Industry Super Australia (ISA) has attempted to deliberately mislead the Financial System Inquiry (FSI) about the SMSF sector because they are threatened by its growing success.
This is according to Reece Agland, the manager of superannuation products and services at Superannuation Australia, a wholly owned subsidiary of Taxpayers Australia.
He has brought into question the motivation behind ISA’s negative assessment of SMSF asset composition in its submission to the FSI.
“The ISA want to be the number one sector, and now the number one sector is SMSF, so they’re trying to stop that growth,” he told Wealth Professional
. “A lot of that is trying to convince the government that there is some intrinsic problem with the SMSF sector.”
In the submission, ISA exaggerate an “issue” with diversification Agland said, but comparing APRA-regulated default options with SMSFs is like comparing “apples with oranges”.
“The part I found misleading is the suggestion that there is something wrong with SMSFs because a lot are invested in low risk. It’s not a bad thing – if you’re in the retirement stage you want your investments to be low risk. A lot of people are in that stage, which will skew the figures,” he said.
However, at the same time younger people are starting to enter the SMSF market with high risk investments, and the figures are changing.
SMSFs are a moving feast with an investment profile that matches the lifestyle choices of those in the fund, and reflects the direct choice of members, not an investment strategy developed for others by others, said Agland. In this way it’s impossible to compare it with APRA funds.
For example, during the global financial crisis many SMSFs went very quickly out of the fund market and into cash because they were protecting themselves: “Now the market is good again and they’re going back into equity.”
SMSFs have got their part of the market and they’re going to be there for a long time, said Agland.
“It’s hypocritical of the ISA to complain that SMSFs can invest in [only] either high risk or low risk investments when their member funds allow the same risk taking within an industry fund,” he said. “It’s important for us to get this message out to policy makers that SMSFs aren’t as scary as [the ISA] make them sound…We’re not seeing SMSFs falling over.”
Agland feels the ISA submission is comparable with Industry Super Fund’s (ISF) “compare the pair” advertising campaign, which has also received wide-spread criticism for misleading the public.
The campaign compares the success rate of industry funds with retail funds.
Last week Wealth Professional revealed
that ASIC were investigating complaints about the advertisement, which appeared in a similar form in 2005 before being suspended due to public outcry and ASIC concern.
“Again that was comparing apples with oranges, and again it’s because it’s in [the ISF] interests to be the dominant party in superannuation,” Agland said.