Superannuation - Am I with the right fund management company?

[wazafi]

Hi All

I came to Australia exactly 5 years ago and has been working since.
I signed up with the super organization my company recommended since then.

I just had a look at my fund just now.

In the 5 years I have been working, total contribution is $67K.
Yet, my net asset is on only $56K.

Hmm, I thought superannuation supposed to grow(?)
Or is it normal considering the bad times we had in 2008/2009 period.

I am bit naive when financial matter is concerned.

What are your opinions?

 

[Bill M]

Hmm, I thought superannuation supposed to grow(?)
Or is it normal considering the bad times we had in 2008/2009 period.

It is about normal for a diversified fund which is about 70% equities and 30% defensive. I got one that is an industry fund that is still behind since the GFC. Most people on this forum would say that a Self Managed Super Fund might be a better way to go, I agree. I currently have another super fund that is in fixed interest overseas and fixed interest in Australia and it has gone no where in 4 Months. If I was running the show myself I could be getting 7.2% fixed interest for 5 years with St. George with almost no risk, bit simple but why can't they do that?

Fees also can eat your capital, who are you with and what fund are you in and do you know what your fees are?

 

[wazafi]

Hi

Thanks for the feedback.

I am with Asgard. (Advance Growth Multi-Blend Fund WS (ADV0085AU) 100.00%)

My monthly fee is about $41.

For me, I don't think I would be managing my own Super fund yet. I am not that savvy when it comes to all that.

Regards

 

[So_Cynical]

I am with Asgard. (Advance Growth Multi-Blend Fund WS (ADV0085AU) 100.00%)

My monthly fee is about $41.

That's expensive for a fund that's loosing you money...standard industry funds would charge less than half that.....some less than a third of that to lose you roughly the same amount but you would be like $1500 in front on the fees.

 

[Bill M]

My monthly fee is about $41.

I agree with So_Cynical, fees are over the top for a 56k account, cheers.

 

[pixel]

It's probably a smart decision NOT to run your own SMSF if you're talking less than $100K. Even if you spend your own time and effort on deciding where to put the $$, the fixed costs add up.
Set-up costs should be less than $1,000; so that's not a big issue. What gets you is the recurring annual fees, where you'll look at -
$150 paid to the Tax Office, simply for the privilege of doing it yourself;
$2000 to $3000 for the compulsory annual Audit.

If you're a high-frequency trader, you may get some of it back (from the ATO) by registering your SMSF as a Trading company; that gets you part of the GST in brokerage returned. Brokerage itself is of course a Deductible and as such comes out of your profitable trades - of which there are hopefully many.

None of that will apply if you're still a wage slave, whose Super is paid to the tune of about 10% each month.
Your suggested Fund Manager has lost heaps up front; not much that you can do about it now. If you trust that they'll continue to follow the Market, and if you further believe that the Australian Economy will continue to grow over the next 5 years, you may decide to cop it sweet and leave your money in an Australian Share Fund. At least, you'll eliminate the FOREX risk - some punters are talking the AUD up by as much as 50% over the next 5 years.
If you're not sure about that either, you're well in your rights to swap Funds and maybe go into a fully secured Cash Fund.

But whatever you do: Don't fret about $20 or $40 monthly admin fees. Find a few Managers that offer a product you like; then compare their rates of return over 1, 2, 3, 5, 10 years - and pick the one with the best overall return. Whether it's total percentage gain, long- or short-term, or stability you're after: If a fund regularly outperforms another by only 1%, that's $500+ each year to your advantage. Making the fees your selection criteria may be saving $20 a month, which comes out to $240 per year.

You do the sums

 

[wazafi]

Should I be looking for a better fund manager?

Is there any sites to check-out the well performing ones as oppose to mind?

 

[pixel]

Should I be looking for a better fund manager?

Is there any sites to check-out the well performing ones as oppose to mind?

You could start at FIDO:
http://www.asic.gov.au/fido/fido.ns...uation+fund+comparison+worksheet?openDocument

or run a Google or Yahoo search for these four keywords: compare super fund manager

You will need to be aware of Fund Managers' self-praising websites and outsiders offering true comparisons. The first that caught my eye was "SelectingSuper". Check out this page:
http://www.selectingsuper.com.au/PerfTables.html
and download the various tables.

Happy Hunting

 

[Intrinsic Value]

If you look at fund performance Asgard rates very low and rates very high on fees.

It is one of the worst performed funds so you would be probably be better off in an industry funds where fees are lower.

Funds like Aust Super also allow you to invest in the ASX200 so you have a bit more control of your super.

 

[FxTrader]

It's probably a smart decision NOT to run your own SMSF if you're talking less than $100K. Even if you spend your own time and effort on deciding where to put the $$, the fixed costs add up.
Set-up costs should be less than $1,000; so that's not a big issue. What gets you is the recurring annual fees, where you'll look at -
$150 paid to the Tax Office, simply for the privilege of doing it yourself;
$2000 to $3000 for the compulsory annual Audit.

Actually it's $2000-$3000 for accounting and audit fees combined. It's the accountant's fees that hit the hardest on an SMSF not the audit fees (about $250/yr).

If you're a buy an hold investor and you don't churn your portfolio much then the accountant's fees should be less than $2000/yr for SMSF.

If your fund manager lost $11k on portfolio last year and you only lose say $2k over the same period managing an SMSF then it's pretty obvious which is the better option.

