Advice for Corporates

Corporate funds lag the rest of the superannuation industry in standardising and promoting their investment choices, according to The Heron Partnership.

The consultancy claims the area of investment choices is a weakness for corporate funds making them vulnerable in the lead up to choice of funds.

Christopher Butler, Managing Director of The Heron Partnership, has devised "four imperatives of investment" and he urges companies and trustees to take action on these. He advises corporate funds to:

• ensure a rigorous investment construction process with a range of investment options from conservative through to high growth;
• provide well constructed investment options through rigorous manager research, robust portfolio construction, and precise execution;
• educate members about performance and risk; and
• choose the right default option.

Butler claims many employer-sponsored superannuation funds do not offer member investment choice, and of those that do, some create member confusion through the structure of their choices.

"Funds in these situations will not be able to face real competition in a choice of funds regime," he says. "Our research shows that for consumers, investment is the key differentiator and is the major factor that will lead to members moving from one fund to another."

He advises superannuation funds to standardise investment options as much as possible and at the same time to "keep it simple".