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the new school of super podcast series

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Join Sunsuper’s Dream Team Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs in our podcast series as they discuss money matters, your super and the things that could affect your financial dreams now, and in the future.

The Sunsuper Dream Team

Anne Fuchs is the Head of Advice and Retirement at Sunsuper. She has worked in the financial advice industry for more than 20 years, and passionately believes great financial advice can change people’s lives. Prior to joining Sunsuper in February 2015, Anne was the Chief Commercial Officer at the Association of Financial Advisers where she was responsible for income generation and servicing of their commercial stakeholders – members, licensees & corporate partners.

Brian Parker was appointed to the role of Sunsuper’s Chief Economist in 2015. In a career spanning more than 25 years, Brian has worked in a series of economics, portfolio management and communication roles with a range of organisations including Rothschild, JP Morgan, Citigroup, MLC and the Reserve Bank of Australia. Brian has an honours degree in economics from the University of Queensland, where he also taught macroeconomics. Additionally, he is a Charted Financial Analyst.

Episode 21

Is more investment market volatility on the cards?

Chief Economist Brian Parker is back to give us the skinny on how and why political events are front and centre for financial markets. Brian trades tips and quips with Anne Fuchs, Head of Advice and Retirement, about how Sunsuper's investment managers are helping ensure members can still sleep soundly at night amidst the ongoing volatility. Listen out for Brian's explanation of why: "Predictions are really hard, especially about the future"!

launch podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering investment markets, money matters, your super and most importantly of course, making sure you live your retirement dreams. My name is Anne Fuchs, for those of you who don't know me and I head up the Advice and Retirement team at Sunsuper and the team and I come to work every day to help our members access great quality financial advice they will live their best possible retirement. Now, with me today is my partner in crime, our chief economist extraordinaire if I might say so, Brian Parker. Hello, sir.

Brian Parker: Hello Miss Fuchs it's wonderful to be with you again.

Anne Fuchs: It is always fun. We've had some different guests and I have to say I've. missed you on the New School of Super, I have missed you.

Brian Parker: I have missed you too.

Anne Fuchs: Look, I've had to do the general advice warning in your absence, and I just don't do it as well as you. Can you show our listeners what a wonderful job you do?

Brian Parker: Thank you so much, Miss Fuchs. As always before we start, I do need to let you know that what you're about to hear is general information only. Any advice does not take into account your personal situation. You should consider your circumstances and think about getting personal advice before acting on anything we discuss. You can also get a copy of our product disclosure statement from our website or by calling the team on 13 11 84.

Anne Fuchs: Well, that was beautiful, Brian.

Brian Parker: Thank you very much, I'm a bit out of practise.

Anne Fuchs: Well speaking of practise, you are very well practised though, in giving our members great comfort - the 'sleep at night' factor - when it comes to their money. And it doesn't pay to turn on the news at the moment, Brian, because between Boris and Donald, there is chaos everywhere. And I think many a member are worrying about the impact this is gonna have on their retirement savings.

Brian Parker: Yeah, that's a very good point, actually. And it's kind of interesting that I've been doing this for nearly 30 years. And while politics was always something you need to keep a weather eye on, it was never usually the main game. So, you know, geopolitics and politics was very rarely sort of front and centre. Where as now what's been unusual about this is that really the state of world politics and the quality of political leadership is really front and centre at the moment. It's almost that it's almost like every market commentator is becoming a geo politics expert.

Anne Fuchs: And, you know, I think it's really hard actually today recording this episode because it is moving so quickly in relation to what's happening in Europe and the UK. Because there are a couple of scenarios whether we- the hard Brexit now seems unlikely, based on what's going on in parliament and the delay, but equally too the likelihood of an election but also too the possibility of a referendum. Is there anything that investors in Australia, any outcomes or things or signals we should be looking for as to indicate how this may turn out?

Brian Parker: I think with Brexit I don't think anyone has a clue how things are going to pan out from here. Let's be honest about this. It's fair to assume that Brexit is going to be an ongoing source of volatility for financial markets. There's one thing I would point out, though, in the list of things that we worry about, Brexit is probably not as big a deal in terms of its impact on the global economy, as what's happening with the US and China and the trade tensions there, for example. So to me, Brexit is yes, it's important. And Brexit is clearly a source of worry, and a source of volatility. There's a whole list of other things to worry about as well.

Anne Fuchs: But before we get to China, don't Sunsuper own some airports in the UK - we've got some important investments over there.

Brian Parker: Yeah we do, and it's not just our investments in airports. I mean, any superannuation fund is going to have a substantial amount of their portfolio allocated to global shares and the UK share market is one of the major share markets of the world. So to that extent, everyone is going to be impacted to some extent by what happens in the UK economy and in UK shares. But with the airports, what's interesting is-

Anne Fuchs: Which airports do we own?

Brian Parker: We own some equity in the Bristol and Birmingham airports. We acquired them towards the end of 2017, when Brexit was well and truly on the horizon. And there's a few things I'd say about that. One is that we think we paid a very, very fair price for equity in those airports, including a price that reflected the uncertainty around Brexit. The second thing is that these are very long term assets. No one buys shares in an airport expecting to sell them in two or three years time. We'll be holding these in the portfolio for many years to come. And so even if you do get some severe disruption around Brexit - and frankly, if there is a hard Brexit at the end of all of this, the disruption could be quite severe to the UK economy - in terms of the long term outlook for these assets, it's not the sort of thing that derails the whole reason for investing. I suppose the other reason is that, let's be honest, the weather in England is terrible and the British are still going to fly, so airports are still going to make money.

Anne Fuchs: It's not like gods own country here in Queensland.

Brian Parker: Apologies to those of our members who are citizens of another country. But I'm sorry, your weather is rubbish. Which is why you live here.

Anne Fuchs: That's correct. That is correct. Okay, so if Brexit is something that we should not be losing sleep over, the risk elevates when it comes to the trade war and the impact this is having. And I guess with China, Australia has a greater dependance than probably most because of our proximity and where we are in the Asia Pacific region.

Brian Parker: Absolutely. And let's be honest here, Australia is a trading nation. We are very open economy. And so anything that actually adversely impacts on global trade and global economy is going to impact on Australia. Let's make no bones about that. In terms of the direct impact on the Australian economy of these trade tensions, though, it's very, very complex. The sort of things that we export to China are overwhelmingly the sort of things that - take coal and iron ore for example - I mean we're basically providing the raw materials that help build China's modern economy. We don't tend to supply the raw materials that go into exports to China then sells to the United States and elsewhere. So if you think about it, I would rather be exporting the kind of things that we sell to China than selling them components, for example, that go into an iPhone.

This is why I think a lot of economies in Asia such as Korea, Thailand, Singapore, Taiwan, these economies are probably going to feel the adverse impact of the trade war more severely than we will here in Australia, for example. The way I would describe is that we feed China's domestic economy, whereas the rest of Asia tends to feed China's export industries. And those export industries are really what Trump is targeting.

Anne Fuchs: Look and if we move to Australian equities and the last quarter in terms of economic growth was very subdued. The treasurer said that we're a very resilient economy, but certainly that media has portrayed it as the worst economic performance in two decades. You're our chief economist. What's your assessment of the performance of the Australian economy, and are we heading into any significant headwinds that our members need to be aware of?

Brian Parker: Look, there's a few things to unpack there. One is that clearly the economy has slowed down. But this has not been just in Australia, it's not just an Australia phenomenon. The global economy in general has slowed down significantly over the last 12 to 18 months. Australia has not been immune to that. But if you look at the domestic factors which have really helped drive the slow down here, we've clearly seen a fairly sharp fall in building activity, residential building activity. We've seen very, very anaemic growth in consumer spending. Consumers are not getting the kind of income growth that would allow them to really propel the economy. So even though jobs growth has been reasonably solid, wages have been growing at a very, very anaemic pace, which means overall household income has been growing very modestly. And all other things being equal, that tells you that consumer spending is only going to be growing very modestly and consumers are, you know, 60% of the economy.

Anne Fuchs: And I think certainly it is cause for reflection around the types of returns our members should be seeking to achieve in times like this, because to your point earlier, this is not just an Australian phenomenon. It is a tough environment to invest in overall. What are the expectations of our investment returns in the long term? And what is our investment committee seeking our investment team to achieve?

Brian Parker: Well, that's a really good question, and one of the messages we've been trying to get across at various public forums that we've been holding and various member presentations is this idea that investment returns over the next decade are going to be substantially weaker than the investment returns we've seen in the last decade. The last decade has been a phenomenal time to be an investor. Why? Because share markets around the world have performed extremely well, and that's really turbocharged everybody's superannuation returns. The next decade, I think it's going to be a more challenging time because shares are not cheap. It's very, very hard to find genuine value out there. If I look at interest rates around the world, government bond yields are in most countries at all time lows or are very close to it. In some countries, government bond yields are negative. Now let's think about that. It means you are literally paying Angela Merkel for the privilege of having her look after your money. That's a little bit insane. No disrespect, but the reality is this means that for conservative investors, these sort of typical assets that conservative investors tend to focus on - things like cash, term deposits and bonds - the future returns from those asset classes are going to be very, very low indeed, and it's going to be a much more challenging environment. I think the best way I can answer your question in a less long winded way is that when you pick up a product disclosure statement from Sunsuper or indeed any major superfund and look at the return objective, look at the return objectives that we quote. So for example, for our balanced option we say that over the next decade we're trying to achieve 3.5% above inflation after fees and after taxes. Now that, I think, is going to be a very, very challenging target to hit because we are in a slower growth world. We're in a world of very, very low interest rates, and so the reasoning behind that return objective we're trying to communicate our members what sort of returns are realistic and achievable over time and our best guess and the best judgement of the Sunsuper board and the investment committee is that we think a real after tax and after fee return, after inflation return, 3.5% is going to be achievable. And that's markedly lower than the returns we've seen in the last decade.

Anne Fuchs: But equally to it's markedly greater than putting money in a term deposit. And I know this to be true in talking to members that because they are scared about the challenging times out there in investment markets, that there is the perception still that either putting your money under the bed so to speak, or in the bank is safer and can help you sleep at night. But in fact, in that environment that you're explaining around low returns on cash and fixed interest, your money is going backwards.

Brian Parker: Effectively it is. It's not going to get any better any time soon, especially with the reserve bank clearly signalling that they have a bias to actually reduce interest rates further. Certainly, they haven't ruled out the likelihood of interest rates going to close to zero. I don't think that's going to happen quite frankly, but why would I rule it out? No, I wouldn't. But one of things I would also argue is that over time do you get rewarded for taking risk? And I think the answer to that is still yes. So in other words, for those investors that are worried about the sort of global environment we're in, to me it's about making sure that we take enough risk to generate the returns that we need and generate the returns that our members need, but not so much risk that we are losing sleep at night. And we talked about this before and on these podcasts - the sleep at night test, And one thing I always tell members is, 'Look if you are doing something with money -whether it's your super or your mortgage or whatever - if you're doing something with money which is causing you to lose more than about three minutes of sleep at night, it means you're probably taking too much risk. It's like your body telling you something.

Anne Fuchs: And look, money does make people emotional and whether they want to spend it or squirrel it away. But certainly I think there are many of our members that choose to stick their head in the sand, because they're terrified of having an uncomfortable conversation or they feel embarrassed that they feel they have too little. But the point is to actually reach out to Sunsuper for trusted financial advice no matter what your balance is, we can provide you that comfort so you can sleep at night and we can maximise those hard earned retirement savings that you've worked. You deserve to maximise what you have with us at Sunsuper. So, Brian we've talked about some really big issues and it's been a bit of a heavy episode there. Any sort of finishing comments you'd like to make to our members?

Brian Parker: Look, I think apart from that point about sleeping at night, and if you are losing sleep at night, I think your point about getting advice is crucial. Please call us and speak to one of our advisors who can help talk you through the issues and explain about the trade offs between between risk and return. And what sort of returns you need to achieve to live your retirement dreams. But also how much risk you might be prepared to take in order to do that. Look, we live in a very, very uncertain world, and I often get asked, Will there be another recession? Will be another crisis, etc. On my response is always the same. Will there be another recession? Yes, there will be. Will there be another crisis? Yes, there will be. Do we know when either of those two things are gonna happen? No, we don't. Someone said predictions are really hard, especially about the future. We don't know with any certainty about when the next recession we're will be or when the next crisis will be. But one thing we do know every crisis, every recession, every downturn, every bare market comes to an end, bar none. And the reason for that is simple. Because despite what happens in London or what Trump does etcetera, life and business and the economy goes on and a whole bunch of companies and a whole bunch of assets in Australia and all around the world will still be working to ensure that our needs as consumers are met and they will make a profit, and they'll pay dividends and generate wealth.

Anne Fuchs: And look it's our job as a fund too, and we have the expertise, and there are many an episode on the New School of Super where you can hear more about our investment expertise. to find those opportunities to make sure your money is secure and growing so it can last you in retirement. Brian, it has been a pleasure as always, to have you.

Brian Parker: Thank you, Anne. Much appreciated.

Anne Fuchs: I look forward to our listeners joining us again on the New School of Super.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 20

The value of advice throughout retirement - part 2

Josh van Gestel, Sunsuper's National Education Manager, joins Anne Fuchs, Head of Advice and Retirement, to discuss how financial needs may change throughout retirement, and our research, which shows the value of financial advice in helping a case study couple wind up their SMSF, take advantage of a Sunsuper Income account, and free them up to enjoy life in the latter years of their retirement.

launch podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering investment markets, money matters, your super and helping you reach your retirement dreams. My name is Anne Fuchs, and I'm the head of Advice and Retirement here at Sunsuper and the team and I come to work every day to help our members access great quality financial advice because we know that when they do, they have the best possible chance of living a wonderful retirement. Now an old friend is back today, and he's been a guest on the show before: the fabulous Joshua van Gestel, our Sunsuper National Education Manager. Hello Josh!

Joshua van Gestel: Hi Anne, I take offence as being referred to his old, but anyway...

Anne Fuchs: Well, we're probably the same age and we're not old at all, we're fabulous. Just ask us, and we'll tell you all about it. It's wonderful to see that you're here. Brian is not here today, so we won't have the two of you competing for microphone space.

Joshua van Gestel: No, and I'm filling his very comfortable chair.

Anne Fuchs: Yes. Good, Good. Well, look, you know, last time we've spoken about when you've been on New School of Super, we've spoken about SMSF, the value of a buy, swimming and super. But what are we talking about today?

Joshua van Gestel: We're actually going to pick up on a few of those things. But before we do, I'm just going to make sure that our compliance team is happy. So before we start, I just need to let our listeners know that what we're going to talk about today is general information only, and that any advice that we may provide doesn't take into account your personal situation. You should always consider your own circumstances and think about getting personal advice before acting on anything we're talking about today. You can get a copy of our product disclosure statement from our website or just give us call on 13 11 84.

Anne Fuchs: You are sounding a little bit husky.

Joshua van Gestel: I am, and it wasn't a big night - it's man-flu unfortunately.

Anne Fuchs: Tail-end of it, but you're doing well. Thank you for being here. Look, you know if I can start by pointing out that financial advice really did cop a battering in the eyes of consumers, particularly during the Royal Commission, which is incredibly sad because we know at Sunsuper that great financial advice materially improves people's retirement outcomes.

Joshua van Gestel: That's right, and I think it's really important with that in mind, that the value of advice research that's been done - and what we're talking about today is actually a case to do with an older couple - that the research really does call out the importance of the advice and where good and trusted financial advice can make a difference. I think in this case, the other thing I'd pick up is that what we're going to discuss about in a moment also talks about the importance of that ongoing advice; that advice is not just simply a one=off conversation, but advice is something that has to change as your circumstances and your needs and your desires change as well.

Anne Fuchs: Yeah it's not unlike exercise. You know, I haven't exercised all winter and now we're in spring and I've been walking and my legs hurt, and that's because it shows I haven't been doing ongoing exercise and it's really no different to money?

Joshua van Gestel: Absolutely. Did you maybe just want to give some background for those people who maybe haven't listened to the previous podcasts on the value of advice research?

Anne Fuchs: Yes, sure. Look, we undertook this exercise, working with Core Data who's a very well regarded independent research house, to empirically prove, I guess that if you pay for financial advice that you will be wealthier as a consequence because to be blunt, that's the point of it. You're paying to improve and maximise your financial position. And so there have been now six case studies overall, that are all on the Dream Project on the Sunsuper website that you can access. The last wave of research that we did with Core Data was focusing on people who are later in life, and that it's not too late to be able to improve your situation.

Joshua van Gestel: And I think in this case it's really important, because what we've got here is a case study that relates to a couple; Susan and Kevin. It's probably something that's a lot of people may actually need to start thinking about and considering, and that is where a lot of us undertake our own investment decisions - in Kevin and Susan's case, having a self manage superfund - that as they age, their ability and maybe their want to actually be so heavily involved in their own investment decisions needs to go on the back seat. What we've got here is a change in their health circumstances; Kevin, who who we know probably makes a lot of the decisions or goes on the front foot a lot with the investing for their self-managed super, he's really losing maybe some of that cognitive ability to maintain that. And he recognises, which I think is important, that we are seeing this become a very big issue, especially depending on how some of the self-managed super funds is structured. So the case study picks up on a couple of things there, both in terms of transparency of that investment and trust and responsibility. But also how can we just re-check in on their situation and what they want and actually make some changes there as well.

Anne Fuchs: And it's worthwhile calling out before we get into a bit of the detail, that the not only to Joshua's point about- Look, I'm sounding very formal, calling you Joshua aren't I?

Joshua van Gestel: Only my mother calls me Joshua.

Anne Fuchs: Yes, Josh's point around just removing complexity, which is particularly important, I think, as people are moving to the latter part of their life. But there is actually a material financial benefit in doing so as well, so they're not just removing complexity - they are in a position where they're better off for undertaking this strategy with their financial advisor.

Joshua van Gestel: And I think the most important thing here is that it also relieves their own commitment and allows there to be both that financial benefit, but also then to just focus again on Kevin's health. So I think where the other benefit of this was, in going through the advice discussion it also identified with them that they could start an allocated income stream, an account-based pension and that would actually, even in itself, take away a lot of that active decision making out.

Anne Fuchs: Absolutely, because, you know, our listeners would know that we have some highly qualified investment managers that could do that and have the capacity to do that much more than Susan and Kevin could.

Joshua van Gestel: Absolutely and it also means that it lets them go on autopilot a bit, that they know the investment to being managed, they know they're receiving their regular income payments. Again and allows them to have that focus on just where their lives are and what they're wanting to do.

Anne Fuchs: In this case study isn't unusual. These people, I would describe as everyday retirees and that they're wanting to downsize their home, they're wanting to be able to leave a bit of a legacy to their grandchildren and children, and see if they can help. And just also, while they're mobile and able to get around, spend some money and get overseas, have some holidays. And so really they're not extravagant goals that this couple and this case study is seeking to explore. But they do have a self-managed superfund. And there are lots of members we know at Sunsuper where the trend of unwinding an SMSF is certainly gaining momentum and quickly, and that's probably a reflection of an ageing population. But also probably post-Royal Commission world as well. Josh, you're our resident SMSF expert here at Sunsuper. If you're a member thinking about unwinding an SMSF like Susan and Kevin, what would be the first step that you would do to begin that process about whether that's the right thing for you?

Joshua van Gestel: As with setting up an SMSF, it can be very complicated to wind it up. It can have consequences around tax, it can have consequences around investments and how you're selling down investments and what you're doing with those. Just complications with the legal elements. So absolutely, the discussion first has to start with that advise, to make sure that firstly you're making the right decision to actually then see the position the funds in and make sure that everything can happen quite cleanly. But then it's also going to be involving either your SMSF administrator if you've got one or your tax agent. But there is going to be a lot of work in just winding that up.

Anne Fuchs: Well it sounds expensive, too.

Joshua van Gestel: There is an expense to it, but I would actually outweigh that to say that the initial expense of winding down an SMSF would be certainly recouped by having that money move into a superannuation fund much like Sunsuper. Often you'll see that the investment costs are lower, you'll see the administration costs are lower, you'll also see the savings and benefits just in that you're not investing your own time anymore. So I do think any of those costs are actually going to be recouped quite quickly.

Anne Fuchs: Well certainly in the case study in the value of advice case study off around Susan and Kevin, that is certainly true where they've paid for that paid $3000 for that advice and $1500 ongoing. And as a consequence, they're well and truly over $300,000 wealthier in terms of their net earnings on the superannuation balance as a consequence of that strategy, but also they're earning $25,000 a year extra in terms of the drawdown income in their retirement income account. I would say that is an excellent return on $3000 and $1500 dollars a year.

Joshua van Gestel: And that's where I think- you alluded to earlier that we are seeing this increase in wind ups of SMSFs and there's probably gonna be two things that people have to think about. It is an investment to wind it up. The cost of winding it up is actually an investment to improve situations, certainly for Kevin and Susan. I think the second thing is, though, and this is something that is never discussed when you're establishing an SMSF, is what happens as you get older? What happens when you no longer want it, no longer can do it? What would be the implications on Susan in this case if Kevin no longer had the capacity or capability?

Anne Fuchs: What happens if they both passed away and they're leaving that to the kids? That could be really complicated.

Joshua van Gestel: So to your point, not only have they seen their financial situation improve as a result of this, but it has been an investment in that financial advice.

Anne Fuchs: And actually I have to stand corrected; I'm just looking at the research now, Josh, and it was actually $2000. So pardon me I didn't have my glasses on, and I'm still in denial about that as I hit my mid-40s and that we are both getting old.

Joshua van Gestel: I'm wearing glasses for the first time, too Anne so there you go.

Anne Fuchs: And what I love to about this case study listeners is that it very much reflects the advised versus the un-advised and what that really is seeking to point out. If Kevin and Susan did nothing and continued on and didn't get that advice about what their options were as they're ageing, what would have happened? What would be their trajectory vs getting that financial advice?

Joshua van Gestel: Absolutely so again, just to maybe summarise some of what we've discussed, that if they didn't have that advice, they'd still have an SMSF and it would be a burden. It would be an increasing burden that would continue regardless of Kevin's health. You'd also see that their main goal here for the advice or for them to have this new advice discussion, is their circumstances have changed - not just in Kevin's health but also their desire to help help their grandkids. That just would not occur if they didn't receive this advice. And I think if you look at what they want to achieve, the quest for the grandkids and to actually be able to focus on Kevin's time and health, absolutely advice has achieved that and provided a lot more financial benefit above that.

Anne Fuchs: And actually what isn't called out, as we live through extraordinary geopolitical times, is the complexity of investing in times like this. Where we're headed, we're in trade wars and Brexit and whatever else, and how Susan and Kevin would navigate that is not discussed in the research paper. But I do what I want to call it out. Look, Josh, are there any closing statements that you wanted to make to our members?

Joshua van Gestel: The only closing statement, this is an SMSF statement - this isn't specific to Kevin and Susan - is to really say the importance of again financial advice being that ongoing discussion. Let's pick up on when your needs change, your circumstances change, your capabilities and your requirements change. The value of advice is in the ongoing advice. It's not just a one off shop to your earlier point.

Anne Fuchs: Life is complicated, and as we know at Sunsuper that for our members the earlier they get advice, the wealthier and more secure they are. And when I say wealthier, I'm not talking rich here, what I mean is they are maximising and doing the most with their hard-earned retirement savings. You work hard all your life. It's your obligation to make the most of it. The early you do that- my analogy is putting on sun cream; if you wait too long to put on sun cream, there's only so much you. But you put it on from a young age will have beautiful porcelain skin. I say that because I have very porcelain skin that I must protect. So on that note, it's been a really great episode. It's been fun.

Joshua van Gestel: Thank you, Anne. Thanks for inviting me.

Anne Fuchs: And you have been a trooper knowing that you are suffering man-flu. Hashtag #pooryoupoorjosh. So thank you to our listeners again for joining us. It's been great, as always, and we look forward to you joining us in the New School of Super Soon.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 19

Explaining Sunsuper's alternative strategy investments

Head of Advice and Retirement Anne Fuchs explores more of Sunsuper's alternative asset investments with Head of Alternative Strategies Bruce Tomlinson. The conversation travels from post-GFC investments in Icelandic banks to the Tel Aviv Stock Exchange, and how these investments are a low-risk strategy to earn a return for members well above cash, and diversify our portfolios during volatile market conditions.

launch podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering investment markets, money matters, your super and helping you reach your retirement dreams. My name is Anne Fuchs, and I'm the head of Advice and Retirement here at Sunsuper and the team and I come to work every day to help our members access great quality financial advice because we know that when they do, they have the best possible chance of living a wonderful retirement. Now we, as you know, we love doing deep dives here in the New School of Super, and we have another fantastic deep dive today with another one of Brian Parker's colleagues Bruce Tomlinson, who is Head of Alternative Strategies in our investment team. How are you? It's so good to have you here, Bruce.

Bruce Tomlinson: I'm very well thanks Anne, good to be with you.

Anne Fuchs: You're not bewildered to be sitting in Brian's chair? It's a big chair to fill.

Bruce Tomlinson: It is a big chair.

Anne Fuchs: It is a big chair to fill. Look before we get into it, I must read out that good general advice warning to keep in the good books with compliance. So before we get underway, I just want to point out that any information I'm providing today is general information only and do not act on anything without seeking personal financial advice. You can contact us on 13 11 84 or, of course, go to our product disclosure statement. So, Bruce, that's a very sexy title if I might say so: Head of Alternative Strategies. What on earth is an alternative strategy?

Bruce Tomlinson: Glad you asked Anne. So alternative strategies is a defensive alternative asset class. We call it cross-asset, and by that I mean we can invest in both credit and equities, both public and private securities. So it is quite an opportunistic programme. But there is a strong focus on being defensive, a strong focus on credit investments in particular.

Anne Fuchs: So credit: I'm pretending that I'm sitting in the shoes of our listeners, and I'm hearing opportunistic and credit and I think of fixed interest. The ordinary person down the street would think of fixed interest and think how terrible things are. Are you able to explain? And also to is that risky? A you able to explain that a bit further?

Bruce Tomlinson: Sure Anne, so it's alternative fixed income. So we're not investing in government bonds that are negative interest rates or zero interest rates, we're investing often in private credit in areas where the cost of finance is higher. And the return that our members will achieve from those assets is significantly higher than some of those government bonds that are yielding almost nothing.

Anne Fuchs: But you described it earlier as defensive, so that to me or to our listeners, I should say, would imply that it plays a role in portfolios as reducing risk. Is that the case or not?

Bruce Tomlinson: Yes. I mean, I was saying it's defensive within the context of the four alternative asset classes at Sunsuper. So it is more defensive say, than private capital or the real asset portfolios.

Anne Fuchs: So maybe should we just list off the four for our listeners?

Bruce Tomlinson: Yes. So the four alternative asset classes are private capital, infrastructure, property, and alternative strategies. And the Alternative Strategies Portfolio, which me and my team look after, as I say it focuses on credit. It has a focus on downside protection and on being a defensive programme. It's not risk-seeking or growth oriented, particularly like the private capital or private equity portfolio.

Anne Fuchs: So I think it might be good for our listeners for an example to bring it to life. Iceland has a few things, including a famous singer, Bjork. Is that how you pronounce? How's my Icelandic pronunciation?

Bruce Tomlinson: Very good, it's good enough.

Anne Fuchs: Okay, so what else has happened in Iceland? And what on earth might that have to do with with private debt?

Bruce Tomlinson: Sure, Anne. So the example there is Sunsuper invested in the debt of some of the Icelandic banks.

Anne Fuchs: This is post GFC?

Bruce Tomlinson: Yes, this is post GFC. So just very briefly, the Icelandic banks took on a lot of debt and they financed investors all over Europe and they got into trouble. And when the GFC happened, those those debts became impaired. And so some of our specialist managers overseas were monitoring the situation. They waited until the prices of the bonds from these banks declined and then they bought them at a cheap level. And then we, with the manager, held those positions for a number of years. And gradually the Icelandic economy healed. The estates of those banks sold assets, and we were paid back more than the purchase price of those bonds.

Anne Fuchs: So you're saying that buying these banks, that were really in a bad way, made our members a good healthy return?

Bruce Tomlinson: Yes. So we bought them you know, I would characterise, this as being modest or low risk because we bought these assets at distress prices at a cheap low price. And our managers had assessed that the value of those businesses were significantly more than the bonds that we were buying. And so there wasn't... we didn't perceive the risk as being high.

Anne Fuchs: But how are you undertaking- how do you and the team source a deal, like a deal in Iceland for goodness sake, when you're sitting in Australia square in Sydney?

