Too many investment options can increase risk for Australian super members
Members have access to 41,000 investment choices.
New research suggests that while Australians have access to tens of thousands of superannuation investment options, the overwhelming majority don't utilise the full suite of choices made available to them.
Rice Warner's Super Insights database, which holds individualised member records for over 14.8 million superannuation accounts, found 85% of industry fund members don't elect an investment choice.
Of the remaining 15%, most are invested in one of four pre-mixed options.
Australian superannuants have access to more than 41,000 investment options, which is around three times as many as were available ten years ago, despite there being less than half the number of funds on the market.
Separate findings presented by the Pension Research Council reveals that over a 20-year investment period, horizon funds that provide an exaggerated number of return options can trim super values by almost $10,000.
Many Australian super funds offer an array of investment choices to allow clients to fine-tune and specifically tailor the allocation of their assets through a diversified contribution strategy.
Financial advise and choice is generally more prevalent among retail superannuation funds.
However, both industry and retail fund members spread their investments across a limited number of options. For example, Rice Warner's data found 30 options across all retail funds account for 75% of all investments.
Rice Warner suggests super funds consider scaling back options, offering a smaller subset of investments that would allow members to customise or replicate strategies without being overwhelmed by too many choices.
The latest research by Industry Super Australia found consumers ranked fees and performance as the two most important factors when selecting a super fund, well ahead of technology and ethical investment options.
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