SMSF satisfaction leads overall despite industry fund pressure
SMSFs continue to lead member satisfaction despite industry funds faring better for balances below $700,000 and trumping retail funds for satisfaction across all balances.
The latest Roy Morgan satisfaction report, a survey of 30,000 superannuation fund members in the six months to February 2019, found that industry funds improved their satisfaction rating by 0.9 of a percentage point to 62.1 per cent, at a time when the total market dropped by 0.4 of a percentage point to 60.3 per cent.
SMSFs continued to lead in satisfaction despite dropping by 0.1 of a percentage point, with 73.4 per cent of their members satisfied. Roy Morgan noted that this was because SMSFs have very few members with balances of less than $100,000, the segment with the lowest satisfaction.
The sweet spot for industry funds comes between the balance range of $100,000 and $699,999, and were only narrowly behind SMSFs for balances over $700,000.
Over the last year, retail funds showed declines in satisfaction at all levels, with the biggest decline being a drop of 14.3 per cent points for members with balances under $5,000, who already suffer the lowest satisfaction. There was also an 8.0 per cent point decline for those with balances of $700,000 and over.
Satisfaction with the financial performance of superannuation generally increases with the balance, the only exception being for industry funds where satisfaction dips marginally in the $700,000 and over segment.
“With the growing strength of industry funds, concerns have been raised that the unions may use this strength to impact company decisions. According to the latest APRA data, industry funds currently have balances of $629.6 billion or 23.7 per cent of the total market and have now passed the $589 billion in retail funds,” said Roy Morgan industry communications director Norman Morris.
“The biggest segment of the market, according to APRA, is in fact the self-managed group, with current balances of $726.5 billion or 27.4 per cent of the market. This segment is likely to face reduced returns if there is a change of government at the next election and if Labor implements its franking credits policy.
“The fact that retail funds now trail industry funds in terms of member satisfaction with performance across all segments is a major challenge for them, as they now face competition from both SMSFs for higher balances and industry funds across all segments.”
