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MySuper must focus on investment outcomes: Russell
MySuper products need to be more "outcome-orientated", otherwise everyone will end up with the same "homogenous, single-purpose solution", says Russell Investments chief executive Chris Corneil.
Corneil was reacting to comments made by MySuper designer Jeremy Cooper in the Australian Financial Review yesterday that unless age and wealth were taken into account, "[you would end up in a world] where you've got an 18-year-old and 74-year-old both in the same fund with the same asset allocation".
Corneil agreed with Cooper that the typical 70/30 equities/bond portfolio was not appropriate for every investor, and argued that the industry could do a much better job of engineering investment outcomes for superannuants.
"If walk down the street and ask someone about a balanced fund, you'll leave them cold. And yet that's what 80 per cent of people have," Corneil said.
But if you asked the same person what their investment outcomes were, you'd get a completely different response, he said.
"They'll say it's about preserving what I have, meeting some long-term objective, or - for more sophisticated investors - it could be about achieving real rates of return," Corneil said.
Superannuation funds should be "scouring the local market and global market" for a broad range of investments solutions that can be used to create a multi-asset portfolio that "delivers on outcome objectives", he said.
Russell Investments is creating products that could be the "building blocks" of outcome-oriented products, such as after-tax equity funds, high dividend exchange-traded funds (ETFs) and fixed income ETFs, Corneil said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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