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Member direct fails to answer SMSF leakage
Member direct investments (MDIs) may not be the answer funds are looking for to stop member leakage to self-managed super funds (SMSFs), IQ Group chief executive Graham Sammells has warned.
Funds need to undertake research to ensure any response relates to members' concerns, according to Sammells, as membership leakage does not always relate to the lack of MDIs.
"An MDI otherwise may be simply a 'bolt-on' strategy and expensive overhead, distracting resources from more significant issues that need addressing," Sammells said.
Where MDI options were not key to reducing member churn, improving relationships and communication processes with employers could prove more successful and be a higher source of revenue, according to IQ Group.
Where a good business case existed for MDIs, funds needed to redesign superannuation products to accommodate accumulation and pension options, including segregating assets that were transferred from accumulation to pension options, Sammells said.
Regulatory reporting obligations also needed consideration, including the consideration of recovering costs under MySuper.
"Product, solution and implementation needs to be one streamlined process in order for a fund to avoid a 'bolt-on' product that costs more to operate than it returns," Sammells said.
Sammells said MDI options required a greater level of collaboration and expertise across divisions including administration, marketing, operations, finance, IT and investment, as well as a potential reworking of distribution channels including direct and adviser networks.
The SMSF sector now accounts for 30 per cent of the Australian superannuation industry.
Many of Australian industry superannuation funds including AustralianSuper, Care Super and Equip have launched MDIs, whilst HOSTPLUS has its offer slated for later this year.
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