Satisfaction with industry super funds jumps as overall satisfaction within the sector falls.
Satisfaction with industry super funds jumped in the past 12 months but overall satisfaction fell, according to the latest findings from Roy Morgan, as lobbying for low-cost advice intensifies and the super watchdog finally gets new powers.
The Roy Morgan Superannuation Satisfaction Report comes as key super bodies agitate for industry funds to be allowed to provide low-cost financial advice to members in the restructured post-royal commission world.
Industry Funds Services (IFS) chief executive Cath Bowtell pointed to a likely softening of “the rules that hamstring low-cost simple advice”. And Australian Institute of Superannuation Trustees (AIST) chief executive Eva Scheerlinck said that while the royal commission had exposed conflicted financial advisors, demand for quality financial advice was increasing.
“We know that the number of people who need advice is growing and there is a demand from members for advice on a host of financial matters,” she told moneymanagement.com, saying this included advice on account consolidation, spouses and Centrelink entitlements.
“The time is ripe for the legal framework around advice – and how advice is described – to change,” she said.
Ms Bowtell agreed, saying the rules that hamstring the provision of low-cost simple advice could be relaxed and that the “governance model of profit-to-member funds meant they were in a strong position to provide quality, low-cost advice to members.”
In other super news, watchdog the Australian Prudential Regulation Authority (APRA) officially has the power to seek civil penalties against fund directors who don’t act in the best interests of members.
APRA deputy chairman Helen Rowell said the passing of legislation allowed the regulator to deal with underperforming funds earlier than had been possible.
“Previously, APRA could only direct a superannuation trustee after a contravention of the law had taken place, or where APRA believed there was an urgent, material threat to members’ interests,” she told the Financial Review.
“The new directions power gives APRA the ability to intervene at an early stage before members suffer significant harm.”
This might involve requiring underperforming funds to merge or exit the industry, she said.
The Roy Morgan report shows that industry funds improved their satisfaction rating by 0.9 percentage points (to 62.1 per cent), at a time when the total market satisfaction dropped 0.4 points to 60.3 per cent.
“As a result, industry funds have increased their lead over retail funds from two percentage points a year ago to the current lead of 6.4 percentage points,” it said.
The report, based on annual face-to-face interviews with more than 50,000 consumers, said that retail funds had shown declines in satisfaction at all levels, with the biggest decline being a drop of 14.3 percentage points for members with balances under $5000 and an eight percentage point decline for those with balances of $700,000 and over.
Overall, SMSFs lead with 73.4 per cent of their members satisfied.
Of the 15 best-performing industry and retail funds, Unisuper with a satisfaction rating of 71.2 per cent was well ahead of second placed HESTA with 68.3 per cent and Cbus (66.6 per cent).
The best performer among retail funds was Macquarie in eighth place overall with a satisfaction rating of 63.2 per cent, followed by Plum (62.2 per cent) and Colonial First State (57.3 per cent).
According to the latest APRA data, industry funds have balances of $629.6 billion or 23.7 per cent of the total market and have now passed the $589 billion in retail funds.
Do you have an industry, retail or self-managed fund? Are you happy with developments post the royal commission?