Not all they're cracked up to be...from the AFR...... Esuperfund is a market leader in the discount SMSF administration sector, thanks to blanket online advertising and a low headline fee of $699.
However, Esuperfund also has an audacious series of arrangements in place with product providers that delivers it commissions from right across the spectrum of products used by SMSFs. From cash accounts and term deposits to broking and insurance policies, the provider has relationships in place that allow it to clip the ticket at every possible juncture.
Clients of Esuperfund are compulsorily required to open a transaction account with either ANZ or Commonwealth Bank of Australia. In addition, it is compulsory for clients to use one of the two brokers it nominates, either CommSec or Ebroking (a white-label platform licensed by Esuperfund).
According to Esuperfund's financial services guide, ANZ and CBA pay it commissions of between 100 and 115 basis points on the cash balances of every transaction account opened by Esuperfund clients. That is, all of them.
A spokesperson for CBA says the bank does not discuss commercial arrangements with third parties. ANZ says it did not pay the commissions at the level outlined in the financial services guide.
In addition, every trade made by clients on either the CommSec or Ebroking platforms will attract a commission of up to $16.75 for trades under $25,000 and 0.075 per cent for trades over $25,000.
But that's just the start. The network of relationships and commissions on products extends to options, contracts for difference, term deposits, precious metals and life insurance. For instance, a policy bought from Macquarie or AIA triggers commissions of 0.20 per cent and 0.30 per cent respectively.
Perhaps the most lucrative of the arrangements sees Macquarie and St George Bank paid upfront commissions of 0.65 per cent and trailing commissions of 0.15 per cent on loans or limited recourse borrowing arrangements used to purchase property.
Esuperfund did not respond to requests for an interview.
But while Esuperfund's elaborate series of links with product providers makes for uncomfortable reading they are by no means alone.
Other providers who receive commissions from transactions with preferred providers are Xpress Super, Super Concepts, selfmanagedsuper.com.au and brightday, a recent market entrant owned by Rupert Murdoch's News Corporation.
