Stemming the flow to SMSFs

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Industry and retail funds are losing thousands of members to SMSFs every year.

Approximately one million Australians changed super funds in the last year, 6% of whom moved to an SMSF. However, less than 1% of those who changed super funds came back the other way, according to the Investment Trends 2013 Member Sentiment and Communications Report.

“It’s a one-way valve,” said Uwe Helmes, Senior Analyst at Investment Trends. “Once members start an SMSF, they rarely ever go back.

“However, our research also shows that the majority of members who are considering setting up an SMSF in the future say that there is something their super fund can do to prevent them from leaving.”

Member retention is a key area of focus for super funds and high member satisfaction is one way to ensure that clients stay with the fund.

Industry super fund, Club Plus Super has launched a direct investment option to meet its members’ needs. The option is designed to give them more freedom over how their super is invested. Available to members immediately, the new option allows them to purchase term deposits, ETFs and shares through the MemberAccess web platform.

Club Plus Super’s head of marketing, Stefan Strano says that it is not a solution to the SMSF leakage, but in some instances it may be effective. Stemming the flow also requires providing more advice, and Strano says, “The other aspect is the interest in property, which is something that funds are still trying to develop.”

Members who register for the new option will be offered a free advice consultation, and if they opt for advice the fee can be taken out of their super but it is not compulsory.

“Members have access to shares and exchange traded funds for only $15 per month, and pay very low brokerage which depends on the value of their trades. If they only want to invest in term deposits, we waive that monthly fee,” says Strano.