DIY and corporate funds out, industry super funds in
Self-managed superannuation funds are unlikely to grow as quickly as other fund types, while corporate funds will lose members in the short term, a research report has predicted.
Additionally, industry funds and some public sector funds that convert to public offer status will grow at the fastest rates, of around 16 per cent and 14 per cent per year respectively from 2005 to 2010, the research from consultancy Chant West suggested.
Chant West principal Warren Chant said although switching between funds had so far been minimal, this would change over time as people changed jobs and thought about which superannuation fund to use in their new employment.
He said corporate superannuation funds would lose membership as new staff joined, bringing their existing funds with them, and existing staff left the funds.
Chant said self-managed superannuation had not experienced the growth rates expected, and he believed some people who had set up their own funds with smaller balances would close them down as they came to understand more about the requirements.
“We think a lot of people who are in them will get out of them. We think people, as they become more aware of the alternatives that are available, like the industry funds and master trusts are getting better and better all the time, they may say to themselves why would I go to a DIY fund,” he said.
Chant said industry funds and public sector funds were likely to gain members.
“Industry funds and public sector funds, by and large do a very good job and we think that people generally are not aware of that and as they become more aware of it, which they will because the industry funds will advertise and so forth É we think that people will naturally gravitate towards industry funds and public sector funds if they can,” he said.
Last December, Chant West released ratings of 58 personal superannuation funds and 40 corporate funds in the industry funds, public sector funds and commercial mater trusts sectors.
Chant said of the 58 personal super funds rated, 25 received ‘five apples’, the highest ranking available. All of the 18 industry funds rated received the ‘five apple’ rating.
Recommended for you
Insignia Financial has issued a statement to the ASX regarding a potential bid from a third global private equity business to acquire the firm.
More than 30 advisers fell off the FAR during the Christmas and New Year period, according to Wealth Data, with half of these coming from licensee giant Entireti.
With next-generation heirs unlikely to retain their family’s financial advisers after receiving an inheritance, Capgemini has explored how firms can work with younger generations to maintain a relationship.
The use of technology and data analytics will be a way for advice firms to grow in 2025, according to Adviser Ratings, with those who are using it successfully reporting 10 per cent higher profit margins.
