"I want to switch superannuation funds, how do I find the best fund for me and what things do I need to look out for, I have no idea where to start?"
-Question from Janelle in Kingaroy, QLD
Top answer provided by:
It is great you are taking an interest in your Super, the first step to growing wealth is always becoming more involved.
It is difficult to say what the best fund for you is, as it all comes down to what you are looking for. You could say finding the right Super for an individual is like buying a car, they come in all shapes and sizes and at the end of the day it comes down to your individual wants and needs.
If you were sitting down in front of me, I would be asking you, what do you want from your Super fund? Are you looking for a great online system? A variety of choice when it comes to assets? Do you want to be in a big fund that looks after it for you as part of a group or are you looking for a fund that is individualised and geared towards your individual wants and needs? What types of assets do you want in your super? What type of involvement are you wanting? As you can see, the list of questions is exhaustive and this isn’t everything I would ask, but this gives you a rough idea of some of the things I would be asking.
At the end of the day, there are around 500 Super funds out there with the main types of funds that you can easily to choose from being Industry and Retail Super funds (not including funds like Self-Managed Super funds and Public Sector funds that not everyone can easily join).
So, to work out what would be best for you then you would need to decide first up what type of fund would suit you, here is a break down on what the 2 main types of funds are:
What Canstar says - Industry Super funds were originally developed by trade unions and industry bodies to provide for their members in retirement. Originally, the various Super funds were only available to people working in a certain industry, such as health or education. However, most industry Super funds are now open to the public, so anyone can join. These are known as ‘public offer funds’.
Essentially, they are not-for-profit funds that typically give you units within the fund that you can allocate towards a limited amount of investment options (ranging anywhere between 5-30 choices) with the profits of the investments being shared within the fund rather than on an individual level.
These funds are usually a low cost, and they do most of the work for you and can be a great option if you are not wanting a fund that requires a lot of work or on-going advice and management.
What Canstar says -Retail Super funds are typically run by banks, investment companies and other financial institutions. The company that owns the fund generally aims to keep some profit and this is paid to shareholders of the company. Membership is typically open to anyone.
With Retail funds though they are usually not unitised meaning that the money you have invested is invested in the individual assets rather than in the superfund, and the dividend and franking credits are individualised meaning they go you back to your fund rather than spread across all of the members.
Retail funds are not as expensive as they once were and tend to have a lot more options in terms of assets than industry funds (ranging for 30 to 800+), so they tend to suit those who are looking to either have a hands-on approach (without the complexity of an SMSF) or ongoing advice from a financial adviser. Keeping in mind though that without expertise behind you, it can be overwhelming and difficult to choose assets that are correct for your situation. This is why I would recommend having an adviser helping you with a retail fund rather than going it alone.
Janelle the biggest thing I can say is work out what you are wanting in a fund and then sit down with a financial adviser to help you find the right thing for you. I realise my answer is quite vague, but without knowing you and what your objectives and needs are it is hard to give you a clear answer.
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