Big campaigns but super funds report zero expenditure
Many well-known superannuation funds with visible advertising campaigns have been reporting zero expenditure on advertising when communicating with the Australian Prudential Regulation Authority (APRA).
At a time when superannuation fund advertising is front and centre due to the playing of rugby league and AFL grand finals, actuarial research house, Rice Warner, has told the Productivity Commission (PC) that it would be difficult for funds to justify spending considerable sums on advertising if they had not been able to increase market share.
In a submission to the PC inquiry into superannuation competitiveness and efficiency, Rice Warner noted advertising expenditure by superannuation funds as being an area of contention, particularly with respect to the use of fees collected from default members.
"In particular, should funds be able to collect fees from default members to then spend on advertising campaigns to attract new members?" it asked.
"In some instances, this advertising has formed part of a concerted strategy to grow fund scale. For funds which have achieved this strategic objective, it would be possible to justify the expense if the benefits have been passed on to all members in the form of reduced fees or access to higher returning asset classes."
However, the Rice Warner submission said that for funds which had lost market share over time but had spent considerable sums on advertising, it would be much more difficult to justify the expense for default members. The firm also pointed to a deficiency of data when it came to advertising expenditure.
"APRA has only recently started collecting advertising expenditure as part of its Superannuation Reporting Framework, which means there is no longitudinal dataset," it said.
"Further, there are deficiencies in the current reporting, many well-known funds with visible advertising campaigns have reported zero expenditure on the APRA forms."
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