Super – Short Term View A Danger
05 July, 2005
Following the commencement of choice of superannuation for some Australians from 1 July 2005, there has been a rush of advertising and commentary in which truth and common sense appear to have been major casualties.
Of significant concern has been the focus of some prominent media 'personalities' on returns for a single year.
Just about everyone in the financial industry will tell you that superannuation is a long – term proposition and that we should be looking at the performance of super funds and investment managers over 3, 5 and even 10 year periods.
The rationale is compelling but simple – last year's best performers are not necessarily going to be among the leaders this year – or as we so often see at the bottom of advertisements, 'past results are no indication of future performance'.
Even the Federal Government's own $20m superannuation education campaign has urged Australians to be cautious and not to make decisions based on a single year's results.
Yet, some prominent media commentators are urging Australians to leave a fund or investment manager because it didn't achieve a given return in any particular year.
According to Tasplan General Manager, Neil Cassidy, it is this sort of advice which led to the debacle in the United Kingdom where over $2 billion in member funds were lost through 'churn' when the industry in that country was similarly deregulated.
Cassidy has called on those making comment to think carefully. Don't just say that all employers have to give staff a Standard Choice Form – because some don't! Don't just say that all Australians have choice – because some don't!
Cassidy called on the Regulators to be tough with media 'personalities' in particular, as many of these are 'exempt' from the laws governing financial advice that bind everyone in the industry.
It could be entirely counter–productive if those in the media were allowed to make statements which caused Australians to take a short term view of investments and make hasty decisions about their retirement savings which they may later regret.
|
