Direct investment options are unlikely to help super funds retain members, according to research from CoreData.
CoreData’s 2013 post-retirement report found that despite the increasing number of super funds launching direct investment options as a way to stem the outflow to self-managed super funds (SMSFs), few members cited it as an offering that would encourage them to stay in a fund.
“On the one hand, yes, members want direct investment options, but in terms of what is going to be able to retain a member’s business, that’s a separate question,” CoreData head of advice, wealth and super, Salvador Saiz, told InvestorDaily.
“It’s just that relative to other products and services that are more likely to help retain members, direct options are sinking towards the bottom of the list.
“Members are more interested in lower fees, competitive returns, customer service and advice offers more so than direct options,” Mr Saiz said.
The report also found that 38 per cent of pre-retirees and 29.7 per cent of post-retirees were unsure of which retirement solution provided the best offerings.
However, SMSFs remain the most popular option with post-retirees, with more than 27.1 per cent nominating them as the best retirement solution.
“The main driver is that respondents are looking for control of their investments,” Mr Saiz said.
“Some SMSF trustees do want a one-stop shop where they can go to a planner and the planner does everything for them, but others are really looking for specialist services.
“So there is a move towards specialisation and advisers do need to sort of cater for that.”
CoreData, however, found that 14.4 per cent of SMSF trustees said they believe they will reach a point in their lives at which they cannot – for mental or physical health or other reasons – maintain an SMSF themselves.
“The sorts of responses that we got were trustees saying they would probably go to an industry fund,” Mr Saiz said.
By: Rachael Micallef