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“Always be in control of your investments and investment decisions.”
Now, more so than ever, is a great time to “compare the pair”.
Hostplus is a $44 billion superannuation fund representing the hospitality industry. Last Friday it updated its product disclosure statement to highlight its “absolute discretion” to “suspend or restrict” applications for cash withdrawals.
Whilst it is the members’ retirement money, it is controlled by Hostplus, as the trustee. Hostplus make all the investment decisions, and now, this includes the discretion to dictate what investment option you can choose, therefore restricting your ability to roll out your superannuation in favour of another super fund; or potentially restricting you from accessing up to $20,000 of your superannuation under the Government’s early access provision due to the COVID-19 pandemic.
Hostplus has been exposed as having a very high proportion of their members’ money invested in unlisted assets including airports, toll roads and property (commercial, retail and hospitality).
In December 2019, it held zero cash in their famous ‘balanced’ option, which by the way includes 80% growth assets.
Whenever there is a run on a managed fund or trust, the manager, in this case, Hostplus), needs to have enough cash to payout the withdrawal requests. If they don’t, they must sell assets to fund the requests. This is extremely dangerous in a market when assets have fallen as they must sell assets at depressed prices. The losers from this are those who remain invested as they will never recoup what has been sold. More on this later.
While industry super funds market themselves to only profit members under a low-cost fee structure, the reality is that the management of our retirement savings is BIG business!
Competition is fierce to gain market share of our retirement savings, and what better way to attract new money than to have exceptional investment performance!
What you wouldn’t know is that many large super fund managers ‘cook the books’ to inflate the value of their unlisted assets. Some have been found to pick and choose when to re-value their unlisted assets to represent better annual performance figures.
There are a number of factors –
ASIC has a continual focus on SMSFs, particularly around fees and performance. This plays perfectly into the hands of industry funds who spruik low fees, with adviser relationships sold separately, and often inflated performance.
While I agree that a minimum account balance is essential, perhaps having complete control and flexibility over your retirement is just as important as fees and performance.
At Hewison Private Wealth ensuring our clients have control over their own investment destiny is our number one objective. For this very reason, we predominantly recommend direct ownership across all investment structures. We actively manage over 700 SMSFs on behalf of our clients, as we ultimately believe it is possible to manage your own affairs to maximise control, cost and performance.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.