Pricing investment management
RSA provide clients three options for pricing asset management advice, they are as follows:
- Option 1 - An establishment fee, no ongoing asset management fee with a high performance bonus only applicable when benchmark returns are exceeded.
- Option 2 - A reduced establishment fee, a reduced asset management fee and a high performance bonus only applicable when benchmark returns are exceeded.
- Option 3 - Time cost establishment fee, standard ongoing asset management fee and a high performance bonus.
Below is a worked example for pricing options 1, 2 and 3 as stated above. The cost consequence is calculated over 1, 3, 5, 7 and 10 years so clients have a clear understanding of the commercial consequence of their actions. The underlying assumptions applied in the worked example are that: The investment is $500,000, the investors benchmark return objective is 8% per annum net of fees, the actual investment return is 12% per annum and therefore a high performance fee has been paid and the fund is in accumulation with no contributions being added.
Projected client account value over time
RSA clients are encouraged to choose the asset management pricing option they prefer. In the example above, Option 3 is best in the short term, option 1 is best over the medium to long term, all options are in our view are reasonable, fair and consider carefully the best interests of our clients.
RSA Asset Management pricing philosophy.
Our objective when pricing is to be fair. Fee analysis of over 1000 super funds allows RSA to value services relative to market. Here are some interesting fee statistics:
The arithmetic Indirect Cost Ratio (ICR) average of nearly 1000 funds reviewed by RSA is 1.60% per annum. Each of RSA's pricing models are cheaper than the arithmetic average, and cheaper than each of the averages listed below for the different superannuation sectors considered in current research. (For more detail please open a discussion with our consultants).
Sectors, fund count and arithmetic averages are below:
- The arithmetic average of the 39 Australian Superannuation Multisector Conservative funds reviewed is 1.70% per annum.
- The arithmetic average of the 192 Australian Superannuation Multisector Moderate funds reviewed is 1.71% per annum.
- The arithmetic average of the 200 Australian Superannuation Multisector Balanced funds reviewed is 1.54% per annum.
- The arithmetic average of the 356 Australian Superannuation Multisector Growth funds reviewed is 1.71% per annum.
- The arithmetic average of the 173 Australian Superannuation Multisector Aggressive funds reviewed is 1.53% per annum.
Asset management pricing regulation
Asset management pricing market is tightly regulated by ASIC. ASIC RG 97 describes reporting requirements for product providers, ASIC have also defined how asset consultants and advisers should disclose fees for asset management services in a plethora of reports, legislation, papers and guides listed below:
- ASIC Corporations (Consent to Deductions – Ongoing Fee Arrangements) Instrument 2021/124) and Explanatory Statement
- ASIC Corporations (Disclosure of Lack of Independence) Instrument 2021/125) and Explanatory Statement
- ASIC Superannuation (Consent to Pass on Costs of Providing Advice) Instrument 2021/126) and Explanatory Statement
- Report 687 Response to submissions on CP 329 on advice fee consents and independence disclosure
- Example written consent form (ongoing fees) (PDF 137 KB)
- Example written consent form (non-ongoing fees) (PDF 88 KB)
- Frequently asked questions – Advice fee consent and independence disclosure