This week, an interview in Investor Daily helped to shed some light on the agenda of the industry super network. The head of the organisation clearly indicated that once they have sorted out financial planners and FOFA, they will be coming after self managed super funds.
"I tell you one thing: once we get this commission thing [FOFA] out of the way, we are coming after self-managed super, not because we want to burden it in any way, but we want them to be on the same footing as industry funds," is the quote used in the article and attributed to Garry Weaven. (see http://www.investordaily.com.au/11846.htm )
This is of concern on so many levels I hardly know where to start - but here goes...
Mr. Weaven clearly thinks that "this commission thing" is his problem to solve - not the regulator or government. Since when does one product provider in the market get to increase their market powers by changing (setting) government policy to the detriment of other providers. Oh, sorry, forgot about the legislative bias that already exists through the default industrial awards system!
Obviously the 'rivers of money' Industry Super Network (ISN) pay for advertising is not quite enough to change the public's view that Financial Planners actually do some good.
Do they also think that FOFA is just about commissions? Industry funds have never paid commissions to advisers (well except their asset advisers and fund managers...) and look at the appalling levels of insurance taken out by the average fund member. Of course, perhaps they think that insurance is really quite unimportant and that they will look after their members when things go bad for them. It will be interesting to see the first person to sue a fund because they "rolled their money over to a cheaper fund that doesn't pay commissions" only to find that they have lost or reduced their insurance.
Then despite the clean bill of health given to the SMSF sector in the much quoted Cooper review - Weaven thinks that they will be next in the firing line. I can see the advertising campaign now: Industry super - the super that takes away all control from members so you don't make the mistake of choosing your own investment path - after all, we know best. Fiona Reynolds (CEO of industry super funds lobby group AIST) then discusses the 'blatant' recommendation by her accountant to set up a SMSF. Perhaps as part of the new financial police she should report this breach of Corporations law by naming her alleged shonky accountant.
I can't help but think of the Dr. Evil line in Austin Powers where he is discussing taking over the world with his "laser" and wants to ransom the world for "ONE BILLION DOLLARS". Mr. Weaven thinks that the billion dollars or so that Financial Planners earn is a really, really big deal. Until of course you compare it to the $1,400 billion dollars currently sitting in super. The percentages you can work out.
What we get over and over again is the non-reviewed, so-called research that is trotted out by ISN 'proving' the benefits of how they see the world. This research is not open to scrutiny as it is never actually released. Rather, they issue press releases that are accepted without question as to methodology...but that may be another topic!
With so much capital wealth in Australia tied to superannuation, the ability to influence our country by controlling capital is a real risk. In the same way that the markets would stop functioning if everyone only used indexed investing, when investment decisions are controlled by so few people we risk the same outcome.
Love to hear your thoughts.
"I tell you one thing: once we get this commission thing [FOFA] out of the way, we are coming after self-managed super, not because we want to burden it in any way, but we want them to be on the same footing as industry funds," is the quote used in the article and attributed to Garry Weaven. (see http://www.investordaily.com.au/11846.htm )
This is of concern on so many levels I hardly know where to start - but here goes...
Mr. Weaven clearly thinks that "this commission thing" is his problem to solve - not the regulator or government. Since when does one product provider in the market get to increase their market powers by changing (setting) government policy to the detriment of other providers. Oh, sorry, forgot about the legislative bias that already exists through the default industrial awards system!
Obviously the 'rivers of money' Industry Super Network (ISN) pay for advertising is not quite enough to change the public's view that Financial Planners actually do some good.
Do they also think that FOFA is just about commissions? Industry funds have never paid commissions to advisers (well except their asset advisers and fund managers...) and look at the appalling levels of insurance taken out by the average fund member. Of course, perhaps they think that insurance is really quite unimportant and that they will look after their members when things go bad for them. It will be interesting to see the first person to sue a fund because they "rolled their money over to a cheaper fund that doesn't pay commissions" only to find that they have lost or reduced their insurance.
Then despite the clean bill of health given to the SMSF sector in the much quoted Cooper review - Weaven thinks that they will be next in the firing line. I can see the advertising campaign now: Industry super - the super that takes away all control from members so you don't make the mistake of choosing your own investment path - after all, we know best. Fiona Reynolds (CEO of industry super funds lobby group AIST) then discusses the 'blatant' recommendation by her accountant to set up a SMSF. Perhaps as part of the new financial police she should report this breach of Corporations law by naming her alleged shonky accountant.
I can't help but think of the Dr. Evil line in Austin Powers where he is discussing taking over the world with his "laser" and wants to ransom the world for "ONE BILLION DOLLARS". Mr. Weaven thinks that the billion dollars or so that Financial Planners earn is a really, really big deal. Until of course you compare it to the $1,400 billion dollars currently sitting in super. The percentages you can work out.
What we get over and over again is the non-reviewed, so-called research that is trotted out by ISN 'proving' the benefits of how they see the world. This research is not open to scrutiny as it is never actually released. Rather, they issue press releases that are accepted without question as to methodology...but that may be another topic!
With so much capital wealth in Australia tied to superannuation, the ability to influence our country by controlling capital is a real risk. In the same way that the markets would stop functioning if everyone only used indexed investing, when investment decisions are controlled by so few people we risk the same outcome.
Love to hear your thoughts.
Paul
ReplyDeleteGary is not only going to take over the SMSF industry, but he's going to manage the economy as well. In his address to National Press Club in Canberra on 23 May 2007, he states 'But what a missed opportunity it'll be if we don't harness at least a good proportion of our world leading superannuation base, to also create world leading economic, social and environmental infrastructure for this country.' Great - so now markets will step in when markets fail rather than government.