New super option broadens user choice

INVESTMENT bank UBS is having a crack at that most under-served part of the superannuation market.

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INVESTMENT bank UBS is having a crack at that most under-served part of the superannuation market: the people who'd like more independence over what they invest in, but find a self-managed super fund might be too expensive.

The group has teamed up with technology provider FNZ to allow direct share trading with super funds that are prepared to go along with the new technology.

It's the SMSF you're having when you're not actually having an SMSF because it won't be borrowing or investing in the full variety of alternative asset classes. You won't, for instance, be able to park the family business premises in the fund, which is one of the most popular and logical uses for an SMSF, but it does address the perennial gripe from members of conventional funds: why can't I choose what stocks to put in my fund?

UBS claims those funds will be able to offer members "the ability to invest in a range of enhanced product options such as Australian and global equities, term deposits, model portfolios, managed funds and cash products which can be tailored to their needs". Which sounds a lot like what funds do already, but with the useful overlay that it's the member making at least some of the decisions.

Interestingly, while it's a UBS idea, the impetus for it may have come from the industry super funds, which very much don't want to see big numbers of their higher balance members (say, above $400,000) leaving the fund for the tempting uplands of being in an SMSF, even if the latter can cost about $3000 a year or more to manage. That desire of some members to get a more hands-on involvement in their super is a very real one.

Aussie Super, one of the biggest funds, with $46 billion worth of funds and 1.6 million members, is understood to have been trialling the system since last year with that aim in mind.

"Aussie Super charges members around $200 a year," said head of platform solutions at UBS Scott Webster, adding that the new facility would not change that figure significantly.

"This solution provides an alternative to establishing a self-managed super fund at a fraction of the cost."