should be the percentage increase (or decrease) of value of all the investments made for a particular risk category. Revenue of funds have two components – income and capital growth. Therefore, fourthly, these two components should be shown separately, both for the customer’s investment and in the industry average. Transferability between Suppliers One of the ruses employed by retail funds to retain their customers is to make it as difficult as possible for a customer to move to other suppliers. This process needs to be made simple, minimal costly, less traumatic to the customer and fast. The ability of customers to move to other suppliers easily will make the suppliers do their utmost to provide the best outcome to their customers. But to prevent them making a mockery of “choice”, as it is now done by energy and telephony suppliers, the industry must be structured for easy comparison between retail funds. Independent Evaluators The industry regulators must establish an independent body that can advise customers on the performance of their particular retail fund in comparison to the industry average, risks and other salient matters. Often, customers are at the mercy of their financial planners and, given that the structure of the industry is such that no realistic comparison could be made, the customers are stuck with retail funds which may not be in their best interest. The independent body should also produce an annual report making comparisons of all retail funds for each category of risk along with other details such as the amounts invested in the fund and the number of clients, etc. Such information put out in the simplest form possible, from an independent body, is what is lacking now. Also, importantly, individual clients should be able to request the independent body (for a small fee) to make an assessment of one’s portfolio and the performance in comparison to other providers. Such reports would be a check on the suppliers and to keep the suppliers on check. In the Ideal World In an ideal world, an average pensioner would want: a secure income until death not have to worry about his or her investment or deal with (retail) fund managers
should be the percentage increase (or decrease) of value of all the investments made for a particular risk category. Revenue of funds have two components – income and capital growth. Therefore, fourthly, these two components should be shown separately, both for the customer’s investment and in the industry average. Transferability between Suppliers One of the ruses employed by retail funds to retain their customers is to make it as difficult as possible for a customer to move to other suppliers. This process needs to be made simple, minimal costly, less traumatic to the customer and fast. The ability of customers to move to other suppliers easily will make the suppliers do their utmost to provide the best outcome to their customers. But to prevent them making a mockery of “choice”, as it is now done by energy and telephony suppliers, the industry must be structured for easy comparison between retail funds. Independent Evaluators The industry regulators must establish an independent body that can advise customers on the performance of their particular retail fund in comparison to the industry average, risks and other salient matters. Often, customers are at the mercy of their financial planners and, given that the structure of the industry is such that no realistic comparison could be made, the customers are stuck with retail funds which may not be in their best interest. The independent body should also produce an annual report making comparisons of all retail funds for each category of risk along with other details such as the amounts invested in the fund and the number of clients, etc. Such information put out in the simplest form possible, from an independent body, is what is lacking now. Also, importantly, individual clients should be able to request the independent body (for a small fee) to make an assessment of one’s portfolio and the performance in comparison to other providers. Such reports would be a check on the suppliers and to keep the suppliers on check. In the Ideal World In an ideal world, an average pensioner would want: a secure income until death not have to worry about his or her investment or deal with (retail) fund managers
subdr064-superannuation-competitiveness-efficiency.docx