C6. Do funds Costs relative to assets and PC proposes using Costs tend to be opaque, especially in relation to investment compete on number of accounts by Regulator data; management where downstream costs get netted off. Therefore costs/price? service (investment, research firms; the indicator doesn’t give a level playing field when comparing administration and insurance fund disclosures. direct and indirect investors. services) and by market segment (input) C6. Do funds Fees relative to assets and PC proposes using Fees can lack comparability both due to structure (e.g. flat dollar compete on number of accounts by Regulator data; +% for some, pure % for others) and the netting off of costs and costs/price? service (investment, research firms; profit margin in underlying investments rather than using administration and insurance fund disclosures. explicit fees. Note that any % fee includes an inbuilt escalation services) and by market factor when FUM increases. PC should actively look for segment (output) indications of % fees decreasing as FUM increases, or else commensurate increases in services. % fees permit some industry participants to capture the benefits of scale rather than passing them to members.
C6. Do funds compete on costs/price? Costs relative to assets and number of accounts by service (investment, administration and insurance services) and by market segment (input) PC proposes using Regulator data; research firms; fund disclosures. Costs tend to be opaque, especially in relation to investment management where downstream costs get netted off. Therefore the indicator doesn’t give a level playing field when comparing direct and indirect investors. C6. Do funds compete on costs/price? Fees relative to assets and number of accounts by service (investment, administration and insurance services) and by market segment (output) PC proposes using Regulator data; research firms; fund disclosures. Fees can lack comparability both due to structure (e.g. flat dollar +% for some, pure % for others) and the netting off of costs and profit margin in underlying investments rather than using explicit fees. Note that any % fee includes an inbuilt escalation factor when FUM increases. PC should actively look for indications of % fees decreasing as FUM increases, or else commensurate increases in services. % fees permit some industry participants to capture the benefits of scale rather than passing them to members.
sub039-superannuation-assessment.docx