Retail funds are usually run by banks or investment companies. These types of funds are open to the general public.
There are two types of retail superannuation funds. Retail funds are known as “for-profit” funds and the master trust option is the most common type of fund. Retail funds are often owned by the big 4 banks, see below for an example:
- BT Super (Westpac)
- MLC (NAB)
- Colonial First State (Commonwealth Bank)
- OnePath (ANZ Bank)
- Retail super funds are open to everyone
- They have a wide range of investment portfolios available
- They may be recommended by financial planners, so it's important to check if they're paid any fees or commission if you sign up.
- They are no defined benefit funds, only accumulate funds
- They often charge mid to high fees, but now some are offering the no-frills option, MySuper
- Companies may want to retain some of the profits, which could mean lower returns for you
Master trusts pool accounts for investment and have single corporate trustees and trust deeds that allow many individuals and companies to participate. These trusts offer a broad range of multi-manager and single sector investment options managed by fund managers sourced by the superannuation trustee.
Here are the advantages and disadvantages of a master trust:
You can generally access the same investment options and fund managers that you can invest with, outside of super so investors can take full advantage of the tax concessions of investing inside super.Master trusts also offer benefits such as death, total and permanent disability (TPD) and salary continuance benefits.
Master trusts may have unnecessary fees attached to it. Retail super funds pay adviser commissions. This is a type of fee that is unnecessary when it comes to superannuation.Super master trusts are generally set up as personal super accounts for individuals.
Retirement Savings Accounts (RSAs)
RSAs are established for holding superannuation savings. Although it operates similar to a bank account, there are restrictions on withdrawals. RSAs are run for profit by banks, building societies, credit unions and life insurance companies.
Compare the advantages and disadvantages of RSAs:
RSAs are low-risk and have low fees attached compared to regular super funds. Many accounts may also include death and disability insurance benefits.
The low-risk associated with RSAs means you will get a lower rate of return. These types of savings are deposited into banks which usually pay lower rates of interest.
What are the pros and cons of retail funds?
- Lots of investment options.
- Reasonable results, especially over the past 12 months.
- Some good advice provided by a large section of advisers.
- More so leading down the line of tied advice.
- Self-managing can be less expensive for amounts over $200,000.
- Dependent on the skill and experience of the adviser.
Outcome: Retail funds can be beneficial to clients looking for advice and funds management.Back to top
How do I compare retail super funds?
Here the features to compare:
- Historical performance. Look at long term returns that span about five to 10 years. It's better to look at the long term yields as super is a long term investment.
- Aim for low fees. If you have lower fees, the less your balance will reduce every year. However, you may find that funds with large fees are the highest performing funds.
- Investment options. You will get more value out of your fund if you get a matched investment portfolio.
- Insurance. Insurance is generally cheaper if you get it within insurance, but it's best to check if it adequately covers your needs.
- Customer service. Do you prefer checking your fund online or would you prefer using the phone to speak to a real person? These are factors to take into consideration.
How do I apply for a retail fund?
First things first. Make sure you know why you want to change to a retail fund or open a retail fund. There are many reasons why you may want to change funds:
- Is it to consolidate your super all into one account?
- Is to reduce the amount of fees being charged?
- Do you want a better funds with more features?
- Do you want a better long term return?
- Do you want to leave a corporate fund because you've resigned from your job?
Once you go through these checks, you can then apply online to either open or switch to a retail super fund.
Retail super funds developed by financial institutions and insurance companies. These funds cater for people who are interested in investing and saving for retirement.