The Australian Securities and Investments Commission (ASIC) looked at the conduct of superannuation trustees (trustees), financial advisers (advisers) and Australian financial services (AFS) licensees (advice licensees) to examine why some members continue to invest in persistently underperforming investment options under their choice superannuation products. This report highlights that there is often insufficient focus on performance and a lack of transparency about persistently underperforming investment options.

Trustees, advisers and advice licensees significantly influence the make-up of a choice member’s superannuation investment portfolio. For example, information made available to members can affect investment choices. Members rely on trustees and, if receiving financial advice, their adviser, to optimise their superannuation investment returns. ASIC is concerned that, in some circumstances, this reliance may be misplaced. Members may be unaware that the options they are invested in are not performing as anticipated and that there could be better options available to them.

Members are the ultimate decision makers in relation to their portfolios and bear the risk of underperformance. We encourage them to ask questions, evaluate options and exercise choice.

But trustees, advisers and licensees must take steps to:

• support members in earning good net returns from their superannuation investments and meeting their financial objectives, and
• address and reduce member exposure to persistently underperforming options where appropriate.

For many trustees, advisers and advice licensees this will require improvements to their practices.