One of my favourite questions to ask a potential new client is ‘Can you tell me three things you absolutely know about your super fund?”
My guess is that more than 90% of the people I meet can’t answer yes to that question. In fact many people can’t even tell me the name of their super fund!
Of course I realise that life is busy and there are many more exciting things to be doing than taking an interest in your superannuation. But given it will be the largest source of retirement wealth for most Australians, I think it deserves at least a bit of attention.
Here are 5 things everyone should look closely at when they read their superannuation statement:
- How much do you have in superannuation, what is your balance? Is there an opportunity for you to contribute more to increase that balance over the long term
- What is your superannuation money actually invested in? Most superannuation funds provide a number of investment options to choose from. These may include various mixtures of shares, property, fixed interest and cash. Broadly speaking, the younger you are, the more exposure to growth assets such as shares and property you should have. As you get older, it may be appropriate to wind back the growth assets and increase the defensive assets like cash and bonds. Everyone has a different attitude to risk and volatility, though, so there’s no one size fits all approach.
- Is Life/TPD and Income Insurance provided by the superannuation fund? If so, it pays to understand how much cover you have, the cost of the cover to the fund and whether the levels of cover are appropriate.
- Are the administration and investment option fees competitive? As a general rule of thumb, if the combined amount of admin and investment fees is more than 1% of the superannuation balance it might pay to look around at alternatives. Low fees don’t necessarily translate to better performance, but they can certainly help!
- If ongoing advice fees are being deducted from your fund it pays to check how much you’re paying. Your statement will disclose this fee. If it doesn’t seem to present value for money then approach your adviser to have a frank discussion. Ongoing financial advice is important, but not if it’s costing too much.
If you need help to understand your superannuation fund, seek the assistance of a qualified financial planner. Choose one that doesn’t benefit from the superannuation products they recommend and ask plenty of questions. It’s your money and it’s important.
To discuss your superannuation, give the team at Steve May a call and start a conversation today.
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.
