Retail funds are “on the operating table”

Retail superannuation funds are “on the operating table”, according to some major industry chief executives, and what state they emerge from surgery with will depend on how they’re able to look after members’ best interests.

Speaking at the Bloomberg BuySide Forum in Sydney today, a panel of industry experts painted a bleak picture of the state of change retail superannuation funds are facing, as they undergo scrutiny following the Banking Royal Commission and ever-growing numbers of both members and default mandates go to industry funds.

Sunsuper chief executive, Scott Hartley, compared this period of flux currently faced by the retail superannuation sector as akin to surgery, as the funds were “all having intense focus put on them”.

“I think that they can emerge from the operating table, but they might lose some limbs,” he said, predicting that if they’re not looking after member interests, they won’t survive.

Financial Services Council chief executive, Sally Loane, was optimistic about retail funds’ recovery, but she didn’t deny that a large portion of her organisations’ member base were currently facing problems.

The Banking Royal Commission and the “great unwind of the big five,” which started before the Royal Commission, put them on the operating table, she said, but innovation, particularly in driving member engagement, will help them get back off it.

“The great thing about competition in any manner is it lets those who have taken a hit … come back in a very competitive manner,” Loane added.

Mercer chief executive, Ben Walsh, continued with Hartley’s operating table comparison, saying that the path to recovery could well reflect a wider change the industry had been seeing for years.

“There’s been a great convergence on the way for seven to eight years”, he said, with small funds expanding their capabilities and large ones simplifying their offerings. As a result, retail funds would come off the operating table with more simplified offerings, lower fees, and “stronger than ever”.

It’s worth noting, as Walsh did, that this change would tie into the Morrison Government’s desire for a better default system for members, which was reinforced in a talk by Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume, today.



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