Industry super funds struggling to retain high-balance members
The vast majority of industry super fund members who receive external financial advice move their money into a retail fund or a self-managed superannuation fund (SMSF), according to Deloitte partner Russell Mason.
In his discussions with an industry super fund chief executive, Mason learned that 95 per cent of members who get external financial advice end up leaving the fund on retirement.
Industry super fund members who seek external advice tend to be those with higher account balances who are nearing retirement, Mason said.
However, people rarely have all of the facts about their industry super fund at their fingertips when they choose to move, he added.
"I've seen people move out of funds because they thought they couldn't have an account-based pension," he said.
Deloitte research into the shape of the superannuation sector over the next 20 years, co-authored by Mason, has found that SMSFs are set to far outstrip other superannuation sectors by 2030.
To prevent the leakage to SMSFs and the retail sector, Mason said it was up to industry super funds to educate their members about the features they could offer.
"Many industry funds are starting to look at offering things that mimic SMSFs. A couple of the big funds have ASX200 options where you can pick the stocks you want to be in," he said.
But industry super funds can't afford to take the high moral ground when it comes to advice, he warned.
"They need to be able to answer questions such as 'Am I in the right fund?', 'What's the best option for me?', and 'Am I contributing enough?'," Mason said.
More complex issues would require the services of a licensed financial planner, but the basic questions should be answered by superannuation funds, he said.
He added that financial advisers needed to do more research into the services offered by industry super funds - particularly as the financial planning industry moved to fee-for-service. However, he stopped short of calling for industry funds to appear on Approved Product Lists (APLs).
"If they're not on recommended lists, at least they should be researched and given the opportunity to appear on APLs," Mason said.
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