David Hartley, chief investment officer of Sunsuper, has challenged the industry to publish for members the costs of running their fund alongside the cost of direct fund management fees and an estimate of trading fees.
He believes not only do trustees have a fiduciary responsibility to disclose fund costs as a proportion of fees to members, but that the disclosure will lead to a more nuanced debate around the fees and returns of high fee alternative asset classes and their impact on overall fees.
“The RSE is looking after members interests, so it is right for member to know how much they charge,” he said.
While fund management fees would be accurate, he said estimates of indirect costs such as the tax, brokerage and FX spreads on trading needed to be only fair and reasonable as it was too hard to gain full accuracy.
Hartley’s presentation to delegates at CMSF was challenged by Gerrard Noonan, chair of MediaSuper. Noonan thought members could already gain a fair assessment of the value of their fund by seeing the published fees, combined with the return figure in their statements. Any other fee disclosure would end up only adding to the fund’s costs.
“As a fiduciary do you need to spend more of your time and money to do that type of level of investigation?”
Hartley replied that he viewed such a disclosure as only incurring a small cost for funds.
The debate was framed by a presentation by Ged Fitzpatrick, senior executive leader, investment managers and superannuation at ASIC. He said that while legislation around more transparent fee disclosure was forthcoming, it was also up to the industry to devise best practice in communicating this to members.
Raewyn Williams, director of research and after-tax solutions at Parametric, predicted trustees would increasingly want to partner with organisations that could bring transparency to the costs embedded in the portfolio.