Super Informed Radio episode #24: We’re Super Fund of the Year! (Which means what, exactly?)
|Disclaimer: What you're about to hear is of a general nature and doesn't take into account your personal financial situation, needs or objectives. We recommend you seek financial advice before making any decisions about your super and consider the relevant UniSuper product disclosure statement.
Tania: Hello, and welcome to Super Informed Radio, the podcast that unpacks the world of super, finance, and life's money matters. I'm Tania.
Lyndon: And I'm Lyndon.
Tania: Well, you may or may not have heard that UniSuper recently took out three major superannuation industry awards. The awards are called the Chant West Super Fund Awards. They’re kind of like super's night of nights, but more on that in a minute.
Lyndon: They are indeed. Now, we don't often blow our own trumpet, as you well know, Tania. But there’s no denying that we did take out the big one, the ‘Super Fund of the Year’ award, which is actually a pretty big deal.
Tania: It is a pretty big deal. But we also took out ‘Best Fund: Investments’, which recognises our investment performance and other investmenty things.
Lyndon: That is definitely another big one, I think it's fair to say.
Tania: And we also took out the gong for ‘Best Fund: Advice Services’ which, as you can probably guess, recognises the quality of the financial advice we offer members through UniSuper Advice.
Lyndon: Award central, Tania. Now look, it's worth pointing out that these awards do actually go right across the super industry. So pretty much everyone from the retail super sector, which can include banks and big firms like BT and AMP, as well as all the industry funds we're all familiar with like AustralianSuper, Hostplus, HESTA, Rest, Cbus, and the list goes on.
But, Tania, what exactly do these awards mean? Are they a bit like the gold, silver, and bronze medals we all see on our wine bottles? And actually—who are the companies and organizations handing out these awards? And what goes into deciding who is the best of the best each year?
Tania: All very good questions, Lyndon. Well, to answer these and more, we managed to track down Ian Fryer, who's the Head of Research at Chant West. Now, Chant West is the organisation who awarded us these gongs and Ian agreed to do a bit of a deep-dive into what this all means.
Lyndon: Let's take a listen.
Lyndon: Ian Fryer, it's a great pleasure to speak with you—thanks so much for joining us on Super Informed Radio.
Ian: Great. Great to talk to you and talk about your fund.
Lyndon: Very good. First cab off the rank, Ian, I guess—could you explain to listeners who Chant West is and what role your organisation plays in the superannuation landscape in Australia?
Ian: Our role is to help members and also advisors compare products, and work out what's the best product for them to be in (the best superannuation product or pension product). In order to do that, we research and assess superannuation funds—things like fees, investments, insurance, services to members, etc.—and we put all of those findings in various online comparison tools that can be used by members or advisors. And that's the way that those members and advisors can get access to information to help them make decisions. Another thing we do is rate funds. So rather than just providing information, we provide our view about how good a fund is. And we also have super fund awards, which is what we're talking about today, of course.
Tania: Ian, you're Head of Research at Chant West. What exactly does your role entail?
Ian: As Head of Research I'm leading the research team. The role of the research team is to gather all the information on superannuation funds from various disclosure documents that funds would have but also meeting with funds and asking for further information that may not be publicly available.
We get all that information and we've got to make sure that that information ticks a few boxes. So that is, the information for each fund is up-to-date, it's accurate and also it's a fair comparison, fund to fund. One of the problems is that super funds sometimes disclose things in different ways and we've got to make various adjustments. We make sure they line up and that it's a fair comparison, like for like—apples with apples, if you like.
Tania: Can we talk a bit about the Super Fund of the Year Award? Obviously, we're quite excited that UniSuper received that award. What does it actually mean to be crowned Super Fund of the Year?
Ian: Well, for us to say you're Super Fund of the Year, that is us saying that we think that for the current year your fund is the best fund out of all the superannuation funds in Australia. So that's a pretty strong statement for us to make and it's a great award for any fund to achieve.
Lyndon: I'm interested, Ian, can you unpack for listeners just a little bit some of the criteria that underscore the Fund of the Year award. What exactly are they?
Ian: Sure. There's a whole range of things we look at but the two most important things are investments and member services. When we look at our assessment, that's more than two thirds in those two areas—investments and member services. When we look at investments, we're not just looking at performance, we're trying to get behind the performance (what has driven the performance) and most importantly, what's likely to drive future performance, which is what's going to affect people into the future.
