Research confirms continuing SMSF ‘threat’ to retail funds

While fewer superannuation members are intending to switch to another fund within the next 12 months, retail funds remain most at risk of leakage to SMSFs, new research has found.

According to research from CoreData, while intentions to establish an SMSF have decreased, there remain around one in six members who are likely to establish an SMSF within five years.

“[This suggests] continued growth in the sector is likely, albeit possibly not at the same historically high growth rates as the industry matures,” the research stated.

Approximately 4.1 per cent of members are likely to establish an SMSF in the next 12 months, down from 6.9 per cent in 2013, while 15.8 per cent are likely to do so in the next five years, down from 22.9 per cent in 2013.

In addition, 4.8 per cent of retail fund members are most likely to establish an SMSF in the next 12 months, while 17.8 per cent are likely to do so in the next five years. 

The research found overall switching intent has decreased, with only 6.7 per cent of respondents likely to move to another APRA-regulated fund in the next 12 months, while 13.9 per cent intend to do so in the next five years, both down from 10.2 per cent and 20.7 per cent respectively in 2013.

"These findings, in addition to past research which found that member engagement is at its highest level in three years, are certainly encouraging for APRA-regulated funds. However, a decline in switching intention is not necessary reflective of higher loyalty with their existing fund; it could just as likely indicate apathy on the part of members,” said Kristen Turnbull, head of financial services at CoreData.

“In fact, recent CoreData research has found many of the traditional engagement indicators are actually highly correlated with switching intent. It could be that your most active members are actually those most likely to leave you."

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