The Traditional Service Model
One major failing of the financial services industry around super is the delivery of an individual service model targeting the optimisation of your balance at your point of retirement. The financial services industry is broadly operating with a tarnished brand while the government tries to prove yet again that the latest regulatory examination of super is the solution to the problem.
The one obvious problem not being discussed involves a commercial examination of the difference between a sales model and then a service model. The obvious problem with super is around what services are actually being delivered. The value being delivered is very much dependent upon the quality of the servicing.
Optional Commercial Models
As a consequence of the heavier penalties being inflicted across the financial services industry for any departure from regulation, the whole industry has become compliance focused, a distraction from explaining the value they bring to market through the delivery of service.
The current approach from product providers delivers a highly important service but very little by way of personal advice required to manage your super as a personal asset. Their definition of servicing has never included the delivery of personal advice at an individual level to optimise your balance and therefore your projected income in retirement.
Super as a Personal Asset
A sales model defines how your supplier makes a profit from providing personal service. A service model examines the same flow between supplier and client from the viewpoint of value delivered against the cost incurred. From the day anyone commences work and requires a super account, best practice involves the management of the asset being created. Super is a payment made by your employer intended to build an asset that replaces your income once you move on to life after work. Like any other asset, super needs to be managed if it is to be optimised.
The intention of government is always hard to ascertain as political opinion changes from government to government depending on their underlying agenda. In the past, government has said that super is a “community and not a personal asset”. Government has also said that the purpose of super has never been defined and such an initiative is overdue for legislation. A strange statement given the fact that compulsory super was introduced in 1992!
From an ownership point of view, there is no doubt that super is a personal wealth asset, in truth similar to anyone’s salary or wage. If you take an active interest in managing your super, there is also no doubt that you will accumulate a lot more than you can imagine. On the other hand, if you ignore your super for too long, the cost can be equally more than you would imagine.
What do I do?
In managing any asset, the object of the game is the increase in its value over time. In examining what to do, there are controlled decisions you can make and then there are market forces you can try to manage. In other words there are elements you can control and then there are events you cannot predict.
|Decisions You Can Make|
|Product Choice||Contribution Strategy||Investment Strategy||Level Of Insurance|
|Goals & Objectives Which Can Be Set|
|Age of retirement||Projected income in retirement||Milestone 1||Milestone 2|
|Monitor the Performance of Your Asset|
|Against your milestones||Compare your investment return||Check your contributions||Consider new product options|
SuperWiser provides assistance with product choice, the importance of optimising your contribution, recommendations on investment strategy including timely updates when required, and will also help with your understanding of personal insurance.
The application is targeted to servicing employees accumulating super, even if you have not paid attention to it for some time. SuperWiser has 40 well-known products already analysed within a database so you can examine decisions around your asset while SuperWiser considers the potential choices you could make. You will find our service at www.superwiser.com.au
This document was prepared and issued by Super Simpler Pty Ltd (ABN 74 150 240 421) a privately-owned company operating as a Corporate Authorised Representative (CAR No. 468 201) of AXIS Financial Group Pty Ltd (ABN 21 092 889 579, AFSL 233 680). The information contained within it is not advice. It provides general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider talking with your financial adviser before making an investment decision. Information in this publication, which is taken from sources other than Super Simpler, is believed to be accurate. However, subject to any contrary provision in any applicable law, neither Super Simpler, nor its employees and directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it.