Superannuation trustees need to focus on education to placate anxious members in the wake of big falls in the stock market, according to Association of Super Funds of Australia (ASFA) chief executive Pauline Vamos.
There are three areas that trustees need to target in order to calm jittery investors, Vamos said.
“Firstly, trustees must ramp up the capacity of their call centres, which may include bringing people back from holiday,” she said.
Secondly, she stressed that company websites must be updated with plenty of information so that members know where their money is and how exposed it is to volatility.
Thirdly, trustees must tell members to contact their own financial planner (or a planner from their fund) to discuss their short, medium and long-term goals, Vamos said.
She added that members should be wary of moving completely out of equities, even if they are in the pension phase.
“People make the mistake of converting everything into cash – that is a mistake. What they need to think about is ‘what am I going to need, and how am I going to protect that cash flow?'” Vamos said.
Big super fund, Sunsuper, has sought to mollify members by releasing a memo urging them not to “be tempted to overreact to short-term movements in the investment markets”. The Suncorp release added that it was “important to consider the full impact of making [any investment] changes, including the cost of any exit fees”.
Vamos said that one advantage trustees had was that they had the recent experience of the global financial crisis (GFC) to guide them.
“Trustees will be very much prepared for this – unlike the GFC. I think the experience of the [GFC] will be put to very good use,” Vamos said.
