Most don’t understand investing
The wealth management industry does not meet best practice benchmarks in any area of its operations, it does not meet the needs of the average Australian and it fails completely in dealing with the biggest emerging investment need – the provision of secure incomes in retirement.
This damning assessment was delivered by Wade Tubman, a director, and Annie Liao, a senior manager in the actuarial practice at PricewaterhouseCoopers. Their report said the industry and the government had to be prepared to consider major changes. One was to do away with all the competing mastertrusts and wrap accounts and operate a single government-owned platform.
Another was to change the basis on which superannuation fund members invest, so that the fund member is no longer bearing all the investment risk. Wealth management companies would be required to develop products that mitigated the superannuant's market and longevity risks. Liao said the industry had to accept that the majority of people had little understanding of super, did not trust their super fund and underinvested as a result.
Liao said: "Half the people in super funds don't know if they are in an accumulation or defined benefit fund, only 30 per cent know approximately what their balance is and a quarter don't know what sort of investment option they are in."
Source: The Sheet