Composition of super fund fees still confusing to members
Professional Planner – 15 October 2024
However, SuperRatings insights manager Joshua Lowen questioned if it is really the fee transparency, or fee complexity, that is the root cause of member confusion.
“Every member pays for fees, you can’t get away from them, but they [fee components] do very different things,” Lowen said.
Lowen said that of the three most common kinds of fees funds charge, an administration fee pays for member services, an investment fee pays for asset management, and a transaction cost occurs when buying and selling underlying investments.
“It’s simple to say ‘let’s do a single fee’…but members then need to understand, just because you’re in a higher cost product – if you’re investing in a way that gives you higher returns – then that may not be a bad thing,” he said.
“Like-for-like, lower fees are better, but members need to be able to work out if they are actually comparing like-for-like as well. That’s where you’re going back to that idea of complexity.”
Lowen added another challenge for a fair fee comparison is a lack of industry average data on some funds’ website.
“It’s kind of easy to compare, say, two or even three funds against each other – you can go to a fund website and look at a product disclosure statement – but it’s quite hard for the average consumer or average fund member to know if those fees are actually high or not,” he said.
“They could be comparing two expensive products, choose the cheaper one of the two, and not realise that they’re actually both expensive.
“That, probably more than anything else, is where I think funds could help.”
But at the end of the day, Lowen said it’s also on members to proactively do their own research and understand the nuances of fees, utilising things like the Australian Taxation Office’s YourSuper comparison tool.
“Members need to take the responsibility of regularly or semi-regularly examining if their fees are in line with that they expect,” he said.
“They need to make sure that they’re comparing like-for-like and not comparing fees with an investment strategy that’s very different.”
