We’re all being fleeced by super fees

HOORAY, financial service companies are expecting bigger profits this year. Great news for all those shareholders, bad news for the rest of the country, specifically every superannuation fund member – including not-for-profit members.

The reason they are expecting bigger profits is because they intend to take more than ever out of our super funds. They call them fees, but I prefer fleeced.

Fleeced for management fees, buy-sell spreads, indirect management, asset allocation, investment advice, administration, contribution, performance, switching, activity, exit, annual fees, pondering lunch fees and salaries!

I’ve lost count of the number of quarterly updates, projections and profit forecasts that have come from these companies and include the magic words “superannuation inflows”.

Superannuation inflows is the latest financial jargon for “guaranteed money for doing nothing”.

Take this example from a fund manager who runs a smallish investment platform. It doesn’t stand out from any of the others, but it gets to the point a bit more quickly and is slightly more upfront about what’s making them all rub their hands together: “Increased flows due to regulatory superannuation contributions”.

Yep, money for doing nothing – sit back and let it roll in.

For every $100 in our super funds, the fund managers, financial vultures and big merchant bankers (that’s rhyming slang for something rhyming with bankers) take an average of $1–$3.

That’s 1–3% regardless of how little work they do. If you have $1 million in super, you’re going to be slugged your percentage, same as if you have $50,000 or $100,000. Regardless of the fund’s performance, we’re going to be fleeced, profit or loss.

That’s because these hand-wringing, smirking financial services companies don’t charge by the amount of work they do or the number of hours they put in. They simply just slug us a percentage.

Somehow we have user pays for almost every other service in the land, but not for superannuation. Instead we get penalised based on our total balance. And it’s often a secret percentage.

Trying to find the real percentage of these fleece deals is like looking for a needle in a haystack.

It’s so buried that anyone would think fund managers had something to hide.

According to the latest Australian Securities and Investments Commission review, 21 super funds, including some of the biggest, still do not fully disclose and present the legally required information clearly enough.

They failed to properly provide “transparency” information such as directors fees, remuneration, trust deeds, significant events and, oh, just a little matter of their product disclosure statements – the legal be-all and end-all of their financial arrangements, obligations, fees and promises.

But, hey, what’s a little legal paperwork when you can just sit back and let the money roll in.