I recently met a couple who came to me with specific instructions that they wish to invest with a certain industry fund option. They had formed this view purely on the basis of what they’d been “recommended” in a very popular money book. Interestingly, the same industry fund recently pointed out to the Hayne Royal Commission that it has received an extra 2.5 Billion dollars into the fund as a result of the endorsement in the book!
So if it’s been recommended in a book, it can’t be bad advice can it?
Now I don’t have a problem with the style of investment the author of the book suggests. It’s a passive, low cost, index style superannuation investment – exactly the style of investment I recommend to many of my clients. But I do have some trouble understanding why this specific investment option is being endorsed so strongly in the book.
Despite it being touted as the lowest fee superannuation investment option in the country (0.06%), this particular superannuation investment has underperformed the market leader in index style funds by more than 1.5% over the past 7 years, given the same asset allocation. Even if we are generous and say the difference is only 1%, it still adds up. The couple I met have over $400,000 invested in superannuation, so it’s a difference of more than $4,000 per year.
To me, it just goes to show that there is no substitute for doing your own research. A financial planner can certainly help, however the information is available to do it yourself if you know where to look and what to look for.
As for the couple I met – I think they are going to take the advice of the book author over mine unfortunately. They didn’t want to hear that there may be better options available – especially as they’d forked out $19 on the book 😊
Buyer beware – especially when it comes to “money’ books.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