I encourage anyone who has any desire and intitiative to manage their own portfolio to do so and educate themselves. As a start, read Roger Montgomery's blog and buy his book. Following his advice should see you outperform the best managers year on year.

 

[Julia]

Agree in principle with FX trader, but appreciate the OP's inexperience.

This is a really unenviable place to be in, and self education is really the only next step from here, even if it's to enable the person to know when he is being badly done by, as seems definitely the case here.

Two suggestions to the OP:

1. Read through this thread. You will learn a lot.
https://www.aussiestockforums.com/forums/showthread.php?t=21047&highlight=Professional+Adviser+Fees

2. Read through the Beginners' Lounge forum, particularly Sir O's comprehensive thread specifically for beginners.

Continue to post up whatever questions you have on here.
Usually someone will be happy to answer. Good luck.
Your experience is replicated across hundreds of thousands of people, poor buggers.

 

[pixel]

Agree in principle with FX trader, but appreciate the OP's inexperience.
...
Your experience is replicated across hundreds of thousands of people, poor buggers.

But wasn't it Li'l Johnny's declared intention when he introduced "Simpler Super" to make it fairer for everybody, provide personal choice, and put every Aussie battler in control of their own destiny and financial future?
What did I miss there?

To FXTrader: You're right; it's Accounting and Auditing combined, and the range 2-3 Grand is afaik about "typical", which doesn't mean you can't find someone who does it for less. If the fee depends on how often you "churn" your portfolio, then it's also a less than satisfactory choice - because if a stock fails to perform, you should NOT have any reason or incentive to hang on to it.
The problem remains, regardless, that your average worker is in no position to manage their finances on their own. They'll need professional help - and that costs extra and is still prone to lose you heaps, yet charge for the privilege.

 

[FxTrader]

To FXTrader: You're right; it's Accounting and Auditing combined, and the range 2-3 Grand is afaik about "typical", which doesn't mean you can't find someone who does it for less.

As far as accountant's fees are concerned, yes you can try and shop around for a better deal but as a general rule, the larger number of and more complex the investment transactions are in the SMSF the higher the fees will be. I trade options, warrants and Fx in the SMSF so the tax returns are complex.

However, I have reviewed the tax returns produced by my accountant over the years on my SMSF when my transaction count was low and primarily equity based and frankly they were not that complex and could have been DIY and then just paid the audit fee.

If the fee depends on how often you "churn" your portfolio, then it's also a less than satisfactory choice - because if a stock fails to perform, you should NOT have any reason or incentive to hang on to it.

Well, this depends on your definition of underperformance and your investment strategy. For instance, say your focus is buying into good A1 businesses (as defined by Montgomery) then you may hold even if the stock of a business underperforms say the ASX200 index (or whatever the benchmark) in a given year.

The problem remains, regardless, that your average worker is in no position to manage their finances on their own. They'll need professional help - and that costs extra and is still prone to lose you heaps, yet charge for the privilege.

I don't agree with this fatalistic statement since the "average worker" (assuming average intelligence) only needs to turn off the TV a few hours a week and educate themselves about investment principles. Laziness is the enemy of the bulk of the financially illiterate masses not comprehension or ability.

The "professional help" most investors need is provided at low cost from your local library, book store and an abundance of web resources including this forum. Unfortunately, many people just want a hot tip or shortcut, not an education.

 

[wazafi]

I admit I do must agree with FXtrader about being uneducated on these financial issues. Just the jargon alone makes me more confuse. I guess that is the reason why I am a field engineer instead of an accountant or one in the financial field.

I have been reading but just no one I know to consult with if my understandings of the details are right or wrong. I am contemplating of getting a financial planner to help me map out my future with the money and asset that I have. I am just going by recommendation from friends.

 

[Julia]

I don't agree with this fatalistic statement since the "average worker" (assuming average intelligence) only needs to turn off the TV a few hours a week and educate themselves about investment principles. Laziness is the enemy of the bulk of the financially illiterate masses not comprehension or ability.

The "professional help" most investors need is provided at low cost from your local library, book store and an abundance of web resources including this forum. Unfortunately, many people just want a hot tip or shortcut, not an education.

Agree absolutely. Some people may have a natural interest/affinity with financial matters, but anyone with a moderate level of intelligence and a bit of application can educate themselves.

I admit I do must agree with FXtrader about being uneducated on these financial issues. Just the jargon alone makes me more confuse. I guess that is the reason why I am a field engineer instead of an accountant or one in the financial field.

That's a reasonable point about the jargon. But by simply being persistent and reading, then asking questions where something isn't clear, you will find it will eventually fall into place.

I have been reading but just no one I know to consult with if my understandings of the details are right or wrong. I am contemplating of getting a financial planner to help me map out my future with the money and asset that I have. I am just going by recommendation from friends.

OK, so what actually have you been reading? Have you started at the very beginning with e.g. the education modules on the ASX website? These presume no prior knowledge.

Then most online brokers will also have an education section which will probably offer additional information.

Then you have the whole Beginners' Lounge on this website, including Sir O's very useful thread.

If you put your various questions up, usually someone will answer you.

You seem to have a pretty negative, defeatist attitude, so that might be the first place to start making a change.

I'd be cautious about recommendations from friends. Often these friends have no clue that they are being done over by financial advisers, so will blindly recommend someone who has been nice to them and assured them they are getting the best possible results in all the circumstances.