Partiality in calculating risk could be confusing for superannuation fund members, according to a management consulting firm.
Round Tower Solutions has released its latest Perspective on the reporting by superannuation funds of the new Standard Risk Measure (SRM), and has said there needs to be a review of the framework for calculating risk.
"The SRM framework is potentially misleading and confusing for superannuation members," Round Tower managing director Aongus O'Gorman said.
"Investment options with essentially the same return objectives and investment strategies should be communicating similar expected risks. However, Round Tower's research indicates that this might not be the case."
Round Tower has said that because funds are not required to use common assumptions about the risk of the asset classes options are invested in, industry-wide comparisons are difficult to make.
They have called for the creation of an independent industry body to be responsible for the standardisation of calculation methodologies.
Mr O'Gorman has also expressed concern in the approach to expressing risk, which does not provide meaningful evaluations to fund members.
"We'd like to see an emphasis on measure that would be more easily understood by members in the SRM's next phase," Mr O'Gorman said.
"The SRM frames risk in the context of the expected occurrence of a year negative over a 20-year period. This concept means very little to members."
Round Tower has said it is important for superannuation members to invest appropriately to meet their financial objectives and to be aware of the risk in investment opportunities.