Bruce Tomlinson: We invest through specialist managers all over the world. So those are the experts who will find these unique opportunities and then monitor them for for years if necessary, and then deciding at the right time the right price to purchase them on our behalf. Yeah, we have a global network. We travel widely. We engage with lots of different people, and we're alert to these opportunities.

Anne Fuchs: And what's the other part of alternate strategies that's in your portfolio Bruce?

Bruce Tomlinson: So besides the private and specialist credit, Iceland being an example, we do invest in hedge funds. So we should talk about that. The hedge funds that Sunsuper invest in are what we call low risk funds. So they are generally market neutral, in that we don't have a long or levered exposure to the market. These are risk controlled strategies that aren't taking market risk.

Anne Fuchs: So why would we invest in them if they're not taking market risk? Isn't it the job of an investment manager to take market risk to make our members money?

Bruce Tomlinson: Yes well, market risk we get that through our listed equity listed fixed income portfolio. So what we want from alternative managers, hedge fund managers, is to give us non-market risk. So they need to make money in a way that isn't correlated to the market. So they will buy securities in a distressed business. They will go long and short, different parts of the capital structure of a business to to extract the value within that business. They will look at opportunities of companies in the same industry long and short. So what they're trying to hedge out some of that market risk and earn an outsized return from basically idiosyncratic fundamentals.

Anne Fuchs: If you're undertaking a risk profile of a client, if you're a financial advisor and you're looking at this asset class; is it a growth asset class or would you describe it as more defensive?

Bruce Tomlinson: I would describe it as defensive. There are some small elements of growth, but generally it is defensive. So we've been managing the capital in this opportunity set for over a dozen years, we went through the GFC and we were successful in preserving members capital.

Anne Fuchs: Because, well, not just advisers, a lot of people would think hedge funds are risky and growth-y in characteristic.

Bruce Tomlinson: Yeah, so let me just say that we have approximately 50% of the portfolios in hedge funds, and that is likely to decline in the near term because we're finding better opportunities in some of the credit investments that we mentioned before. The hedge funds that we invest in are not growth-y and not risky. They are like I said, market neutral. So they are absolute return strategies, trying to deliver a significant margin over cash. They're not benchmarked against the market.

Anne Fuchs: Okay, and so when our head of asset allocation, Andrew Fisher, is pulling together a portfolio, I guess my first question is, what percentage of the overall assets do these diversified alternative strategies - so the four that we spoke about earlier, what percentage do they represent off the overall money we manage?

Bruce Tomlinson: Sure. So they range from about 5% to 8% depending on the diversified option that the members invest in. So they're small but meaningful components.

Anne Fuchs: So just to clarify though, 5% to 8% of your asset class or of the overall unlisted assets?

Bruce Tomlinson: No, it's 5 to 8% of the balance fund or the growth fund or the conservative or retirement.

Anne Fuchs: Okay, all right. Because I think sometimes there is a perception from investors, whether it's members or advisers, that in superfund world all of our money is invested in these sort of diversified alternative strategies, these unlisted opportunities, and there's sort of opaqueness around transparency. But that you're saying that's not the case at all?

Bruce Tomlinson: No, it's a modest but meaningful part of those diversified options.

Anne Fuchs: And with the hedge fund - because it's probably useful, too, as it's a complex instrument or investment class, as a class that you've described - is there just a quick story you could give us, to our listeners, to bring that to life?

Bruce Tomlinson: Yes. Okay, so one of...

Anne Fuchs: I'm putting you on the spot there.

Bruce Tomlinson: So one of our managers in New York is Manikay Partners, we've been invested with them since 2010. They invest in public equities and they have an expertise in the financial sector and particularly in stock exchanges. So they've invested in the ASX and in Deutsche Börse and the New York Stock Exchange, etc. So they have public equities, they go long and short these investments and they've generated a very good return for us over many, many years. They, because of their knowledge and expertise in exchanges, made an investment in the Tel Aviv Stock Exchange, which was a private investment in a business that was de-mutualising and was owned collectively by the banks and the Israeli government wanted it to be privatised. So through Manikay we ended up purchasing a stake in this business during the de-mutualisation before the IPO. That businesses is now successfully IPO'd, we've sold down some of our stake and we've retained some of our stake. But that's an example of a hedge fund manager who delivered a very unique investment for Sunsuper and it's continuing to deliver strong returns.

Anne Fuchs: So let me play this back; Sunsuper members own little bit of the Tel Aviv Stock Exchange. That's incredibly exciting. There you go, listeners. I bet you didn't know that. So you have absolutely learned something incredibly interesting today on the New school of Super. Bruce, to finish off, what are your reflections? You've been managing money for a long time now, you're a very experienced investment manager. What are your reflections around investment markets generally in the role that your team play to optimise our members' retirement savings?

Bruce Tomlinson: Look, we're very excited about the opportunities.

Anne Fuchs: You're not worried? There's a few worried people out there.

Bruce Tomlinson: Not at all, not at all. In fact, the more dislocation and disruption that there is we see that as more opportunities for our managers and therefore for Sunsuper to make good investments for our members. So in the alternative space, because we can move between public and private markets, because we're less constrained by parameters that other investors and other asset classes have, we can take advantage of these opportunities - these dislocations. So, for example, in energy, it's a dislocated space because of because of greenhouse gas emissions, because of global warming, because of renewables disrupting traditional power sources. That to us is an interesting opportunity. In transportation you've got change and disruption again because of emerging markets, because of the growing middle class in emerging markets, again because of different transportation methods. So we embrace change and disruption, and we think that it's an opportunity to make good investments, good safe investments with strong asset backing and strong cash flows that can deliver outsized returns for members.

Anne Fuchs: Look that I think is a beautiful way to end. I certainly think if I reflect on my mother, who turns 70 next year, and I know she, as she ages, is I know many, many of our members do, they get worried about the pace of change technology and the world's just getting to complicated. And they see that as risky, and particularly in relation to the security of their money and worrying about it running out. But what you're saying is, actually, they can sleep at night because you and the team have the expertise to make the most of that, so that that money can outlast them.

Bruce Tomlinson: Absolutely. And we're working very hard to safeguard the money and to grow the money. We have very good managers globally. We have good, good connections and and we're looking forward to those opportunities.

Anne Fuchs: Now Bruce, if you ever need anyone to carry your bags to Iceland or Tel Aviv or New York or any of these other really interesting places you go to, I'll take some time off from the New School of Super and come along. Will you have me?

Bruce Tomlinson: Absolutely.

Anne Fuchs: That's great. All right, well to our listeners thanks again. That was an incredibly interesting episode and thank you, Bruce, for coming along, and we look forward to you joining us again soon.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 18

Explaining Sunsuper's private market investments

In this episode, Anne Fuchs describes Michael Weaver, Sunsuper's Head of Private Markets, as "never boring". Michael does not disappoint, explaining some of the property, infrastructure, private capital and hedge funds investments in Sunsuper's portfolio that may not be known or available to most individual investors, along with the diligence and consideration that goes into sourcing and maximising these opportunities for members.

launch podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering money markets, investment matters, your super and most importantly, helping you achieve your retirement dreams. My name is Anne Fuchs, and I'm the head of Advice and Retirement here at Sunsuper. And the team and I come to work every day to help more members access great quality financial advice because we know that when they do, they have the best possible chance of living their best retirement. Today I have a very special guest with me, someone who is an investment guru themselves. And no, it's not the usual guest, my partner in crime Brian Parker, our chief economist at Sunsuper. It's someone that works very closely with Brian Parker though, his name is Michael Weaver, and he's Head of Private Markets here at Sunsuper and the team and him have had an extraordinary year and play such an important role in making sure our members live their best possible retirement, because we know that our members care most of all about maxing their hard-earned retirement savings. And that's what Michael and his team do. It's so good to have you here, Michael.

Michael Weaver: Thanks Anne, it's good to be here.

Anne Fuchs: Now, Brian is a bit of fun, so I'm hoping you're prepared to have a bit of fun with me as well on this episode of the New School of Super.

Michael Weaver: I'll do my best, but he is a hard act to follow.

Anne Fuchs: He is a hard act to follow, I couldn't agree more and saying he is a hard act to follow. I should follow in his footsteps of steps and give that general advice warning for you and our listeners. So what is very important for me to point out to our listeners is that today we're talking general information only, and any advice doesn't take into account your personal situation. And if you want to act on anything we discussed today in relation to Sunsuper, you should grab a copy of our product disclosure statement or contact us on 13 11 84. Now today, Michael I'm sure there'll be many of our listeners who are either members themselves or also financial advisors who are interested in this concept of unlisted assets and private markets. We've had some extraordinary investment performance of late of which your team have contributed to as I mentioned earlier. Can you explain? What are the assets within your portfolio that have have made such an important impact to our performance?

Michael Weaver: Yes, maybe I'll start by talking a little bit about the different asset classes that are in the alternative asset or unlisted asset area. So looking after property, so that's unlisted property that includes shopping centres, office buildings, industrial estates. Then there's infrastructure. Infrastructure includes airports, ports, gas and electricity distribution networks. And then this private equity, which is unlisted companies that manages by and then improve the operations, and look to sell in a few years time. Then we also have private credit that you'll be talking to Bruce Tomlinson later on and he'll tell you about that. Assets that have done really well in the last few years, are office buildings and industrial estates in the property sector have been really strong and we've found great returns from those both in Australia and offshore as more people have been attracted to those assets. Infrastructure in particular, has had a strong year. What's happened with interest rates reducing over time, more and more people are looking at infrastructure assets, as an alternative source of generating returns. So these could be long term monopoly assets, they're assets that people will generate a return from, both from a cash flow but also a capital growth perspective, and they've been quite quite good for us. And then in private equity space, lots of different companies all around the world. Different assets have done quite well.

Anne Fuchs: Michael, I know certainly in the financial advisor community, there is a lack of understanding and probably too, I think be fair to say in the broader Australian community, about what the type of roles that these assets play, particularly from a risk perspective. If you're a financial advisor and you're seeking to quantify the risk appetite of your client and them being perceived as certainly I think the perception is they're a high growth asset class. But what would you say to that superficial view of the assets you manage?

Michael Weaver: Look, I can understand the concern, because what's unknown to most people is there's a huge variety of assets within these different pools, so you can have everything from a relatively sort of boring building that has a long term lease to a good quality tenant might be a government tenant, something like that. That's a pretty low risk property investment. It could be mainly focused on cash flow, not really much growth. But sitting in that same property portfolio for some people might be a quite speculative development that doesn't have any cash flow - it's really essentially a bet on the future, which is good if it works, or it can be quite poor if it doesn't.

Anne Fuchs: So are we doing the latter though?

Michael Weaver: No. So we have a real focus in our property and our infrastructure portfolios for the core, and more boring assets.

Anne Fuchs: You're never boring, Michael.

Michael Weaver: Well, sometimes we need to be, because that's where we think we get the best risk adjusted returns. So a lot of people get excited by some of the more interesting and, you know, funky investments. But that's not necessarily where you get the best risk adjusted returns. So generally what we say to the adviser community is; in property and infrastructure it's somewhere between growth and defensive, because we're having a really high focus on cash flow generative investments. Both of those portfolios are generating at least 5% in terms of just a cash flow coming off the different investments. And then you're expecting a bit of growth on top of that as well, which we think is quite attractive, especially where bond and cash rates are right now.

Anne Fuchs: Well, there is too, I think, some concern that has been raised to me around the concept of valuing these assets and the lack of transparency that's perceived there, where that's not the case so much. Would you like to explain that to our listeners?

Michael Weaver: So we have external valuers that look at all of our different property and infrastructure, assets...

Anne Fuchs: Who are those valuers? What sort of organisations are you talking about there?

Michael Weaver: In the property sphere it's expert property valuers, people like CBRE or Savills or JLL. In the infrastructure area it's generally one of the Big Four accounting firms that do an external valuation so that can be PwC, KPMG, EY. So you're getting professional advisers, professional valuers, that this is what they do day in, day out. And then we have rolling valuations, where we constantly get these values updated - depends on the size of the asset, whether that's every three months or six months or 12 months, but it is constantly looked at. And then, obviously we're getting the cash flow on the way through. So it's the underlying value changes, but as we get cash flow come through that all accrues to members' accounts. So you know, we have to look after members, both for today and tomorrow, so we're very conscious of the valuation policies of the managers we work with and the valuation firms and as part of the job of our wider Sunsuper investment team to make sure that we're doing that in a sensible way.

Anne Fuchs: And for those advisers that are interested, we have a booklet that we've produced (if you contact us at Sunsuper) on a deep dive on the diversified alternative space that gives a lot of detail around this asset class, if you're interested in it and in particular valuation methodologies and the like. Now I guess the other question I pose to you is around asset allocation, and we have a gentleman, Andrew Fisher, who heads up our strategic asset allocation. When he's constructing a portfolio for our member and he looks at your asset class, what's the main function he's seeking that asset class to perform?

Michael Weaver: So in looking at the three different asset classes I mentioned, so both property and infrastructure seeing that's a more stable asset it'll generate a higher cash flow return than something like the bond portfolio today, or fixed income portfolios you might know it as or the cash portfolio obviously, but bond rates and cash rates are very low right now. So you're getting good good cash flow, but you're also generating some growth. You're not having that sort of high growth nature, which is more like what you're expecting from your equities books, so Australian equities or international equities. Private equity is a little bit different. We call it Private Capital because it includes private equity and venture capital and some other investments. That's one of the more high growth strategies that we'd be looking at. And what you're seeking there is over the medium to long term, you're seeking a premium over the listed assets.

Anne Fuchs: Sorry, too I cut you off. There must be a benefit too, within that in the spirit of that valuation question earlier, about these assets not being completely correlated to the stock exchange?

Michael Weaver: That's right. Particularly, you're going to have some correlation in the private equity area. But things like venture capital and some of the private equity businesses, you know, these are small businesses, very small. They're family run businesses that often get bought, bought out and then you helped grow them, where some of the founders or the families may not have had the capital or the desire to really grow the business a lot bigger. They're just not accessible on the listed market. Things like venture capital, we don't have a huge exposure to that. But that is an area that is just generally not on any listed market by its nature, because they're taking longer term view on where they think a company could go and not all of them will work. Some will be really good and quite a lot will be pretty poor. But over the long term, it can still generate differentiated returns to members.

Anne Fuchs: So when you say some can be really poor, we don't invest in these really poor ones?

Michael Weaver: No, so venture capital by its nature you're investing in quite a lot of different startup businesses and some will be really poor. So we're not making those decisions, we're finding expert external managers, both here on offshore. Let them make those decisions. Some will work really well and some won't be as good.

Anne Fuchs: So how do we manage that risk for members? Because that might be something that our advisers or members would be worried about.

Michael Weaver: That's right. So what you do, you have a diversification. So can you access the next Facebook or the next Google that gets born out of the venture capital community? You know, they can be one in 1000 shots. So what you need to do, you have diversification. You don't try and put all your eggs in one basket.

Anne Fuchs: It's in very small bits?

Michael Weaver: Very, very small bits that are diversified.

Anne Fuchs: So I know there's certainly one investment we made - which you know, you said you like being boring, which is around storage in the United States and there could be nothing more boring in property, than storage.

Michael Weaver: It depends. You might watch storage wars, and that might be a little bit more interesting. There'll be some people out there who will have seen that, and you might find it more than interesting. But you know, they are self storage investments. They've been something that big, relatively boring sheds where people, particularly in the U.S., it's been quite a large... they're becoming a larger and larger asset class, there it's quite a transient sort of workforce where people are quite happy to go and move states for a job or they move for education or whatever else it might be so they'll often store within a small shed within a much larger shed. We find it's a good cash flowing business. It's got quite good tenancy over time and you can buy a diversified pool. We partnered up with a listed company, bought boarding with them into a diversified pool of different assets across the U.S. Bought it for the income stream and then was able to sell that to an institutional investor down the track at quite a high valuation compared to where we bought it because this asset class, when we first invested, it wasn't as popular as it is now. So we're often looking for those things that are a little bit ahead of the curve if they can get a good income and then have some sort of upside on top of that.

Anne Fuchs: Look, I think when I describe this asset class, it is incredibly diverse. I think it's the most interesting by a long shot. And certainly I think the power that it has in terms of smoothing the ride out for our for our members and managing that downside risk is just so wonderful. And it's certainly a unique competitive advantage for superfunds, but particularly Sunsuper. To finish up, I guess my question to you, Michael, is why does Sunsuper have a competitive advantage over say other super funds in this space?

Michael Weaver: I think one of the advantages that we do have is that we're open to lots of different ideas. We see ourselves as having a real need to have lots of different ideas come our way, really big funnels of seeing lots of different investments. And then the teams work together for quite a while, so it's quite helpful to see lots of different investments, talk about which ones we think makes sense, spend a lot of time diligencing the ones that we think do make sense, and then buying the ones that we think we can buy at a reasonable price. Sometimes you get outbid, sometimes by a lot. That's okay. You work out what you think you should pay for an asset, and what you think it will learn the members over time. Then you're able to consistently do that time and time again, and you end up getting good performance out of it. And we've been able to achieve that and it's good for all of us coming to work, thinking about Well, how does this actually make money for the members? I think that has been helpful for us in our competitive advantage.

Anne Fuchs: That's great, and I think to, if I can point out that I think the strong net cash flows that we continue to experience obviously support your team, and if I could call that you've been very humble, I think the deep expertise and experience in your team also puts us at a competitive advantage, and I generally don't use this podcast to be sales-y. But I will say that in this in this instance.

Michael Weaver: I'm lucky to be supported by a really good team, so very lucky there. And there's no doubt that having strong cash flow, and we have had that and continue to have that, helps us allocate more to these asset classes, which is beneficial for members. So it's a good, virtuous cycle.

Anne Fuchs: So if members are advisors, are interested in this asset class we obviously have our quarterly investment report. There's the deep dive document on the asset class diversified alternatives that we also have available that can be emailed to you if you call us on 13 11 84. Michael Weaver, it has been a pleasure to have you sitting in the hot seat today.

Michael Weaver: Thank you, Anne.

Anne Fuchs: And thank you to our listeners for listening to another episode of the New School of Super.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 17

Advisers and super funds - working together in clients' best interests

In the wake of the Banking Royal Commission, which highlighted the importance of trust and integrity in the financial advice and financial services industries, Head of Advice and Retirement Anne Fuchs talks with Rhett Das, Managing Director of Integrity Compliance - a Melbourne-based financial services compliance consultancy firm. They cover issues that are even more relevant to financial advisers in a post-Royal Commission world, including the application of the sole purpose test, fee-for-no-service, bundled fees and risk mitigation.

Launch Podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New school of Super - Sunsuper's podcast series covering investment markets, money matters, your super and most importantly, helping you achieve your retirement dreams. My name is Anne Fuchs, and I'm the head of advice and retirement here at Sunsuper, and the team and I come to work every day to help our members access the right financial advice for their needs and support them achieving their retirement dreams. Today is a different episode; I don't have Brian Parker with me, and we're not talking investment markets, but we are talking compliance, and I promise you that actually compliance in a post-Royal Commission world is almost as as fabulous and interesting, if I might say so, as our discussions that I normally have with Brian. Our special guest today is Rhett Das who's flown all the way up from Melbourne and he's the managing director of Integrity Compliance. Rhett is incredibly well regarded and known across the industry because he isn't really very much a subject matter expert on compliance relating to super funds, funds management businesses, licences, financial advice, all of those things to do to make sure that we all stay in the good books with the regulator. Now Rhett, a little bit about Rhett - he lives just out of Melbourne on a very large property with a border collie, horses, a wife and a beautiful baby boy that just arrived a couple of weeks ago. So welcome, welcome, welcome Rhett.

Rhett Das: Thank you, Anne.

Anne Fuchs: It's good that you're here today and before we jump into it, I just need to provide a warning which normally Brian would be doing this but today it's me. So I just need to let our listeners know that what we're going to talk about today is general information only, and that any advice doesn't take into account anyone's personal situation. So if you're a financial advisor or on behalf of your clients wanting to act on anything we discussed today in relation to Sunsuper, you can get a copy of our product disclosure statement from our website or by calling us on 13 11 84. Now Rhett, compliance and the importance of it when it comes to brand integrity, trust is so important in a Royal Commission world. And one of the things that came up in this during the event of the Royal Commission was this concept of sole purpose test, and I wondered if you would be able to provide your insights about it because our listeners may or may not know that recently ASIC and APRA sent a joint letter to trustees of super funds around why this sole purpose test is incredibly important. And why also financial advisors and members need to be aware of this.

Rhett Das: Thanks Anne. I think from our perspective, there's been a lack of understanding from advisers, and what's also contributed to this is prior to the Royal Commission, the sole purpose requirement was always there, however we found - and we were probably guilty of this too - that unless you saw what we would regard as the 'car crash' examples of this, it wasn't something that was actively being pointed out. And so when we read the report from the Royal Commission, we actually as a business, said we actually need to go back and look at the way that we test advice and make sure that we're actually capturing this. And to our surprise, we received quite a lot of pushback from a lot of clients where we had pointed out to them and said, 'Well, look, you know, you need to be aware of this now'. And again, I think that comes back to the point that I made earlier, which is there wasn't really a very clear understanding at the adviser level around sole purpose and what it means and how you meet that test.

Anne Fuchs: So sole purpose test if you think about it in the sense of when an advice fee is being charged out of a superannuation member superannuation account, it really is an early release of money. Which is why there are some very strict conditions within the sole purpose test. What are some of the types of advice that meet sole purpose test Rhett?

Rhett Das: So I was actually reviewing a piece of advice for an advisor yesterday, and I explained to him - and just give you some context these clients had quite a bit of credit card debt, and the adviser hadn't actually scoped that advice, even though there was an implied or implicit need that this client would need to address his credit card debt. But he also provided the client with advice around his superannuation. The client was part of a couple, and there was the husband who had a much more sizable Superannuation fund, and the client, when I say 'the client' I mean 'our client' had actually made the decision that he would make a recommendation that the husband would absorb, or his Superfund would absorb part of the fees that were associated with the advice that was provided to his wife. And when we pointed it out to him when we said, 'You're actually you're breaching sole purpose there because you know the husband's money's there in his superannuation for the preservation of his benefits when he retires and by taking or charging a fee to his super to subsidise the wife's fee you're actually breaching', he was shocked. That was probably one of the better examples, we've actually had similar examples with other groups where we've said to them you can't you can't do this for the reasons previous outlined and some people became actually very, very aggressive and were actually quite angry. And again it comes down to the fact that people don't understand. So we've been spending a lot of time focusing on this, and as I said, you know, changing our order question sets to make sure we capture this. And that was actually one of the reasons why I guess I'm here because I think our businesses are seeing this together, that lack of understanding. And I think only since the Royal Commission are we now starting to see a greater awareness of it.

Anne Fuchs: And certainly there's the primary requirements or types of advice that meets sole purpose test which are incredibly obvious, like retirement planning, investment choice within super, transition to retirement, those types of things. But there's also this ancillary and things, I should let you - you're the expert...

Rhett Das: I think you know the example that I was talking about from yesterday, where had this adviser gone ahead with his advice and actually said to the client 'You've got a credit card debt I can charge you or I can give you some advice on how to reduce debt and budgeting, and run that through super as well.' that would have also breached as well, because that's not advice that's directly related to superannuation. We get people that push back on this quite a bit. They'll say to us, 'If they can't get control of their debt, then how they actually ever going to save for their retirement?' . We just have to politely say 'Unfortunately, the law is what it is and you can't do it.'. And again, it comes back to that lack of understanding from our clients and so we will continue to spread this message. It's not the best received message, but we're telling people what they need to hear, not what they want to hear.

Anne Fuchs: I think certainly in a post-Royal Commission world, both the regulator and trustee directors have the importance of following the law, the letter of the law and being really clear around what that means these days. The ramifications - we saw some terrible things and some businesses, iconic brands, the like of AMP that had trust for 130 plus years just evaporate overnight as a consequence of not doing the right thing in in the eyes of community standards. Another area where certainly I think this comes to light if we extend past sole purpose test, is this issue that came up during the Royal Commission about fee for no service. And that's another area that certainly impacts our trustee directors that they have an obligation to ensure that if there is an ongoing fee charged to a member's account that they have comfort that a service is being provided. What are your reflections or insights from out there Rhett?

Rhett Das: This has probably been the hardest message for us as a group to work with our clients to say 'Where you haven't provided an ongoing service but you've charged an ongoing fee that that would need to be refunded.'. We work with a range of licences; small licensees, medium sized and large; and what we're seeing is the licences that have got the money will just say, 'We just need to refund these fees in bulk, we need to get rid of this, and we need to move' but smaller licences who may not have the cash reserves are the ones who are finding this particularly hard to take. When I sort of contrast the attitude I sort of laughed to myself a bit because, as you mentioned, I had a baby or my wife had a baby a couple of months ago, and we've got clients that we see every quarter. And I actually explained to one of my clients-

Anne Fuchs: Your clients being financial advisors?

Rhett Das: Yeah. And I explained to the client 'The baby's due around this date and we've got a meeting scheduled for this [same] date, so if we don't have the meeting on this quarter we'll do two meetings the next quarter.' and one of our clients, the principle of the practice, said no problem. One of the other advisers in the group then said 'We didn't have our quarterly catch up this month, so we're not paying your fee.'. And I thought that's really interesting because when the boots when the boots thing-

Anne Fuchs: When the shoes on the other foot?

Rhett Das: Yeah, but then they can't see that if you haven't delivered a service that they should be entitled to keep the fee. A lot of people will say, 'Well, you know, we provide all these other services and it costs money to keep the doors open' and we acknowledge that. And I think that when you're providing on ongoing fee and you bundle your fees to include different ancillary services, and you don't have that meeting with the client or you don't provide the client with some form of advice, whether it's in the form of an ROA or an SOA for the year ASIC's made their position very clear. And you only need to read info sheet 232, which spells out ASIC's position in relation to this. Now ASIC has said, where you do charge bundle fees if there is some sort of evidence based methodology, then you may be able to refund only a portion of the fee of the client. But we seem to find a lot of businesses who are spending a lot of time and energy on how they can try and get around these things rather than saying, 'Look, I've done the wrong thing and I need to deal with it.'. I think that when this message first came out and this fee for no service issue started to appear a few years ago, people were very angry about it. But I think as time progresses and we're seeing the regulator take action, more people are now more accepting of it. But they don't necessarily like it.

Anne Fuchs: Well, we at Sunsuper currently having ongoing fee facility for members to use to be able to pay for advice. But we are moving from 24 months to 12 months in the spirit of the recommendations out of the Royal Commission. We are seeing too as a trend that advisers, because of the risk of the fee no service and that you could go 14 months for arguments sake because the client's been travelling on holidays or that you're missing that annual review day, that they just are actually charging the fee at the time the service is provided because then you're actually completely mitigating that risk. Another thing theme to, when considering advice and compliance and learnings from Royal Commission, is informed member consent and transparency around fees and charges, particularly in relation to clients Superannuation's account and knowing what what's being charged. Also too, the impact that balance erosion and these fees are having on members balances. What are your reflections about balance erosion Rhett? Do you see much of it? And what's the response been from the advisers?

Rhett Das: We do and we have to take each each file or approach each matter as we see it on its own merits and depending on the age and stage in life of the client. One of the files that I was reviewing yesterday there was a couple, and obviously they've got quite a lot of credit card debt, and they were spending quite a lot of time shuffling around debt to pay off one card and pay off another card. But there was also a real need for insurance. And you know, there was a young family that had home loan, car loan, credit card. But had something happened to the mother then, the father would be left with young children and a mortgage and either has to stop work. And so when you see a situation like that, you sort of say, 'Well, obviously these people need insurance. Are they're going to have to fund it through their superannuation or is it going to be a step premium?' Obviously, I don't think they're going to be able to afford level. But we see these situations a lot, so from our perspective we don't have a hard and fast rule. But what we're looking for is evidence on the file that the advisor has considered these things, has actually considered the affordability, has actually considered strategies where the client may be able to get extra money into superannuation. Have they pointed out to the client, through the use of modelling, that if you keep going down this path, this is where you're your balance would end up. And if the clients aware of that and you've got that informed consent, then we can't sort of turn around and say the advice is not appropriate. Some people might not like the advice that's being provided, whether it's a regulator or another advisor. But at the end of the day, if the advice is meeting the needs of the client, and the advisor can articulate how they've arrived there, then we can't really sit back or stand there and fault their advice, provided there's a basis for it.

