Do planners pose a risk to industry funds?
Despite their long-term potential in terms of member demographics, industry funds have cause to be concerned about the potential for members to lured away by financial planners and self-managed superannuation funds, according to new analysis from Roy Morgan Research.
The research, published this week, said a combination of the largest membership base and the youngest age profile gave industry funds the greatest long-term or lifetime growth potential, noting that of the 13.4 million Australians aged over 14, 6.8 million (50.7 per cent) were members of an industry fund.
“This big lead in membership numbers by industry funds gives them the greatest growth potential if they [members] can be retained through to retirement,” the analysis said.
However, Norman Morris, Roy Morgan's industry communications director pointed to the challenges of member retention.
“Although industry funds have the greatest long-term potential, there are a number of challenges to achieving this, particularly over time as balances increase,” he said.
“With higher balances there is likely to be a greater use of financial planners which often have a leaning towards their own funds or other retail funds and move away from industry funds. Another major issue is the challenge of high balances moving to SMSFs which impact retail and industry funds.”
Morris said engaging young people was the key to maximising their lifetime potential in the industry but this had generally proven to be difficult due to the long term nature of these issue compared to more immediate priorities, including housing affordability.
“For young people to become more engaged in superannuation they are likely to need financial advice and education but this has proven difficult in the past because of cost, the level of interest and trust,” he said.
However, Morris said that the poor regard in which financial planners were held with respect to honesty and ethics represented a significant barrier to their wider use.
AUTHOR
Mike Taylor
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
