Superannuation funds have received abysmal marks when it comes to delivering complex information to a diverse range of members.
The ranking, produced by Ethos CRS, analysed 20 funds and ranked them according to the readability of documents available online, such as product disclosure statements and company policies.
Ethos CRS measured three attributes of text, grade level, average sentence length and use of active voice. Documents that met Ethos CRS benchmarks for each attribute generated a readability score of 100.
According to the results, not a single fund scored over 50. Moreover, the research ranked industry funds above retail funds declaring them more readable on average.
In fact, the fund with the highest readability score of 49.4 was CareSuper, followed by HESTA on 49.2 and AustralianSuper on 49.2.
Cbus ranked fourth with a score of 48.4, while Hostplus and UniSuper earned 47.7.
The lowest-ranked fund was Netwealth with a readability score of 40.2.
Among the bottom five were AMP, IOOF and Perpetual Select.
The average readability score of all 80 documents from 20 companies was 45.6.
“This tells us that, on average, content did not meet established benchmarks. Scores fell short on grade level and active voice benchmarks overall,” said Ethos CRS.
Broken down into categories, the benchmark for grade level was 7, meaning content is clear to anyone with a lower-secondary education.
The average score for grade level was 13.5, which suggested members may need a tertiary-level education to understand or accurately interpret these documents.
QSuper, Rest and Cbus stood out in this category.
Under sentence length, Ethos CRS found that the average sentence length was 21.9 words – within the recommended range of 15 to 25 words.
Best performing in regard to sentence length were CareSuper, AustralianSuper and HESTA.
As for active voice use, Ethos CRS found that 68 per cent of sentences were written in the active voice, well below its benchmark of 95 per cent.
Top performers included HESTA, CareSuper, Hostplus and AustralianSuper.
Commenting on the findings, Ethos CRS declared the “superannuation sector faces a challenge”, given around 50 per cent of adult Australians are financially literate and only 35 per cent know the value of their super.
“If many Australians are not advanced readers or expert financial analysts, then one simple step for super funds is to produce clearer, more readable content,” Ethos CRS said.
This is far from just a superannuation issue. All regulatory prescribed financial services disclosure documents are unreadable, because of the regulatory requirements. The document issuers have little control over their design or content. Product Disclosure Statements, Statements of Advice, Financial Services Guide, Fee Disclosure Statement etc etc etc are all a huge cost imposition on consumers that deliver very little benefit.
It is just part of the broader malaise that is Australia’s badly designed financial services regulatory environment. A total rewrite of the Corps Act and a complete rout of ASIC cannot come soon enough.
I struggle to understand many of the IF’s fee disclosers.