Anne Fuchs: I think the contrasting view Rhett there, is that we're walking in the shoes of a trustee, director of a Superfund is the broader member best members best interest test and you know the obligations they bear. And certainly they're not just a regular company director. A trustee director is sort of the highest level of fiduciary duty where they're acting and protecting a person's financial money, financial assets like in a trust and certainly one of the things we really stewed over that matter around balance erosion and insurance and fees. But we did, in the end, decide that for fees where the balance is less than $50,000, we needed to see that statement of advice. Because the risk of balance erosion is just too great and we certainly were not comfortable with any ongoing fees coming out, because again wearing a trustee lens going backwards, the risk of it is just too great.

Rhett Das: I would agree with that. I think that an approach to be commended that, yes, we are going to ask to see advices where you have these low balances because they are vulnerable people. And usually people who have a low balance, there's a reason they have a low balance because they're not working or they're not earning a lot of money in the first instance or that they may not be capable. So I don't have an issue with that, and so I think we agree on those points. From my perspective, we would like to see advisors who are providing advice to these sort of people, because we always get the argument pushed and thrown back at us where, 'Well, these people need advice.' And the reality is, you know, a lot of people do need advice, but if they can't afford it, you sort of have to say well what do they need more today? Do they need to prepare for their retirement? Or do they need the insurance today? Again, we want to see how people have arrived at that conclusion.

Anne Fuchs: The education around sole purpose test, and if I can sort of go back to where we started, we changed our advice fee form. That was one of our learnings from Royal Commission, knowing that it hasn't been I guess policed for want of a better word, that a piece of law for a couple of decades. So my analogy, would be like going to the dentist and you get your private health insurance and they tick the boxes. They've cleaned your teeth, there might have been an X-ray, tick tick. So we've actually laid out on the form the types of advice that meet the definition of soul purpose test from a Sunsuper perspective. But have you noticed that there are broader definitions across Superfunds?

Rhett Das: Definitely. When we have these conversations with people, some of the things that people say to us is, Well, you know, that's something that's that trustees interpretation of the law and we say, look, that's fine - that's their interpretation of the law. And it doesn't help that there isn't really uniformed decisions. But then, in the industry in which we operate - and we're also (my business partner, Charlie and I) are both qualified lawyers - you can ask one lawyer, one opinion, and you will get a different opinion from someone else. And even in our own business, Charlie and I don't always agree on the same thing. But again, it does frustrate us that there isn't that uniformity. And to give you a really more recent example, I was speaking to someone who said: 'in the self-managed Superfund space, if the financial order is prepared to sign off on that, then you know I don't have a problem with that'. And in those instances we're seeing what I would say is one party or partner in the fund who was subsidising very heavily the cost of advice for the members of the fund, but it's being signed off by a financial order.

Anne Fuchs: So your advice to advisors around sole purpose test and these issues of fee for no service that have arisen from the Royal Commission. What would you say to them? Take it seriously at your own peril? Or am I being too grave?

Rhett Das: No, I think that this is an area that will start to receive more focus and another thing that we now do is also perform quantitative analysis on file. So we will look at the advice files now and say to an adviser, look based on the fees that you're charging or the costs that are coming out of this fund, the client just can't recover. Or it's going to take the client two years to recover the upfront fees and all the ongoings. And the interesting thing, too, is we're seeing other trustees like Sunsuperwho are being more proactive now, who were asking the question. I had one client that I still work with, who we had warned him and said, 'Look, you know, your fees are in our view on the higher side, how you articulating the value and do you realise you know, that you're a risk?' And he sort of laughed it off to start with. But then, about a month later, he actually got a letter from one of the funds saying, 'Can you please explain your fees and what you do?'. So I think we will see more of this and I think trustee obligations as you pointed out will force people's hands.

Anne Fuchs: Well, look, I'm sure you have never been busier when it comes to compliance, and certainly every year I I feel like the last 10 years the change that just continues when it comes to compliance and legislation in financial advice. And certainly I hope that what comes out of this will be trust, and five years from now, everyday Australians have a higher degree of trust in financial advice because of the pain that's being experienced now. And I commend you for the leadership you've taken Rhett for many years around that very high bar that you set for compliance, and I know you are very well regarded by many licensee executives and advisors around the country for the work that you do. So thank you so much for coming in today.

Rhett Das: Thank you.

Anne Fuchs: And you're getting on a plane back to Melbourne now?

Rhett Das: I am.

Anne Fuchs: All right. And listeners, thank you, thank you so much for listening. It's been another really interesting episode on the New School of Super, and we look forward to you joining us again soon. Thanks.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 16

Your super post federal election

Sunsuper Chief Economist Brian Parker is back on the mic with Anne Fuchs, Head of Advice and Retirement, breaking down the federal election outcome and what’s affecting the global economy. It’s must-listen material if you want to know how your super could be impacted as our country moves forward with a newly formed government, and political issues around the world impact global and local financial markets.

Launch Podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper’s Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper’s podcast series covering investment markets, money matters, your superannuation and most importantly, making sure you live your retirement dreams. Now again, Brian Parker, our Chief Economists extraordinare here at Sunsuper is sitting opposite me, and he's going to be talking all about investments today because we are living through extraordinary times, and that's incredibly important when it comes to your super. And for those of you who don't know me, my name is Anne Fuchs, I'm Head of Advice and Retirement here at Sunsuper. And the team and I work hard every day to make sure our members are living their best retirement.

Brian Parker: Thanks very much Anne, it is great to be here with you again. And as always, before we start, we need to let you all know that we're going to talk today; what we're going to talk about today is just general information only. Any advice does not take into account your personal situation. You should consider your circumstances and think about getting a personal advice before acting on anything we talk about. You can also get a copy of our product disclosure statement from our website or by calling us on 13 11 84.

Anne Fuchs: That was beautiful. I'm sure you'll get a gold star from the compliance team, Brian for that one. Well done.

Brian Parker: Thank you Anne.

Anne Fuchs: So two weeks? Oh no, it's probably much longer. Actually, I'm losing track of time. Weeks ago, weeks ago, there was an election where Sports Bet didn't do too well in terms of paying out as to what the result was going to be.

Brian Parker: Yeah, I think that was written off to the marketing budget I suspect.

Anne Fuchs: I Suspect so? So I mean, besides the fact that everyone was very surprised by it. What did the stock market do? Was the stock market surprise? Has it had an impact?

Brian Parker: Well, not a lasting one. I mean, what you did see on the day after the first trading day after the election? You did see bank share prices, for example, rise really, really sharply

Anne Fuchs: They were euphoric.

Brian Parker: Yes, absolutely euphoric. But really, that reaction settled down fairly quickly. The bottom line for us is that has the economic outlook materially changed post the election. And the answer really is no. Or at least it hasn't changed because of the election. The Australian economy still has fairly significant challenges. Those challenges were with us before polling day, and those challenges remain well and truly in place.

Anne Fuchs: Well, speaking of challenges we have had, the trade wars are heating up again, and I think Australia narrowly avoided a tariff against us. I think - was it steel or…

Brian Fuchs: Or aluminium?

Anne Fuchs: Aluminium it was. I sense that this problem isn't going to go away in terms of the U.S. and the and the pressure and the posturing between China and America and whether we’re collateral damage as an economy, what are your thoughts on that?

Brian Parker: It's a really good question, and I think you're right. I don't see the U.S. - China trade tensions being resolved soon. I think this is going to be an ongoing source of uncertainty for financial markets and for the world economy, and you talk about Australia as being perhaps collateral damage. For Australia it's kind of complicated because even though we're not directly impacted, certainly anything that adversely affects world trade adversely effects a trading nation like Australia. Anything that adversely affect our major trading partners, most notably China, obviously, but also the rest of Asia, that also does have an impact on us. But a lot of what we export to China is perhaps not going to be as seriously affected as, say, what other countries in Asia export to China because what you tend to find is that, ah, lot of exports to China from places like Korea and Taiwan, for example, they tend to be things like components that go into China's key exports and say you know IT or electronics, for example, and so anything that targets those sort of exports from China also adversely affects people who supply components to China is that that makes sense, whereas we don't tend to supply that sort of stuff. The stuff that we supply to China tends to go into Chinese infrastructure, Chinese housing, it’s raw materials of steel.

Anne Fuchs: Okay then my question to you then Brian, so the Reserve Bank of Australia cut rates a couple of weeks ago and there was a sense actually after the election - it's a bit schizophrenic, really - the markets go up and then actually the Reserve Bank of Australia cuts rates. That in itself is quite schizophrenic in terms of messages, and then the sentiment is Australia's in for a bit of a hard time and slower growth. How does that all, how do they all marry, marry up, that we don't wear the risk that U.S does; stock markets go up, but rates are going down?

Brian Parker: Yeah, I think it's really what you’ve really seen is that in the second half of last year, the Australian economy really did slow down to a crawl and most of the data, at least a good deal of the economic data we saw in the first few months of this year, were actually quite soft. So the Australian economy is not doing brilliantly, really. We are seeing a much softer period of growth than we've seen for some time. One piece of good news that people have hung their hats on is the fact that we've continued to generate jobs and that's terrific. However, what we're also starting to see in the data is signs that that job generation is about to slow down, and if that does slow down, it means that unemployment could start to rise. It also means that the modest pickup in wages that we've seen in the last twelve months could also start to stall. That's really been keeping the Reserve Bank awaken night. What the Reserve Bank needs to see is they need to see jobs growth continuing, they need to see unemployment and under underemployment also come down on the need to see wages keeping, continuing to accelerate. There is a risk that process stalls, and that risk is now significant enough to prompt the RBA to cut rates.

Anne Fuchs: So, Brian, I'm going a little bit off script here. But certainly if you look at the election and one of the reasons why the result was probably different to what everyone thought was because of employment and regional Queensland and a lot of our listeners would actually be in Queensland and particularly regional Queensland and, where youth unemployment, I think - is close to - is in the high twenties. So what's your take on, do you have any insights around, you talk about employment slowing overall, is that just a metropolitan sort of capital city phenomenon? Or do you see that as a more, a broader trend?

Brian Parker: Well, again, we tend to deal in the macro aggregate. So if I look at the aggregate data across the economy, that's, that's really the picture we are seeing. We're seeing the risk of an overall slowdown and jobs growth. But in certain key regions of Queensland, in certain key regions of WA, you've started seeing mining activity ramp up again. So we're getting really, really good prices for coal and iron ore at the moment. And we're seeing very good volume growth in a lot of our key mining exports. Mining is one actually source of strength of the moment. But the reality is, for the rest of the economy, things that perhaps not quite as rosy. Retail sales, for example, are really quite soft, so retailers are doing it tough at the moment. Especially smaller retails are doing it quite tough. The financial services industry, for example, in the wake of the Royal Commission, you saw quite a sharp slowdown in hiring in that industry, not surprisingly; and, so it's what mining is doing well and key regions that are benefiting from that mining activity. They're doing quite well. But the rest of the country, perhaps not so much.

Anne Fuchs: So what's the lesson to our listeners in terms of, you know, what I'm hearing is uncertain times, complicated times. If you were to make a prediction, would you be able to make a prediction? Or you probably wouldn't be sitting opposite me, would you?

Brian Parker: No, if I could tell you where markets are going to be in the next six to 12 months, I'm not sure I'd be here. I'd probably be at my farm house in Tuscany, drinking my own body weight in candy, which is a lot of candy.

Anne Fuchs: That would be a sight to behold, Brian.

Brian Parker: I think the keys messages that we would like to get across to listeners is firstly, look, the last decade really has been a very, very good period for investment returns. You've seen quite decent global growth, and you've seen a strong recovery and share markets from the depths of the GFC. So the view through the rear-view mirror actually looks really good. But frankly, when you're investing money, investing money is like driving a car in the rear-view mirror is useful, but the windscreen is far more important and the view through the windscreen is more challenging. We are in an uncertain world. We're in a volatile world. We are seeing a slowdown in global growth. And I think what we need to understand is that over the longer term from here, investment returns are likely to be lower than the kind of returns that were achieved in the last decade.

Anne Fuchs: And for our listeners, there are a number of, we've had a couple of other episodes where we've discussed unlisted assets and this asset class is incredibly important for those uncertain times in terms of smoothing out the ride for our members. And I would encourage you to go back, and we, where Brian and I have done a deep dive and had a bit of a chat in more detail around why this is incredibly important to protecting your retirement savings.

Brian Parker: Absolutely. What we tend to find is that during a major market downturn, having a substantial exposure to unlisted assets in your portfolio, it doesn't mean that you're immune from these market downturns. But it does help soften the blow somewhat.

Anne Fuchs: Well I think, I hope our listeners have enjoyed today. I certainly have. It's been an extraordinary year so far, again, I can't believe we’re six months plus into it. And it will be interesting to see where we finish. I wish you had actually made a prediction, Brian, because I'd like to have held you to it. But you've weaselled out of that one.

Brian Parker: I know it was a gift what can I say.

Anne Fuchs: well to our listeners thanks again. Thanks for listening to the New School of Super, and Brian, it's been fun, as always.

Brian Parker: Thanks, Anne. Talk to you again soon.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 15

Three things to fast-track your super this new financial year

Is this financial year the one you’ll make sure your super is on the right track to help you achieve your retirement dreams? Sunsuper’s Dream Team shares three simple steps to get your super revved up today so you can be ready to ease back in the future.

Launch Podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper’s Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the new School of Super, Sunsuper’s podcast series, covering investment markets, money matters, your super, and most importantly, making sure you achieve your retirement dreams.

With me today is our Chief Economist, Brian Parker, from Sunsuper. He's an extraordinary man, he knows so much about investments and the like, and how to build investment portfolios, and today we're going to be talking all about getting financially efficient in the new financial year.

For those of our listeners who don't know me, my name is Anne Fuchs and I head up Advice and Retirement, and our team, we're all about making sure our members fulfil their retirement dreams, and I guess I'm incredibly biased because it's not just investment markets that make sure you live your retirement dreams. It's great quality financial advice as well, so, Brian, it's good to see you!

Brian Parker: Great to be here again with you. And as always, before we start quick word from our sponsors, we need to know that we're going to talk about…

Anne Fuchs: Compliance?

Brian Parker: Yes, exactly. We need to let people know that what we're going to talk about today is general information only. Any advice doesn't take into account your personal situation. You should consider your circumstances and think about getting personal advice before acting on anything we talk about today. You could also get a copy of our product disclosure statement from our website or give us a call on 13 11 84.

Anne Fuchs: So Happy New Year to you. I cannot believe we’re - it's winter. I don't understand where the year has gone, and I feel like as I age, the year just speeds up. I don't know if you feel the same, Brian.

Brian Parker: I have done for years because I'm older than you.

Anne Fuchs: And it was only your birthday recently and you would be thinking -- are you paying attention to your super Brian?

Brian Parker: I am. I am.

Anne Fuchs: because we are here today to talk about what's really important when you're paying attention to your super and so, are you - you're not one of these, you're not a smoking cardiologist or a plumber with leaking taps?

Brian Parker: No, I'm not. I do actually pay a lot of attention to my super, but I also invest in the same superannuation that our members do. It's important for the job I do that we have to eat our own cooking,

Anne Fuchs: You eat you your own cooking - as do I. And I think for our listeners there is a simplicity to this. There are three key rules. That simplicity that this to get it right. And it's not rocket science. Actually, the heartbeat is just getting off your behind and doing it and taking that first step. And so, what Brian and I wanted to talk about today is, what are those three things so that you can sense, you can feel motivated to do it yourself. So, the first one, you need to look at your super when you superfund emails you your annual statement, open it up. If it's a letter or an email, don't delete it or throw it in the bin with the envelope closed. Open it up.

Brian Parker: I couldn't agree more, and actually, I hear a lot of people say “oh, but I don't want to, it's too much to read”, and I always come back and say, tell people “look, it's your money. Read it. It's not their – we don't put it out there for our own amusement”. We put it out there because it's important. So always remember, this is your money, and we should really get involved in in actually making sure it's invested properly.

Anne Fuchs: I mean, I think, too, that this might be more so with women than men and that they don't want to open it up because they're quite frankly depressed of what the number that they're going to see on the piece of paper. And so, the sort of the head sticking your head in the sand mentality if I just sort of closed. If I don't open it up, it's not really and it's not there. But in fact, that's actually the wrong approach. Because if you open it up and actually just accept the number for what it is, and then actually put up your hand and say ‘How long? What do I need to do? How long is this going to last in retirement? What more can I do?’

Brian Parker: Absolutely. And the second thing that we want -- a second key message we want to get across is that we need people to actually pay attention, to how the superannuation is invested and also, related to that, to make sure that the way their super is invested is right for them because everybody's different. Everybody has a different appetite for risk. Everyone's at a different phase of life. Everyone has different financial needs and goals. And so, we need to make sure that the way our super's invested is actually right for us. And again, it's not easy to do on your own, but certainly on the Sunsuper website, for example, is a whole heap of tools on a whole heap of things you can use to help make sure that the investment option you have is the right one for you. And I always say to people that may be the best guide. If you think about what kind of investor am I and how, how willing and am I to take risk, I apply what I call the sleeper dye test. If you're doing something with money which is causing you to lose more than about two minutes of sleep at night, then you're taking too much risk.

Anne Fuchs: So sleeping at night can never be overrated.

Brian Parker: Yeah, that's right, and especially when you get into, as you approach retirement and especially as you enter retirement, because one of things we find is that if you’re unlucky enough to encounter a major share market downturn, for example, just before you retire or just after you retire, that can do some serious damage to your retirement dreams. And so that's why, for example, if you're invested in Sunsuper’s default option the lifecycle strategy, what we do for our members in that strategy is that we very, very gradually reduced their exposure to growth assets such as shares for the ten years leading up to their retirement or ten years leading up to age sixty five. And we do that very gradually because we don't want our members of retirement to be ruined by major stock market downturn just before they go to retire.

Anne Fuchs: No surprises. No one likes surprises when it comes to money.

Brian Parker: Correct.

Anne Fuchs: So I think it's worthwhile pointing out too, that there’s a raft of other different investments, aren't there, Brian?

Brian Parker: Well, that's right, and we end up -- we offer twenty investment options. Basically, overwhelmingly, Sunsuper members tend to be invested in the lifecycle approach. That tends to be the default option for most of our members, but we, as I said, we do offer a range of other investment options, and this is really where financial advice becomes so much more important. And I know there's something you're particularly patient about.

Anne Fuchs: Well, certainly we know that our members who have sought advice are much, much better prepared for their retirement. And certainly, I believe you go to work hard every day. This money's getting put away for you. You're…you must do your bit to make sure you're maximising every bit of those retirement savings, so that when you are retired, you get to have get to have the life you deserve. And advice is one of the most powerful enablers towards that. You know, besides the fact that you actually end up with more money there's a - we have proven that through some research the value of advice research, which you can find on the Dream Project website, and there are a number of case studies that show the numbers and the strategies, to prove you wealthier, which is great, but also too there's a whole lot of - to your earlier point Brian, about the sleep at night factor -because we know money causes mental health issues, relationship strains, and just self-esteem issues in their own right; and the research that we undertook was very clear that our members - eighty percent of members had confidence once they had financial advice, they actually could make informed decisions about their money, and they weren't second guessing themselves. And I know, I'm sure there's many people who listen to this podcast that second guess themselves when it comes to money. And it's not a good feeling.

So I think we've got so the lessons today, Brian, if I can recount them; so the first one: open your annual statement.

Brian Parker: Have a look, exactly; open your annual statement. Two: find out how your super is invested and make sure that the way it's invested suits you, make sure that the way it's invested is right for your particular needs.

Anne Fuchs: And lastly, pick up the phone and call us to see whether you could benefit from some high quality, trusted financial advice. I promise you, your future self will be incredibly grateful when you were drinking a beautiful quality of red as opposed to a cheap bottle of red or going on a great holiday, as opposed to one locally that you've gone to for years and it's getting a bit boring, promise me, that’s my final words to the listeners, I say that with conviction and Brian, it's been great. I bid you farewell.

Brian Parker: Thank you again and we'll speak again.

Anne Fuchs: Speak again. Thank you, listeners.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 14

How a local business can make a real difference to people with special needs

Anne Fuchs, Sunsuper’s Head of Advice and Retirement, chats with a remarkable young woman who has created a profit-for-purpose business employing Australians with special needs. Nipuni ‘Nip’ Wijewickrema started GG’s Flowers and Hampers to get her sister Gayana off welfare and into a purposeful vocation — and won the inaugural Sunsuper Dreams for a Better World Business Grants Grand Final.

Launch Podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper’s Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper’s, podcast series covering money markets, investments, your superannuation and most importantly, helping you achieve your retirement dreams.

Now, today's somewhat of a different episode, I have to say the illustrious Brian Parker, my -normally my partner in crime, the Chief Economist here at Sunsuper isn't with me, but I have someone sitting in front of me, who is wearing the most beautiful yellow blouse and her name is Nip and she's all the way up from Canberra, from cold Canberra to Brisbane from GG’s Flowers and Hampers. And we're talking today with me about employing people in disabilities and the benefits of that can have to businesses, to communities and families. So, it's really good to have you here today, Nip!

Nip Wijewickrema: Thanks so much Anne, normally I'm wearing pink, so happy to change it up a bit. Good.

Anne Fuchs: Yellow's very Sunsuper! I have to say your in-brand, though you may not have deliberately done it. Now, before we begin, we’re - what we're talking about today is more is learning a lot and hearing about Nip’s experience. And it's about, I guess, predominantly focused for our small business owners. But certainly, anyone that's listening, we just wanted to share with you that this is just general information only. And if you're thinking about superannuation more generally, that you obviously can always contact Sunsuper and get a copy of our product disclosure statement or contact us to seek financial advice and you can call us on 13 11 84.

So before we begin, let's talk about Dreams for a Better World. And you know, this is a way, this is a programme, or a way of Sunsuper giving back to the community. How does a woman such as yourself, a small business owner in Canberra, even come into contact with this programme?

Nip Wijewickrema: I know it’s a little bit surreal, and I can't kind of believe I'm sitting here at Sunsuper’s headquarters in Brisbane when I'm normally kind of used to, you know, my garden shed in Canberra, where we deliver flowers and hampers. So, I suppose around about this time last year, a bit later, I came across the Dream for a Better World grants, and I was really inspired by the incredible amount of support that Sunsuper was putting behind small businesses like mine.

Anne Fuchs: So how did you find the grants, even? Like, how did you even get to that point where you found the grants? Tell me. Just rewind a little.

Nip Wijewickrema: Let's rewind. Yeah, I think it was via social media. Anyone that knows me out there knows that I love my social media, and I'm sure a few people sent it to me, and sure, I just saw and I thought “you know what? That has our name written all over it”. And I really wanted to be aligned with the brand, like Sunsuper as well; so I just thought, “You know what? I'm not going to win, but let's just put my hat in the ring”.

Anne Fuchs: And so you applied?

Nip Wijewickrema: Yes. I applied online through a really, really easy process, I might say, and it was just, you know, like as someone that applies for grants, all the time, sometimes they can be super complicated and super hard, and you just feel like it's not even worth it. But it was great, it was easy, it was a breeze, and I'm so super glad I did it.

Anne Fuchs: And you're…tell our listeners a bit about your business and why you've become a finalist in the Dreams for a Better World.

Nip Wijewickrema: So GG’s Flowers and Hampers is a florist and gift hamper business that provides meaningful employment for people with special needs. I started the business seven years ago for my little sister, Gayana, who's very cheeky, and she has down syndrome, and I really wanted her to have a job, and I really wanted her to have a purpose in life. And so obviously we built a florist in our bathroom and, you know, and then a few months later, we moved all the way to the garden shed, and from that, we just kind of grew from strength to strength, and we were delivering flowers every day, and then we started doing gift hampers, and the gift hamper aspect of our business has become kind of our core business, where we provide people with special needs with meaningful employment. We pay them award wages, boring things like super, but also make sure that they're participating in our economy in Australia.

Anne Fuchs: here at Sunsuper we think super is not boring; we think it’s fabulous it's fabulous, fabulous! No, I'm just I'm teasing, I was being a bit cheeky there.

Nip Wijewickrema: No, absolutely. I even said it on the Dreams for a Better World gala night, I said “You know what I used to think super was so boring, but it's only until you talk to a person with a disability that really values their super. That's when you really realise how life changing it can be”.

Anne Fuchs: So I know I was watching Employable Me on the ABC quite a few weeks ago now, and I found it just so inspiring, and just the impact; you don't think about people being left out of the workforce just because they have a disability and what that impact might have on their families and their self-esteem, and also the loss - to your point earlier around -the lost economic value for the overall contribution they make to productivity to Australia. Tell me, what are the statistics around people with a disability, do you have any? You know, sort of facts you could rattle off that you might have pre-prepared earlier around that?

Nip Wijewickrema: So, you know, and I haven't just pre prepared for this; like, there are in Australia, there are 4.8 million people with a disability, and of 4.8 million, only 27 percent have employment. So, that basically means that 73 percent of Australians living with the disability right here right now are unemployed and therefore welfare dependent. And, you know, and for me, when I was doing this research years and years ago, I realised that obviously when they're unemployed than they’re welfare dependent; well, then let's delve a bit deeper into that kind of look at their welfare system. And actually, their payment is only about $445.15 a fortnight. And so how can you kind of live off that? If anyone's met my sister, they will know that she is a very tough crowd to follow. And, you know, she really likes getting her nails done. She really likes going out, but obviously, on her $445, she could never do that. Which is why economics participation for a person with a disability or anyone on the welfare system is really, really important if they want to live.

Anne Fuchs: I guess too, it's the fact that that amount of money is not going to pay the bills. And so, then there's the impact, the flow-on impact to the families, to make up that shortfall, isn't there?

Nip Wijewickrema: Absolutely. I used to joke that the only reason I worked with to pay for her life [laughs]

Anne Fuchs: Your sister, I have to say this, is so lucky to have you, that big smile that you have in your face and the Passion. So if you're a small business, we have over 90,000 employers around Australia, could even be close to 100,000 now employers around Australia, and I'm sure many of them having a disability - you said 4.8 million Australians - so there's lots of employees that would have people in their lives who have a disability. Where would you even start in wanting to employ someone with a disability in the business? And what are the benefits for doing it?

Nip Wijewickrema: Look, and I will always throw my hands up in the air and tell you that over the last seven years I have had, you know, it's been a really it's a bit of a roller coaster and employing people with disabilities is in no way like you can't liken it to a walk in the park. It's a complex workforce, but you do it because you want to do good business. And as small business owners, you clearly want to do good business because that's why we're all in the same game, right? And, I think that for me personally, I have thousands of people that want employment from me because they acknowledge that we're providing a really safe, compassionate and caring workplace, and we're doing it in a really meaningful way, and we're not taking advantage of anyone or anything like that. However, you know, every day I'm approached by other small businesses that want to do their little bit to employ a person with a disability, and my kind of tips for that would be to reach out to disability organisations because often they have people that are desperate to work or desperate to volunteer. You know you don't need to necessarily give them a full-time job off the bat. It could be well, why don't you just come in for three hours a week just to kind of get to know everyone in the office and, see what's happening and kind of do it gradually and then offer them employment.

Anne Fuchs: And you make a good point, I mean, a small business - and Queensland, I have to say is a small business state, like fundamentally, our economy is a small business economy up here in Queensland and small business, it's a hard game and a lot goes on the line. So why you spoke about being good business? How is it good business employing somebody with a disability?

Nip Wijewickrema: So I think that in large corporate organisations which I'd kind of never really - don't have much background too, because I've never really worked for a large corporate. But I actually think that it's quite difficult to bring on a tiny little change like that, whereas in a small business where you're agile and you can make decisions quickly and you can tinker and tailor, it's actually easier to employ someone that perhaps has complex needs because you can adjust and see what's working and what's not working and react very quickly to something like that.

Anne Fuchs: What's the impact on the other staff who don't have a disability? What is it and the culture of the organisation?

Nip Wijewickrema: Look, I speak to thousands of organisations every month about the culture and it's proven that when you employ people with disabilities and additional needs in your community and include them in your community, your community is going to grow and it's going to become stronger because then you…it’s inclusion, it’s acceptance. It's moving away from tolerance and moving to acceptance and making sure that we're all on the same page because at the end of the day there are people with special needs all over, and just because it's not diagnosed doesn't mean it doesn't exist. And, I think that's really important to realise that no matter where you turn, there are people of different abilities around, and it's just about identifying that.

Anne Fuchs: Your conviction and quite frankly, raw leadership qualities around this arereally compelling. You know, I've just met you today and is dreams like, what is your vision? This platform of Dreams for a Better World? What is your vision? Where do you go to from here? How do you use this conviction and your leadership qualities to really change the landscape? What are you thinking?

