The 3 Main Types of Super Funds in Australia
Navigating the Australian superannuation landscape can be complex. There’s so many big ‘super brands’ out there, and each of them have a myriad of options to choose from. Many Australian’s don’t even know what their super is invested in. And that’s a problem…
No super fund is the same. It’s important to understand the different types of super and their differences before making changes to your super. At Waymaker, we recommend working with a Financial Advisor to get personal advice around your super options and create a strategy that gives you the income you want throughout life.
The 3 main types of super include retail, industry, platform, and self-managed super funds (SMSFs).
1. Retail & Industry Super Funds
Retail super funds are typically run by banks or investment companies. They are open to everyone and offer a broad range of investment options. Retail super funds are professionally managed, but that doesn’t mean all investment are actively managed. Some funds use a combination of indexing and actively managed funds.
Industry super funds were initially designed for workers from specific industries, but many are now open to all Australians. They are usually run by non-profit organisations. Industry super funds generally have lower fees than retail super funds, but they may offer fewer investment options.
Industry super funds love to advertise their brand, so you’ll probably recognise them: Australian Retirement Trust, Australian Super, Hostplus, Rest Super, and UniSuper, just to name a few.
2. Platform Super Funds
Platform super funds, also known as wrap accounts or master trusts, provide access to a wide range of investments through one platform. They allow for a high degree of customisation, appealing to investors who desire flexibility and control over their investments. Financial Advisors typically use platforms to create diverse portfolios of managed funds and investments to achieve a desired return.
While they provide comprehensive reporting tools, flexibility and tax managed, you’ll pay slightly higher fees for the services. Remember, though, paying fees for a higher performance is not a bad thing!
In some ways, platforms are like a SMSF without the legal and administrative hassle. You can choose your investments, with guidance of your adviser, and pursue your investment strategy.
Common platforms include: North Online, CFS, Praemium, Netwealth.
3. Self-Managed Super Funds (SMSFs)
SMSFs are private superannuation funds that you manage yourself. They can have up to four members, all of whom are trustees responsible for complying with the super and tax laws. While SMSFs provide the highest level of control over your investments, they demand significant time, financial knowledge, and strict regulatory compliance.
A SMSF is typically used by business owners to hold commercial or residential property, but they can also be used to hold cash and equities. Setting up and maintaining a SMSF requires the help of an accountant and financial planner.
Each type of super fund offers distinct benefits, but the most important question to ask first is: how much income do you need throughout life? Your Advocate can help you generally calculate potential returns using your cash flow spreadsheet, but then it’s up to you to seek professional advice (from a financial planner) to make a product decision.
Disclaimer: Everything here is general in nature and for educational purposes only. We recommend you speak to a professional to obtain personal financial advice that considers your personal goals and situation.
