Are no-fee funds the superannuation model of the future? This bank certainly thinks so, and it’s hatching plans to offer the product through financial advisers.
The new super fund, ING DIRECT Living Super, is aimed at allowing Australians to take more control of their investments without being slugged with hefty fees, claims the bank.
ING DIRECT chief operating officer Anne Myers argued that their research clearly suggested that there is a lack of trust in super, and that control is something that consumers seek.
“All I want from my super is to be able to control it myself, control my investments and keep a close eye on it every day,” she said of one friend who has had to push her retirement back by 10 years.
“I think this emphasises the lack of trust that particularly the people over the age of 40 or 45 have in our current superannuation structure. And it also shows through the amount of people who are opening self-managed super funds – there’s been a 20% increase in the number of self-managed super funds over the last four years,” she added. “A lot of that is what we saw in the research – people want to have control.”
On the issue of fees, Myers used her own daughter’s experiences as being typical of those that were uncovered by ING DIRECT's research.
“She brought me her superannuation statement a while ago. She had a part-time job through uni, paid a few thousand dollars into super. But, of course, three years’ later there’s almost nothing left, because it’s been eaten away by fees and by insurance premiums,” she said.
“Control, transparency and fees are the issues for superannuation, and it came through again and again in our research.”
Speaking at the product’s launch, Minister for Financial Services and Superannuation Bill Shorten added his voice to the call for lower super fees.
“At the moment Australians pay, on average, about 100 to 120 basis points for their balanced funds,” he said. “I think we can afford to put downward pressure on those fees.”
Using the catch cry of building a better super fund, with low costs, wide investment options, ease and transparency, Myers explained that investors in ING DIRECT's offering will have four options:
‘Safe’: a range of cash and term deposits – fee free.
‘Smart’, the product’s balanced option: 50% equities and 50% cash. ING DIRECT claims that this is the first balanced option available to Australians with no admin or management fees.
'Select': managed investments, including cash, Australian listed property, Australian and international fixed interest, and Australian and international shares – fees apply.
Share trading: a selection of S&P/ASX200 ETFs and listed investment companies. Aimed at providing access to the benefits of an SMSF, without the high costs or hassle – fees apply..
Myers noted that, while that the product is currently being offered directly to consumers online and over the phone, there are plans to offer it through the adviser channel in future. She added that the post-FoFA fee-for-service financial advice structure will allow the bank to go through the adviser channel while keeping costs down.
Let's Get Real on 05 Sep 2012 10:41 AM
And so starts the direct-to-consumer product campaign. We better get used to it.
Mel on 05 Sep 2012 11:52 AM
Pretty sure we can afford to push down Bill Shorten's salary also. After all he doesn't provide positive returns all the time either.
Michael on 06 Sep 2012 06:31 AM
The PDS states that no fees are charged on Cash and Term Deposits. They also have the first Balanced option with no admin or management fees. They do charge fees for their other options and for tading shares but they look pretty good to me!
Adam on 07 Sep 2012 11:19 AM
In what world is 50% equities and 50% cash a balanced portfolio?? Asset allocation is dead! Risk allocation is true diversification.
WereS on 07 Sep 2012 02:57 PM
The majors and industry funds have pretty much tied up the Australian retail super market. ING, as an outsider, needs to charge no fees to break through. It's worth noting Virgin tried this a few years ago without success.
You get what you pay for.
JohnE on 11 Oct 2012 05:33 PM
So they say; 'average person need about one million ($1M) to have a reasonable retirement income', but abysmally, people have just 80K men, and 50K women. Why? Sucked dry by Government taxes and Fund fees & charges.
There is no correlation between Top10 performing funds, and Top10 lowest TER/MER (Management Expense Ratio) funds. ING still returns a decent 5%pa - and sucks zero (0) fees & charges.
Dr Evil on 23 Oct 2012 01:06 PM
The fees are there they are just hidden behind smoke and mirrors. ING Direct have just lowered their *cash crediting rate on the 50% cash portion of the "Balance Fund" option. This way they can absorb the 50% invested in the Australian Share Index Fund cost MER (say average of 0.30% divided by 2 = 0.15%) and offer it for :"FREE" Why don't they offer some free steak knives as well to Check out the cash credit rating with help lead the sheep along the yellow brick road as well?? PS Check out the super cash crediting rates and the normal ING Direct cash rates as proof! Wayne Swan come on down!
Warren on 22 Nov 2012 12:42 PM
I'm a risk insurance adviser so I don't have the same level of experience and expertise that financial planners do when they provide the Super advice they provide their clients. One thing I know for sure though - all these so called experts who want to manage and have control over their own Super Retirement Nest Eggs best beware and mindful of the consequences. If you think planners and advisers who specialise in Super got their accreditation and expertise from the back of a Kelloggs pack - you're kidding yourself! The lack of knowledge in this area by everyday Australian's is staggering so paying a fee for that experience and advice is a wise move in my opinion. Like Ben says back on Sept 5, "If it sounds too good to be true, it usually is." Nothing good is FREE - you get what you pay for. Have a look at Greece's economy for example. No-one wants to pay for anything so their economy is now st-ffed. No fees here, no fees there. What a lot of rubbish - you're paying for it - you just don't know it!
Brian on 22 Nov 2012 02:54 PM
In response to Mel let's not push down Bill Shorten's salary, let's put him on a Fee for Service model for his income---if he cannot prove to us that he is providing a beneficial "service" to us he dosen't get paid, and he has to beg annually for his income with some proof of his provision of "benefits"---then see how he likes it ---and listen for the Bleating to begin
Brian on 22 Nov 2012 03:54 PM
following up on Mel's comments above about Shorten's salary---why don't we suggest that Bill is remunerated on a Fee for Service model, where he has to prove that he is able to deliver a beneficial "Service" before he gets paid, and then has to present proof again next year that his "services" are of benefit to us an ongoing basis before he gets paid again,
Imagine the Bleating we would hear from Canberra