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Less is more for investment options
Super fund members would prefer it if their fund offered a concise rather, than exhaustive list of investment options, according to a survey by legalsuper.
More than half of the 1,300 members surveyed by the fund said legalsuper’s 11 investment options were ‘about right’, while a quarter thought there were too many and just two per cent wanted more options.
The Heron Partnership figures quoted by legalsuper suggest the average number of options offered by a fund amount to 16.
legalsuper chief executive Andrew Proebstl said the survey shows more options are not necessarily what members want.
Funds could potentially save costs by reducing the number of investment options on offer, he said.
Providing a high number of investment options could have a negative effect for both funds and members, resulting in some members not making a choice because it is too difficult to choose an option, he added.
“Super is complex and can be confusing. A lower number of investment options may be one way to simplify things for members. A higher number of investment options costs super funds more money to establish and administer, increasing the costs and therefore, the fees charged to members.”
Some super funds offer a high number of options as a way to differentiate their firm, thinking this could be used to market the fund, but this may actually be less attractive to members, Proebstl said.
It can be easier for specialised funds like legalsuper to offer fewer investment options because their member base is more homogeneous, he said.
AUTHOR
Mike Taylor
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