Research released recently shows an average of $35 billion* in super money is being switched every year. Worryingly, 31% of those changing funds say they didn’t receive any advice on the switch, with those switching to an industry fund getting the least advice of all.
We’re all familiar with the mantra about consolidation and saving money on multiple fees and charges, but there are other considerations to be made before switching funds.
One of the biggest risks is in not understanding that any insurance cover you have within your current super fund will become void once you are no longer a member of that fund. Researching available cover and the cost under the new fund is vital, as is a logical comparison with your current insurance cover.
You need to be sure that the investment options on offer at the new fund suit your specific needs and circumstances. How involved are you able to be in the selection of your investments? Do you want a lot of control or does the new fund have a ‘set and forget’ option that suits you?
While past performance does not guarantee future performance, long-term performance of the new fund should be critically assessed. Just because a fund performed well last year, doesn’t mean you should jump on the bandwagon. Super is a long-term investment, so it makes sense to view it in that light.
What ‘extras’ does your super fund provide? Does it offer free general advice? Are you able to manage and track your super easily online or with an app? Does it offer free seminars on retirement planning and wealth creation? And, does the fund’s website offer tools, calculators and other resources such as online financial education?
$35 billion dollars every year is a lot of money! When it comes to our life savings, all Australians need to be well informed so we can make the absolute best choices for our future. Regardless of whether or not we seek professional financial advice, a solid and basic understanding of good money management, investing, insurance, retirement and wealth creation is essential to stay ahead of the pack and confidently and proactively engage with our super.
Money101 offers off the shelf and tailored online financial education for all ages and life stages. Give us a call, we’d love to chat to you about how we can help your members, staff or customers become empowered with the knowledge they need to secure a comfortable financial future.
*Average calculated over three years to November 2015