Superannuation Funds Have Lost All Trustworthiness

I have been looking at the Super (401K/Retirement) Funds over the last few months and I don't see that they have much of a future.

In Australia investors who haven't quite lost all their money have either had their instructions completely ignored by the funds, or had their deposits frozen. I'd be thinking that once those customers get their money out of them, it'll never go back.

One person showed me how they had (following my advice) prior to the first market collapse, instructed their fund to switch their investment to cash based, they also instructed one fund AMP, to transfer their money to another fund which had the balance of their retirement investment. AMP simply ignored the instruction, probably realising AMP was virtually bankrupt, and exposed the investor to the full losses when the market later fell through the floor. That investor is probably going to sue AMP.

AMP were notified in writing, and they simply waited a couple of weeks for the market to bottom, (probably hoping they could freeze the funds meantime) then called the customer to confirm their decision to consolidate their fund all the while trying to talk them out of it. When the customer could not be swayed, they simply ignored the instruction. The other fund is still waiting to receive the transfer months later. I'd say that exceeded incompetence and bordered on criminal. Remember these funds have massive legal resources and simply play the odds that if they have all your money locked up, you simply can't afford to sue them, and they can simply use your 'investment' to pay their lawyers.

Friends in the US had similar difficulty getting their brokers to exit their positions, with the brokers basically ignoring their client's repeated instructions. Some of those US investors are going to sue.

As for putting your funds into a super fund like AMP, I'd say you'd be better off at the race track, at least they pay out on your 'investment' when you ask, unlike the quite probably fraudulent, and at the very least incompetent actions of AMP.

I predict a rush of self-managed super funds as investors lose all trust in these institutions, due to the actions (or inaction) of companies like AMP. Basically parasites anyway, they have performed poorly over the long term despite their claims. The current spin that if you take out your investment now, you 'lock in the losses', what a load of rubbish, the investor is the one who should decide and these companies are and have been verging on the unlawful in saying so, and trying to bully their customers into not jumping ship. Well that ship has well and truly sunk.

Investors may be better off getting their money out even now, that is if the funds will let them, as some have frozen their funds and are not allowing withdrawals.

That sounds like a very high risk investment to me.

I for one will never invest with funds such as AMP, or any of the long list of others who have frozen their funds, purely because they are technically bankrupt. I don't care what their definition is, but if they can't pay out their unit-holders, they are insolvent. Meanwhile they continue to 'attract' management fees, which could more adequately be described as mis-management fees.

The reams of advice being spruiked by some of these con-men prior to the second bottoming of the market (not the final one by any means) could not be construed as financial advice, more likely bad advice and most probably motivated by their own desire to save their skins and hide the real state of their customer's investments.

Trust in superannuation funds is gone. It'll take a while to seep through to the rest of the public but the word is out. If you are in wealth management this might provide an opportunity to start a small fund, because I predict a lot of companies like AMP will not ever reach the once lofty heights those and other scammers have enjoyed in the past.

I personally would never invest a cent with them and would advise a family member or friend not to either (I am not an investment advisor, but I can't recommend you talk to an AMP advisor, from what I hear they are either deaf, incompetent or simply not to be trusted). A retirement fund is of no use when it is locked up and you can't get at it. If they did it once, they'll do it again. You are better off keeping your money under the mattress than with a super fund such as AMP. At least you'll be able to spend it when and how you choose and not when some parasite living off your retirement fund decides.

If you are working at one of these institutions you'll know exactly what I mean.

I should assume some comment from AMP on this, all I can say is be very careful, I do not ever write anything which has not been thoroughly researched. By all means do though, because we'd like to include it in an upcoming media campaign (which will be timed to coincide with their expected counter of an increase in advertising spin).

While you are at it, tell us what pay cuts your executives have taken to demonstrate their good faith, and after all they're certainly no good at reading the market or understanding risk, not any better than me for instance and I happily admit to being an amateur, although an amateur who obviously knows a lot more than the average AMP investment manager.

For those of you working for such firms I would suggest a career change at the earliest opportunity might be a good investment in your own future. I forsee a very big change in the financial services industry.

p.s. I have a recording of AMP customer service advising me that it takes 3 to 5 working days to transfer a customer's funds to another institution, provided the required inFORMation is included in the request. Seeing as it is done via a FORM it would seem unlikely that if the form were filled out there would be any delay in tranfering the funds(unless the form were designed to be 'incomplete'). In the cases I am aware of, the forms appear to be correctly filled out and AMP has not contacted the customers to advise them otherwise. They have merely ignored the instructions.

I believe the customer and the other institution is still waiting...

I would post the recording here, but it might be better if you ring them up for yourself, the menu system will put you off investing with them, even if what I relate to you doesn't.

I also would like to remind AMP that investors have a right to determine the future of their investments, and if they choose to cash in their fund, they should be allowed to do so. They should not be restricted from doing so because thos fools remaining in the fund will suffer from their or other wiser investor's withdrawals. Superannuation funds have no right to decide a socialist outcome and determine that their customers should 'all lose together' rather than be allowed to exercise their rights and intelligence and decide where their money is invested. The mere fact that these funds locked their customers in is ample demonstartion that they are not a good risk, especially if the fund is attempting to have you carry the other customer's and the funds risk, against your, the investor's wishes.

The Howard government has another legacy - the greatest wealth reduction in the history of Australian household wealth, encouraging retirees to put even more money into these sinking ships just before the rather predictable crash. Clearly the next time any government suggests an investment strategy, it is clearly a sign to put that money under the mattress. What were these guys doing driving while asleep at the wheel with everyone's future in the back seat? It sure ended in a hell of a wreck didn't it?

What about those salary reductions?

Update: 11/12/2008

Media is reporting that 97% of Australians agree with this article, less than 3% of Australians think that Superannuation is a safe place to put their money.

The share market fares slightly better with only 92% of people thinking the sharemarket is an unsafe place to invest your money.

Looks like a bit of a setback for the industry eh?