Getting advice about your super
Your super is your investment for your retirement, and may become one of your most important financial assets. You may decide to get some professional advice on how to look after it.
Start off on the right foot by dealing only with a licensed advisory business. Then consider these tips and safety checks, especially if your adviser suggests changing funds.
Finding out your needs and goals
Good personal advice considers your own particular financial situation and needs, and then recommends financial strategies to suit you.
Your adviser must properly understand your needs and goals. To do that, your adviser will generally need to find out about:
- your age, intended retirement age and any dependants you have
- your future financial needs and goals
- your understanding of financial matters and how much risk you can tolerate
- your existing super, other investments and tax situation.
Understand your existing super
Over your working life, you could easily have a number of super funds.
To give you advice about super, your adviser will generally need to find out about and understand your current super funds, even if this includes funds that the advisory business does not usually deal with. (You'll find that many advisers mainly recommend 'retail funds' and don't usually advise about 'industry' or 'corporate' funds.)
To make it easier for your adviser, take along any information you have about your super, for example your member statements and annual report. Your adviser may ask you for written authority to contact your fund.
Recommending a switch of funds
Your adviser should only recommend switching funds where this is appropriate for you. They must always make reasonable inquiries about the advantages and the disadvantages of switching. This could include fees to leave an old fund, extra fees to join the new one or the possible loss of insurance.
Take insurance for example. Make sure you'll still have the insurance cover you need before leaving your old fund. If you have to pass a medical exam or answer a medical questionnaire before the new fund accepts you, there's a risk you might be refused cover.
You have right to have these facts explained clearly and simply in your written statement of advice.
Even if your adviser is just recommending redirecting future super contributions away from one fund to another, they must explain in writing why they've made that recommendation. They must also write down the costs, benefits and significant consequences of redirecting those contributions.
Is your advice adequate?
Your advice needs to be detailed enough for you to understand what would happen if you accept the advice.
For example, it would generally be inadequate for your adviser to say "the fees in the new fund will be higher, but I think the extra features make it worthwhile". This doesn't tell you how much more you will pay in the new fund and doesn't explain the features or benefits or why they are relevant to you.
It would also generally be inadequate to say "if you have insurance, you will lose it if you switch". Your advise must generally tell you about the benefits that will be lost, including the level of cover.
Is the advice appropriate for you?
By law, your adviser must give you appropriate advice. This means advice that suits your needs.
For example, if you rely on super for life insurance, a recommendation to switch to a product that had inadequate life insurance would clearly not be appropriate.
More generally, advice to switch your super fund will generally be inappropriate if your adviser knew (or should have known) that:
- the overall benefits likely to result from switching would be lower than under staying put, or
- the cost of the new fund is higher than the old fund, unless the new fund better satisfies your needs.
Problems with advice?
If you experience problems with advice about super, discuss them with your adviser or make an official complaint to the person named in the business's financial services guide. If you remain dissatisfied you can have your complaint heard at not cost to you by an independent complaints scheme.
If you suspect misconduct, dishonesty or fraud, contact us at ASIC immediately by emailing infoline@asic.gov.au or calling 1300 300 630. More information about complaining
How to choose a licensed advisory busines
Read lots more information about super
FIDO Website: Printed 02/09/2010
