There was an interesting article in today's Courier Mail about HESTA, an industry superannuation fund. There has been a lot of marketing by industry superannuation funds lately - Sunsuper, HESTA, the construction industry super fund and so on. As a supporter of industry superannuation funds, this is a bit of a concern. The last thing that we want to be seeing is industry superannuation funds behaving like retail superannuation funds - and starting to charge fees accordingly.
HESTA use the headline rate of fees of '$1.25 a week'. They fail to mention that as well as this there is a investment management fee, plus they have started to charge a 'performance bonus' fee. Not very industry superannuation fund like.
It is interesting to see that HESTA say that most of their clients have a balance of less than $20,000. This is an interesting part of the equation. This, to my mind, is the folks for who an industry superannuation fund is ideal for - people starting to accumulate some superannuation wealth. They don't have to worry about high fees eroding their superannuation returns - as often happens with retail superannuation products.
Our benchmark for total superannuation fees is 1.5%. Industry superannuation funds tend to be cheaper than this, retail funds less expensive. Costs do matter in investing, and industry superannuation funds still have a cost advantage. Let's hope that they don't spend so much money advertising this advantage that they have to raise their fees!