Industry funds attempt to stem SMSF outflows

The outflow of members from industry funds to SMSFs is leading a growing number of not-for-profit super funds to offer more flexible products, according to new research from Rice Warner.

Rice Warner recently conducted analysis of 56 industry super funds and found they were offering new member-directed investments (MDI) services.

These services allow super fund members to make their own investment decisions and invest directly in shares, term deposits and other assets, according to Rice Warner.

Of the surveyed funds, 17 had either implemented a member-directed investment service or were in the process of implementing one.

A further 11 were actively considering offering such a service, with only five of the 56 funds ruling out MDI services, Rice Warner stated.

A main reason for the shift was identified by Rice Warner as being “super funds seeking to defend against membership loss to SMSFs”.

“The funds and service providers behind the MDI services are seeking to tap into a growing demand from members,” said Rice Warner’s senior consultant Alun Stevens.

“Members can expect a lot more from their superannuation providers in coming years as they vie for market share with innovative and cost-effective services,” he added.

The Rice Warner analysis concluded that “take-up of the services by members is building”, with “some 15,250 members using an MDI service with approximately $750 million under personal management”.

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