In order to do that, we need to meet with funds and understand how they invest, understand who makes the decisions, understand how the various groups interact. For example, a fund will have an internal investment team but they'll also have a consultant, an external consultant, that advises them. They'll also work with their fund managers. There'll also be a board and investment committee.
So we've got to get our heads around who makes the decisions about how things will be invested, what are the checks and balances, what's the expertise of those people. We’ve found that when we do all that, that's quite a good predictor of future performance. If you get the people and processes right then you'll tend to get the long-term performance right as well.
Lyndon: So we might’ve got it right this year then.
Ian: UniSuper got it right this year. There's a few things that happened on markets—including property trust doing very well, of course—that helped UniSuper a lot. But look, at the end of the day, UniSuper has a very robust process and has performed well over most periods.
I think one of the particularly striking aspects is UniSuper has been the highest performing fund over the one year to March 2019, but also over the 10 years to March 2019. So it shows that it hasn't just been a flash in the pan but UniSuper’s been strong over a long period of time.
Lyndon: We probably should pop in a little disclaimer for our members there. Our lawyers usually like to remind us ‘past performance is no guarantee of future performance’. And just quickly, is that for the Balanced investment option that most of our members will be invested in? Is that the one you're talking about there?
Ian: Yeah. So when we look at the performance, we're focusing on where most of the money is. And most of the money is in the MySuper option, UniSuper Balanced, and that's the one that's been top performer for both one year and 10 years to the end of March 2019.
Lyndon: The general theme for the awards this year was ‘it's all about the members’. What was the importance of this theme and how did UniSuper stack up in terms of helping members get the most from their super?
Ian: With the Royal Commission and Productivity Commission and a whole bunch of other stuff that’s come out about super in the past year, it’s been clear that some funds haven't been focusing as well as they could on the outcomes for their members. We've always believed that our awards, indeed all that we do as a company, needs to be focused on identifying the funds that are doing what's best for the members. And indeed, they're the only ones that really count in this.
Whatever a fund does needs to be focused on what is best for the members. That's why the fund exists. The fund exists to be able to provide a good retirement income, an adequate retirement income for its members. So there's a whole range of things that come under that. One of them is investments. The other one, which I mentioned briefly earlier, was member services. When we look at member services, we're trying to look there about what does a fund do to help the members get the most from their super, which is part of your question.
Funds do a whole bunch of things but probably the two most important things is financial advice, but also identifying the particular characteristics of each member and perhaps what each member should be doing to improve their super. UniSuper does a particularly good job on advice, and indeed, we gave UniSuper our Advice Services award as well. UniSuper, in some ways, has an advantage here because the vast majority of UniSuper members are on university campuses and UniSuper can therefore put advisors on those campuses. So there's ready access to financial advice for UniSuper members.
That's not the case for most funds. Most funds have members spread across the country and it's quite hard for them to provide access to financial advice at scale for their members. UniSuper has that advantage by having ready access but has also invested a lot in having a strong and large financial advice team who can provide a wide range of financial advice. All the way from simple advice to quite complex advice, including estate planning and aged care advice.
If a member has a question about ‘what should I be doing?’, UniSuper has a lot of ways that a member can get the answer to that really important question. The other area that UniSuper does a fair bit in is using what they know about their members who may not be going to see an advisor to communicate to them about what they could do to grow their super. To try to help members who perhaps haven't gone to seek advice, but just give them some tips—some nudges, if you like—about what they could do.
Tania: How many funds do you review as part of the awards process? And how are they reviewed and compared?
Ian: When we look at our awards, we tend to do that the start of each year. The key information we use is the results of our ratings process, which happens at the end of each year. Our rating process looks at about 250 products that we rate. We do those ratings and that highlights for us what we think the best funds are—maybe the top 15 or 20 in each category. Then it comes to the start of the year, and we start the awards process. What we do then is try to identify those funds which we believe could be in the top 10 for particular categories, and then we go and meet those funds.
So the first few months of this year, we would have gone and had about 40 meetings with funds, where we go and meet with them for a couple of hours to understand better about how they run their fund, about how they're trying to improve outcomes for members, about how they invest—a whole range of things. So we have those 40 meetings and they give us a lot more information upon which to base our assessment.