Nip Wijewickrema: So I started, you know, with this dream for my little sister to just make sure that she had enough money to paint her nails. That's basically what I wanted to do. And now it's grown from this to this vicious beast that we feed every day, and we deliver flowers and we deliver hampers. And so, I'm really committed to economic participation on people with disabilities paying award wages and providing a safe, compassionate and caring workplace for them; and then in turn leading hopefully the rest of Australia to do the same. You don't have to build a florist in your bathroom to do it, but just in small little ways you, can tinker and tailor it to make Australia a more inclusive place.

Anne Fuchs: Have you met, has it given you, has the Dreams programme given you more of a platform or networks that you can tap into to help accelerate your dream for this idea spreading across the country?

Nip Wijewickrema: Absolutely. I've been absolutely floored by the generosity of Sunsuper, but also of their partners. You know, they have really embraced what we're doing, and that's actually quite an important point too is, you know, we're a small business from Canberra. Not very many people know about us. And then a huge giant like Sunsuper comes sweeping across, puts us on TV ads, puts us on their Facebook and really gives us a platform to share what we're doing, which is kind of in two ways, obviously selling our gift tampers but also in a way, promoting inclusion and promoting people with disabilities in the work force.

Anne Fuchs: Do you think in terms of going back to the good business sense that you're, that you're actually acquiring more customers and more goodwill for your brand? And as a consequence of this policy that people are actually choosing to do business with GG’s Flowers and Hampers because of your policy, as opposed to just another florist up the road that doesn't do this?

Nip Wijewickrema: I hope so. You know, it's a very, very hard process and it's a slow process, but hopefully as time goes, it's going to get bigger, and it's going to strengthen people's loyalty and also acknowledging that it's a really good way to do. You know, the way you could buy a gift hamper from down the street and you could spend the same money. Or you can come to GG’s, and you can actually change a few lives in the process.

Anne Fuchs: So and one final question before we wrap up, I guess if you are thinking about employing somebody with a disability, and you said to, suggested to go to a local, like a local...what was the organisation that you, was there anyone in particular?

Nip Wijewickrema: Any disability organisation.

Anne Fuchs: Any disability organisation. And in terms of knowing how to integrate them into the workforce and finding that, I guess the scaffolding, so they've got the needs, that they've got their needs well cared for. What would be your advice? Is there any resource centre that you would you would recommend?

Nip Wijewickrema: Look, in Australia, we are truly blessed. We have the National Disability Insurance Scheme, and that is something that no other country has. It means that people with disabilities are finally supported, and it's about utilising that, you know, it's about utilising their plans, talking to their parents or talking to the support organisation that's providing them with support and seeing how they can have, you know, if they need a support worker, if they need mobility, access or what they need in order to be a really great asset to your business.

Anne Fuchs: Okay, so it's the NDIS that provides that support and would help provide the guidance to the employer that was thinking about doing this. Absolutely. That's really incredibly informed, informative Nip. So congratulations again. Thanks so much for coming to Brisbane and to coming into Sunsuper and for the inspirational work that you are doing. You're…it’s so exciting to see young, dynamic, powerful women out there making the world a better place. So thank you for doing your bit.

Nip Wijewickrema: Thank you so much for having me.

Anne Fuchs: so listeners, if you wanted to make a difference in your local community if you've been inspired what you've heard Nip achieved today. There are small business grants available through Dreams for a Better World on that website, and you can see also some stories from other small businesses and the like that have made a difference in their local communities. And there's a beautiful video of Nip and her sister, and so you can get to see this lovely lady that I've spoken to today. Thank you very much.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 13

Interview with Gus Sauter, former Vanguard chief investment officer

In this special New School of Super episode, Sunsuper’s Head of Advice and Retirement Anne Fuchs speaks with Gus Sauter, former Vanguard Chief Investment Officer and external adviser to the Sunsuper Board Investment Committee. Gus was responsible for overseeing $US2 trillion in funds under management at Vanguard – more than the total value of Australia’s entire superannuation pool. So you don’t want to miss his views on passive vs active investment management, the power of the mutual or profit-for-member fund model, and what could be in store for global financial markets.

Launch Podcast

Intro: Welcome to the New School of Super. A fresh look at money matters, your super and the things that could affect your financial dreams now and in future, with Sunsuper’s Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper’s podcast series covering money, investment markets and, most importantly, helping you achieve your retirement dreams.

My name is Anne Fuchs and I'm Head of Advice and Retirement here at Sunsuper, and the team and I we’re incredibly passionate about making sure our members fulfil their retirement dreams. Now, I have a very special guest here today who is going to trump Brian Parker. But before I do that, I need to read out the compliance terms and conditions, so I stay in the good books. So, before we begin, I just need to let our listeners know that we're going to be talking today about financial advice investments, but it's general information only, and any advice doesn't take into account your personal situation. You should consider your circumstances and think about getting personal financial advice before acting on anything that my special guest and I are talking about today and you can get a copy of our product disclosure statement from our website or by calling us on 13 11 84. So, I did that the out-trumping Brian on purpose. And for our listeners, you would know Brian Parker, our Chief Economist here; and I deliberately used that term because my guest today is -- has the same passport as the man I just referenced. That's probably all that's about similar, with me is Gus Sauter, the former Chief Investment Officer from Vanguard and is on this Sunsuper Investment Committee. This man managed more money than the superannuation system in Australia together, close to $3 trillion dollars. Gus, it's so lovely to have you here.

Gus Sauter: Thank you. And it's great to be with you today.

Anne Fuchs: And I understand you landed yesterday. So, you're you finished your jet lag, you had a good night's sleep?

Gus Sauter: I slept eleven hours, so I'm ready to go.

Anne Fuchs: Okay. Good stuff. So, for our listeners today, I thought we could have a bit of a rambling chat with Gus, this man has a wealth of experience working for arguably the most trusted and well-known fund manager in across the world, but also to, just his insights from a career perspective on what got him to where he's got to in what is an incredibly challenging environment. So Gus, do you mind if we start there? What did you study as a boy? Did you know you'd end up where you are here today?

Gus Sauter: I had a strong interest in investing from really about the age of ten or eleven. And I made my first investment in the stock market when I was about eleven years old. So I studied economics, math and finance when I was in school. And I think that's really what prepared me for my career.

Anne Fuchs: And did you know that? Did you move to New York like, you know, like Madonna did, she moved to New York to start a career bright lights, big city? Or was it something that just was more gradual and less premeditated?

Gus Sauter: It was less premeditated, and in fact, I made a commitment to myself that I wouldn't go to New York. And fortunately for me, I worked for Vanguard, which was located in the suburbs of Philadelphia. So, it was kind of like the perfect setting for me.

Anne Fuchs: So what, you've come to contribute to the Sunsuper Investment Committee. Tell me, how did that come about?

Gus Sauter: When I retired from Vanguard about six years ago, Sunsuper had a strong relationship with Vanguard. And when I became available, I think Sunsuper wanted to hear a perspective, a different perspective from a traditional Australian perspective. And so they were looking for somebody, perhaps that I just had a slightly different point of view that could maybe help out.

Anne Fuchs: And so, one of the things we've spoken about in the past, things like unlisted assets, an asset class that's probably not used by retail investors over in the States but quite prevalent here, particularly for Mum and Dad investors within the superannuation. What are your thoughts around that is? An asset class and from a portfolio construction perspective?

Gus Sauter: Yes, you're correct. In the U. S. People really think of the publicly traded assets, stocks, bonds and cash, and that's where most of the money is, at least on the individual side, in the financial advisor community as well, for the most part. When you get to endowments, then you start talking about unlisted assets, and I think it's a bona fide asset class that certainly accomplishes broader diversification and historically has frequently provided extra return as well. So, you think about private equity versus publicly traded equity. Historically, private equity has provided a little bit of a premium return over public equity. And so, you know, it has been a way to improve your results overall.

Anne Fuchs: And from a returns perspective, you're twenty or twenty five years of Vanguard. Well, was that that was it? That long, yes?

Gus Sauter: Yes, twenty-five years in two months.

Anne Fuchs: Okay, there was a sense there was a little bit I didn't get it exactly right. So, over those years, did you – from a, from achieving, it returns perspective. Is it all about our asset allocation? Is its stock picking? Is it a mix? What, What are the key drivers for delivering return for investors?

Gus Sauter: So, asset allocation deals with beta. It's deals with the returns in the marketplace. Whether the marketplaces, stocks or bonds or cash, stock picking or security selection is really trying to do better than the asset class itself is doing. And so really, that's the difference between an alfa and beta. Quite clearly, alfa is swamped by beta, so asset allocation clearly is the most important decision you will make; should you be in stocks, whether it's publicly traded or privately listed, should you be in bonds or cash and then the question and just being in those asset classes can give you a very attractive rate of return. And the question is, can you do better than that? And should you engage in stock picking or trying to find positive alfa and I think it's worthwhile trying to do that. If it's done very well, it's a difficult game, but if you're very sophisticated, you can actually enhance your return.

Anne Fuchs: I think what's fascinating about you, Gus, is that you -- you lead the investment house of what’s seen as the leader, the home of passive investing, where, ironically, I know you're incredibly passionate about active investment, so can you explain the paradox that that is?

Gus Sauter: It's kind of funny. When I first started at Vanguard, three percent of our assets were passive index and we helped grow that industry at the time we were really the only player in the index mutual fund industry, and we grew that into a very large portion of our business. Today, it's about seventy or seventy five percent of Vanguard's assets. But the other side of that coin is about twenty-five, or thirty percent of Vanguard's assets are actively managed, and I personally -- the funds that I managed for about eight or nine years were actively managed. So, I believe in indexing. I think it's a very appropriate way for many investors to invest. But if they have additional skill and can identify good managers, then they should complement what they have through active management as well.

Anne Fuchs: Are there any insights you have for our listeners, Gus, around, particularly our listeners who are financial advisors themselves around trends from an investment perspective? Over the last probably five to ten years, Vanguard here in Australia has grown enormously in popularity with the cool versus satellite investment approach. There any sort of insights you could share with our listeners around investment trends for advisors in the US.?

Gus Sauter: Well, certainly that same trend is developing in the US, where indexing has grown substantially from really modest beginning just thirty years ago. And so, we are seeing this core satellite type of approach. We're starting to see a lot of fads as well that by using the term fad, I think that tells you a little bit what I think of it.

And a lot of that tends to be more marketing than substance. I think if you really think of this core satellite approach and then trying to get the right mix, how big is the core? In other words, how much of just trying to do mark market rate of return through indexing versus how big is a satellite? Aggressive? Are you trying to complement what you can get through the core of by way of active management? And that's that's really, I think, the big the big game. It's not all of these fads come and go.

Anne Fuchs: I think I haven't sort of worded you up before, but I really do commend Vanguard in their leadership around Advisor Alfa and the work that you've done. I'm putting you on the spot here, but you could you explain a little bit more, is there any advice to our listeners around Advisor Al, from what that means?

Gus Sauter: About twenty or thirty years ago, the adviser community was very different from what it is today used to be, that advisers would pick individual securities, and that was really what they were hired to do. We think that today advisers have evolved into something different from that, really their biggest…

Anne Fuchs: value, that they can add

Gus Sauter: the biggest value

Anne Fuchs: contribution, I guess.

Gus Sauter: the biggest value that advises today is determining that asset allocation and then how to implement that asset allocation. Should it be with passive, should it be with active? And can they find the right active managers as well? So, it's not -- it's no longer about security selection.

Anne Fuchs: What about - What about, I guess, the role of costs as well of investing.

Gus Sauter: You know, the interesting thing about investing we or about other aspects of our lives we think about you get what you pay for. The interesting thing about investing is you get to keep what you don't pay, and in fact, if you keep more, that's a better return, and you're better off. So cost is extraordinarily important when it comes to investing in it. So, it's the best predictor of future performance. There have been many, many studies, academic and practitioner studies that show the lower cost investing the better your future returns tend to be so. So cost is critical to success in the investment industry.

Anne Fuchs: And so on the Sunsuper Investment Committee, what are, I guess the themes you mentioned earlier that you were brought on board to sort of add a different level of thinking to our investment committee. Is there anything in particular that you're challenging the committee on to think differently about?

Gus Sauter: Well, you know, it is coming with a slightly different perspective. I mean, we all have studied finance. Everybody really understands investing. I grew up in a different environment in the U. S. than what you experience here. Different regulatory environment. And so, there is a slightly different way of thinking, and I try to bring what I experienced in my career to the investment committee and really kind of play a devil's advocate and some opportunities where I challenge what the status quo thinking might be. Or just try to add something that maybe we experienced in the US that you haven't experienced here. So really, just trying to add little things here and there certainly not change anything, major.

Anne Fuchs: Okay, well, we've certainly been through an extraordinary – speaking of change - we have been through an extraordinary amount of change in financial services generally, as I mentioned to you earlier with the Royal Commission, and one of the things we've spoken about is the power of the mutual. The member-owned superannuation and is a big segment of the market, is obviously member owned or industry fund, we’re profit for member here it Sunsuper, and it's turned out to be a huge competitive advantage. But tell us about the US landscape when it comes to mutuals and your learnings as Vanguard is probably one of the few mutuals that exist in the U. S.?

Gus Sauter: Yes. Among asset advisers, or asset managers, Vanguard is the only mutual structure in the US. Mutual or member ownership is common in the insurance industry in the US, but not at all in the investment industry. It's given us a huge advantage, though I think one that you experience here. We operate with no conflicts of interests. The we have one fiduciary responsibility instead of two. With a traditional manager in the US, they have to fiduciary responsibilities. One is to the members or the investors in their funds, the others to the owners of the management group, and so we don't have that conflict. We don't have owners of the management group. We just have members who are the owners of our firm. So that's been a huge advantage in that same time, It's also led to our low cost advantage being guarded by far or a the lowest cost provider in the U. S. Mutual fund industry because of our mutual structure.

Anne Fuchs: And what do you think in terms of trust in the finance sector in general? Where is it placed from, from a U. S. point of view?

Gus Sauter: Well, trust is everything when it comes to investing. If, if you lose that and we've seen that happen on a few occasions in the U. S., firms have been totally destroyed. When they've done something on toward that has led to a distrust. So, we think it's very, very important that you really focus on doing the right things for investors and do what's appropriate, to maintain their trust in you, your business is destroyed without it.

And it should be.

Anne Fuchs: Yes, it should be pays dividends if you actually act in a fit and proper fit and proper way.

Gus Sauter: There is no question about it.

Anne Fuchs: We've spoken about trust - I guess taking it a step further. You've arrived here from the States yesterday, and our Chief Economist, Brian Parker, is quite reserved, I guess, about market conditions and where we're heading. But we're here in little old Australia, even though he's in the big smoke in Sydney and I'm here in Brisbane. But you've arrived from the United States, which is still the heart of the global economy. What's your take on the next twelve months for any of our listeners?

Gus Sauter: Well, you listen to ten economists and you get eleven different points of view. I think it's more of the same there are two things that typically end a kind of growth economy. One would be inflation and the central banks moving to stop inflation. The other is exhaustion of spenders of consumers, and I don't see either of those happening now. So I think that the central banks, certainly in the U. S,. and throughout the world, will continue to be accommodative. Certainly, no need to try to stop inflation. The bigger risk, I think, might be actually consumers just becoming exhausted. We've been on a ten-year spending spree without pause, so I'm not so worried that I think it's going to cause an end to the growth in the market, in the marketplace or in the economy. But, you know, it's probably a bigger concern of mine and then inflation. But I think more of the same over the next twelve months.

Anne Fuchs: Well, I think before we finish up one question, it's probably a big one. If you reflect back on your twenty-five years Vanguard and then before that is there. Is there anything in particular that you're really proud of, in terms of the legacy you've left for investors, not just to have their money with Vanguard, but in a general sense. Whether it's around the people you've led, anything that you're incredibly proud of, that's your legacy?

Gus Sauter: You know, it's interesting. I worked for five different companies for a year or two when I first started my career out of school, and when I finally got to Vanguard, I realised literally in the first week that Vanguard was a very, very different company and I knew at that point in time that I wanted to retire at some point, not too soon from Vanguard, and the culture was extremely strong. I love the fact that we were actually working for investors for their benefit. It’s a great feeling to think you're working hard, but you're helping people themselves. So I'd have to say that's probably the thing I'm most proud about is what we did for investors, not only in the US but what we've done globally as well as we've expanded internationally.

Anne Fuchs: I commend you on the advocacy around, you know, standing up for investors and the rights of investors. And the growth that you lead is unprecedented and certainly from a Sunsuper point of view, we're incredibly proud to share the partnership with Vanguard and the close relationship that we do have. Being privileged enough to go to Melvin in Pennsylvania and see it’s a fantastic place and actually thrilled that you're here today in God's own country, as I call it, opposite Suncorp Stadium, and XXXX brewery here at Sunsuper. But to all our listeners around the country, Gus Sauter, it's been wonderful to have you. Thanks for listening.

Outro: This has been the New School of Super. For information and inspiration to help you plan your future, manager Super, and enjoy your retirement, visit Or if you've got a superannuation or investment question, you'd like Brian and Anne to discuss, then get in touch at for it feature in one of our future New School of Super podcasts.

Episode 12

Seven ‘super’ steps to strive for

Sunsuper’s Dream Team welcome back Joshua van Gestel, Sunsuper’s National Education Manager, for a round-table discussion on how to maximise the potential of your super. It’s essential listening for anyone wanting to get on the right track to achieve their retirement dreams.

Launch Podcast

Voice-over: Welcome to The New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to The New School of Super, Sunsuper's podcast series covering money markets, investing, your superannuation, and helping you fulfil your retirement dreams. Today is a very special day because with me is Brian Parker, Sunsuper's fabulous and most knowledgeable Chief Economist.

Brian Parker: Thanks, Anne.

Anne Fuchs: He knows everything there is to know about investing and money markets and the economy, but we also have another fabulous special guest today. I call him JVG, but he is technically known and was born as Joshua van Gestel. He's our National Manager of Education here at Sunsuper.

Joshua van Gestel: Thank you, Anne. Good day, Brian.

Brian Parker: Hello, Josh.

Anne Fuchs: We are so happy to have you here. For our listeners who don't know me, I'm Anne Fuchs. I head up Advice and Retirement here at Sunsuper, and the team and I come to work every day to understand our members’ retirement dreams and bring them to life. So, Brian, in the spirit of you being the star child with legal risk and compliance, do you have something to say to our listeners?

Brian Parker: I do, Anne, actually. Thank you for mentioning that. Thanks, Anne. It's great to be here again. But before we start, I do need to let everybody know that what we're going to talk about today is really just general information only. Any advice doesn't take into account your personal circumstances, your personal situation. You should consider your circumstances and think about getting personal advice before acting on anything we talk about today. You can also get a copy of our Product Disclosure Statement from our website or give us a call on 13 11 84.

Anne Fuchs: Beautifully done as always, Brian. Look, I have to say, our last podcast that we recorded a while back, it was about the investing principles. It was seven investment principles you shared with our listeners, and I have had a lot of feedback from listeners saying they loved the current affairs story, keeping your face off a current affair. Not to be outdone, Joshua van Gestel certainly doesn't like being outdone by you.

Joshuaua van Gestel: Not at all.

Brian Parker: Certainly outdone by the Economist, no.

Anne Fuchs: No. Josh is here today to join us. We're extending that theme of investing by seven, but today we're talking about the seven super steps to strive for, that's a bit of a tongue twister, when you want to maximize your retirement savings. Josh, where should we kick off?

Joshua van Gestel: Thanks, Anne. Well, as much as I like to outdo Brian, I think we'll kick off with Brian. One of the first steps is to consider your investment choice. Brian?

Brian Parker: Yeah. Look, I think it's important. The best investment portfolio that any member is really one that they've built to suit their particular needs, and preferably one that they built using the help of professional financial advice. Now, at Sunsuper, we've got 20 investment options, including our default or our Life Cycle Investment option for those who don't make a formal choice, but another 19 options to choose from. You can use those 19 options to build an investment portfolio that suits your particular needs in your particular phase of life.

Anne Fuchs: Making that active investment choice is the first one.

Joshua van Gestel: That's right. I think we'll come back to Brian in a minute just to build on that.

Anne Fuchs: Building is a good terminology, Josh, because the next one is all about building. It's about adding extra money into your super.

Joshua van Gestel: That's right. It's putting in additional contributions above what your employee may be putting in. I think I describe this very much as contributions in nudges. Especially when you're young, you can make these small additional nudges over time. As you wage and get closer to retirement, those nudges maybe need to get a bit bigger. There really are two main ways that you can make additional contributions. One is pre-tax, where you can make salary sacrifice contributions through your employer if they allow it, or you can actually make contributions that you claim as a tax deduction. The second way is actually to make after tax contributions. Contributions from your own savings, which I'll come to a bit later on.

But the important thing to note about both of these is that there's actually a limit to how much you can put it.

Anne Fuchs: That's correct. Yes.

Joshua van Gestel: For pre-tax, it's a $25,000 a year limit generally, and for post-tax, it's $100,000 a year. But the important thing where I'd like to bring Brain back in if that's okay is that by making these regular contributions, by rather than putting in big chunks very rarely, by making small contributions overtime, that actually benefits with compound interest.

Anne Fuchs: Compounding interest.

Brian Parker: Yes, absolutely. Yeah.

Anne Fuchs: Someone called it the greatest eighth. Was is greatest natural wonder of the world or am I making that up?

Brian Parker: Yes, I think it was the eighth. I think a famous Australian economist called it the eighth natural wonder of the world and that economist wasn't me.

Anne Fuchs: I thought you're talking about yourself, Brian.

Brian Parker: But the bottom line is the longer you leave money in the system, the more powerful the effects of compound interest become. I know it's hard especially when you're starting out, when you're early twenties or mid-twenties and you're worrying about, "Well, am I going to settle down into a longer term relationship? Do I need to put money aside for mortgage," etcetera, etcetera. There's all these competing demands on your savings and all these competing demands on your income.

But the extent to which you can put money aside for your retirement, the more you put aside for longer, the better your long-term outcome will be because of the power of compound interest. You provide more time for investment returns to do their job.

Joshua van Gestel: If I could go back to the 20 year old JVG, that's what I'd be telling him I think.

Anne Fuchs: To recap for our listeners, so rule number one was making an active investment choice. Rule number two is adding extra to your super, and rule number three is do it often.

Joshua van Gestel: That's right.

Anne Fuchs: Okay.

Joshua van Gestel: That's right.

Anne Fuchs: Where are we at now? What's number four?

Joshua van Gestel: Well, rule four is sort of linked to the second rule of adding extra is do it in a way that where possible the government's putting in some money in for you as well. There's three ways that the government can really chip in, and for some of these you don't actually have to do anything. Firstly, thinking about if you're a lower income earner or maybe you're working part-time or looking to wind down and seeing your salary reduce. If you earn less than $37,000 year, then the contributions that go in from your employer, they effectively have tax refunded to them. That can be up to $500 a year that goes back in.

If you make a post-tax contribution that I discussed earlier, then if you're actually earning less than about $52,000-$52,500 a year, then for every dollar you're putting in, the government may in fact put up to about 50 cents. That can be up to another $500 a year that is automatically going in from the government. Thirdly, if you actually make contributions towards your spouse, they benefit from seeing their super grow, but you can also benefit by having a tax offset provided by the government to reduce your final tax bill.

Brian Parker: You end up with a happier spouse, which is never to be ...

Joshua van Gestel: That's correct. That's correct.

Anne Fuchs: Rule number five is incredibly important because I think the statistic is one in two Australians will have cancer at some point in their lifetime, and they'll be off work or they'll experience another significant illness and the impact that can have on a family's financial security. Insurance through superannuation. Josh, what do we need to cover off there?

Joshua van Gestel: I think there's two things to think about when it comes to insurance. The first is understanding what you get and the second is then thinking seriously about how much you need and knowing that you're paying for that through an insurance premium, but you're getting value for that insurance premium. In superannuation, there's generally three types of insurance that are offered. There's cover for the event of death if you die prior to retirement. There's cover for if you become totally and permanently disabled. Then there's also income protection cover that you can elect to receive, which will help continue some of your income in the event that you're off work for a short period.

In all three cases, there is as I said a cost. There is a premium that you pay to get access to those benefits at a later date if unfortunately you require them. It's important that you think very clearly about how much cover you want and a bit like thinking about investments and thinking about other financial decisions. Are you happy with the payment that you're making for that cover?

Anne Fuchs: I'll jump in and say this is where financial advice is incredibly important because sometimes it's best to have it in super and sometimes it's better to have it outside of super depending on the definitions and the cover you require. Again, this is a very technical area, but important area and financial advice is the best way to go if you are looking at do you have the right insurance for your family.

Joshua van Gestel: But you're jumping to step seven, Anne.

Anne Fuchs: Oh, goodness gracious. Sorry. I can't help it. I so love my job in financial advice. I'm sorry, JVG. Where are we up to then? We're up to seven, aren't we?

Joshua van Gestel: No, we're up to six.

Anne Fuchs: Six. Of course, sorry. I'm sorry.

Joshua van Gestel: We're up to six, which also leads to advice. Many of us have much more than one super account. I think it's really important that you make sure wherever you've got more than one super account that you track them down, bring them together unless there's a really valid reason to have more than one. The important thing is to note is that if you've got multiple super accounts, each will have administration fees coming off it. Each may have insurance premiums coming off it, going back to our earlier discussion. But the other thing is with more than one account, you run the risk of actually losing track. It's important that much like your back accounts that you're on top of where your super is managing it.

Anne Fuchs: I think actually the government's passing some legislation this week that will see more Australians consolidating their super, which is a good thing.

Joshua van Gestel: That's correct.

Anne Fuchs: Which is a good thing.

Joshua van Gestel: That's correct.

Anne Fuchs: The last one?

Joshua van Gestel: The last one is yours, Anne.

Anne Fuchs: Great financial advice. Look, I was plugging financial advice in the insurance top tip. Tip number five I think it was. Look, money makes people emotional. Money can cause divorce. Money can be the source of domestic violence, illness. Money worries can create awful damage in communities. Great financial advice, trusted financial advice has the power to turn a family situation around through stepping back, looking at what can be done and keeping a family on track.

None of these things that we've spoken about today, making more contributions, salary sacrifice, spouse contributions, investment choice, none of it in itself is particular rocket science per se, but it's being able to navigate it, knowing how to fill in the paperwork, what's the right amount you should putting in. That's where personal financial advice really comes to the fore. Like I would decide maybe I want to get fit and maybe one day I'll hire a personal trainer. There's that accountability piece as well that financial advisors bring around keeping members on track with their savings goals. I am passionate about financial advice.

I encourage our listeners to contact us if they're thinking that they need some ... To action some or all of these steps today.

Joshua van Gestel: I think that properly just to recap, the first step, to make an investment choice. Thank you, Brian. There's lots more information that Brian has been involved in. The podcast and videos and things on their website that can help you there. Second step, adding additional moneys to your superannuation and remembering to do that on a regular basis and making sure that compound interest is working for you. That was really another step in there. Fourth, make the government chip in for you. Make sure that you're taking those opportunities. Fifth, look after your insurance and make sure that's appropriate. Sixth, make sure that you bring all your super together.

Importantly, overseeing all of these and something that's beneficial for each of those steps is making sure that you seek some financial advice.

Anne Fuchs: Well, it's been a heavy episode. We've covered a lot, haven't we? Are you okay over there, Brian? Do you need to go and have a nap and lie down?

Joshua van Gestel: He looks a bit tired.

Anne Fuchs: He does look a bit.

Brian Parker: I know. I didn't really know what to do, but it's been a terrific session.

Anne Fuchs: It has been a terrific sessions. Thanks so much listeners and we look forward to you joining us in our next podcast series. Thank you.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage your super and enjoy your retirement, visit, or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our New School of Super Podcast.

Episode 11

Financial market wrap – what’s next for 2019?

With 2018 now in the rearview mirror, it’s time to look ahead at what 2019 looks like for global markets and your superannuation. Join Sunsuper’s Dream Team, Anne Fuchs and Brian Parker as they discuss everything from the US-China trade war, Italy and the Eurozone, Brexit and, of course, financial events closer to home.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, you Super, and the things that could affect your financial dream now and in future, with Sunsuper's chief economist, Brian Parker and head of advice and retirement, Anne Fuchs.

Anne Fuchs: Hello, and thanks for listening. Welcome to The New School of Super, Sunsuper's podcast series covering money markets, investments, Super, and most importantly, making sure you achieve your retirement dreams. With me is my good friend Brian Parker, he's back again, our Chief Economist. The man that knows everything about the world, the Australian economy, investment markets, how to build investment portfolios, and members’ investment needs. My goodness you are clever Brian. Now-

Brian Parker: Oh, thanks so much.

