Warren Buffett famously said: “It’s only when the tide goes out that you get to see those who have been swimming naked” Why do we fail to check the facts when we think we’re making money.
- Retail funds pay commision to advisors
- They have missed $50bn in growth
- Calls for reforms grow louder
Retail superannuation funds miss out on $50bn in growth because of poor management, high fees
IT is the most expensive financial scandal in Australia.
Retail super funds – usually recommended by financial planners because of their generous commissions – have missed out on $50 billion of investment growth in the past 12 years.
Research from Industry Super Network (ISN), the super trade body, has revealed that poor investment management, high fees and commissions paid to financial planners has reduced the investment returns on retail super funds by a staggering $20 billion in the past year alone.
The report, called Australia’s Lost Savings, was written by ISN and reviewed by the University of Canberra using average super fund performance data going back to 1997.
ISN boss David Whitely is now calling on the Federal Government to reform the financial advice system so that finance planners are forced to act in their clients’ best interests, and not promote products that pay the highest commissions.
“It is one of the great injustices of our time,” Mr Whitely said. “The current system legitimises financial incentives to salesmen who have no legal obligation to act in our best interests.”
Under existing regulations, planners have to give only advice that is “appropriate”.
“That gives far too much leeway for planners and offers insufficient protection for investors,” said Mr White”
Another Howard Government failure? Over to you.
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