Trusting Super

an outstanding tool to build wealth for retirement

I’ve lost count on how many times I’ve had a client tell me they don’t believe in Superannuation or Superannuation is too risky along with numerous other misgivings surrounding investing in Superannuation. These comments come from the association of the assets that the Superannuation is invested rather the Superannuation itself.

I feel the mistrust comes from two main sources, the early superannuation products were often restrictive and heavy on fees, and the vast majority of Superannuation funds invest primarily in shares and are often more aggressive than the risk profile of the investor.

The early Superfunds were very rudimentary, often distributed by salesmen who were renumerated handsomely for signing up new clients.  Some had restrictive terms, some had large exit fees and others were both a combination of insurance and investment. The end result many people felt disillusioned by the whole experience.

This is no longer the case, most modern Super funds are efficient investment vehicles and in most cases fairly cost effective in comparison to other investments. The advice costs in the new funds have been separated from the product cost itself with commissions replaced by advice fees that are negotiated between advisor and client.

The second issue is related to the underlying investments. Traditionally most Superfunds have a large exposure to the share market, which is substantially more volatile than defensive assets and in down turns clients have seen their investments fall.  This has caused problems in 2 areas, for many clients they are too conservative (in investment terms) to be invested as aggressively as the traditional super fund and should have had a more defensive portfolio all along. The other issue is that although many investors if properly informed about the nature of their investment would be much more comfortable with the risk, many Super investors don’t receive advice in relation to Super benefits and are flying blind, this leads to anxiety as they are not sure what to expect.

On a ‘Balanced fund’ investment (the most common investment selection super), ASIC gives investment guideline of an average return of 7.5% with a 78% of a positive return in any given year, this means that more than 1 in 5 years will be negative, and this is expected. Many clients if aware of this they would be much less concerned when the inevitable negative year came around.

If this is too risky still, almost every fund offers more conservative investment options, it now possible to invest in cash, term deposits as well as defensive portfolios. The reverse is true, many clients would like to be more aggressive and take on more risk I order to have potential higher gains in the long term.

It is possible to invest in just about all the same things you can outside of super, but inside of super.

The advantage of investing inside Super is that gains are taxed concessionally and once in pension phase are tax free. Superannuation should be viewed as a Tax structure not an investment, the government offers taxation advantages to the client to encourage them to save for their retirement.


Superannuation is an outstanding tool to build wealth for retirement and if you are one that has mistrusted super previously, maybe it is worth reviewing.

Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services


  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State


  • University of Western Sydney
  • Penrith High


As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

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