The Federal Budget 2020
This year the government did not make changes at all to the details of superannuation in Australia, but they did introduce a new initiative called “Your Future, Your Super”. It’s another measure that again wrestles the personal responsibility for your super away from the individual and has your choices controlled by someone else.
The limitation in this initiative is that it only examines the default service settings for your super without looking at alternative options that might present more value to you as far as maximising your balance at retirement.
In effect, the government is progressing with initiatives that disengage you from your super as a wealth creation strategy. To optimise your own super asset, you must pay it some attention.
The development of new technology, such as SuperWiser, make it easier than ever before to optimise your super and provides you with more opportunity to make more super dollars and improve your lifestyle in retirement.
Make Yourself SuperWiser
The truth is that super is not as complicated as you think. The financial services industry has made it complicated with a wide array of products and services that appear beneficial but aren’t aimed at optimising your super value.
Finding information can seem difficult, sources of information are usually less than reliable because of potential for bias. Unfortunately this often means you are more likely to make the decision that is in someone else’s best interest and not yours.
Where someone provides you with meaningful information for consideration, the first step is always to pause and filter that information to the point where you have sufficient knowledge to make a decision in your best interest.
Informed decisions always work out better than blind guesswork.
Straightforward Information?
This is not always easy to find but then maybe it is hard to locate a source of truth in this modern world. Let’s start with the statement that a key initiative in improving your super is finding quality information.
The government has presented quite a few initiatives in making various attempts to improve the value delivered by financial services companies around super. There has been the introduction of a MySuper Investment Default some ten years ago which in theory should have improved investment returns.
A comparison for MySuper investment returns would indicate the following range between bottom and top performers:
Performer | Investment Option | Annual Projected Income in Retirement to Age 67 | ||
|---|---|---|---|---|
| Age 25 Salary $60,000 | Age 35 Salary $80,000 | Age 45 Salary $85,000 | ||
| Balance $20,000 | Balance $75,000 | Balance $120,000 | ||
| Top | Factory Default -MySuper | $37,300 | $30,600 | $23,300 |
| Bottom | Factory Default -MySuper | $30,500 | $25,200 | $19,400 |
| Annual Difference | $6,800 Plus 22% | $5,400 Plus 21% | $3,900 Plus 20% | |
Figures obtained from AXIS Financial Group Pty Ltd as at 30/06/2020
By using a products investment choice menu, how does the top MySuper investment strategy compare with what is the top performing SuperWiser recommended portfolio:
| Performer | Investment Option | Annual Projected Income in Retirement to Age 67 | ||
|---|---|---|---|---|
| Age 25 Salary $60,000 | Age 35 Salary $80,000 | Age 45 Salary $85,000 | ||
| Balance $20,000 | Balance $75,000 | Balance $120,000 | ||
| Top | Factory Default -MySuper | $37,300 | $30,600 | $23,300 |
| Top | SuperWiser – High Growth | $44,300 | $35,500 | $25,900 |
| Annual Difference | $7,000 Plus Another 19% | $4,900 Plus Another 16% | $2,600 Plus Another 11% | |
Figures obtained from AXIS Financial Group Pty Ltd as at 30/06/2020
The latest government initiative announced within the federal budget still focuses purely on the MySuper Investment Default. This has become the standard default for most people and no product will tell you about their comparable performance with other MySuper defaults (unless it is to their advantage) and most certainly government initiative is only focused on the MySuper service model and not looking at other non-standard investment options within products.
Where To From Here?
Upon demonstrating SuperWiser to one large product provider, a senior executive commented that this innovation is unusable for them as the calculations would identify how many other products deliver more value. The executive unwisely commented “we would have to explain to the board why we have lost all our clients”.
The financial services industry is known for its high fees and its poor delivery of service value. In terms of delivering value at an individual account level, product providers see this as an impossible ask involving the recruitment of too many people and presenting too many organisational complications.
Clearly technology is the answer but any service technology from super product providers is likely to focus on retaining members, not adding value. Which means technology needs to come from those who have no ownership in any product.
Try SuperWiser
SuperWiser allows you to examine what you are currently doing against what you could do for yourself in managing your super. Minimal information is required to get started.
As an authorised representative under an AFSL license as provided by AXIS Financial Group Pty Ltd (ABN 21 092 889 579, AFSL 233680), SuperWiser proceeds to request some personal information so the initial calculation can be confirmed. This requires an authority to access information as provided by your current product and as required under current regulation. As always around super, regulation must be followed.
The next stage involves some explanation as to where you can do better by comparing the appropriate elements of your current super against what might be better by way of cost, target market return, target outperformance return and then salary sacrifice. The proposition will be the provision of advice and an implementation service of said advice, all for the affordable price of $220 (inc GST).
Get started by completing a free Super Review. If you have any questions call 1800 467 467.