Anne Fuchs: And for those who haven't heard one of our podcasts before, my name is Anne Fuchs and I head up Advice and Retirement here at Sunsuper. And the team and I are passionate about helping our members fulfil their retirement dreams. We come to work every day giving them high quality financial advice to meet that goal. So Brian, what are we talking about today?

Brian Parker: Well thanks Anne, it's great to be here with you again. But before we start, there's an important message.

Anne Fuchs: Yes of course. Of course.

Brian Parker: Yes, indeed. As always, before we start, I need to let you know that what we're going to be talking about today is general information only. Any advice doesn't take into account your particular circumstances, you should consider your circumstances and think about getting personal advice before acting on anything we talk about today. You can also get a copy of our product disclosure statement from our website or give us a call on 13 11 84.

Anne Fuchs: Brian, I always know why you're in the good books with our legal risk and compliance team, because you always do such a fabulous job.

Brian Parker: Absolutely. I just have a much quieter life if I do that.

Anne Fuchs: It's a good approach. So 2018, that was a big year. I don't know if I would describe it as a great year for financial markets.

Brian Parker: Well, it certainly wasn't a good ending to financial markets, share markets across the world really performed quite badly in the December quarter. We have seen a bit of a rebound so far in 2019, which is pleasing. But it's fair to say that financial conditions remain pretty volatile. It's still a very uncertain world at the moment.

Anne Fuchs: So 2018, if we break it down into two halves, what, the first half of 2018 was?

Brian Parker: The first half of 2018, there was plenty of stuff to worry about and there was certainly plenty of uncertainties but still share markets performed reasonably well, that you actually got very, very solid investment returns and markets seemed quite willing to sort of overlook some of these sort of emerging problems. But when the December-

Anne Fuchs: The second half.

Brian Parker: Quarter hit in particular, a whole bunch of things ... Here's a list we prepared earlier, worries about slower global growth, worries about the U.S. China trade war, worries about Brexit, and towards the end of the quarter, worries about another U.S. government shut down, because Congress and the White House couldn't agree on funding the operations with the U.S. government and build a wall at the same time. So, there was a whole list of things which finally sort of put a serious dent in the market’s confidence.

Anne Fuchs: And do you think too, the second half of last year for banks was incredibly challenging as a consequence of the Royal Commission?

Brian Parker: Yeah, absolutely. That's certainly weighed on. If you look at the performance of bank shares in Australia, the whole Royal Commission environment weighed on them very heavily. It also led to a lot of people worrying about how banks would respond. Because one of the things that's really crucial for the longer term health of any economy is that if you're a credit worthy household or business, you need to be confident that you can actually go to your bank and find your bank ready and willing to lend you money on reasonable terms. And there was some doubt as to whether banks would actually respond to the sort of new regulatory environment or the pressures from the RC by sort of unilaterally if you like, tightening credit standards. And I think the jury's still out on that one.

Anne Fuchs: Because the small business complain that they can't get a loan regularly, and yeah, small business is the fuel of the Australian Economy.

Brian Parker: Yeah, very much so. In fact, if you look at some of the business surveys, there's an element of that but it's certainly not dire, I don't want to ring too many alarm bells here. But if you look at some of the more recent business surveys, when you ask businesses, "Are you finding it harder to get credit," there's been a reasonably significant increase in the percentage of businesses saying, "Yes, I am finding it harder to get credit." It's nowhere near GFC days, if you think about it. During the GFC the availability of credit really did seize up for a lot of businesses, not just here in Australia but around the world. But it's certainly something to watch pretty closely there.

Anne Fuchs: And banks just for our listeners, what do the banks represent in terms of the overall stock exchange here in Australia, the market that we have to invest in? Is that testing your knowledge there Brian? I heard a statistic-

Brian Parker: I'd say about it's about a third.

Anne Fuchs: I heard 25% but if you-

Brian Parker: Yeah, it's a very sizable chunk. If you think about it, our stock market is dominated really by a handful of big banks and a handful of big mining companies. And it does mean that that's not exactly a wonderfully diversified portfolio, if you stick to just Australian shares. But yeah, banks are obviously really crucial to the underlying performance of our stock market.

Anne Fuchs: So, I guess which is why investing overseas in incredibly important to how we manage our members’ money here at Sunsuper, and I guess a quick update for 2018 heading into 2019 there's the geopolitical risks that we've spoken bout in a previous podcast, haven't gone away. Trade wars, I'm not sure is North Korea and the U.S.A. are friends today, I don't know if you have an update on Kim Jong-un and Trump, Brian?

Brian Parker: Well, there clearly varying amount of love in that room I think is the best way to describe it. There's certainly a whole bunch of stuff to worry about. As we record this, we don't have any clarity as to what's going to happen to Brexit for example, we don't know whether any sort of reasonable Brexit deal is actually going to be done, and we don't know whether we're going to face yet another U.S. government shutdown, because if Trump can't get his wall, he may just take his bat and ball and go home again.

Anne Fuchs: Well he's threatening to do that.

Brian Parker: Absolutely. And so there's still a whole plethora of political issues that could weigh on markets. And again, one we haven't talked about for a little while is Italy, problems in the Euro zone in general and Italy in particular, could also come back to really unsettle the market. So there's a whole list of stuff to worry about but to be fair, when you're investing money, there is always stuff to worry about.

Anne Fuchs: So I'll ask you the pointed question, what's Italy's ‘problema’, to use an Italian word?

Brian Parker: Oh, very nice. Yeah.

Anne Fuchs: Grazie tanto.

Brian Parker: I've got nothing.

Anne Fuchs: Yeah.

Brian Parker: So look in short, slow growth, very, very high levels of public debt, a very inefficient economy, and a bank system that is basically struggling under weight of quite large problem loans. So it's really not a terribly pretty picture.

Anne Fuchs: So if it's a hard Brexit and the United Kingdom are not able to import the high quality cheese, bread, and olive oil from the Italians, what impact does that have on the Italian economy and the Sunsuper member?

Brian Parker: Oh look, the impact of Brexit on Italy is relatively minor to be honest. Italy is sort of ...

Anne Fuchs: So our members shouldn't be worrying about this?

Brian Parker: The should be ... I'd put it this way, all of these issues one way or another will get resolved. And I think even they're a source of short term market volatility, it’s important to remember that if you're investing money for your superannuation, especially if you're a relatively young member, every crisis, every bare market, every disaster you care to name comes to an end bar none, and life and the economy and business goes on.

And I often sort of say to members is that, there's always stuff out there to worry about but if you're thinking about, where are you going to generate good long term returns from? The reality is, despite all these risks that we've talked about, a whole range of businesses, all around Australia and all around the world are going to basically make a profit and pay dividends out of that profit.

And why are they going to do that? They're going to do that because every day we wake up needing to be fed, to be clothed, to be entertained, to be medicated when we're sick, to be travelled around, to be communicated with, to be banked, to be insured, and a whole bunch of companies all around the world will make a profit by meeting our needs. That hasn't changed regardless of what happens with Brexit, or what happens in North Korea, or what happens in Italy.

Anne Fuchs: However I will say that risk and your risk appetite as an investor is incredibly important, as to finish up this conversation, that in these challenging times, an investor who is considering retiring in a year or two's time, versus an investor who is 35, has much different considerations around where they're money's invested from an asset allocation perspective.

Brian Parker: Yes. Absolutely. And it's worth mentioning that if you happen to be a Sunsuper member in our default option, we kind of take care of that for you. So as you approach and then enter retirement, we are gradually, gradually reducing your exposure to share markets. So that we're trying to reduce the risk of share markets ruining your retirement, and I think it's important to remember that.

But you make a valid point that everyone is different. Everyone is at a different phase of life, everyone has a different appetite for risk, everyone has different financial needs and goals. And so really, while we think our default option suits a large number of members, and full disclosure, it certainly suits this particular member, i.e. me, but at the same time, the best investment portfolio is one that you've actually sat down, got some professional advice about and actually constructed yourself.

Yeah, so I think advice is absolutely crucial here to make sure that the investment portfolio you have suits you and suits your stage of life. And one last point, if you're trying to make up your mind about what kind of investor you are, I have this great rule of thumb called the sleep at night test. As a true measure of what kind of investor you are and how much risk you're willing to take, ask yourself this, "Am I losing more than five minutes of sleep at night because of something I'm doing with money?" If the answer's yes, it means you're taking too much risk and your body is telling you something, because sleeping at night can never be overrated.

Anne Fuchs: I couldn't agree more. So, I think that's a good plug for the importance of financial advice.

Brian Parker: Correct.

Anne Fuchs: Sunsuper members, you can access that by contacting us on 13 11 84 and for those listeners who need financial advice, find a good quality qualified financial advisor and seek out that professional financial advice, because it can make a huge difference. So Brian, I think we're done. They're shooing us off. How rude.

Brian Parker: I know, absolutely.

Anne Fuchs: Don't they want to hear us talk all day?

Brian Parker: You certainly do.

Anne Fuchs: Thank you very much for listening.

Brian Parker: Good on you. Thanks Anne.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage your super, and enjoy your retirement, visit Or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super podcasts.

Episode 10

Value of Advice for your best retirement - Part 1

In the first of a three-part series, join Sunsuper’s Head of Advice and Retirement, Anne Fuchs, and National Education Manager, Joshua van Gestel, as they look at recent modelling research that examines the material impact good financial advice can have on a case study of a single female nurse wanting to cut back on her working hours as she eases into retirement.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper’s chief economist Brian Parker and head of advice and retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper’s podcast series covering money markets, investing, your Superannuation and helping you reach your retirement dreams. Today I'm with Joshua Van Gestel.

Joshua van Gestel: Hello Anne, good to be back.

Anne Fuchs: Good to have you here. You're our national education manager here at Sunsuper-

Joshua van Gestel: I am.

Anne Fuchs: And you are the best at giving member presentations-

Joshua van Gestel: Thank you.

Anne Fuchs: Education seminars. And for our listeners that don't know me, my name is Anne Fuchs and I head up Advice and Retirement here at Sunsuper. The team and I work every day to make sure our members are getting the right financial advice to meet their retirement needs and dreams. Josh, I have a favour to ask you.

Joshua van Gestel: Yes Anne.

Anne Fuchs: Normally at this point in the podcast, our mutual friend ...

Joshua van Gestel: Mr. Parker.

Anne Fuchs: Mr. Parker is doing his best to keep in good with legal risk and compliance but-

Joshua van Gestel: That's right. So, before we get started it's important that anyone listening know that what we're talking about today is general information only and any advice doesn't take into account in your personal situation. So, you should consider what we're talking about and think about your own circumstances. And if you do want to add on, act on any of this, then please seek some advice by either calling us on 13 11 84 or you can also get a copy of our Product Disclosure Statement from our website.

Anne Fuchs: Fabulous. Well today we are talking about something that I'm incredibly proud of here at Sunsuper that we've done. We've commissioned a piece of independent advice looking at typical member scenarios and the impact, the material impact financial advice had to their retirement outcomes. We've worked with an organization, an independent research organization, very well respected, called Core Data and they've put these numbers together with us to help our members identify, I guess themselves in these stories.

Joshua van Gestel: Yeah, and that's great to actually have you in the hot seat today, Anne, I must admit that for me, going out and presenting seminars and talking to our members day after day to actually see the impact, the positive impact that good advice can have on their lives is a big part of what I love and why I do what I do. But can you take us a bit more deeper into what the research was actually about?

Anne Fuchs: Well, yeah, yeah, sure. It's, and sorry if I just cut you off there, Josh.

Joshua van Gestel: Not at all.

Anne Fuchs: Not at all, I'm not used to being interviewed I confess, I'm normally doing the interviewing, it's a bit strange. But I think the first thing, one of the reasons why we did this research is that it is focused on ordinary Australians. There is a perception, I think amongst the community that financial advice is for rich people, wealthy people. And actually my personal view is that it's great to get financial advice if you’re rich, but it's only going to make you richer. Where if you're an ordinary Australian, it's incredibly important that you maximize your-

Joshua van Gestel: Absolutely.

Anne Fuchs: Yeah. You've worked hard your whole life, you deserve to optimize those retirement savings. And so this is where these case studies, we've built them so that our members can look at them, see themselves in the stories, and then know what they should be thinking about and then contacting us.

Joshua van Gestel: So I'll get you to explain a bit more about the case studies in a moment and the impact that good advice made in those case studies. But I thought it's probably worth us quickly going back to some of the qualitative research that we've done in the past when we've asked Australians who have received financial advice about the difference that it made to their lives.

Anne Fuchs: Yeah, I think, so confidence is incredibly important. 80% of people we spoke to that had the confidence to make good quality financial decisions, which I think is, you know, a big part of navigating, accumulating and protecting your wealth. I think the number, 79%, that sounds about right, they felt that they had more control over their money, 80% felt more secure. So I think 77% felt they were more prepared for their retirement and 80% had peace of mind. So what you're hearing is a big chunk, a big proportion of the people we spoke to had got advice, had the sleep at night factor, which Brian rates very highly.

Joshua van Gestel: Which was something I was actually going to mention, absolutely. And so the latest research is slightly different in that it's actually giving us some hard numbers around the dollar value improvement that good financial advice can make to your retirement, and we're talking in some cases, hundreds of thousands.

Anne Fuchs: Correct, yeah. It can be really compelling numbers. So it's all about, at the core of it is around, it's no point having money again at the end folks view of the world if you're not going to spend it. So what do you actually want to do with your money? These stories are about members spending their money, having great lives, having holidays, empowering themselves and their families. Better protection, so when something or if something goes wrong, they're looked after. Paying less tax, I've never met anyone that wants to pay more tax and they're feeling secure in retirement, just great, really great outcomes.

Joshua van Gestel: So, I think all of this is really wonderful, but what I really love about this research is that it's actually very tangible. That we're talking about case studies that people can relate to and that they can understand. So maybe Anne, we dive into one of the case studies and look at the difference that it made for someone's retirement.

Anne Fuchs: Well, I think, maybe we go through the independent woman case study. I think that harks back to a previous podcast series we did about the retirement security for women and the importance of women taking control of their financial situation. So we picked a notional, a fictional member, and we called her Lisa. She's independent, she's 58 years old, she's single. However, she has two adult children that have moved out of home and now her focus is for the first time in a really long time herself and thinking about what retirement looks like for her.

Joshua van Gestel: And Lisa is very typical. I must say of a lot of members that we do meet when we're going around the country presenting seminars. So, what were Lisa's goals for her retirement?

Anne Fuchs: Well, Lisa has been a career nurse, senior full time registered nurse and it's a really hard job, physically demanding, emotionally challenging. And to be blunt, she's just tired. She's been doing it a really, really long time and she decided she needs to step back for her own wellbeing. And so, she's trying to work out from a financial advice perspective, how can she meet her retirement goals, but take the step back that she needs for herself and her wellbeing?

Joshua van Gestel: So, in looking at Lisa's case, there was then some very clear advice that was recommended. Can you take us through some of those pieces of advice?

Anne Fuchs: Yes, I can. And I think I used this terminology a lot about it not being rocket science, that financial advice isn't rocket science per se. So, the simple steps, the advice that was given to her included opening up a transition to retirement account from her Superannuation fund. She had an investment property and the advice was to sell that property and then salary sacrifice back into Superannuation. And Josh, for our listeners who want to know more about salary sacrifice, we've had an episode with Josh on before talking about salary sacrifice and what it can do for your super. And also the other last piece of financial advice was that she was fortunate to inherit a small amount of money from a relative, and so how she was to invest that money.

Joshua van Gestel: So, this isn't something that would be foreign to many of our listeners. And as we said earlier, some of these case studies we actually saw significant improvements into the hundreds of thousands of dollars. So what was it that we actually saw as the outcomes for Lisa or in this case study?

Anne Fuchs: So, if I asked you Josh, would you pay $3,000 initially and then one and a half thousand dollars every year to have $200,000 more in retirement, start working part-time and be able to draw down an extra $12,000 a year from your super account, do you think that's a good deal?

Joshua van Gestel: Absolutely. And at the same time, you've probably given me a lot of peace of mind and comfort.

Anne Fuchs: Exactly. So there is the whole wellbeing factor, which you rightly touched on there, that this member Lisa is being able to, yes, she's $200,000 better off as a consequence. And yes, she's able to draw down the $12,000 a year, but what I love about this story is this woman who has given herself as a nurse, the emotional impact that would have on her, she's put herself last her whole life, she gets to step back and has four days a week for herself. And I think that to me, almost is you know, you can't put a price on the impact that financial advice has to her.

Joshua van Gestel: And I would say, and I know I've reflected on this a bit and that sort of what comes up with doing podcasts like this that I reflect on the number of people, I only hear good advice stories when our members come and speak to me at seminars. But I also hear lots of stories from people like Lisa who probably to a point you made earlier, get very scared about financial advice, not realizing that actually it’s small steps and maybe a different perspective that can really shift things quite dramatically.

Anne Fuchs: Correct. And I think probably pointing out too that they think they can't afford it, and I wanted to highlight to our listeners, that if Lisa sounds like you, that you are thinking about how can you start winding down from work, do something to fast track your retirement savings because you're not comfortable that there's enough in there, then contacting us at Sunsuper is a great place to start because you can, if you need that comprehensive financial advice, if you work with an external financial advisor who is registered with Sunsuper and that advice is around your Sunsuper account, you can have that fee that Lisa, you pay the $3,000 I made mention of earlier, paid out of your Sunsuper account. So it's not that you're having to fund that out of your back pocket. So I wanted to highlight that, don't think that you can't afford it. If that, that retirement planning advice is about Sunsuper and building your retirement dreams, that, that financial advice fee can be funded out of your Sunsuper account. So that's I guess all I probably wanted to finish up on, Josh.

Joshua van Gestel: Well, can I say thank you for letting me sit in Brian’s seat. It is a very big seat to fill-

Anne Fuchs: It is.

Joshua van Gestel: One that's quite comfortable actually. But, can I maybe be a bit forward and suggest that we come together again at another point and talk about another case study and really look at another situation where we can make a substantial difference to someone who just follows some simple financial advice and some very valuable advice.

Anne Fuchs: Great, that sounds lovely. I would love to do that with you, Josh. And our listeners, thank you again for listening. We appreciate your loyalty and we look forward to you joining us again soon. Thanks.

Voice-over: This has been the New School of Super. For information and inspiration to help you plan your future, manage your super and enjoy your retirement, visit Or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super podcasts.

Episode 9

What about women's super?

To celebrate International Women’s Day, Anne is joined by Joshua van Gestel, Sunsuper's National Education Manager, to discuss wealth equality and closing the superannuation gap as you head into your retirement.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future, with Sunsuper's Chief Economist, Brian Parker, and Head of Advice and Retirement, Anne Fuchs.

Anne Fuchs: Hello, and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering investment markets, money matters, your superannuation, and most importantly, making sure you achieve your retirement dreams. Today we are mixing it up a bit, and I have a fabulous fellow. He's been with us on a previous episode, Josh van Gestel, a National Education Manager here at Sunsuper.

Josh van Gestel: Hi, Anne. Thank you, thank you.

Anne Fuchs: Welcome, it's good to have you here. I'm feeling a bit weird, Brian not joining us today.

Josh van Gestel: Yeah, the seat's a bit warm, yeah.

Anne Fuchs: Yes, it does feel a bit unusual. We are talking today about things that aren't investment related as such, which is why Brian's not joining us.

Josh van Gestel: Yes, he doesn't know much outside of that.

Anne Fuchs: That's unkind, but we are talking about women and money. Before we get started though, I'm going to hand over to you, which the job that Brian normally has.

Josh van Gestel: Yes, yes, thanking our sponsors. So yeah, before we start, Anne, just what we're talking about today is general information only. Any advice doesn't take into account our listener's personal situation. I think it's important that anyone listening should consider their circumstances, and think about getting personal advice before acting on anything we talk about. As you know, Anne, you've got a wonderful advice team, and they can be contacted on 13 11 84 to assist them.

Anne Fuchs: Listeners can also get a copy of our product disclosure statement on the Sunsuper website as well. That's probably worthwhile highlighting that.

Josh van Gestel: Thank you, Anne, yes.

Anne Fuchs: This podcast today is in honor of International Women's Day, and it's important we stop and reflect on the challenges women face when it comes to wealth equality globally, but in Australia, what is a wealthy country. We want to talk together and encourage our listeners to think about what more they can be doing to bride that gap.

Josh van Gestel: Absolutely.

Anne Fuchs: That wealth equality gap.

Josh van Gestel: I think, and probably to show how much of a concern it is, is we've got employers really starting to actively think about not just the pay gap, but also thinking about the inequality in retirement. I think it's between men and women, we've got the government thinking about it, we've got a lot more measures now, especially for when women might leave the workforce to raise children, but I think some of the stats are actually quite scary.

Anne Fuchs: Well, I have a son and two daughters, and I think it's outrageous that on average, women are earning $245 less per week than men, and that a 20-year-old woman is earning ... let's call it 19%, close to 20% less than her male counterpart in the same job. Then that doesn't even take into account the fact that they're jobs in sectors that we say as a society we value; looking after our elderly, looking after our young ones, so aged cared, childcare, that those sectors are incredibly underpaid, and in fact, childcare workers are paid less than retail workers and hospitality workers.

Josh van Gestel: I think when you combine all that, the scary thing is, certainly from a retirement perspective, that we are seeing women on average retire with about half as much as a male counterpart. I think the other thing, just to a point you made, was that we in our society generally see that it is women who take time off to look after children and raise them, but the other thing we're also seeing is that older women are then leaving the workforce again in many instances, to help care for their parents or for the in-laws. There's these huge periods generally within our society for women where they're absent from the workforce, and their super stops, effectively.

Anne Fuchs: And you know, I have three children, 12, 10, and 8, and I am the main breadwinner in our family. Even though I took very short breaks, you know, three months, two months, four months, my super wasn't getting paid over that period, and I think about now, and I was back in my 40s, almost mid-40s, as sad as that is, and I didn't know or think about in my early 30s the fact that my employer actually wasn't contributing to super while I was off-

Josh van Gestel: Absolutely.

Anne Fuchs: ... and the impact that has in compounding interest. Probably ... not probably, and I'm quite certain the fact that I was being paid much less than my male counterparts. Even though I'm in a great job in a secure role, I'm still going to be in the back foot compared to a male equivalent in my position.

Josh van Gestel: I think although we're talking today and at the moment about whether it's thinking about the effects on retirement, or even the pay inequality, I think the other issue that's important to probably just highlight is that it is women who will more likely be subject to financial abuse, who will have control of money in a relationship generally fall to a male, and the statistics there are alarming as well, that three in five Australian women will actually have some form of financial abuse.

Anne Fuchs: Yeah, CoreData published that recently. I think it's absolutely terrible. It's a form of domestic violence. It's all well and good, I think. I think it's all well and good to encourage women to think about their retirement savings gap and do something about it, but it can be so daunting to be on the back foot so profoundly, and when you're in a lower paid job, but sticking your head in the sand equally too is only going to exacerbate the problem. No matter what salary you're on, these simple tips that we could have a quick chat about are worthwhile really reflecting very much about.

Josh van Gestel: I think there's also opportunities there that people just aren't aware about.

Anne Fuchs: Like?

Josh van Gestel: There's a few things to think about, and from my perspective, I've got a wife who has gone from being very highly paid, to leaving the workforce and now coming back into the workforce on a part-time basis. There's strategies worth implementing that I think I know about because I live and breathe the industry.

Some of those strategies that people may not be aware of, is as your income drops, the government really gives three free kicks, as I see it. If you earn beneath $37,000, then the tax that normally is deducted from the contributions that your employer's required to make, super guarantee, that tax is effectively refunded. That's the first thing that it's not really a strategy you have to think about, it just automatically happens. I would suggest most people don't know about it. When your incomes drops, there is a payback.

Anne Fuchs: There's also, I guess, if you have a spouse that's then earning more than you, the concept of spouse contributions, because one of the things with women retiring in poverty and this increased phenomenon is that they might have given up their career, and they haven't had superannuation contributed at all, and then they divorce in their 60s, and then all of a sudden they have barely any assets.

Josh van Gestel: That's right.

Anne Fuchs: This concept of spouse contributions-

Josh van Gestel: If I as a spouse make a contribution-

Anne Fuchs: To your wife, yeah.

Josh van Gestel: ... to my wife's account, and I do that contribution from our joint savings, it's coming from our combined wealth, that I then am entitled to an offset on my tax return of up to $540. There's two things happening here. I as the contributing spouse am getting a tax advantage. Meanwhile, my wife is actually benefiting from seeing her super balance grow.

Anne Fuchs: As sad as it is with one in two people divorcing, it's a nice insurance policy for her that she's actually building up some financial independence in terms of her retirement savings.

Josh van Gestel: That's right, that's right. There are two other things as well. One thing that the member can do, and in my case, that my wife can do, from again, our personal savings, she can make a contribution herself, and if she earns less than $52,600 odd dollars, then the government will actually throw in up to $500 as well.

Anne Fuchs: That's called a co-contribution, if you hear about it.

Josh van Gestel: That's correct. To your point, Anne, that actually helps the spouse in this situation, or any person, actually, grow their superannuation when they may be on lower income. The only other thing that I'd like to mention as an important strategy is I also have the ability in my relationship, and as many people would in their relationships, that there may be one person who's earning more than the other, they've got higher superannuation contributions going into their account.

There is this ability to split contributions, for me to at the end of the financial year, actually take some of those contributions have come into my account, and actually put those into my wife's account. Doesn't give me a tax advantage, doesn't give me a savings advantage, but where the equalization is, is that it's actually making sure that we're spreading out our retirement wealth across both accounts.

Anne Fuchs: Yeah, that's right, yeah. I think there are lots of people that aren't in relationships too, and just good old fashioned salary sacrificing. I spoke on a previous episode with Brian about New Year's resolutions, and one of ... I think about the money I waste on not being organized and packing my lunches. It's $10 here, $10 there, and it adds up. I do think just the principle of just being organized, and using that money to contribute to superannuation rather than a very expensive sandwich.

Josh van Gestel: Absolutely. I present to a lot of members, and I talk about superannuation is doing small nudges. It is that sandwich, it is that coffee, it's diverting that money. It's a small nudge, but you're doing it numerous times, and those all add up.

I think the other thing is though, that every person can do in making sure their super is growing and working for them is actually to think about how they're investing it. What is it that you're actually able to achieve not just by putting additional money in, but actually growing that through thinking about the investment strategies that we offer?

Anne Fuchs: And look, I think that's a really good point, Josh. Sunsuper have a service offering for our members where our members can access simple, trusted financial advice over the phone. If you're a woman and a member of Sunsuper, and you want to think about, and you're thinking about what more you could do to maximize your retirement savings, and to make sure that money's invested to maximize, again, your retirement savings, the best thing you could do is call Sunsuper.

We live and breathe this stuff day in, day out. We help women like you, our listeners, every day do more so that you can bridge that gap, that wealth equality gap that exists. We desperately want you to. We want you to live the life that you deserve to live and fulfill your retirement dreams. We celebrate today, Women's International Day, and Josh, I love your ... you're an honorary feminist in my eyes.

Josh van Gestel: Thank you, Anne, and thank you for inviting me in Brian's hot seat.

Anne Fuchs: Yes, it was a pleasure to have you.

Josh van Gestel: It's been wonderful, thank you.

Anne Fuchs: Thank you, listeners, and we'll look forward to you joining us again soon. Thanks.

Voice-over: This has been the New School of Super. For information and inspiration to help you plan your future, manage your super, and enjoy your retirement, visit, or if you've got a superannuation or an investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super podcasts.

Episode 8

Thinking of starting an SMSF?

In this episode, Sunsuper’s Dream Team is joined by Joshua van Gestel, Sunsuper’s National Education Manager to help you get wise on self-managed super fund and if one could be right for you.

Launch Podcast

Voice-over: Welcome to The New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist, Brian Parker and Head of Advice and Retirement, Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering investment markets, money matters, superannuation, and most importantly making sure you fulfill your retirement dreams. Today, as per usual, the fabulous Brian Parker, Chief Economist, is by my side. The man that knows everything there is to know about money markets and the economy. Hello, Brian. [inaudible 00:00:47] see you.

Brian Parker: Hello, Anne. Great to be with you again.

Anne Fuchs: And we have a special guest today. A very special appearance. Joshua Van Gestel, our national education manager is joining us today. Josh is going to break down self-managed super funds for us Brian.

Anne Fuchs: And before we get into it I should introduce myself, too, even though I'd like to think all of our listeners know who I am by now. My name is Anne Fuchs and I head up advice and retirements here at Sunsuper and we make sure on my team that all of our members get fabulous trusted high quality financial advice so they maximize their retirement savings.

