Image from Risk Management Magazine

Superannuation, A Disaster In Wait

Undue Influence in markets

Corporate Psyche

Government Interference

Investment Terms

AustralianSuper portfolio investment mixes

Control

  1. Compulsory Member Voting
    Similar to shareholder rights fund members would be given the right to vote on key fund decisions. This may include voting on executive remuneration, significant changes of strategy or major investments. This would create more active involvement of society and better direction of the funds resources whilst also making the fund managers directly accountable to its members.
  2. Superannuation Regulator
    A regular much like the SEC, or ASIC, the super fund regulator would be responsible for ensuring appropriate corporate behaviour, risk management and excessive influence. Sadly most industries need some form of regulator but that doesn’t mean they need to be regulation heavy. There’s usually only a needs for a cop walking the beat.
  3. Break-Up Funds
    Break-up of the funds and make them more competitive. The American model of corporate funds, hedge funds, and various 401(k) managers is an example of what a competitive landscape may look like. Self-managed super funds are generally a disaster for performance returns but breaking up the funds may lead to robo-funds and ETF focused funds that are low fee. It may also generate more value aligned funds such as ethical super funds.
  4. Compulsory Disclosure
    There is also limited disclosure of company performance and an annual reports. However these are far too dense for the average person or employer when selecting default funds. Compulsory disclosure on fees (AustralianSuper just increased fees — unbeknown to most people), performance, remuneration and investments would be a great step.
  5. Standardised Fund Scorecards
    Standardised scorecards that can be used to easily measure fee’s, performance and investment strategies. Just like a nutrition label on food the funds should be instantly recognised for what they are and aren’t doing. This may even include a star rating for their overall product.

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Chris Leeson

Chris Leeson

Bringing finance and economics to you with a focus on in-depth analysis and everyday life.

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