Advisers opt for retail over SMSFs

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Self-managed funds are outperforming industry and retail when it comes to satisfying their members.

According to the August 2013 Roy Morgan research ‘Superannuation Satisfaction’ report, which is based on more than 30,000 interviews with people per annum with superannuation, the average level of satisfaction in superannuation was about 49.2%.

SMSFs have shot clear of this mark, with 71.6% of fund members saying that they are very, or fairly, satisfied with their current fund. This is compared to a 45.5% satisfaction rate for retail funds.

However, Norman Morris, industry communications director at Roy Morgan Research, says that despite the difference in satisfaction, advisers still tend to recommend retail funds to clients.

“The ease of switching super funds and the increase in people using SMSFs means that the retail sector will increasingly rely on their adviser network to retain customers,” says Morris. “The relatively poor long-term performance of the retail funds however is of concern as there is a very clear fiduciary responsibility for financial planners to act in the best interest of their clients and yet financial planners are more likely to direct their clients to retail funds.”

Morris says that although there are many published tables of performance and fees, clients are unlikely to understand them.

“For this reason we have been measuring what people think about the financial performance of their fund because it will be this which will ultimately determine their action.”

The major reason that people are switching to SMSFs is related to the poor investment performance and the level of fees and charges in their retail or industry funds, says Morris.

According to the research, from December 2002 to August 2013, self-managed super funds have generally been around 20 percentage points ahead of the other major players in terms of satisfaction.

Industry funds were marginally ahead of retail funds up to 2007, but since that date have mostly increased their lead.

Of the major industry funds, HESTA has the highest satisfaction with 54.5%, followed by Cbus (52.2%), First State Super (51.8%) and AustralianSuper (49.3%).

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