Financial advice leaving Aussie pension savers worse off – Senator Sherry

Senator Nick Sherry, Minister Assisting on Deregulation and Public Sector Superannuation, who has held key roles in the development of Australia’s compulsion Superannuation system for the last 20 years, says the data that proves the underperformance of those who have been advised compared to those who have stayed in defaults exists, but has yet to be published. These figures will be published in future, when reforms from the Cooper review of the Superannuation system take effect.
Speaking at a Tor Financial event in London this week, Sherry described the rapid pace of consolidation in the Australian market following the introduction of compulsion, with banks buying up distribution.
Sherry said: “Choosers are generally worse off, because they have been advised. In Australia you may have between five and eight investment options or you might have 300 fund options available. On balance the long term return on being advised, net of fees means you are worse off.
“The data is collected on defaults and on what I call the exotica, but it is not published so people do not know about it. Once the reforms are in place this data will be published. I am confident that on average generally if you are an activist you are worse off if you have been advised than if you have been in a default.
“Once the 9 per cent contribution was legislated for in 1993 the banks thought ’we need to buy life companies’. We now have just one insurer left that is not owned by a bank. We have some of the biggest banks in the world, and in three to four years time their Super subsidiaries will be larger than the banking parts of the businesses.”