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.

  • James Smith on 13/09/2013 10:24:35 AM

    The pendulum has swung the other way. Index funds such as Vanguard offer MERs of 0.18% pa while industry funds get more and more expensive as they add bells and whistles. Also SMSFs will underperform if they remain with their significantly overweight exposure to Aussie shares and cash. Hence the need for advice to expose the flaws in these options.

  • Pat on 13/09/2013 9:14:24 AM

    But Investor, isn't the reason Industry Funds spend so much of their members' money on adverstising so they can attract more new members to drive down members' costs? Otherwise, isn't said advertising costs a breach of the sole purpose test?

  • Investor on 12/09/2013 4:22:24 PM

    I can see the Industry funds costs plummeting now! Full advice, wrap investment service, all at a super low fee! Not! Their fees are rising consistently and they have now lost their, low service, inflexible investments, at a low cost advantage. Albeit at a higher cost than their clients were aware of! Lucky they have a labor government to force their clientele in the door! What! Labor is gone! Woops. Hang on boys, that’s not an earth quake, its the playing field levelling!

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