What we then do is we bring all that information back to our team. And we discuss with our team about what we've heard, and also basing it on what we already know about funds, because we already know a lot before we do those meetings. The information from those meetings helps us decide who should be in the top two or three for each award. We then write a rationale for what gets each fund into the top two or three and we have some further discussion about who should win each of those awards.
The final piece is at the awards night, rather than just getting up and saying, "And the winner is..." what we do is we say, "Here are the top two or three funds, and here is what makes them the best funds." After we give that rationale, that justification, after we talk about what makes these funds some of the best, then the winner is announced.
So just to summarise, in terms of the process—we believe that giving these awards is a really serious business and we've got to do it properly. We can't just base our assessment on publicly available information. We need to go and meet the funds and understand, from the inside, how they work. It's a lot of work for us but it's warranted because if we're going to come out and say, "This fund is the best," there need to be very good reasons why.
Lyndon: Ian, it has to be said that there are a number of other good funds out there (and even UniSuper would have to acknowledge we've not won Fund of the Year more times than we have won it), so how are the finalists shortlisted and how is the winner selected? That must often be a pretty close call.
Ian: Yeah. This year we said just before the Fund of the Year was announced, that this was probably one of the closest years for us. We said that the top three funds in this category were UniSuper, AustralianSuper, and Sunsuper. We would see that all those three funds are, from our point of view, the best funds in the country. However, we need to make a call and this year we thought there was enough warrant giving Fund of the Year to UniSuper.
Tania: Ian, Chant West has some really great comparison tools, such as your Super AppleCheck, which is fabulous for super and pension products. So we were just wondering if you could just tell us a bit more about that. And also, what else can people out there access from your website in terms of super and pension products?
Ian: The AppleCheck tool is a tool that we built a number of years ago for consumers, recognising that super is pretty complex. But how can we simplify super so that we can put before a consumer the basic information about a fund—including our views, including our ratings—so that a consumer who perhaps doesn't know much about super can look at this report and understand how various funds compare on a whole range of metrics. We've recently changed it so it’s mobile-enabled and is really easy to use. It's a great way for members just to say, "Well, I want to see how my fund compares." It's probably about 12 of the best funds around the country where that tool is available on their website.
Tania: And it is actually very easy to use, speaking from experience.
Ian: Yes. So that's the AppleCheck tool. There are other ways as well that we try to help members understand the different super and pension products out there and how they compare. So, the ratings that we do for different funds—we will give a fund, typically, a rating of three, four, or five apples, with five being the highest. Rather than having a star rating we have an ‘apples’ rating, recognising that it's important when you're comparing funds to compare like with like, to compare apples with apples.
Those ratings are publicly available, so to go to our website you can just go to our rating section and it'll tell you all the major funds, how they rate. So that's helpful as well. Also, the whole idea of our Super Fund Awards is to highlight the funds that are doing the best job for members and that can be helpful as well.
Tania: And where can our listeners go if they would like some more information about Chant West and its resources?
Ian: Our website is www.chantwest.com.au and that's got a lot of information about funds, how we rate them, our awards and how we do things—how we see the superannuation industry.
Lyndon: Ian Fryer, once again, thank you so much for speaking with us on Super Informed Radio. We really appreciate you taking the time to come and explain all of that to our listeners, so thank you.
Ian: Great, thank you very much.
Lyndon: Ian Fryer there, head of research at Chant West. Tania, quite the robust process, I have to say, that they go through at Chant West to determine who wins and who doesn't win those awards. I was, well, not quite surprised but pleasantly surprised.
Tania: Yeah, it's incredibly thorough how they go about their analysis of all the super funds out there and who gets the awards. Quite a lot of meetings, reviews of document,s so yeah, it's good to know.
Lyndon: Forty meetings, can you imagine?!
Tania: Yeah, forty. I know! It's a lot of meetings, it’s a lot of coffees.
Lyndon:A lot of coffees. Now the super AppleCheck tool that Ian mentioned in the interview, UniSuper members can actually use that tool by going to unisuper.com.au/compare. And just a note that the tool doesn't compare defined benefit funds. If you would like to learn more about financial advice through UniSuper or investments at UniSuper, just check our show notes and we'll have some links in there for you.
Tania: And that brings us to the end of another episode of Super Informed Radio. If you'd like to listen to any of our previous podcasts, you can go to unisuper.com.au/podcasts or you can subscribe through any good podcast app. We'll see you next time.
Lyndon: Bye for now.