Anne Fuchs: So Brian, what do we need to do to stay in the good books with our compliance team?

Brian Parker: Oh, thanks Anne. Well, as you mentioned Josh is here today to explain self-managed super funds and I think a lot of people are attracted to the idea of an SMSF for its flexibility and the control it can offer. That as always the devil's in the detail and one detail we definitely need to share with our listeners is that before we start we need to let you know that what you're going to hear today is general information only. That anything we say here, any advice that we give here, doesn't take into account your personal situation. You really should consider your circumstances and think about getting personal financial advice before acting on anything we discuss. You can also get a copy of our product disclosure statement from our website or give us a call on 13 11 84.

Anne Fuchs: Beautiful. Well, Joshua, welcome. It's lovely to have you here.

Josh Van Gestel: Thank you. It's wonderful to be here at last.

Anne Fuchs: And I look forward to all of our listeners being that much wiser about this SMSF thing, this thing called self-managed super, 'cause you're going to educate us all about it today. And probably it's worthwhile starting with what on earth is it? Are you able to break it down for us?

Josh Van Gestel: Well, we'll certainly break it down but I think really probably the thing to think about is the main consideration I think around SMSFs and their popularity is maybe there's been a bit of a disconnect between perceptions and what they can actually do. We've seen this incredible growth in them, with I've personally had a lot more people talk to me at barbecues about them than anything else once they know what I do for work.

Josh Van Gestel: But we have a lot of questions from people about what they're actually wanting to achieve with it. Is it that they think they can perform better? Is it going to be cheaper for them? Does it give them opportunities? And those are some of the things that I think we should actually unpack tonight.

Anne Fuchs: So SMSF, is it sort of this niche kind of very boutique investment opportunity or is it a sizable part of the superannuation market? How big is this sector?

Josh Van Gestel: Oh, it's a very big part and the growth has been absolutely unbelievable. So at the moment they probably make up a good quarter of the entire superannuation industry.

Anne Fuchs: That much.

Josh Van Gestel: Probably have about a million members or more but they do have incredible wealth within them. But really at the end of the day, Anne, they just run like a normal superannuation fund. They look the same, feel the same, largely have the same opportunities. But the main things is that when you've got an SMSF, you're the one in control. You're the one who not only calls the shots but you also have to take on all the responsibility.

Anne Fuchs: So is that ... 'Cause I was going to ask you why do you think there's been this sort of surge in popularity over the last how many years with SMSF and why it's a quarter of the market now. Is the psychological sort of concept of control? Or people are repressed investment managers and want to be like Brian? 'Cause we all want to be like Brian.

Brian Parker: [crosstalk 00:04:30] be like Brian.

Josh Van Gestel: I think it goes back to the original point. There's this perception versus reality. I think a lot of people perceive that they can do better than Brian and his peers. And the reality though is maybe they've bitten off more than they can chew. And so although we've seen this tremendous growth, it should be noted that we're also seeing now a bit of an uptick in how many people are actually closing their SMSF because maybe they have the realization that they just can't look after it.

Anne Fuchs: So you said earlier it sort of looks like a super fund, smells like a super fund, quacks like a duck, that type of concept, but surely that can't be true. And I just, in a sense of you said earlier that concept of you take on all the responsibility. So it's our responsibility here at Sunsuper to make sure we protect and grow our members retirement savings assets and so that they have that money when they retire. But when you're in a SMSF, what happens when you invest in a dodgy investment, like a unit of the plan and something goes wrong.

Josh Van Gestel: Absolutely. So when you're on your own SMSF you have the same obligations and outcomes as we do at Sunsuper. You are trying to achieve a good retirement outcome. I do wonder though how many people maybe go into a SMSF not realizing that that's actually what they're trying to do. I think a lot of people might go into a SMSF because it feels glamorous, because they can access property, because they can do a number of things.

Josh Van Gestel: Truth just is they want all the rest of it, but do they actually realize at some point in time they're going to have to withdraw from this thing. That they need to draw down an income or lord forbid that they actually need to make a withdrawal because someone passes away or they suffer a disability or some event like that.

Anne Fuchs: So, Josh, a friend of mine has just become a barrister and he's going into the Inns of Court in Brisbane and he's talking about thinking about rolling out of his industry fund and buying rooms at the Inns of Court and setting up an SMSF and there are some scenarios where SMSF is reasonable and appropriate.

Anne Fuchs: In general advice terms, are you able to give some just general principles around when SMSF sort of feels right or when it's more likely to be considered as something that might be right for you and-

Josh Van Gestel: Absolutely. And I think it's very important to realize SMSFs are actually a really great investment vehicle or superannuation vehicle, but definitely for the right person. Firstly, you need to think about the balance. So you don't want to start or even considering starting an SMSF unless you've got some reasonable money to put in. Different research suggests anywhere between 200,000 and half a million is probably a good starting point.

Josh Van Gestel: The second thing to think about is then what are the costs? What's the reality of it? If you are going to buy property with your SMSF, well that property will actually come with legal fees, management fees, everything else that normally is part of purchasing a property.

Josh Van Gestel: Thirdly, you also need to think about am I really interested? Am I personally going to invest the time to run my SMSF? Or do I actually have to pay someone to help me run it? So ultimately you are in control and you have to make the decision am I going to do it or am I actually going to outsource elements of it? And if I do then it comes back to that very first thing, do I have enough money? And what is the cost going to be?

Anne Fuchs: I think it'd be worthwhile bringing in our illustrious Chief Economist at this point. 'Cause I would like to jump to the fact that the Productivity Commission recently highlighted I guess the significant underperformance of SMSFs compared to a typical balanced fund within my super and the lack of investment strategy and philosophy and active management. Brian, what's your experience in this area?

Brian Parker: I'd say a few things actually, Anne. The draw on Josh's point about how much money you can put into this. And personally I think you need sort of up towards the half a million and above before you'd even think about it given the cost of actually running your fund. But it's also worth bearing in mind that you want to build, if u go back to investments 101 you want to build a sense of reconstructed diversified portfolio. And I can do that a hell of a lot better with $55 to $60 billion than I can with $500,000. But getting a really well-diversified portfolio is a real challenge unless you've got serious money to put to work in your self-managed super fund.

Brian Parker: And I suppose the other thing is, and again to Josh's point about what are you actually trying to achieve, and if you think you can do better, you have to ask yourself can you really? And one of the things we saw after the global financial crisis when your returns were very poor, 'cause markets were very, very unkind obviously, and a lot of people say well why am I paying superannuation fund fees to get negative returns? I can do better myself. Now frankly the productivity commission data suggests that that's simply not the case. That and those markets have recovered and as super fund returns have really performed well in recent, or really over the last nearly decade, those super funds have actually come back with a vengeance and they have outperformed most self-managed super funds.

Brian Parker: Now we really shouldn't be surprised by that and it's not just the investment expertise that you get by investing through major super funds, but it's also just simply the fact that these funds are able to invest in a very widely diversified way and invest globally. I mean the investment universe that major super funds are able to access is just far greater than whatever's available to the typical self-managed super fund investor.

Josh Van Gestel: And I think the other advantage is though when you've got someone like Sunsuper looking after investments, and it brings all of that with it, but you know can also to some extent set and forget. You know that your money's in good hands. If you're looking after it yourself and you're SMSF, then you have to invest the time. You absolutely have to invest the time. You can't just set and forget.

Anne Fuchs: And I mean you've both heard me talk at length about why I think money's such an emotional thing. And people make decisions about money, it's not rational, it feeds back into what their parents taught them, what their emotional relationship is. And I do think there is a strong connection, in my experience anyway, with people who estimates in a lot of cases where they just ... It's a lack of trust and desire to control. And that's sort of the rational things that Brian and you have referenced in a lot of instances just aren't as important as the desire to just control my nest egg at all costs. But they can't, as we all know, 'cause we live and breathe superannuation governance every day and compliance, there is a lot attached to governing a superannuation fund.

Anne Fuchs: So it's probably worthwhile, Josh, if you just high level explain what are the obligations, the paperwork with APRA, which is the regulator attached to super, what are the things our listeners need to know?

Josh Van Gestel: So I think again, it comes down to this perception versus reality. The reality is it's not easy. And whether that's lodging tax returns each year, getting audits done each year, managing the investments, we've already spoken about, all of these things you have to make a decision. Am I going to do it? Or am I going to pay someone else to do it?

Josh Van Gestel: So once you've answered that questions it really is going to drive two things: How much work you, yourself, have to do? And how much money you're paying out of the fund in fees? The obligations are many and I would actually go as far as saying a lot of people go into an SMSF without actually knowing what those full obligations are.

Josh Van Gestel: So besides tax return and audit, there's also just operationally. How do you make sure that the fund is doing what it's to and doing it legally? Are you purchasing and selling investments within the fund in the right way? Are you allocating returns to the members in the right way? If you're running a pension out of the fund, are you actually able to manage all the issues and requirements around that? There will come a point where you, yourself, have to think about am I up to it and am I still willing to keep doing it.

Anne Fuchs: And I was going to ask that question actually around the transition from when you're accumulating retirement assets to decumulation when you're actually drawing on those assets to draw an income in retirement. There's not only the, I guess the compliance obligations of how you structure that, but I guess too, Brian, to throw to you again, is what is a change in investment strategy required? Are different assets required? Because-

Josh Van Gestel: You can't sell one of the bedrooms.

Anne Fuchs: Well no, and this is right, we spoke in our previous episode about the importance of diversification and risk. And it probably is worthwhile just touching on that now, in light of SMSF investment strategy and the different phases of your retirement and accumulation lifestyle.

Brian Parker: Absolutely. And the key question is can you have a self-managed super fund that is big enough and diversified enough to be able to pay you an income without you having to basically sell down a chunk of assets really. And to go to Josh's point where can't sell a bedroom, you can rent it out, but you can't sell a bedroom. And that is an ongoing challenge for self-managed super funds.

Anne Fuchs: So I think any final tips. Brian's very good. You're sort of following someone who's very good at giving our listeners tips. Joshua, I have to warn you. I don't know if you heard our previous episode about tips for investors-

Josh Van Gestel: Brian's seven tips.

Anne Fuchs: Brian's seven tips do we have-

Josh Van Gestel: Do I have seven-

Anne Fuchs: So does Joshua have any ... Does he have any tips?

Josh Van Gestel: I might be a bit more succinct than seven. I think first and foremost if you're thinking about an SMSF, don't listen to your friends. Don't listen to the family. Don't just read the newspaper. Really important to get good advice. Really, really important. Know exactly what you're chewing off. What you're biting off. Know what the reality is not the perception. That would be the first thing.

Josh Van Gestel: Second thing is I think if you're going into a SMSF you have to research. What are you paying? What are you going to invest in? Are there elements you can do yourself? Are there elements that you have to outsource? Know exactly what you, yourself, are going to do.

Josh Van Gestel: And I think thirdly, going back to an earlier point, SMSFs can be a really great option for the right person. And I think the right person is someone who not just wants to invest through it, but also invest the time in it. Maybe have a bit of passion about it and enthusiasm about it.

Josh Van Gestel: If you're wanting a set and forget superannuation product, I'd suggest an SMSF ain't right for you. And there's got to be a greater reason to have one other than to be able to talk about barbecues about it. That would be my closing thoughts I think.

Anne Fuchs: Thank you and I think it's probably I'd like to just highlight to our listeners if they are thinking about an SMSF, they can contact Sunsuper. We have some fund-based advisors. They're able to provide simple advice on super, but they can after talking with you refer you to advisors. We have a number of advisors, external advisors to Sunsuper around the country. We have, we call them [inaudible 00:16:40] but they pass the [inaudible 00:16:42] test. We've stringent sort of guidelines and education standards that they [inaudible 00:16:46] and we have the highest level of trust that they can and will provide you the right advice for you. And if setting up an SMSF is what you need, then they will provide you that advice.

Josh Van Gestel: And Anne, I'd suggest they can also talk to them if they're at a point in their SMSF life if they have one where they feel it's actually time to pass that trust and responsibility to a superannuation fund like Sunsuper and how they actually go about that.

Anne Fuchs: Well I like [inaudible 00:17:13] and Nuser and I think Nuser is absolutely a hotspot for people who like to wind down SMSFs as life becomes more lovely and relaxed and anyway on that note I think I would like to thank you, Joshua.

Josh Van Gestel: Thank you, Anne.

Anne Fuchs: Josh, it's been great to have you. Brian, it's been a bit unnerving. You've been a bit quieter because there's been a special guest on the show but-

Brian Parker: I know. It's been physically painful [inaudible 00:17:36] honestly talk enough. I think I've done well, absolutely.

Josh Van Gestel: Thank you, Brian.

Brian Parker: Thank you, Joshua. Thank you, Anne.

Anne Fuchs: All right, well look forward to you joining us on our next episode of the New School of Super.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage your super, and enjoy your retirement visit, or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super podcasts.

Episode 7

Seven investment rules to live by

The Dream Team return. Join us as Chief Economist Brian Parker and Head of Advice and Retirement Anne Fuchs deliver Brian’s seven top investment tips to live by to help you achieve your retirement dreams.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist Brian Parker and head of Advice in Retirement Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super. Sunsuper podcast series covering investment markets, money matters, your superannuation and most importantly, making sure you fulfill your retirement dreams. With me is my good friend Brian Parker, our Chief Economist here in Sunsuper. Brian is so entertaining, we've had such wonderful feedback about you Brian, because you really do apparently know everything there is to know about money and investment markets..

Brian Parker: Well, thanks so much Anne. I'm so glad about you too. I'm glad to be here with you again, but before we start, as always we need to let our listeners know that what we're going to talk about today is general information only. Any advice doesn't take into account your personal situation. You should consider your circumstances and think about getting personal advise before acting on anything we talk about today. You can also get a copy of that product disclosure statement from our website or give us a call on 131184..

Anne Fuchs: Before we get into it, Brian, I should point out, I actually head up advice here at Sunsuper. So I'm the head of advice and retirement here and we have a fabulous advice offering for our members here at Sunsuper so they can get to trust the advice they need and financial resolutions. [crosstalk 00:01:32] So, happy New Year to you sir..

Brian Parker: Thank you..

Anne Fuchs: [crosstalk 00:01:35] Financial learnings or things that you could explain to our members to help them to get financially fish in 2019 and yeah, are you happy to have a chat about that today?.

Brian Parker: Yeah, absolutely. As I sort of travel around the country talking to members and talking to a lot of the employer groups who use Sunsuper, I've, and really over many, many years, this is ... I've found this is some of the smartest people I've met, really successful people, successful business people, doctors, lawyers, engineers, et Cetera, often have very little clue about money. I've seen some really, really smart people make some really dumb decisions with money and it just kind of struck me that we really didn't get told a lot about money matters. We don't really get taught a lot about investments and financial matters at school and so now we're all grown up and have to my grown up decisions about our super and about whether we can afford a mortgage or in decisions which really our education system hasn't really prepared as for..

Anne Fuchs: Culturally too, I might point out, Brian. That culturally Australians are really uncomfortable generally talking about money. I'm married to a German, Germans are very comfortable talking about money a bit too comfortable-.

Brian Parker: They're too comfortable talking about it..

Anne Fuchs: Too comfortable actually. So we thought in this safe environment of a podcast, people we can have a chat about money today without being judged as you normally would be at a barbecue or at a family function. So there are some lessons, you've got I think six just- <p class="p--xl">Brian Parker: Seven..

Anne Fuchs: Seven? I got it wrong, seven-.

Brian Parker: Seven rules-.

Anne Fuchs: Goodness gracious-.

Brian Parker: When it comes to investing money..

Anne Fuchs: Okay. All right. So the seven top tips, and you've got a really catchy name for this, don't you Brian? The seven top tips. What do you call that?.

Brian Parker: Honestly, this is the seven rules to live by and it's how to keep your face off a current affair..

Anne Fuchs: Yeah. No one wants to be on current affair..

Brian Parker: Yeah, you don't want to be one of those people who turns up on a current affair because of some really, really stupid thing you've done with money. You don't want to be one of those people looking mournful and having Tracy Grimshaw look at you in sort of politely nod at you and feel sorry for you. You just don't want to be one of those people. So I've got seven rules to live by and probably rule number one, we all grew up with the saying that there's no such thing as a free lunch. But in an investment speak, people need to realize there's this long run trade off between risk and return. Anybody who actually comes to you and say, "I've got this great investment idea, is going to deliver a really, really strong returns and it has no risk", run a mile, get out of there..

Anne Fuchs: That was one of the things about story financial, I remember. I've been an advice for 20 years that it sadly when there is risk, but actually understanding what that risk is too. So, this goes back to financial literacy, doesn't it?.

Brian Parker: Absolutely, and when we think about financial markets, we often think about risk in terms of volatility. But for our members, risk is really, "Will I have enough to live on retirement? Could I lose my money completely? Could I suffer a catastrophic loss of capital?" This is what we find a lot of members are really worried about. So understanding risk in return and the trade off is an absolutely crucial part of investing and again, a lot of people get caught up with it on a very basic point..

Anne Fuchs: Actually I'm just thinking it'll might be really good in our next episode when we've got the fabulous Joshua Van Gestel who's our expert in all things SMSF to explore that concept of risk return when it comes to SMSF as well and the risks attached to investing your own superannuation. But not to confuse things now, but maybe something to get our listeners excited about for the next episode..

Brian Parker: Yep, absolutely..

Anne Fuchs: Okay. But what's the next lesson we need to know?.

Brian Parker: Okay, rule two. Now we all again grew up at the saying, "Oh, you shouldn't put all your eggs into one basket", right? Now and again, in investment speak, this is the power of diversification. It's about having lots of eggs and lots of different baskets investing in a whole range of different assets and a whole range of different markets so that if something goes wrong with one particular investment, it's not going to be fatal to your overall strategy and it's not going to ruin your retirement dreams by itself. Diversification is often ... People often say it's the only free lunch in investing, lots of eggs, lots of different bars.

Anne Fuchs: But would that mean having a property portfolio with houses in Redfern, Hornsby and Bondi Beach? Is that diversification?.

Brian Parker: No, probably no. Just means you go both sides of Sydney harbor covered, but that's not really diversified portfolio..

Anne Fuchs: Okay. So what does that mean? What does diversification mean? So it's still breakdown that jargon. So ....

Brian Parker: Yeah. It's like investing in a range of different asset classes for example some shares-.

Anne Fuchs: So what's an asset class? Okay..

Brian Parker: Like shares or fixed interest or property. Lot's of different asset classes but also within that asset class, ensure that you're not just investing in say one or two properties or you're investing in say three shares. It's about investing in lots of different companies and ideally lots of different properties so that you're spreading your risk, you're not going to be ... So if something goes wrong with one particular investment, it doesn't destroy your retirement dreams. Diversification is crucial..

Anne Fuchs: That sounds like a good insurance policy, really protection..

Brian Parker: Yup, it is. It is a way of protecting your downside. It's a way of basically ensuring that if something goes wrong with one thing, it doesn't destroy your retirement..

Anne Fuchs: Okay, well that's a really and very important lesson when you have to live in your retirement savings. Lesson number ....

Brian Parker: Lesson number three..

Anne Fuchs: Three, yes..

Brian Parker: When it comes to investing, jealousy is a curse. I know I hate this old time when someone says, "Oh, but I made a lot of money by doing this" or if you tell "My old boss actually used to call it barbecue risk". Is the risk that you turn up at a barbecue thinking you're doing really well. Let's say you turn up at a barbecue, you've turned up at the barbecue earlier this year and you've just got your statement from your Super fun and you think you've done well and someone turns up and they've done a whole lot better. Now the temptation is to say, well, what did you do? How did you get a better return than me?.

Anne Fuchs: But we don't talk about that in Australia, do we?.

Brian Parker: No, we don't. But if someone says, they might've said, "Oh, I invested here, I invested there and I've made a lot of money" and you think, "Hang on a minute, I was really happy with the way I did. Now I'm feeling really annoyed about how I've done cause I didn't do as well as this other person" and that's a challenge. In other words, my point about jealousy being a curse, it's about your retirement dreams, no one else's. It's about your appetite for risk, it's about your financial needs. What someone else does with their money and how well or how badly they do with their money is utterly irrelevant to you and that's real, and it's particularly dangerous when I go to my rule number four, rear view mirrors and knowledge useful is windscreens both in driving a car and an investing money. So the person you met at the barbecue, what worked for them last year may or may not work for them or work for you over the next few years..

Anne Fuchs: But surely to, I think the media has a role to play here, Brian. Cause when they publish the top performing super funds for 2018 or whatever it might be or talking about investment markets, it does create, as you said, whether it's jealousy or concern, they're missing out the form or panic and as a consequence, people make rash decisions without getting professional advice..

Brian Parker: Absolutely. But the key thing, absolutely right, a short info on some performance makes no sense. Especially when you're talking about superannuation where this is the longest term asset most people will ever hold..

Anne Fuchs: And the second biggest asset they'll probably hold..

Brian Parker: Pretty much, exactly. So really [inaudible 00:08:41], it's about being forward looking. It's about realizing that what worked last year may not work next year. So, really mirrors not being as useful as windscreens. Look, the rule number five is the power of common sense and I call it a BS detector. It's the ability ... Call it a sniff test if you like..

Anne Fuchs: Pretend I don't know what that means, as being the lady I am..

Brian Parker: Well, call it a sniff test. If someone comes to you with an investment idea and it just sounds too good to be true. Well guess what? It probably is. The ability when someone gives you this really hot investment idea they go, "You know what, that's just no, that just doesn't sound right"..

Anne Fuchs: Well, that goes back to my earlier point when you were talking about risk and still-.

Brian Parker: Absolutely-.

Anne Fuchs: What happened there, which was incredibly sad..

Brian Parker: Yeah. But, anyone implying that you can actually generate really, really high returns with no risk, that person is either a fool or a charlatan or both. The best strategy when dealing with those sort of people is to run away and fast..

Anne Fuchs: Cause you will end up on a current affair..

Brian Parker: You'll end up in a current affair. Now rule number six is really, really ... It's very difficult rule to tell any Australian audience. Getting a tax bill is good news. Australians, we hate paying tax and a lot of people in-.

Anne Fuchs: I'm not sure this is Australian phenomenon to be honest?.

Brian Parker: No, I don't think its Australian phenomenon, but do you remember like Kerry Packer famously said that he didn't think politicians were spending money so well that he ought to be paying them any extra. I kind of agree with that, but getting a text bill is good news, it's for the simple reason you made money. If you're getting something back from the tax office because of something you've done with investing, you have lost money and the tax department is saying they're, "Sorry for your loss. Here's a little bit of your money back", but you're still fundamentally staffed..

Anne Fuchs: Yeah..

Brian Parker: So getting a tax bill is good news. Now I also, one of the interesting things about, if you think about Australia's history, we used to have really, really high rates of income tax. The top marginal tax rate used to be over 60 cents in the dollar, close to 65 cents in the dollar. Now, if the tax man is going to take 65 cents of your marginal dollar, well by God you do everything you could to avoid nine techs and a lot of people did and a whole industry sprung up to help you do it. Think macadamia nuts, think olives, think tea tree, think a whole range of these things. All designed to basically lose money, so you save tax. Getting a text bill is good news and it's funny how that industry and that sort of mentality to not want to pay tax and to try and get out of paying tax has survived the fact that the top marginal tax rate is now miles below where it used to be. But getting a tax bill is good news, making money good, losing money bad, fairly basic investment preposition..

Anne Fuchs: So if you don't want to lose money, what would be? One, what's your final tip?.

Brian Parker: My final tip is a good advice pays. Good medical advice, good legal advice and good financial advice pays and we believe very passionately advice here and the good financial advice can make a really meaningful difference to people's retirement outcomes. It also means that a financial advisor worth his or her salt should never balk at saying, "I kept your face off a current affair for another year. Here is a bill, here's the cost of my professional services" cause that advice absolutely has a value..

Anne Fuchs: Okay and do you know, we were doing some analysis, the sort of tail end of 2018 looking at those members at Sunsuper who have sought financial advice and have got financial advice and those that haven't, and there is, I mean, you're not going to be surprised by this Brian, but there's a profound gap difference in terms of what people ending up with in retirement. The activity on their account is much more sort of engaged activity around, making the right investment choice, making sure they've got binding nominations when something bad happens. They're really, really so much better prepared for their retirement. Which is why we bang on about it so much to put a cross like we just want more members to do this because you'll be better off as a consequence, that's why we come to work every day..

Brian Parker: Absolutely..

Anne Fuchs: I think we have covered the main points very succinctly today, Brian..

Brian Parker: I think we have indeed. Absolutely. So look, there's my seven rules to live by. I'm very much looking forward to the next podcast..

Anne Fuchs: Look, I am sure Josh Van Gestel is quite a force of nature. I don't know how you're going to contain yourself, Brian in the next episode. You'll have some serious competition..

Brian Parker: I'm sure I'll be fine..

Anne Fuchs: Okay. All right. Well thank you very much for listening and we look forward to you joining us at the next episode of the New School of Super..

Voice-over: This has been the New School of Super. For information and inspiration to help you plan your future, manage your super and enjoy your retirement, visit or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, Then get in touch at for it to feature in one of their future New School of Super Podcasts.

Episode 6

Using your super when you retire

Join Sunsuper’s Dream Team as Chief Economist Brian Parker puts Head of Advice and Retirement Anne Fuchs in the hot seat to discuss why it’s never too early to start planning for your future, and explain when and how you can most tax-effectively access your super pot when you retire.

Launch Podcast

Voice-over: Welcome to The New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future with Sunsuper's Chief Economist, Brian Parker and Head of Advice and Retirement, Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to The New School of Super, Sunsuper's podcast series covering investment markets, money matters, and your superannuation, and most importantly, helping you achieve your retirement dreams. With me is my friend, the Chief Economist of Sunsuper whose name is Brian Parker. This man knows everything when it comes to investing. He is a source, font of wisdom that we rely on heavily here at Sunsuper. It's great to see you Brian.

Brian Parker: Thanks Anne. Good to be with you again.

Anne: Now, I know you know who I am, but I probably should introduce myself to our listeners. What do you think?

Brian: Every chance really.

Anne: Every chance. So my name is Anne Fuchs. A little bit of gem for our listeners. Fuchs means fox. There's a bit of tidbit for you today. I head up advice and retirement here at Sunsuper. The team and I, we are passionate about helping our members fulfill their retirement dreams, and I would argue the most important enabler for that is actually good quality financial advice.

Brian: Well, thanks very much for that Anne. Today we're actually going to flip our normal podcast schedule, so yes.

Anne: Oh, we're getting crazy.

Brian: We're going a bit crazy. I am actually going to do the interviewing for a change. I'm going to actually ask you some questions. Now in particular today we're going to delve into the whys and hows of using your super balance when you retire, and I'm going to look to you Anne to give everybody listening the straight answers on how far ahead people should be thinking about retirement and what they should do now to make sure the lifestyle they want in retirement is going to be delivered.

Brian: Now before we start, we do need to go through our usual disclaimer. I need to let everyone listening know that what we're going to talk about today is general information only. Anything we say today can never possibly take into account your particular circumstances. You need to consider your own circumstances and think about getting personal advice before acting on anything we talk about today. You can also get a copy of our product disclosure statement from our website, or by calling us on 13 11 84.

Anne: Look, talking superannuation and retirement particularly to younger people but I would actually argue for most Australians is something they really don't want to talk about. I remember when my grandfather retired at 65, people weren't living, particularly men much longer after that. Where now men are living to 84, 87, and the kids that are being born, the babies being born now will well and truly make that, they'll all be getting a letter from King Charles probably and Queen Catherine.

Brian: That's going to be really a frightening thought. That's all good points Anne. In fact, I've always felt the old adage was that people start to pay attention to their super when the balance gets to either 100,000 or a year salary whatever comes first. But when should people be starting to really think about their super and think about retirement? At what point should they really start planning for their retirement?

Anne: There's a really disturbing statistic Brian that people in their 30s, early 30s in particular, the average man has about $43,000 in their superannuation and the women only have $33k. Probably in our 30s, that's when a lot of us have interrupted career breaks because we're having families, so that situation and that inner quality is then compounded again and again, which is why we're seeing more women retiring in poverty and women retiring with 50% of the balances as men.

Anne: So my argument would be that particularly for women, they need to be taking a much active interest as early as possible, but of course men too. I think I speak to all of our listeners that are feminists out there that if they are calling themselves a feminist and they believe in equal opportunity, then you can't assume that in superannuation you're getting a fair go and you need to do more in terms of planning for your retirement.

