After wading through the hundreds of media articles and public reactions following the release of the Cooper Report and seeing almost no meaningful criticisms apart from minor protests coming from the arts community, it's time we in the superannuation industry accept we lost the fight and sued for peace on just terms.
As we do, let's be clear on what this entire war has been about. It has not been about choice, wealth management or even the role of advice. No, it's been about how to manage occupational superannuation and whether people uninterested in it should be punished or protected.
Trouble for us in super fund land is that in taking up this fight that was always only about SG driven employer super we conceded so much ground in the other growth areas of what is beyond-SG super. The result is the fix required for sorting out compulsory super will now most likely lead to everything else being partitioned.
We allowed this to happen because we forgot the fundamental three-pillar structure of superannuation, which is: Pillar one, the age pension; Pillar two, occupational SG super, and; Pillar three, voluntary member top-up contributions for those who can afford it.
The reaction we are now witnessing is the direct consequence of choices being imposed through the entire superannuation funds market, even on those who didn't want it or who were unprepared for it, causing pillar three to encroach on and nearly crush pillar two.
For funds living primarily in a world that is about engaged member choice and above-SG contributions this can only be a huge distraction. But for funds living in a world driven by SG it's a complete non-event, meaning it will be a distraction if they mismanage their response to it.
The destructive fights over excessive choices and commissions versus fee-for-service advice are therefore ones that stems solely from the view of how we think we should return integrity to this pillar structure. It's the entire constitutional, and conceptual, basis of the Cooper and Henry pillar renovation crew.
This disconnect between the scope of the looming reforms, which in all likelihood will be influenced by the re-empowered Greens in the 2011-14 Senate, is highlighted by the way super fund insiders criticising the Cooper Report have been all but dismissed. Indeed the worrying aspect of how these criticisms have been reported is in the way it has highlighted our weak arguments against so-called paternalism even though the entire superannuation system itself is fundamentally built on this same paternalism.
This is reinforced by new consumer research commissioned by the Association of Financial Advisers that shows investors using advisers, being those interested in choices, are generally wealthier and more financially contented than those who do not. More significantly it shows that for these people hard core investment results are only a minor aspect of what they are seeking.
Add in how there is no way Australia's 18,000 advisers could possibly hope to extend their reach across the population unless they became at least three times more efficient and it leaves you with the impression the war we have been conscripted into is for the most part synthetic and virtual.
This might be why many choice oriented funds and advisers who service it are telling us regardless of what is about to happen at Superannuation and Wealth Management HQ that for them either not much will functionally change or that they'll roll with the changes and just get on with things.
Giving these players peace of mind is knowing which pillar is holding them up. For the rest of us still fighting the war we've already lost, we should take the advice of the Prime Minister and "move forward".
