory force for super, the government has proven themselves to be less than competent since 1992.


Market Indicators

I am of the view that there will be a significant drop in global markets in 2021, most likely between April and September. Market factors considered in my prediction are:

• Economic damage globally, caused by the ongoing mismanagement of the pandemic by various governments.
  
  
• Global political tensions across major nations.
  
  
• Global trade tensions, some of which emanate from the above political tensions.
  
  
• Social unrest in major economies, possibly triggered by underlying social tensions between the haves and have-nots.
  
  
• Economic structural change caused by the introduction of technology and climate change.
  
  
• Record level of global government debt.
  
  
• Record levels of domestic debt across the developed economies.
  
  
• The fact that the ongoing global expectation of, let’s say, annual growth of 3% is actually unsustainable.
   
• Overall extremely poor economic management by governments in trying to sustain their power as opposed to dealing with economic challenges that only become more complicated.