POWERED BY MOMENTUM MEDIA
Do members know best?
There can be no doubting that the industry super funds' "compare the pair" advertising campaign proved to be one of the most successful exercises of its kind and that it played a significant role in the elimination of commission-based remuneration within the financial planning sector.
It is now history that the Industry Super Network (now Industry Super Australia) utilised funding from its member superannuation funds to develop a major television advertising campaign which, despite the claims of some sections of the financial services industry, were deemed not to have breached the sole purpose test.
To understand the motivations of the funds which backed the campaign, there needs to be an understanding of the political factors which were at play at the time and the fact that the former Howard Coalition Government had sought to introduce choice of fund. In other words, the "compare the pair" campaign had its genesis in defence, rather than attack.
However, well after the industry funds had arguably won the choice of fund battle they continued to prosecute their television advertising campaign.
Given the original defensive nature of the campaign it could legitimately argued that it was aimed at membership retention and growth - two elements which met the best interests test. However at no time did the funds in question consult their members about the advisability of making such an investment.
Around a decade later, new research suggests that if superannuation fund trustees boards actually sought their members' permission to mount such a campaign that permission would likely be denied.
Why? Because the research undertaken by CoreData suggests that members do not see such television advertising as being particularly pertinent to their needs in 2015. According to that research, members most commonly say that they have seen super fund communications and marketing through television advertising but rank it second last in terms of their preferred methods of member communications.
Indeed, the superannuation fund members surveyed ranked television advertising ranked only just behind their funds' sponsorship of sporting teams and events.
It seems that in these days of social media, super fund members much prefer the directness of e-mails and text messages.
But, of course, the trustee boards of superannuation funds aren't obliged to ask their members' permission to make such investments and on the evidence contained in the latest Pillar Administration/Super Review survey undertaken during last November's Association of Superannuation Funds of Australia conference, few believe they should do so.
Asked whether superannuation funds should be required to seek member approval before entering into major sporting sponsorships, 42.2 per cent of respondents answered yes, while 54.9 per cent opposed the proposition.
Importantly, the majority of respondents to the survey described themselves as being superannuation fund trustees and executives - precisely the people who make the decisions about such expenditures by superannuation funds.
While the Federal Government is still contemplating changes to superannuation fund governance arrangements, there is no suggestion that it will in any way move to require fund trustee boards to consult members about expenditures such as television advertising or sporting sponsorships, notwithstanding the evidence of member antipathy.
It seems that for the foreseeable future, and irrespective of recent research, investment in television advertising campaigns and sporting sponsorships will remain entirely at the discretion of those controlling trustee boards.
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