Advice gap could see retirees fleeing
There is a substantial advice capability gap in many industry superannuation funds compared to their retail counterparts, which puts them at risk of losing members at the crucial point of retirement, Tria Investment Partners said.
Tria principal consultant, Chris Hurst, said there are already indications that funds with a significant network of advisers were pulling in larger number of retirees, while those with weak advice networks struggled to keep members.
Tria figures indicated a strong connection between the scale of a fund's salaried and aligned planner force and the breadth of its pension division, with retailers holding more than 20 per cent of their assets in pension mode.
"For many funds, the lack of an adequate advice proposition requires an urgent response," Hurst said.
Tria figures also showed the number of fund members per aligned adviser within large industry funds were substantially higher than within their retail equivalents.
While this overlooked the independent financial adviser networks, it was still indicative of the substantial gap between industry and retail funds.
"However, they are not alone. Most advisers have less than 250 active clients, so even the retail sector with its much larger aligned adviser forces and supportive IFA networks is under pressure," Hurst said.
Industry funds were still ahead on market share in workplace super from retail funds, with retail funds falling over minus six per cent over the last 10 years, while industry funds gained just over five per cent.
"However with the forces we've outlined above, without any type of response it's only be a matter of time before we start to see a significant shift in the competitive landscape," Hurst said.
AUTHOR
Malavika Santhebennur
Recommended for you
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