Anne: I think culturally too about superannuation Brian, and when our members call us, you're spot on, they generally only call us when their balance is of a decent size or they're getting close to retirement. The longer you leave it, my analogy is it's almost like putting on sunscreen. The early you put on sunscreen, the better condition your skin will be in. If you start putting sunscreen on in your 40s, the damage is done. If you're not paying attention to your superannuation until you're late 40s, early 50s, there is only so much a financial advisor can do. You have a couple of choices, you work longer, you invest in more risky assets, and put out your retirement recognizing the risk attached to that, or you die earlier. None of these are particularly attractive options for most Australians.

Brian: Yes, right, Anne, it really just highlights just how important financial advice is, and over many, many years of talking to members and talking to clients of financial advisors, I really haven't spoken to anyone who said, "Gee, I wish I would have come here later." I've spoken to plenty of people who've said, "I should've come here a lot earlier," but also people who've said to me, client seminars or member seminars, "Gee, I should've brought my children or brought my grandchildren along to listen to this."

Brian: Okay, Anne, so talk to us about when people can actually get their hands on their super and how they go about it?

Anne: This is really important when you think about the life expectancies I was mentioning earlier that we're living longer. So the government has a real risk on their hands. They can't afford to pay everyone a pension if we're all living longer. So they've got to make some hard decisions. They've got to balance a budget and so they're looking at what is the right preservation age now and into the future. As it stands it's 56, but it's increasing. This is what our listeners need to understand, that if you're born after the 30th of June in 1964, it'll be 60 for you.

Anne: I as almost a 43-year-old I'm very well prepared that it might be 70 by the time I retire, which is all well and good if I work in a white collar job and I'm not doing physical labor. But many of our members who are listening would be in quite physical roles, whether they're in hairdressing, or laboring, and that has a much bigger impact for our members. I encourage our listeners to think about, "Well, if that preservation continues to go up, what are my options in terms of planning for retirement," and picking up the phone and speaking to us earlier.

Anne: One of the things Brian I probably want to point out to our listeners is that they probably don't understand that when they retire, if they're getting good quality advice, they can set up an income account in retirement. Once the money reaches preservation age, they can roll into this thing that a lot of people call in everyday society a pension and they can use that to draw a tax-free income in retirement.

Brian: At the end of the day I mean superannuation is meant to provide a long-term income stream in your retirement, and your point about that people do tend to look at their superannuation balance and then just kind of take it out, and depending on the size of the balance and what sort of debts for example you might retire with, we do worry that a lot of people take that balance out and then either spend it on a retirement holiday or pay down a mortgage or whatever, but they're not left with much left to actually fund their retirement income. I think it's important for people to consider that when you do retire, the advantages of leaving the money in the system, leaving the money invested so that it can continue to grow.

Anne: Yeah, it's working for you.

Brian: Absolutely, because we all hope to live a hell of a long time.

Anne: Well, and I'd also point out too that if you're keeping it in that superannuation product as opposed to moving it across into either a transition to retirement which we can touch on our retirement income account, you're paying tax unnecessarily within the fund, where if you're moving it across to a retirement product you're in a tax-free environment. And I don't know any Australian ever that wants to pay more tax than what they have to pay.

Brian: Absolutely.

Anne: There's a lot of people too if you think about retirement and what the new paradigm is that maybe retirement isn't just sort of starting getting out the knitting needles or the golf clubs, but you might scale back your work, you might do a different type of job, you might pursue a different career, open up a coffee shop or do tutoring if you were a teacher, whatever that might be, and you can actually set up what's called the transition to retirement account when you reach preservation age. So you can keep contributing to super and also draw an income which is a really tax effective way of accessing your superannuation once you've hit that preservation age.

Brian: Okay. And what about those people who want to have a more traditional retirement, they want to be working one day and not working the next, how do they get access to their super and what should they do?

Anne: That's a really good question Brian. For those people that want to pack up their desk, go home, and that's it, put their feet up and relax and enjoy their retirement, they have a couple of options available to them. If they meet that preservation age I spoke about earlier and they really are retired, then they can look at a retirement income account. Or if they hit age 65, that's also worth noting, there are people that will continue to work full time after age 65. They can also set up a retirement income account.

Anne: The thing to note there is a retirement income account and I did touch on it before, but I cannot stress it enough why this retirement income account is so great for anyone that meets that preservation age or retirement age is because they can be investing with us, with our fabulous investment team, having all of the benefits associated with that, drawing an income stream to fund their lifestyle, their holidays and all of that, and there is not a cent of tax being paid. Now if that is not a compelling opportunity and something to consider. But sadly I have to say a lot of Australians do take the approach that they either get to retirement age or preservation age and they pull their money out and put it in the bank, and we all know what interest rates are doing. Are they doing well or not so well?

Brian: Lots of things with it, bank interest is ... Even pre-tax bank interest is pretty disappointing at the moment.

Anne: Pretty dismal, so not doing much. And if you've got that longevity risk of living to 80, 90, 100, you've got that money's got to be doing something, doesn't it Brian?

Brian: Yeah, absolutely, we all hope to live for a long time. So while we want to be somewhat cautious in our investment approach, but we also want to make sure that our assets will hopefully live as long as we do.

Brian: Okay, so we talked a lot about the need for an income in retirement. We talked about longevity. We talked about transition to retirement. But for those members approaching retirement, what should they do now?

Anne: Do not go to doctor Google would be my advice. This is a serious matter. Your health, your family, and your financial security are the three most important things. You will always go and seek professional advice when it comes to your health, and I think, I strongly believe the same applies to money, and at Sunsuper you can. We have great tools and calculators and lots of information on our website if you want to self-educate. I should point out too that there is lots of information particularly on the MoneySmart website that ASIC have. But I think you cannot beat talking to somebody either face-to-face or over the phone, and depending on the complexity of your situation because the reality is this concept of retirement is an emotional thing, it can create a lot of conflicting emotions of joy and fear and having that human interaction is important.

Anne: Sunsuper have a team of advisers that can provide our members advice about their assets invested with Sunsuper. The sooner you do this, think of I'd go back to the skin analogy Brian. We all are slathering sunscreen all over our children from the moment they leave the house, and maybe we can make generational change here because when I was a kid growing up in Brisbane, you were growing up on the Gold Coast, I don't recall my parents' hysteria if I left the house without sunscreen on. But these days kids know they've got to put on sunscreen. Maybe we can create generational change in superannuation and get the younger people more engaged and buying into this investment that they own. I would encourage the older members listening to talk to your children about it, have a look at the statement with them, play around with the calculator, and again, pick up the phone. We've got a great team here to help you.

Brian: Thanks Anne. Thanks everybody listening for their time. We hope to join you again in the next podcast.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage your super, and enjoy your retirement visit, or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super podcasts.

Episode 5

Politics, financial markets and your super

From our new PM and whispers of a potential property crash, to the inexorable antics of President Trump and a fractious and fraught Brexit, Sunsuper’s Dream Team looks at what it all may mean for investment markets, your super and your dreams in retirement.

Launch Podcast

Voice-over: Welcome to The New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future, with Sunsuper's Chief Economist, Brian Parker, and Head of Advice and Retirement, Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to The New School of Super, Sunsuper's podcast series covering investment markets, money matters, your superannuation, and most importantly, helping you achieve your retirement's dreams. With me today is Brian Parker, our Chief Economist here at Sunsuper, the man who knows everything about the world, the Australian economy. He reminds me all the time that he knows everything at Sunsuper, don't you, Brian?

Brian Parker: Oh, no, Anne, but as long as you think that, that's fine.

Anne: Okay. Well, look, before we get started, I should introduce myself. My name is Anne Fuchs, and I am the Head of Advice and Retirement here at Sunsuper. Me and the team, we come to work every day to help our members get good quality, trusted financial advice so that they can fulfil their personal retirement dreams.

Brian: Thanks very much, Anne. Today we just wanted to give you all a bit of an overview of what's been happening in politics, what's been happening in the Australian economy, the global economy, and also most importantly, what is it all going to mean for your retirement savings?

Anne: Because not much has been happening.

Brian: No, it's been pretty quiet really.

Anne: Very quiet. Well, we've got to do something, don't we, Brian, before we start?

Brian: Yes, we do. We need to let you all know that what you're about to hear from us is general information only. Nothing we say today can possibly take into account your personal situation. You should consider your circumstances and think about getting personal advice before acting on anything we discuss. You can also get a copy of our product disclosure statement from our website, or you can call us on 13 11 84.

Anne: Thank you, Brian. Well, Australia, have we now beat Italy as having the most prime ministers in a period of time? I mean, it's been quite extraordinary. There are certainly some problems in Canberra, to say the least. Has this had any impact on markets and investing? What's your view?

Brian: Well, it has gotten a little bit embarrassing, but what's interesting is that when you talk to global investors and you talk about political uncertainty in Australia, they kind of look at you as if you're from another planet, because relative to a lot of other places around the world, our politics looks kind of mundane. I know it's hard to believe that when we look at it from our perspective, but if you're sitting there allocating global portfolios, Australia still looks like a relatively safe investment from a political perspective.

Anne: I guess that's probably because the policy framework isn't jumping about with prime minister changes, and there is a degree of policy certainty there.

Brian: Look, that's exactly right. That's a really, really important point actually, Anne, because if you think about what really matters from the point of view of financial markets and for long-term investors is it's the long-term direction of the things like interest rates and inflation, the long-term outlook for sort of corporate profits, but even from a government policy perspective, what are both sides of politics likely to do about, say, the budget deficit, for example? Even though there's a lot of noise coming out of Canberra, those sort of broad policy settings, there's not really as much difference between the two sides as you might think. The Reserve Bank still runs monetary policy. The Australian dollar is still going to be influenced by a whole range of things, most of which have nothing to do with events in Canberra. Even when you look at the policy differences between both sides of politics, they really don't add up to much in terms of their influence on the longer-term outlook.

Anne: It's interesting, I think, when you look at developed economies that ... Pardon me, the developed economies around the world are in essence where sort of the crazy behaviour is happening at the moment, and the instability exists if we look at Trump's America and Brexit, two of the biggest developed economic blocs in the world. It just looks a bit scary right now. This morning, I turned on the news, Brian, and I need you to break this down for me and for our listeners. This prospect of a tariff war between the US and China actually looks like it's about to happen.

Brian: Oh, it's underway, well and truly, this sort of tit-for-tat increases in tariffs that both sides have engaged in, and I think there's two key messages for me. One is that the measures that have been put in place thus far, yes, they are significant, but they're not the kind of thing that could seriously derail prospects for either the US or global or Chinese economy. Yes, they are a worry, but they're not the sort of thing which could, by themselves, force the world into another recession, for example. The second thing I'd say is that the trend is clearly not your friend, that the longer this goes on, the more we do risk causing serious damage to the global economy.

Anne: One of the things I also heard on the news this morning is that Australia is choosing not to buy into the rhetoric and the tariff war, and because we rely very heavily on the Chinese economy, and we're in a bit of an awkward position because we have the strong military ties to the United States, but we also have the very clear imperative to stay good with China because our economy needs it. What's your take on that and where this could be heading?

Brian: The short answer is it's complicated, but when you look at the economic impacts potentially on Australia, firstly the bad news. The bad news is that, look, we are a small open economy, and anything that is bad news for world trade is going to be bad news for us. The second thing though is that when you think about the kind of things that we sell to the rest of the world, and most importantly, the things that we sell to China, the things that we sell to China don't tend to feed into Chinese exports. They tend to feed into what's happening within the Chinese domestic economy.

Brian: Let me explain that a bit further. Iron ore is a classic example. Out of the iron ore that we ship to China, not much of that is going to be turned into something else that ends up being sold into the United States, and therefore potentially being the kind of thing that causes Trump to get angry at us. The stuff that we ship to China overwhelmingly goes into helping to develop the infrastructure of the Chinese economy, so in that sense, our exports are not as directly vulnerable to what actually Trump might do. That's a piece of good news.

Anne: That's good news for members, but what about too ... I saw Boris Johnson on the news a lot in the last couple of weeks, and I'm worried. There was some quite dramatic language about the impact that Brexit will have on the United Kingdom and their economy. Is it as dire as that, and is that something else that could have any flow and effects for Sunsuper members and the Australian economy?

Brian: Yeah, look, I think my base case on Brexit is that firstly, yes, it's going to be in the short to medium term, a disaster, well, particularly the short term, because frankly the grownups aren't in charge.

Anne: Angela Merkel's a bit of a grownup though, isn't she?

Brian: Yes, but she's not in charge in the UK, so look, I think that ... and I do feel for Theresa May, because she really got thrown a hospital pass in being forced to deal with all this. It's very hard to see how a deal could be put in place that won't cause at least some significant disruption to the UK economy, but, and this is where the impact on Sunsuper members comes in, over the longer term, is the UK still going to be an economy that will grow and still provide investment opportunities for long-term investors? The answer is absolutely yes. In the case of Sunsuper members, do we have an exposure to the UK? Yes, we do. We will own shares that are listed on the UK stock market. A lot of those shares are in companies that actually do business not just in the UK, but all over the world. They just happen to be listed in London.

Brian: But also towards the end of last year, we acquired a small equity holding in a couple of airports in the UK, in Birmingham and Bristol. Now, you might say, "Why the hell did you do that, given that Brexit is going to be pretty ordinary?" My short answer is that firstly, we buy airports not with the idea of selling them in six to 12 months. This is going to be a multi-year investment for Sunsuper members, and also as we all know, the weather in the UK is lousy 11 months out of 12. Poms are going to fly, and every time they do, we are going to make money for our members.

Anne: Now, journalists and the media have a lot to answer for. If you turned off the TV, you'd probably be doing yourself a favor in a lot of instances, because there's a lot of bad news. There has also been some bad news about the property market here in Australia, in particular Sydney, Melbourne, and to a lesser extent, other capitals around the country. What's your interpretation of this? Because I've actually heard the term, 'we're heading into the next GFC' being thrown about.

Brian: That's a really good question. There's a lot to unpack there. Let's talk about property first. Whenever anyone asks me, "What do you think about the Australian property market," my answer is always, "Which one?" Because so much of the commentary that we read is very much Sydney and Melbourne-centric. When you talk about a bubble in Melbourne property or a bubble in Sydney property, that has not been replicated across the whole country. In fact, there are heaps of areas in the country, especially the regions that were formerly the sort of boom towns during the mining and gas boom, where you saw property prices reach ridiculous levels only to have them collapse.

Brian: If you go to some of these regional areas and talk about a property bubble, they'll look at you as if you're from another planet. A lot of the commentary, a lot of the concern, is very much Sydney and Melbourne-focused. Other parts of the country haven't seen, at least recently, anything like the kind of gains that Sydney and Melbourne have had, and so I think it's important to understand that the Australian property market is quite a diverse beast. The likelihood of getting a 20, 30, 40% across-the-board collapse in property prices is relatively low. I'm somewhat more sanguine than some of the doom-and-gloom stories out there.

Anne: Because we invest in a lot of property at Sunsuper. It's a big part of how we invest money.

Brian: Not so much residential though. Our residential property exposure in Australia is minimal.

Anne: That point you made earlier about, well, what type of property, so maybe do you want to explain? We spoke residential.

Brian: Yeah, I mean, we do have ... For example, we are Australia's largest owner and operator of holiday parks, so we own the Discovery Park network across the country. Do we have office properties? Yes, we do. Do we have industrial property exposure? Yes, we do. We don't tend to have residential exposure, although we will, for example, own shares in companies that build residential property, so that's another matter. One of the reasons we do that is that we typically find with Australian superannuation members, our members will typically already be quite heavily exposed to property, either because they work in the property industry, they own their own home, they may have investment property as well. We don't really want their super fund to be adding to their property exposure, if you like.

Brian: The second thing is that we are quite open to the idea of property investments internationally. For example, in the United States, we will own some exposure in what we call multifamily property investment. These are apartment or housing developments that are built for the rental market, where the yield you can get on those assets is actually quite attractive for Australians.

Anne: Actually, I understand too from our head of unlisted assets, Michael Weaver, that we own a property on the Königsallee in Dusseldorf where my husband is from, so I was very, very happy. I'll have to go and visit it when I go and visit the in-laws in Dusseldorf soon.

Brian: Absolutely, and point of them is that we own that building. I think that's an important point to bear in mind. We are a global investor. We build globally diversified portfolios in all the asset classes we invest in, including in property. Anne, you mentioned the GFC again, and a lot of people in the media talking about, well, is there a risk of another crisis? Look, we've now had many years of decent investment returns, very strong investment returns in fact. It's now been about a decade since the GFC. The world economy has grown at a pretty solid pace. Investment returns have been very strong. Will we see another recession? Yes, we will inevitably. Downturns happen. Recessions happen. Can we time them with any degree of precision? I would argue we can't.

Brian: Many of our members, in fact most Sunsuper members, are relatively young. If I'm sitting here, if I was in my 20s or my 30s, which is where the bulk of our members are, I am investing for 30, 40, 50 years. Now, over that period, I'm highly likely to have to experience a whole range of different crises along the way. I might end up with a major market downturn or a significant financial crisis, I don't know, maybe four, five, six times during my working life. I might experience a whole bunch of sort of miniature versions of it over that time. This is how the economy works. This is how financial markets behave.

Brian: But the key takeout for members is, if you see a major market downturn, your level of pain, how bad you feel about that, very much determines what sort of investor you are. If you're the kind of investor that says, "Look, this is a part of life. I understand that markets will have their ups and downs, but over the longer term, they deliver good, strong returns," if that is your view, that means you're likely to be a far more optimistic and perhaps a more growth-orientated investor. But if you're the sort of investor that says, "Every time there's a major market downturn, I lose sleep," that would tend to suggest that you're a more conservative investor.

Anne: I think that's a really good point, Brian. There was an episode we did recently about life-cycle investing, and timing is, I guess, everything from an investor point. As someone that's the person that heads up all things retirement at Sunsuper, our members ... Well, obviously financial advice is really important, but when you retire and where that sits within the cycle of investments and financial crisis is equally as important if you're realising or in essence withdrawing some money out of super.

Anne: I think I'm mindful of time, and I just encourage our listeners to go back to that episode around our investment options. Brian's spoken about what type of investor you are and your risk profile, how optimistic you are. Also think about, what is the timeframe for when you want to retire? If you are feeling nervous, we encourage you to pick up the phone and speak to one of our financial advisors, or speak to your advisor if you have one already. Brian, thanks. We've really covered a lot of topics today, haven't we?

Brian: We have indeed actually, and thanks very much for your time.

Anne: Thank you.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage your super, and enjoy your retirement, visit, or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super podcasts.

Episode 4

Socially responsible investing

In this episode, Sunsuper’s Dream Team is joined by special guest Stuart Wilson, Sunsuper’s Manager for Environmental Social and Governance (ESG) Investments to talk about socially responsible investing and Sunsuper’s approach on behalf of its members.

Launch Podcast

Voice-over: Welcome to The New School of Super. A fresh look at money matters, your Super, and the things that could affect your financial dreams now and in future, with Sunsuper's Chief Economist Brian Parker, and Head of Advice and Retirement, Anne Fuchs.

Anne Fuchs: Hello and thanks for listening. Welcome to The New School of Super. Sunsuper's Podcast Series covering investment markets, money matters, your Superannuation, and most importantly, helping you reach your retirement dreams. With me is Brian Parker, Sunsuper's Chief Economist, the rock star of economics in my mind, and what this man doesn't know about investing is not worth knowing. And we have a special guest today which is very exciting. His name is Stuart Wilson, and Stuart is the Manager of Environmental, Social, and Governance Investments here at Sunsuper. Now this is an area of investing which is getting a lot of interest out there. It's very topical. Socially responsible investing is something you might have heard about before, and Stuart is here today to talk to us about how we approach this at Sunsuper.

Anne: Now before we kick off, I'll just introduce myself in case you haven't heard the previous podcast series. My name's Anne Fuchs, and I head up Advice and Retirement here at Sunsuper. I'm passionate about helping our members get the right financial advice, so that they can live a happy and fulfilling retirement. So, Brian ...

Brian Parker: Thanks, Anne. Today, we're joined by Stuart as you said, and he's gonna explain a lot about socially responsible investing, and our approach to socially responsible investing. I think it's fair to say that people in general and super fund members in particular are probably more concerned than ever about how and where their savings are invested. Now, we take this area of investing extremely seriously at Sunsuper. Now, before I start though, there's the usual disclaimer. I need to let you know that anything we're gonna talk about today is just general information only. Any advice does not take into account your particular circumstances. You should consider those circumstances and think about getting personal advice before you act on anything we talk about today. You can also get a copy of our PDS, our Product Disclosure Statement, from our website, or by calling us on 13 11 84. Anne, over to you.

Anne: Okay, Stuart, let's start with socially responsible investing. This acronym, ESG, it was in your title before. Environmental Social Governance. It sounds like a bit of investment jargon for the ordinary person. What does this mean to Sunsuper and why is this really important that members understand this?

Stuart Wilson: Thanks, Ann and it's great to be here. Okay, so ESG is one of the many acronyms that is in my world. Environmental Social and Governance. So all things non-financial risk fall under my purview. And it's important when you're doing investments for the long term, that you're not simple looking at the next six months' earnings, and things like that, that you actually take a broader world view of trends that are happening, underlying risks that some investors not always pick up. And that's my job, to integrate these sorts of risk management processes into our investment decision making and thinking.

Anne: But what does that really mean, Stuart? So when you're talking risk and I think about investing, I think about the stock market going backwards and losing money, and I'm sure to most members, that's what they're thinking about. ESG and risk, where is the risk? What should we be looking out for and what are you looking out for in your job, in protecting our members' money?

Stuart: Okay, so when you're looking in my world, there is a whole range of issues that get thrown out. It could really come from any direction. It could be something in relation to the environment such as climate change. It could be within social issues around stolen wages, or a lack of good safety processes within a company. And within governance, all things around the Board of Directors and how good they are, through to how you remunerate or pay the CEO, and what are you motivating that CEO to do. So all of those sorts of things get thrown into my bucket.

Anne: So, what I'm hearing there is that the superannuation fund in Sunsuper, with very close to 60 billion dollars of assets under management is using that money for good societal community outcomes. Is that what I'm hearing you say?

Stuart: So we have a broad range of investments, and all things being equal, we prefer to invest in things that make a positive impact on the world. But we invest in a whole range of industries and companies.

Anne: So, let's get it into the technical just a little bit for our listeners, so that they can educate themselves about this area of investing. There's a bit of jargon that I know is used, terms such as exclusions, activism, engagement. What do these words mean when it comes to ESG investing?

Stuart: Okay, so as I mentioned, we have a whole range of things that get thrown at us from a risk perspective. They might come from media, they might come from members. They might come from the companies themselves. And we have to take all of these issues, and consider them both in terms of materiality, but also how they might impact the investment portfolio. This means that we have to put them in separate buckets, depending on how severe they may be. Exclusion for instance is something that we prefer not to do, but we will do in extreme circumstances. It means simply getting out of that industry or sector, or things relating to that issue altogether. Activism means taking a really strong view, public view of a particular issue. Engagement talks about behind closed doors meetings with companies and their management, and their boards, to try and get an improvement or resolution. And watching is simply building up our knowledge base on a particular issue, with a view to determining what to do about it.

Anne: So, what are some examples that can bring this to life? What are we not investing in, and what are some of the companies where we've decided that we're going to sell our investment, for example?

Stuart: Sure. Okay, so the main exclusion that we have is tobacco. And we got out of tobacco manufacturers around about five years ago. So, it's been a long standing exclusion. And it's something where we were actually quite early to exclude. Smoking kills almost six million people a year, and it's a unique thing in that taken as directed, it's probably going to kill you. From a customer perspective, it's not great. From an investment perspective, smoking rates globally are falling. Regulation to curb smoking is on the increase. There are E-cigarettes that are in competition. There's a whole range of head winds for that industry, and therefore it makes sense not to be invested.

Anne: So, Stuart, how is that done over a five year period?

Stuart: So, in the five years that we've been out of tobacco, that sector has actually underperformed the market. So, we've actually, it's actually been a positive for members.

Anne: So, smoking's an obvious one, we all know that tobacco is terrible for you, and everyone pretty well agrees with that probably, except the tobacco companies. So, let's think about something that's a bit more contentious and there are different views across certainly the political divide, scientific, and community around climate change. How does a fund like ours approach climate change with an ESG lens?

Stuart: So, we believe in the science of climate change, that the world is gradually getting warmer, and that is to do with human intervention. However, the energy sector is a huge part of financial markets and simply getting out removes the chance that you have for engaging with companies. We look at climate risk through a range of different factors. It's not just how quickly fossil fuels are going to be replaced by renewable energy. It's also a consideration in the physical impact, so the impact of say, the water level rising, or the frequency and intensity of storms on our assets. All of those things are being taken into account.

Anne: So do we then go and invest in renewable energy sources. Are we? Is that an extension of our approach to climate change in ESG, Stuart?

Stuart: So we've increasingly started looking at renewable energy and we've made some investments in that space. They are very, very popular at the moment, and the costs are still coming down. So, we still have a very, very disciplined investment approach, a hard headed investment approach, to make sure that we're not buying things that are just too expensive.

Anne: Okay, and I'm very mindful about time, but I think it's really important to think about, if you're an investor and this is an asset class or a belief system that you hold very deeply and you want your Superannuation to be doing good for the community, how would you invest in Sunsuper? What do you need to be looking out for in our investment menu?

Stuart: Okay, so we have over 20 different options that people can choose from. One of them is our socially conscious balanced option. It's similar to our other balanced option, which is our default fund, but it is ESG on steroids. So, it has a lot more exclusions. It moves into best of sector in relation to ESG for companies, so we try and pick the best of the best. And it's expected to perform inline with our general balanced option. So, it's something for consideration if you were of that mind.

Anne: So Stuart, are you leading a big team, and how involved is the broader Sunsuper business, you know from the top down with the Board and our Chief Executive. Do you feel like you're a very popular person, with a big team of people helping you?

Stuart: The Board is very engaged. We have a diverse Board with different backgrounds, different perspectives. One thing that they have on top of, doing everything in members' best interest is having a very keen interest in ESG and responsible investing. So, they are continually encouraging me to increase the amount of integration within the investment process. The team itself is only relatively small, but I like to think that our ESG activities extend through the investment team, where everyone is a champion.

Anne: Thank you very much, Stuart, for that explanation of ESG. In a prior episode, Brian and I were talking about investing more generally, different asset classes, and the investment menu. If this is something of interest, have a listen to that prior episode and also, you can go to our website and have a look at our investment menu, and find more information. As I said, it's an area growing of interest. I know particularly with the younger demographic of members that are very passionate about doing good with their retirement savings. So, it's been wonderful talking to you today, Stuart. Thanks for coming along, and Brian I have to say, it's a bit unnerving, you being quiet over there. We're not really used to it.

Brian: I know, it's certainly out of character, but I think it's really good to hear from experts internally like Stuart, and the main message I take out from this is that investing with an ESG lens can be done quite comfortably without compromising your return outcomes. That we believe that investing sensibly from an environmental perspective, investing with companies that actually are aware and want to benefit positively the communities they operate in, and companies with good governance ultimately make good long term investments for our members.

Anne: That's exactly right. I think the point that Stuart made about tobacco was really bringing that what you've just said to life.

Anne: All right, well thanks everyone. We'll look forward to talking with you on our next podcast episode.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage your Super, and enjoy your retirement, visit Or, if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at for it to feature in one of our future New School of Super Podcasts.

Episode 3

The world economic wrap

We’re living in strange and interesting times, but what does it all mean for you and your super? Sunsuper’s Dream Team takes a look at economic growth since the GFC, how current geo-political and other events are shaping the world economy, and what it all might mean for your super investment.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future with Sunsuper’s Chief Economist, Brian Parker and Head of Advice and Retail Distribution, Anne Fuchs.

Anne: Hello and thanks for listening. Welcome to the New School of Super – Sunsuper’s podcast covering all things investment markets, money, and you know that thing that helps you achieve your retirement dreams – superannuation. My name's Anne Fuchs and I head up financial advice at Sunsuper and sitting opposite me is the Chief Economist of Sunsuper who knows everything when it comes to the economy and investments. Brian Parker, it's so wonderful to see you today.

Brian: Thanks Anne, good to be here.

Anne: So Brian, we’re going to be looking at the world and the economy and how it impacts members’ money, but before we start having a bit of a natter about that, the people in compliance upstairs want us to say something don’t they?

Brian: Yes, they do, Anne. Every time. This is just general advice – but if what we say prompts you to think about taking some action with the way you’re investing money either within your super or outside of it, then please seek personal advice.

