Member retention depends on SMSF services

While competitive fees and good investment returns are essential for super funds to retain their members, catering to those who are considering setting up a self-managed super fund (SMSF) is becoming ever-important, according to a report by CoreData. 

CoreData’s Member Retention report states the majority of those likely to leave to establish an SMSF - 83 per cent - would first consider using their existing fund’s SMSF services if available. 

This is particularly true for industry fund members, according to CoreData head of advice, wealth and super Salvador Saiz.  

“If we look closer, then we see that one in three of those members most at risk of setting up/joining an SMSF cite such services by their main fund as a key tool for retaining their business,” Saiz added.   

“As funds search for growth and look to broaden their services offer, it is no surprise that outside of direct investment options, funds are considering or have already begun to offer other services - such as mortgage broking services and even partnering with SMSF specialist providers - in order to service those members most at risk of setting up an SMSF or those members that already have an SMSF.”   

However, the finding clashes with a recent warning by IQ Group chief executive Graham Sammells that member direct investments, or MDIs, may not be the answer super funds were looking for to prevent the flight to SMSFs. 

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. 

Financial advice remains one of the key areas super funds need to maintain and improve in order to retain members, the report also found.  

The member retention report found that while maintaining competitive fees and investment returns was essential, almost half of those at risk of switching funds (44.5 per cent) suggested advice was certainly a key factor.  

A large proportion of members, however, are not aware that their fund offered advice, Saiz said.  

“There is no doubt that advice is a key factor in member engagement, with previous research indicating not only that members would like to access advice (in one form or another) through their superfund, but that it is a key retention tool.”  

Far from advice only being relevant to older generations, slightly more than half of respondents believe that superfunds should get in touch with members as early as possible to discuss their individual financial future, the report found.

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