Super news for October 2022

Most Australians (81%) stayed with their existing super risk profile in the past six months and just 7% of Baby Boomers (currently aged between 58 and 76) made a switch.

Australian responsible investment assets reach $1.54 trillion

The percentage of professionally managed assets in Australia that is responsibly managed rose to 43% in 2022, from 40% in 2021, according to the Responsible Investment Association of Australia’s (RIAA) 2022 Australia Benchmark Report. That represents $1.54 trillion of the total $3.61 trillion professionally managed investment market in Australia in 2022.

A record 45% of investment managers are also now holding companies to account on matters relating to environmental and social issues and reporting back to investors on outcomes achieved. That is more than double the 21% of investment managers engaging in such activity in 2019.

“This year’s study shows that we’ve hit a tipping point of the responsible investing trend. Companies can no longer tick a box by providing cursory ESG metrics. Investors are expecting real, measurable action towards environmental and social issues,” RIAA executive manager, programs Estelle Parker said.

“Investment managers are also getting much better at backing up their claims around the sustainability of their portfolios, as they don’t want to find themselves on the wrong side of tightening greenwashing regulation and scrutiny.”

Responsible investment products also continued to outperform the overall market in the multi-asset category over one, three, five and 10-year timeframes.

Treasurer establishes investor roundtable

Federal treasurer Jim Chalmers has established an investor roundtable of 20 leaders across the investment community that will look at unlocking investment opportunities in national priority areas such as housing.

The roundtable includes the CEOs of HESTA, AustralianSuper, Aware Super, UniSuper, Rest Super and the Australian Retirement Trust, along with the CEOs of the four major banks.

“There is a massive opportunity in promoting greater investment in sectors that deliver both strong returns for investors and strong returns for our community,” the treasurer said when announcing the roundtable.

The first roundtable, to be held in November, will focus on housing and will look at barriers to investment within the housing sector, along with identifying partnership opportunities for government co-investment, and issues around revenue streams and investor confidence.

The treasurer said future roundtables will cover topics such as data and digitisation and clean energy.

The announcement was welcomed by industry bodies including the Association of Superannuation Funds of Australia (ASFA).

“There are key challenges for governments and economies in the global environment and a constructive dialogue with government is important to determine the policy measures needed to create more productive investment opportunities across the Australian economy,” ASFA chief executive officer Dr Martin Fahy said.

Over 250 SMSF trustees disqualified last financial year

There were 80 SMSF trustees disqualified by the Australian Taxation Office (ATO) in the three months to 30 June 2022, bringing the total disqualified in the financial year to 252.

Trustees are disqualified for not complying with super laws or if the ATO believes a trustee is not a ‘fit and proper person’ to continue managing their SMSF.

The names, suburbs and states of disqualified trustees, along with the date of the disqualification, are published in the disqualified trustees register that is publicly available.The 252 trustees disqualified last financial year was an increase on the 197 disqualified the previous financial year.

“Once disqualified, a trustee must remove themselves from the role. If you have been disqualified and continue to act as a trustee, your auditor will report you to us and further penalties will apply,” the ATO said.

Australia in global top 5 retirement nations

Australia is now one of the top five nations in the world to retire in, according to the Natixis Investment Manager and Core Data Research’s Global Retirement Index (GRI).

Australia received an overall GRI score of 75%, which combines the four subindices of health, quality of life, material wellbeing and finances in retirement. It ranks fifth behind Norway, Switzerland, Iceland and Ireland.

“Australia and New Zealand rank fifth and sixth overall in this year’s GRI with Australia moving up two spots and New Zealand retaining the same rank as last year. Both countries place in the top ten for two subindices. Australia ranks fourth and ninth for Finances and Health respectively, while New Zealand ranks sixth and ninth for Finances and Quality of Life respectively. Both have relatively mediocre scores for the Material Wellbeing subindex at 19th and 20th,” the report said.

The report identified high inflation, rising interest rates and ageing populations as the three most critical retirement risks today.

Financial adviser numbers continue to fall

If the number of financial advisers continues to fall at the rate it has over the past three years, Australia will run out of financial advisers within five years, according to Rainmaker Information.

The number of financial advisers has fallen to 16,671 in 2022 from 26,500 in 2019, or 38%, according to Rainmaker, which tracks the number of advisers. However, the rate of attrition is slowing, with a fall of 2,710 advisers in the year to June 2022 following falls of 2,950 in 2021 and 4,200 in 2020.

The falls followed the introduction of the requirement that all advisers had to be registered on the ASIC Financial Adviser Register (FAR) by 1 January 2019. Prior to then, adviser numbers had been growing rapidly, increasing by 8,500 between 2015 and 2019.

“The number of registered financial advisers is now back to where it was even before the adviser registration system was introduced,” Rainmaker executive director of research Alex Dunnin said.

“All projections for adviser numbers point to no recovery without profound structural industry policy change,” he cautioned.