Anne: Great financial advice can change things for the better. That’s my little infomercial in this podcast today. So, Brian, we’re living through extraordinary times, I think about 2008 and they were dark, dark, days but it seems like a lifetime ago and we’ve experienced this extraordinary growth. What’s happened?

Brian: It’s a really good question. And I remember 2008 and early 2009 well, and back in early 2009, let’s make no mistake about this. We really were standing on the edge of financial abyss. We really were on the edge of Great Depression part 2. The world financial system was going into meltdown and policy makers at that point seemed to be clueless. However, they did actually take steps which not just brought us one or two steps back from the abyss, but many steps back from the abyss. You know, just when you think things couldn’t get any worse, they don’t, they actually get better. And it’s worth remembering that if you look at the history of these things, every crisis, every downturn, every bare market, every recession bar none comes to an end without exception. At the end of the day, life and the economy and business goes on – the only uncertainty is the timing. And clearly since the end of that time, we have seen some very, very strong returns from world share markets in particular and that’s really helped propel superannuation fund returns over the past 5 to 7 years.

Anne: So what have been the themes in terms of those bright pockets of growth, where I’ve got my superannuation statement and I’ve seen year upon year is growing and growing, what are the themes underlying that? What are the sectors, what are the countries? Where are those bright pockets?

Brian: Let’s talk more broadly. Back then, if you started your investment journey in February 2009, you were starting from a point where global share markets looked unambiguously cheap. Where there was so much bad news, not just in the headlines, but so much bad news factored into the price you paid for shares here in Australia and all around the world. And a lot of the future returns you generate from any asset you buy is really determined from how much you pay for it upfront. And if you overpay for an asset, any asset, the future returns are almost by definition going to be lousy. But if you buy cheap assets that deliver you a reasonable income then your future returns are probably going to be pretty good. and that was one of the overarching lessons, I think, in February 2009, that there was so much bad news factored into share prices already. In addition, a lot of the steps that policy makers took during 2008 and early 2009, both the world’s major central banks, but also governments, actually did bare fruit. They did actually help drive a recovery in the world economy. That recovery helped drive a recovery in things like employment and corporate profits and share prices, and that really helped underpin very good returns over the last 5 to 7 years.

Anne: The growth in particular, if I can ping you, and say looking at the emerging markets versus developed countries, the European Union, the USA versus Brasil or China, how has that played out over the last 5 years and are you game enough to make a prediction about the next 5 years?

Brian: Look, a lot of what I’m about to say, it really does depend on where markets have gotten to today. If I look at valuations, if I look at what I am being asked to pay to buy assets in a range of markets, in particular to buy shares in major world share markets, there are very few bargains to be had. Back in early 2009, there were plenty of bargains to be had. You know, we were in crisis and so there were plenty of good quality assets, good quality businesses trading at very, very cheap prices. And so, when prices return to what you might call fair value, and in many cases beyond fair value, you made a great return. Today, if I was starting from scratch and putting money to work today, I’d look around and say well, where are the bargains? And there are not many out there. Because past returns have been so strong so it’s very, very hard to buy quality assets at a genuinely cheap price. Now what does that mean? It means that overall, future returns are probably going to be lower than the returns we’ve seen from share markets in general and super funds in particular in the last 5 to 7 years. And you mentioned emerging markets.

Anne: I was going to say I wasn’t letting you run away

Brian: You thought I was going to avoid that, no. Look, emerging markets are interesting. If I look at the rate of growth in emerging markets as a group, so these are markets in Asia, in Latin America, in Eastern Europe, and parts of Africa and the Middle East, generally speaking these economies have grown faster than economies in the developed world. And that’s what you’d expect to see because they have more upside, I mean, they are developing, so you’d expect them to grow faster. But another lesson we’ve learned from a very long span of history is that just because an economy is doing well does not mean that the share markets will do well. There’s not a lot of linkage between the performance of an economy perse, and the performance of their share market. Now, for most of the last 6 or 7 years emerging share markets have done alright, but they’ve tended to actually lag the performance of the major developed markets, in particular the United States. That’s changed in the last 12 months. In the last 12 months, emerging share markets have performed very, very strongly. In fact, if we were recording this podcast about a year to a year and a half ago, and if you asked me, where do you see value, where do you see opportunities, I would say look, you know what, emerging share markets look to be one of the few places that offer real value. In other words, where I could buy quality assets at cheap prices. The trouble is, that was about 30% ago, because that’s the kind of returns we’ve seen from these markets. So, even there it’s hard to find value.

Anne: So Brian, you said that there might be some grey clouds out there on the horizon. As a super fund, that’s incredibly important that we manage that, worry about that, and protect our members from those grey clouds. What are we doing?

Brian: Look, that’s a really good question. Let me rephrase your question a little bit if I may.

Anne: Yes.

Brian: Where the hell are returns going to come from? If you look at our product disclosure statements, you know, we tell our members that over the longer term we expect to deliver returns that are CPI plus 3 and a half or CPI plus 4 depending on the particular investment option. What assets are going to deliver those sort of returns, or at least, where can we be most confident of achieving the kind of returns that our members need to fulfil their retirement dreams.

Anne: But also where are we avoiding as well.

Brian: Well partly that too. Firstly, where are we avoiding? We’re tending to avoid, at the moment, sovereign government bonds in particular because if you look at the level of interest rates around the world, you look at the level of bond yields around the world. In other words, future returns from fixed income are lively to be quite low. So we actually tend to have a lower allocation to those assets to many of our competitors. What are we favouring? I mean, I suppose if I go back to my question before, where can we be most confident of generating the return members need? Look, there’s some chance the share markets will still do ok. I’m not saying that the share markets are going to fall into a heap tomorrow, I’m simply saying that future returns are going to be lower, but I need to do what I can and Sunsuper needs to do what it can to maximise the chances our members have of living their retirement dreams – and that means, where can we get the most reliable returns? And the short answer is, it’s in the alternative asset space. It’s investing outside of traditional assets like shares, and by that I mean carefully selected hedge funds or absolute care orientated strategies, but also unlisted asserts. Things like direct property, infrastructure, private equity. We’re still seeing opportunities coming across the desk every week. We’re still seeing deal flow come into our office where we do the math and say yes, this investment is capable of delivering more than adequate returns to justify the risks involved and justify the costs incurred. And more importantly the returns that members actually need to meet their objectives, but I must say that even the returns from those assets classes in the clast 5 to 7 years have been very, very strong, which means it’s very hard to find bargains even in that space. So, future returns there, while still very very attractive, especially when I compare it to the returns from traditional markets like shares. But, future returns from there have also come down. If I looked at say, an infrastructure deal or a property deal 5 years ago and if I did the math it might have said I can get 15% per annum out of this. Well if I looked at exactly the same deal today I might do the math and come up with a return of 9%. Now, I’ll still take 9% every day of the week, it’s just that 9% is not 15. Even in that space we’ve seen returns come down because a lot of money has forced up the price of these assets.

Anne: But I think that there’s this other thing that we haven’t spoken about, and I know we don’t have much time Brian, but I think we’ve got to say the word. It starts with ‘T’.

Brian: And it ends in ‘rump’.

Anne: Yes, Trump. But there are a lot of investors, where it’s just the sheer…

Brian: The unpredictability.

Anne: Yeah, unpredictability and one minute he’s meeting with Mr rocket man, and then he’s not. And it makes people very nervous. And I wondered what is Sunsuper doing to manage that risk?

Brian: Let me take it more broadly. Geo-political risk, if I can use that kind of term, is elevated and it’s going to stay elevated. Geo-political developments are going to remain a source of volatility for markets. But if you think about a longer span of history, geo-politics has always been a source of uncertainty for markets. Trump is just the latest manifestation of it. But I think it’s important to realise that regardless of what happens in the Whitehouse, regardless of what happens in North Korea, or in Italy or in the Middles East, it’s a very uncertain and volatile world. There’s lots of awful stuff happening out there, but I have to say there almost always is. And yet, life and business and the economy goes on. From Sunsuper’s perspective we take the view that, yes, this is a source of volatility, but regardless of that, people are still going to land and take off at Brisbane Airport and we will make money. A whole range of companies listed on the stock market will still make money by meeting our everyday needs as consumers and we will benefit from them making money. People in Finland will still need to turn on an electricity switch to light their homes and we will make money. People will still, in the Czech Republic need to use gas to cook their evening meal on their stove. It’s about investing in a wide range of assets which generate income that we can pass on to members. That doesn’t change regardless of who is in the Whitehouse.

Anne: Ok, so Brian. Final question before we wrap up. China and Australia and the impact China has on our economy, and the impact that China as a country has on our portfolio of investments. Any thoughts? Any advice for our members? Because I know certainly lots of people worry about that.

Brian: Look I think that the worry is real. I mean, China will remain a source of uncertainty and China’s emergence as an economy has been an unambiguous positive for the Australian economy, for the world economy, for global trade and for the hundreds of millions of Chinese that have been lifted out of poverty. But that doesn’t mean that China is not going to be a source of uncertainty, both geo-political and economic. It’s fair to say that the Chinese authorities, certainly in the region, have not been behaving terribly well. And I don’t think that’s a terribly controversial view. And so China will remain a source of uncertainty, but it’s just one of many sources of uncertainty. Now what do you do about it as an investor? It means that an investor, I certainly don’t want to put all my eggs into one basket labelled ‘China’ and I certainly don’t want to put all my eggs into a basket labelled ‘Australia’, because the Australian market and the Australian economy, yes, is quite heavily dependent on the performance of China among other things. I just want to make sure that our best defence against an uncertain world is to build portfolios that are as widely diversified as possible, and that’s exactly what we do.

Anne: Brian, I think for our listeners today what we’ve spoken about, it’s so important that maybe they overlay that with a former podcast we’ve done where we spoke about all the investment options out there, and if you look at the political landscape, the economic landscape and then look at the options that Sunsuper has available, to consider what is the right investment for you. We’ve got a great team of people here to help. You can jump online, visit us at There’s a wealth of information to help you make the right decisions about where your money’s invested, make informed decisions after listening to Brian, assessing all those things he’s spoken about, you have to remember, this is your single biggest asset. Think of it like your home, think about what Brian said. Come and have a chat to us if you need to. Brian, thank you so much for talking today. Always a pleasure.

Brian: Thanks very much Anne.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage you super and enjoy your retirement, visit Or if you’ve got a superannuation or investment question, you’d like Brian and Anne to discuss, then get in touch at the, for it to feature in one The New School of Super podcasts.

Episode 2

Understand your investment options

In this episode, Sunsuper’s Dream Team explains the broad range of investment options Sunsuper offers members, including diversified and single asset class, and active versus passive options, and what you should consider in choosing the right investment strategy for you.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future with Sunsuper’s Chief Economist, Brian Parker and Head of Advice and Retail Distribution, Anne Fuchs.

Anne: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper’s podcast covering all things investment, money, superannuation and most importantly, making sure you reach your retirement dreams. My name's Anne Fuchs and I head up advice at Sunsuper for our 1.3 million members and we're all about making sure our members make the most of what they have, so that they can live the life that they want. Now sitting opposite me is a pretty special man, who's been around a very long time, though he does not look it. He knows everything about investment markets and the economy, he's our Chief Economist and his name is Brian Parker. Brian, nice to see you today.

Brian: Thanks Anne and what a lovely introduction.

Anne: So, we’re here to talk today, about all things investing and what really is the right investment for you. There's so many products out there, how do you decide which one is the right one for you? So Brian, before we get started and you share your pearls of wisdom, what do those people upstairs need us to say, those compliance people upstairs.

Brian: Anne, they need us to inform the listeners, that this is general information only, it doesn't represent personal financial advice, it doesn't take into account your particular personal circumstances. But if something we say sparks an interest, it sparks something in you, which says I need to make change, we strongly recommend that you seek personal financial advice.

Anne: And great financial advice, wonderful financial advice, can profoundly change lives for the better.

Brian: Indeed.

Anne: So, if you're sitting here today, as a listener and wondering how on earth do you possibly pick the right investments for you, you’re listening to the right session, because we’re going to be unpacking all the different options available within superfund world and I think my one observation before we get started, Brian, is the one thing I've learnt, after twenty years of being in superannuation financial advice, is that members always remember if you've lost them money. They never remember as much if you've made some money. So really this is the most important decision they make around their retirement savings. So, I think a really good place to start, is single class assets versus diversified options, and that is for the ordinary member, I think a bit of jargon. We need to break this down, diversified single asset. What does that mean Brian?

Brian: Okay, a diversified option basically means that if I invest in a diversified option, I’m letting my super fund basically spread my assets across a range of different asset classes. Whether it be shares, cash, or bonds, or property, or infrastructure. Whatever, but it's basically letting the superfund do the work. They spread the assets across a diversified portfolio of assets for me, with a single asset class option, I’m making a decision to put my money into one particular asset class. Be it shares or bonds, or whatever. So, that's really the difference. It’s whether, I suppose the best way to summarise it is, do I want the superfund to do the work, or do I want to do the work?

Anne: So, if I can ask a silly question, why is diversification important? I mean Australia has a great economy, why would I not just put all of my money in Australia shares? You know, there’s a lot of craziness overseas, geopolitical risk. You know, maybe it’s safer just to put it all in Australia?

Brian: It’s really a good question and you think about the way Australian investors behave, we tend to actually favour the home front, a lot more than counterparts overseas. We tend to have what investors call a home bias and that's kind of unusual, given that we are one of the smaller economies of the world. You know, the Australian economy is only a few percent of global GDP. Our share market is only a few percent of global market value if you like. So, most of the investment opportunities, most of the universe of investment opportunities are beyond our shores. You raise diversification, there's an old adage that you shouldn’t put all your eggs in one basket and that's really what it comes down to. It’s that yeah, the Australian economic story is relatively solid, but I still don't want to put all my eggs into a basket labelled Australia. I want to try and pick the best universe of investment opportunities I can find, which means inevitably, I’m going to have to have some global exposure.

Anne: So why would somebody pick a diversified option, so I’m guessing that's a balanced option?

Brian: Well it could be a balanced option in other words, but there's a range of different diversified options that super funds offer. In the case of Sunsuper, we offer a conservative option which is, again, designed for more cautious investors. We offer our retirement, a balanced and then a growth option for those investors that are prepared to take more risks in search of higher returns.

Anne: So what does that mean it does that mean in terms of the exposure to these riskier assets of the further you go up the spectrum from conservative to growth the more exposed you are, and if you're doing that what's the stuff you need to be worried about? What should you be thinking about if you going to make that decision?

Brian: That’s a really good point, and in fact it's a crucial point. I call it the sleep at night test. If you're doing something with money, anything at all, whether it's your super, your mortgage, any other investments you’re making. If you're doing something with money which is causing you to lose more than about five minutes of sleep at night, it means you’re probably taking too much risk and you’re doing the wrong thing. Sleeping at night can never be overrated. Why would I want to take high risk? I take high risks because I’m prepared to do that because I believe I’ll get higher long term returns. If, in search of those higher returns, I’m losing sleep at night, well something's got to give. Half the battle with the deciding where to put your money is working out what kind of investor you really are. What investment returns do you need in order to achieve your retirement dreams. What risk are you prepared to take in search of those dreams. And understand that that there's often a trade off.

Anne: So, the sophisticated investor would have heard of this term of alpha, which is the you know out performance, and there's a lot of talk around, certainly in financial advice circles, about just how expensive it is to invest these days with fees and everything else and try to find that great return that you were talking about and where is the alpha and there's a lot of financial advisors out there that are a big believer in passive investments because it's all about keeping fees low and that's where they believe they can find alpha. But Brian, you’re the Chief Economist, what's your expert opinion on this concept of passive investing versus active investing.

Brian: Look, let’s start by defining some terms, and you raised the point about active versus passive investing. If I'm a passive investor, what I’m essentially trying to do is to replicate the performance of a particular market index or benchmark. So let's take Australian shares as an example. Let's say I just don't believe that there are people out there who can do better than the market, so I'm going to give my money to an investment manager who’ll basically give me a return which replicates the return of say these S&P ASX 300 index, and they'll do that for a very small fee. On the other hand, what if I believe there are managers out there who are genuinely good at what they do, who can actually add value over and above the performance of the index. Now I know that's going to cost more but if I could be convinced, if I could be really confident that those managers can deliver enough outperformance to justify their fee, then I’ll invest in an active manager.

Anne: Ok, and that out performance is that alpha that I was mentioning earlier.

Brian: Correct, exactly. So if you deliver alpha you deliver a certain amount of outperformance over and above a particular market benchmark.

Anne: So we've spoken about passive, active, single asset classes, diversified – it's pretty overwhelming. How would you possibly begin to decide what is the right option for you.

Brian: Look, that's a really good question and it is hard. At Sunsuper, for example, we offer twenty different investment options. We’ve deliberately kept the size of our investment menu relatively small. What we found from a lot of the academic literature on what we call behavioural finance, is that if you give people too much choice people just find it overwhelming so what we're trying to do is provide our members with a nice range of options which will enable them to build a diversified strategy that will suit their particular needs, and what we also do is make sure that we provide our members with a range of both active options but also passive options so that they can choose whether their prepared to pay a higher fee in search of higher returns or not. There are certain asset classes also where we don't offer an active option and that's really come down to two things. One is demand and the other is our view of value for money. If we have an asset class where we don't believe that investment managers can deliver reliable outperformance to justify their fee, then we think members are best going passive and so we only offer a passive option in those particular asset classes.

Anne: So I still think that it's incredibly confusing. As much as you're an extraordinary communicator, Brian, I still think it's incredibly confusing and for the ordinary person they think it's too hard, I'm just going to put my superannuation statement in the bin every year that it comes in because I would rather stick my fingers in my ears, close my eyes and sing ‘la la la’. So how do we make sure as investment professionals we’re helping those members.

Brian: Well that's a really good question and if you think about it most of our members, and I suspect most of pretty much every super fund’s members are what we call default members, that they have chosen or have just literally defaulted into their particular super funds My Super default option, and that means it's really really important that your super fund constructs a default option that works for the majority of those members. And so at Sunsuper we've gone for what we call Sunsuper for life, it's what we call a lifecycle option and we think it's quite unique in the Australian market. Up until the age of 55 investors in a lifecycle option will basically be invested in our balanced option, in other words they will have about 70% of their portfolio invested in what we call growth assets, and that means somewhat higher risk but also a higher returning assets such as shares. At the age of 55, on the day of the 55th birthday the system starts to crank into action. Over the next ten years every month we will very very gradually reduce our members’ exposure to growth assets such as shares, and we’ll do it in 120 discrete monthly steps so that by the time our member in the default option reaches the age of 65 they'll no longer be invested in balance. They won't be anywhere near as exposed to share markets, they’ll actually have 10% of the portfolio in cash and they'll have the other 90% of the portfolio invested in what we call that our retirement option. What is averages out to is that you'll end up with about 45% of your portfolio in growth assets. Why do we do this? We do this partly because we can. We have the administration systems to allow us to do this for members but also and more importantly we want to make sure that our members are not going to be as exposed to a major market downturn either when they’re about to retire or just after they retire. Because if that happens and you're heavily exposed to the stock market, that can really put a serious dent in your retirement plan.

Anne: Certainly I know Brian, I couldn't agree more. In 2008, you know, a number of people that were too heavily exposed to stock markets and we're planning on retiring and then all of a sudden 40% of their portfolio vanished overnight.

Brian: Exactly, and they drawing down on that portfolio, they’re drawing down on a pie that is shrinking.

Anne: Well they had to work longer and then that causes other impacts, you know, whatever else, and I think this is such a great feature for those people that choose just to leave it to the investment professionals. So Brian, we've had a really good natter today haven’t we?

Brian: We indeed, we always do, Anne.

Anne: We do indeed. Well thanks again. We'll see you next time.

Brian: Thanks Anne.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage you super and enjoy your retirement, visit Or if you’ve got a superannuation or investment question, you’d like Brian and Anne to discuss, then get in touch at the, for it to feature in one The New School of Super podcasts.

Episode 1

Listed vs unlisted assets

For our first-ever episode, Sunsuper’s Dream Team breaks down the difference between listed and unlisted assets and why Sunsuper members should be extra-interested when they take off on a flight from Brisbane Airport.

Launch Podcast

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future with Sunsuper’s Chief Economist, Brian Parker and Head of Advice and Retail Distribution, Anne Fuchs.

Anne: Hello and thank you for listening. Welcome to the new school of super – Sunsuper’s podcast covering all things money, investments, superannuation and most importantly, how to help you reach your retirement dreams. My name's Anne Fuchs and I head up financial advice at Sunsuper and I'm sitting here today with someone who’s pretty special, the Chief Economist from Sunsuper. His name is Brian Parker and what this man doesn't know about investment markets isn't with knowing. Brian it's so great to see you.

Brian: Thanks Anne, it’s good to be here.

Anne: So today we're talking about unlisted assets versus listed assets and you know, helping our listeners understand what this means and why it's important to their superannuation and retirement savings. But, I think before we start doing that the people upstairs in compliance need us to say something, don’t they?

Brian: Yeah, they do. I think they want me to say that this is general information only and that we're not providing personal advice, and that if what we say today does actually spark an interest and does lead you to think that you need to do something, to change something about the way you invest your money, either in super, or outside of super, then

do get some personal financial advice. Because as you say Anne, you know very good personal financial advice can change people's lives.

Anne: Thank you Brian. So, we're talking about listed and unlisted assets. Listed assets I think are pretty well understood, aren’t they Brian? They’re just the stock exchange simply. How would you describe it?

Brian: Yeah, I think that's right Anne. I mean I think a lot of people can understand that their superannuation fund invests at least a portion of their assets, perhaps a large portion of their assets in shares. In other words, you’re buying a piece of the business and that piece of the business, that share is actively traded, day to day on world share markets. And so, the value of that asset on any given day, in fact any minute of the day, can go up or down quite dramatically.

Anne: And highly liquid, so you can get your money at any given time.

Brian: Absolutely, if you go online or get on the phone and I can basically sell my shares in BHP or Commonwealth Bank. Literally within days.

Anne: Okay and so an unlisted asset means what?

Brian: Well it means I can’t actually get on the phone or get online and actually sell my equity in an unlisted asset immediately. I’m effectively locking money up for a period of time. So, in other words, the value of these assets is not determined day to day in world markets. The value these assets is priced periodically by independent valuers.

Anne: Okay, so if that's still a bit of investment gobbledy-goop.

Brian: Oh, thanks for that.

Anne: Let's break it down even more. So, bring it to life. Like what does that mean? What are you talking about?

Brian: That’s a very good question. It's interesting, I think a lot of people, when they look at their super fund, apart from saying I think there's some shares in there, I think that a lot of people actually don't really have a lot of understanding about where their money is invested. When we talk about unlisted assets, we're talking about primarily unlisted property assets, so direct property. We’re talking about infrastructure assets, such as airports and ports for example, or what we call private equity. So, in other words, we’re buying shares in businesses, but those shares are not traded day to day, on world markets, they’re unlisted businesses.

Anne: It’s still too abstract. How would I describe it to my mom?

Brian: Yeah absolutely, in words, I’m buying equity. I’m taking a stake in an asset say like Brisbane Airport, or if I look overseas, I'm taking a stake in the electricity distribution network in Finland, or I’m taking a stake in the gas distribution network in the Czech Republic. So, in other words, whenever anybody lands or takes off from Brisbane Airport, anyone in Finland turns on a light switch, anyone in the Czech Republic who turns on their gas stove, we will make money.

Anne: So, is this just something that Sunsuper does or do other super funds do it? How does that work?

Brian: Yeah look, a lot of the profit for member super funds and, in fact, I’d probably say most of the profit from member super funds in Australia, and indeed a lot of the big sovereign wealth funds and pension funds overseas, do invest a substantial part of their portfolio in unlisted assets. So, it’s not just a Sunsuper thing. Why we are able to do it, is a more interesting question perhaps. We're able to do it because our members are overwhelmingly young. They’re overwhelmingly investing in compulsory superannuation, which means that our members are not going to be drawing down on the fund, on average, anytime soon.Which means we can afford to worry less about day to day liquidity, than perhaps some of our competitors can.

Anne: So, what if you were describing it to some of our members or you know the listeners here today, what is the main big draw card about this asset class, the big why, behind why we do it? Why is it good for members?

Brian: Very, very simply – higher long-term returns. In particular, higher long-term real or after inflation returns, that are a smoother ride along the way.

Anne: So, does that mean when you say a smoother ride along the way, does that mean it doesn't follow what the stock market does? And that I lose less money? Is that what you're saying?

Brian: It means that the value of the assets we hold, by virtue of the fact that they not traded every minute of the day, it means the value doesn't move around dramatically, so you end up with the returns generated by Sunsuper or a similar profit from a member fund, being somewhat less volatile than a lot of other funds.

Anne: But the downside, risk side of it, does it help with managing that downside risk?

Brian: It does somewhat, yes. Because what you tend to find is during a major share market down turn, especially if that share market downturn is really prolonged, eventually the value of your unlisted assets, is going to be affected by that. But, what we find is the jury major share market downturns, the value of unlisted assets, doesn't decline anywhere near as much as share prices do.

Anne: So, what do you, as the investment managers, worry about? What can go wrong? Because it sounds just fantastic, but nothing's ever perfect. So, what do you worry about? What should we be looking out for to protect our members money?

Brian: Key things: One, is doing a due diligence on these assets. So, we make sure that we have really, really good managers, that are managing these assets day to day. Two, that we do our own due diligence, before we put a single dollar of members money into an asset. We also make sure that we and never, never exposed heavily to one single asset. We'd make sure that we build very well diversified portfolios of these assets and let me give you an example. One of our major assets, if not our largest single asset, is our shareholding in Brisbane Airport. That's a very, very major investment and a very major airport. The value of our equity in Brisbane Airport accounts for less than one percent of the fund. So we're talking about investing in literally a couple of dozen different infrastructure assets around the world. We're talking about in investing in perhaps about a hundred to two hundred individual property assets around the world. And literally thousands of unlisted businesses as part of our private equity folio.

Anne: So, what I'm fascinated by and I guess this is my last question, is how does a fund, look Sunsuper is an iconic Queensland brand, it's for a national fund, one point three million members around the country and all of that, and yes for a big player in Australia. However, how in earth does a fund like ours, get to buy the gas that goes into the Czech Republic, or turning on the electricity network in Finland? How do they even know we have the money to invest in these types of things?

Brian: That’s a really good question. It means that you need to burn a lot of shoe leather and you need to spend a lot of time in international markets talking to the key players and making sure you have really good investment contacts all around the world. So that when these opportunities do arise, you’re well placed to capitalise on them. We also have an advantage, in the sense that we can move quite quickly. The way Sunsuper is governed, a good deal of day to day investment responsibility, is delegated to the investment team, the internal team of professional investors. Which means that if an investment opportunity comes up to invest in a particular infrastructure asset, we can move quickly, and we can actually make decisions, perhaps more efficiently and faster than many of our competitors. That makes us a reliable investment partner for a range of global investment houses.

Anne: So Brian, before we finish up, for our listeners, one final tip around this particular asset class. How would members know how to access this investment class? How to find out whether their money is invested in unlisted assets?

Brian: That's a good question, Anne. If you look at Sunsuper’s range of diversified investment options, the growth option, the balanced option, retirement and conservative option, all of those options have an allocation to unlisted assets. I should also point out though, it’s important to realise that we're not talking about having eighty or ninety percent of the fund invested in these assets. We're talking about a third of the fund actually invested in alternative assets and unlisted assets in particular. We do worry about liquidity, we need to make sure we have the lion’s share of the portfolio invested in liquid assets. So all of our diversified options have exposure to unlisted assets. For those members that want a particular discrete exposure, we also offer diversified alternatives option and we also offer a property option. That diversified alternatives option, it's been on the market now for a few months. That consists of a small amount of cash, but it also consists of our hedge fund alternative investment strategies and our infrastructure and private equity strategy. Now, our property option includes an allocation to liquid property or listed property, but it also includes a substantial allocation to Sunsuper’s unlisted property portfolio. So our members can access it via our diversified options, but they can also access our diversified alternatives directly.

Anne: So, I guess the advice is, talk to your super fund. If you’re a Sunsuper member call us. If you're a member of another profit for member super fund and you're really interested in this asset class, have a look online, give them a call. This incredibly fascinating asset class, I really love it and I've loved listening to you speak about it today Brian. Thanks so much.

Brian: Thanks Anne for you time.

Voice-over: This has been The New School of Super. For information and inspiration to help you plan your future, manage you super and enjoy your retirement, visit Or if you’ve got a superannuation or investment question, you’d like Brian and Anne to discuss, then get in touch at the, for it to feature in one The New School of Super podcasts.

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