Satisfaction with the self-managed super funds (SMSFs) remains considerably higher than that of retail and in dustry funds, according to the latest Roy Morgan Superannuation Satisfaction report shows.
SMSFs can boast 64% satisfaction while industry funds scored just 49%. Retail funds languished behind with just 43% satisfaction. The findings come out of a survey of over 30,000 peoplewith superannuation.
Norman Morris, industry communications director at Roy Morgan Research, says that the desire to reduce fees is a major motivation for people setting up an SMSF.
“Our research shows that the major reason that people are switching to SMSF’s is associated with the poor investment performance and the level of fees and charges and as a result their funds are moving from retail and a to a lesser extent industry funds into SMSF’s,” he said.
“While a great deal of discussion over recent times has been about the level of fees associated with super and the need to minimise these, the question of looking at fees in conjunction with performance has not received so much attention.”
The rise and rise of SMSFs, a major trend seen over the last 10 years, is a result of a investors wanting greater control over their pension pots to combat a perceived lack of performance of pooled funds.
“With growing competition between the industry and retail funds for market share and the rapid expansion of the SMSF sector, satisfaction with financial performance is increasingly a factor that fund managers should be taking notice of,” Morris added.
“Our research shows that there is a strong correlation between satisfaction with superannuation financial performance and the likelihood of switching funds.”
“The ease of switching super funds and the increase in people using SMSF’s means that the retail sector will increasingly rely on their adviser network and advice to retain customers, but at the same time be acting in the best interest of their client.”
In truth the dichotomy between the levels of satisfaction trustees have with SMSFs versus pooled super funds is not easy to explain with performance. Industry funds have actually underperformed their retail peers over the last 12 months.
However, the tide of opinion is very much against retail funds and it would seem little can be done to halt the march towards self-managed portfolios.
By Mark Smith