Multiple Super Account and Zombie Insurance Costs Australians Billions

Having multiple Super Accounts and “zombie insurance” costs Australians billions!

At AAM, we find it depressing to know that one third of Australians have unintended multiple super accounts — costing $2.6b annually in fees**.

An Audit of your Supers can show if it can be consolidated and to make sure you know what insurance you are losing if you roll one into another.

Ian Black, Head of Financial Planning and Wealth Solutions for AAM Advisory recently spoke with a client who has three Super Accounts.

Ian says, “This is completely crazy, paying three lots of fees, and multiple insurance premiums that are not cost effective or necessary”.

When looking at insurance within Super, Ian commented, “I am constantly amazed Australians are not aware that they are paying premiums that increase every year, for insurance in their Super that rarely meets their needs”.

Considering the problem of multiple Supers, Ian observed, “no one sets out to get three Superannuation accounts, but like so many, our client just seemed to acquire them as he wended his way through the world of work”.

The AAM Wealth Solutions team completed a Super Audit for this client and was able to bring the funds together into a single plan, making it easier for our client to know what his Super is doing and at the same time reducing his costs by more than $85,000 by the time he retires*. That is $85,000 more in his pocket rather than being paid to his existing Super providers.

The super myth about retirement

Australians are brought up to think that all Supers are the same and there is no need to look at them until you retire. This could not be further from the truth.

The good news (or bad news, depending on how you look at this) is that our client with three Supers is not alone.

The Productivity Commission estimates a third of all Super Accounts are unintended multiple accounts, which are unwanted and unneeded, and that’s costing Australians $2.6 billion annually in fees**.

Ian says, “If there is one thing we can be sure of, it is that Superannuation Funds charge Australians a lot for their Supers and I am determined to help ensure that our clients do not pay more than they need to. If there is one thing you should do on the financial front it is to consolidate your Super Funds”.

So how do you go about it?

You can either pay a qualified financial professional to do it for you, or you can do it yourself.

The trouble with DIY is that you might jump from the frying pan into the fire.

Ian encourages everyone to get professional advice as it is the professional’s job to help you avoid the potential pitfalls of making the wrong choice.

“I’ve worked in financial services for over 24 years and have seen the difference a good advisor can make” he said.

How can you check your Super Funds?

To receive your Super Audit, request your personal consultation now, and schedule it at your convenience – it’s complimentary.

Your Super Audit will show

  • the current value of your funds
  • what you can expect to receive in retirement
  • if you have the Optimum Super for your circumstances and plans, particularly:

– if your portfolio is in line with the level of investment risk you are comfortable with

-are you getting value for money?

The detailed Audit report will clearly illustrate if our approach to Super and investing could further increase your returns and improve your financial flexibility.

At the end of your consultation you will be under no obligation whatsoever to commit to any further consultation or to take any action at all.

To secure your retirement, request your personal consultation now, and schedule it at your convenience – remember it’s complimentary so you have nothing to lose.

Remember, the risk of doing nothing is the biggest risk of all.

* assuming 6% per annum returns before charges and a 25 year term to retirement.

**Source: https://www.pc.gov.au/__data/assets/pdf_file/0014/228200/superannuation-assessment-draft-overview.pdf

 

Disclaimer:

This article is an op-ed piece by Ian Black. The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any securities/products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of future performance. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data.

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About AAM Advisory

AAM Advisory offers complete financial planning services for Expatriates, Permanent Residents and Singaporeans focused around wealth creation and preservation strategies. We have a team of over 30 experienced financial representatives backed by a wealth of research, knowledge and expertise servicing over 5,000 clients and in excess of SGD 1 billion under advisement.

Our office is located in the heart of the CBD at CapitaGreen, an ultra-modern 40-storey eco-friendly office tower.

International Adviser, Best Practice Adviser Awards (Singapore)
We were winners in the following categories:

  1. Best Adviser Firm, by Region (2018)
  2. Excellence In Operational Efficiency (2018)
  3. Excellence In Professional Development (2018)
  4. Excellence In Marketing & Client Engagement (2017)
  5. Excellence In Social Media (2017)
  6. Excellence In Investment Planning (2016) 
  7. Excellence In Professional Development (2016)

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We were Gold Winners, winning best Financial Planning company in 2019