Scaled advice: Clients won’t pay

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Client attitudes are constantly changing, and despite speculation that the majority are looking for more control in their super, industry funds are benefiting the most from switching members.

According to CoreData’s Member Retention Report, of those looking to switch going forward, about 42.2% are likely to move to an industry fund. This is followed by less than one quarter that will move to an SMSF.

However, Australians are calling for greater access to advice from whatever fund they are involved in. While a large portion of members aren’t aware that their fund offers advice, 44.5% of those looking to switch said advice was a key factor.

It is mostly demand for scaled and single-issue advice, particularly tax minimization. More than three quarters of members would prefer access via online advice tools but the majority of respondents said that they would not be willing to pay for the services.

Salvador Saiz, Head of Advice, Wealth & Super at CoreData says that in a bid to retain members, “…funds are considering or have already begun to offer other services, such as mortgage broking services and even partnering with SMSF specialist providers.”

So who’s stealing the members? At a fund level, those funds mostly likely to benefit from switching members are AustralianSuper, AMP, MLC, HESTA and Colonial First State, respectively.

“If we consider the leakage to SMSFSs that all funds are grappling with, retail funds have lost the largest proportion of members to this segment”, says Saiz. In particular, advisers should be wary of those that are defined by CoreData as “controllers and outsourcer SMSF trustees”, who Saiz says are more likely to have come from retail funds than from other sectors.