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.