Pooled trust options signal SMSF convergence wave

The emergence of pooled trust options is keeping the SMSF industry on its toes, and incumbent providers need to constantly assess what ‘substitute’ products they are up against according to Aaron Dunn, CEO and co-founder of SmarterSMSF.

Speaking on the SMSF business landscape at the SMSF Association’s national conference on the Gold Coast this morning, Dunn said that new entrants into the world of self-managed superannuation are flooded with choice in terms of service provision.

“We go from MySuper default right through the choice environment and come up through the SMSF industry,” Dunn said. “So from that point of view, what is appealing to the individuals…?”

Dunn ventured that the proliferation of options should lead market incumbents to ask what the alternatives or “substitutions” to their offerings are.

“We’re starting to see a convergence happening in this industry,” he said. “I don’t know if many of you know but Hostplus have now created their own Super trust.”

The entrance of industry fund Hostplus into the pooled trust market is emblematic of a “shift” in the target of industry activity, Dunn reckons. “Now we’ve got Hostplus saying ‘look, why don’t you just invest into our pooled trust and take advantage of our investment managers?’”

Hostplus joined the likes of Perpetual, IOOF, Suncorp and Russell Investments in launching their own version of a pooled superannuation trust mid-last year. A PST is a unitised and APRA-regulated trust that fund trustees can invest in. PST investors, particularly SMSF members, can theoretically benefit from reduced administrative and compliance responsibilities.

“We’ve got those within the sector or those within the superannuation sector more broadly who are saying, ‘we can do member-directed more, we can do all the things that a self-managed superannuation fund can do’,” he said. “We are going to see a greater convergence of SMSFs tapping into these key areas as well.”

The effect on industry, Dunn, reckons, is that other providers need to sharpen their game.

“Think about what the strengths are that can attract clients to your business and what are the threats that will continue to exist with these substitute products with potential trustees,” he said.