“It is crucial that super investors understand what services they are receiving and what it costs them or else you can end up paying for services you are not aware of and don’t use.
Australia (PRWEB) August 13, 2012
The Australian superannuation market boasts the fastest growing pension sector in the world. According to a report by the Australian Financial Review, Australia’s super has grown by 17% in the last 10 years. The Australian super industry is now a $1.3 trillion business, more than triple the United States retirement market. However, despite this amazing growth in productivity, members and assets invested, super fees have grown instead of dropped in recent years. Consumers may think that paying fees is unavoidable if they want the benefits of a managed superannuation fund. They may also conclude that a per cent here or there won’t make much of a difference in the long run. Unfortunately, they would be completely wrong.
Typically, when a company increases its production or its supply of services it achieves an economy of scale and can reduce the costs of doing business. Superannuation funds do not seem to have passed on these savings to fund members.
Of course, not all super funds charge the same fees for management fees. The average fee super funds charge is 1.3%, according to super industry researchers SuperRatings. However, some funds will charge up to 4% of the fund’s assets in fees. That is a huge difference. When it comes to super funds, just half of a point difference can mean $50,000 less at retirement.
According to an article by the Daily Telegraph, self-managed superannuation funds have, by far, the lowest management costs: just 0.54%. Nevertheless, self-managed super funds do require a substantial investment in time and resources that could make them prohibitively expensive for members with small super fund balances.
Often managers will charge fees for services clients either do not need or do not know about. “It is crucial that super investors understand what services they are receiving and what it costs them or else you can end up paying for services you are not aware of and don’t use,” says Chris Appleyard, Chief Analyst for Custom Wealth Solutions.
“That is why we recommend all our clients consider cost and availability of insurance; the fees super funds charge and their expected retirement age before choosing a super. For some clients a competitive industry or government super fund is a good fit; while others benefit from more flexible instruments, such as master trusts and self-managed super funds,” adds Appleyard.
Appleyard further explains, “Whatever your circumstances, it is important to ensure you have reliable advice from a qualified financial advisor who knows your particular goals and circumstances; and can recommend the right super options for you. “
Custom Wealth Solutions is an established finance specialist firm in Australia, providing services to private and business clients needing financial advice in Brisbane, Sydney, Melbourne and the Gold Coast. Their comprehensive services include insurance options, investment strategies, lending solutions, and superannuation including SMSFs.
Consult a financial adviser today and make the most out of your finances – call Custom Wealth Solutions at 1300 001 297 or drop by their website http://www.customwealth.com.au/.