By JasonPetersen, CFP® | Managing Partner & Head of Advice, 5 Financial
In November last year, 720 TelstraSuper members were told they had seven weeks to sell all their individually held shares and ETFs. Seven weeks. Over Christmas. With no email. Just a pop-up window buried in a 24-page disclosure document.
That’s the story the ABC reported, and while the details are specific to one fund, the lesson isn’t.
TelstraSuper offered a product called Direct Access, which allowed members to hold individual ASX shares, ETFs, and term deposits directly within their super. The kind of flexibility most large funds don’t offer.
Then came the merger with Aware Super and with it, seven weeks’ notice to sell everything. Whether the timing suited them or not.
One member, Lauren Castles, told the ABC she lost thousands of dollars having to sell at the wrong time. She said she never would have bought those shares if she’d known this could happen.
Here’s what made this possible: TelstraSuper had quietly changed its terms and conditions 18 months earlier, via a pop-up window that members had to click through to access their account. Not even an email or a letter.
That single change gave the fund the right to close the product with just 30 business days’ notice. Once the merger decision was made, they used it.
In their statement, TelstraSuper said the closure was “in the best financial interests of the membership as a whole.”
That phrase sounds reasonable. But it means one person’s carefully constructed investment portfolio can be unwound by a decision that had nothing to do with them, with almost no warning.
At 5 Financial, we place most of our clients’ investment portfolios with Netwealth. The TelstraSuper story is a useful illustration of why.
With Netwealth, your account is genuinely yours. Every investment is held individually in your name. What happens across the rest of the membership has no bearing on your portfolio. There are no collective decisions made by the fund that can force you to sell.
Everything is listed and transparent. There are no pooled structures, no vague product terms that allow your investments to be closed with 30 days’ notice. If you hold a share, you hold it. That clarity matters far more than most people realise.
It would be highly unlikely that Netwealth would ever decide as TelstraSuper did. The structure simply doesn’t allow for it.
You’ve probably not heard of Netwealth allot. That’s not acoincidence.
Industry super funds spend enormous amounts on advertising. Netwealth doesn’t. They put that money back into the platform and the people who use it.
In our experience working with clients, Netwealth is often at least 50% less expensive than the so-called ‘cheap’ industry funds once all fees are accounted for. That difference compounds over a 20- or 30-year investment horizon. It has a direct impact on what you end up with.
Unlike many large pooled funds, any tax benefits from your investments (including franking credits) are credited 100% to your account.
If you’re in an industry super fund and haven’t looked closely at what you’re actually paying or what decisions the fund can make without your knowledge, now is a reasonable time to ask.
A few questions worth sitting with:
· Can your fund change or close your investment option without sending you a direct email?
· Do you know your total fee as a percentage of your balance?
· Are your franking credits and other tax benefits being fully credited to you?
· Are the investments fully transparent?
These are the kinds of questions we work through with clients every day, whether they’re building wealth, approaching retirement, or simply wondering whether their super is working as hard as they are.
If you’d like a review of your current super arrangements, we’d be glad to help. We’re based in Rhodes and Sydney CBD, and we’re here when you’re ready.
When you’re clear financially, life feels better.