Ask Paul: Should I pay a fee to switch super funds?

Dear Paul,

I'm good with money but recently I have seen ads pop up online regarding superannuation. They lead to a super review, whereby a financial planner notes all history and current super balance.

The planner does a super and insurance check and have come back with recommendations to switch super and a better paying insurance for the same premium, all for a fee paid out of super and an ongoing small percent each month to manage. 

The forecast projections include the fees and the comparison looks stronger if I switch.

My current super is underperforming, but how do I switch with either a company like this or myself to a better-performing fund. I'm just really lost.

Where do I look for information that I can rely on without thinking I'm being taken for a ride? - Glenn

This is very interesting, Glenn. I am very keen for people to seek professional advice when it comes to planning complexity.

But I am not so sure your issue is complex enough to be paying initial and ongoing monthly fees.

What I do know is that while investment returns are not particularly certain in the short to medium term, they are pretty certain in the long term.

But fees are very certain. They are a drag on performance, meaning less money for you.

You've told me you are good with money but confused about whether to go with fee-paying advice or 'do it yourself'.

A lot of this comes down to our own money personality.

Also, the initial fee and then monthly payments may well cover matters inside and outside super; they may give you a full financial plan and assist you to grow your wealth with investment advice outside super. That sounds like a pretty good idea to me.

But if it is just a question of changing to a better-performing, low-cost super fund, plus insurance, if I was in your shoes, I'd do this myself.

Quite frankly, I'd take a look at one or two of the many websites that show you the performance of funds, such as moneymag.com.au/super/funds/compare; you can also look at which ones have the best insurance inside the fund. Working out our insurance needs is very personal but not very hard.

A good super fund will have either insurance calculators or someone you can talk to.

Unless your finances are more complex than you have indicated here, or the fee-for-advice arrangement gives you significant value around all of your money and building a financial plan, I'd be avoiding paying fees to anyone and just choose a good, low-cost, large super fund and put in place inside that fund the insurance you require.

Fees and costs are a drag on investment performance. We should only pay fees when we are certain that the cost will lead to a better outcome for ourselves.

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