The royal commission has triggered the super shake-up we have to have
It's been a tough few months for the superannuation industry following revelations at the royal commission into misconduct in the financial services sector.
But before we despair at some of what we've been hearing we should appreciate that the problems the royal commission has identified have not been with the funds that are run by the major banks but with the convoluted arrangements that still exist between them, or rather their trustees, and their networks of aligned financial advisers.
The irony is that many of the funds they run are actually quite sound - retail funds as a group are now as cheap as industry super funds while in some asset classes retail funds are the best performers in the market.
This fee revolution is so sharp that Australia's smartest retail superannuation funds are Australia's cheapest.
This brings us to what is going to be the main legacy of the royal commission: the disentangling of complex relationships between super funds and their financial advisers.
It has to happen because it's these relationships that are holding back the super industry.
It's imperative this happens quickly because unless it does, retail super funds will simply not be able to move on from the disastrous headlines now plaguing them.
But the good news is that this is already happening.
In the past two years, the financial advice and retail superannuation market has gone through massive restructuring and will soon be unrecognisable from what it was before.
The royal commission just confirms that the debate about why super needs to change and lift its game is over.
Illustrating this, almost all of Australia's large superannuation companies have now announced they are ending grandfathered commissions and tied adviser payments.
These changes will happen because the royal commission has reminded everybody that super funds are to be run for the benefit of their members, and that the commercial interests of those who run them have to take a back seat.