Feedback from financial planners and licensees was a major factor behind Aware Super’s rollout of new “low-cost indexed options” last month.
The $150 billion industry fund in July announced four new indexed options, which it claimed had “thrown down the gauntlet to other players” offering passively managed and lower-cost choice products to members.
Aware Super group executive for member growth Steve Travis says advisers’ regulatory compliance considerations, especially FOFA’s duty to act in the best interests of clients, had “100 per cent” factored into the fund’s decision to bring the new suite to market.
“The adviser appetite for index options was probably stronger than it was from members themselves,” Travis tells Professional Planner.
“There is a cohort of members who want that control, but it was much stronger messaging from advisers that they really liked index options. They are a far more sophisticated group [than members] and understand investments. They want to be able to choose a portfolio that had index in it.”
The suite which was quietly made available to members in May contained two options aimed at members in accumulation and two for members in pension phase. Aware has tapped global giant State Street Global Advisors to provide the underlying indexes, allowing it to charge members in its high-growth index option a total fee of 9 basis points, or 0.09 per cent, which it said was competitive against other super index options.
Cost is widely believed to be a key – but not the only – factor regulators or the courts would consider when assessing whether a financial product recommendation made by an adviser met the best interests duty.
But in addition to the index options, Aware this week launched a term deposit option, allowing superannuants to invest directly in the investment product taking advantage of concessional tax settings in the super system.
Aware members can invest a portion of their super directly in term deposits for three, six, nine or
12 months at rates currently ranging from 4.85-5.25 per cent p.a.
Embracing external advisers