While more superannuation members view mergers as positive than negative, the vast majority are indifferent to the merger activity of their fund according to researcher Investment Trends.

If their fund were to merge with a larger fund, 27 per cent of members consider the move to be positive, according to the Investment Trends 2021 Super Engagement Report, while only 11 per cent would see the move as negative.

The rest, however, remain indifferent.

According to Investment Trends senior analyst Bailey Hao, the figures actually point to a relatively high engagement level between members and their funds.

““There is a general view that engagement between Australians and their super fund is underwhelming, but our research shows that super fund members are very much engaged with current events, having strong opinions about their super fund’s strategic decisions,” Hao says.

The few who hold negative views on mergers are most concerned with potential negative impacts on fees and returns, he explains.

“Super funds that are in the process of merging, or thinking about doing so, will do well if they alleviate their members’ top concerns of potential increased fees and underperformance,” he says, adding that some also expressed concern about service levels.

Branding also plays a role in client sentiment, Hao explains. While 78 per cent of  members were indifferent about a merged fund changing its name or logo post-merger, it’s significant that 19 per cent opposed these potential changes.

“Those who oppose a brand change most often believe the existing brand already represents their member base well and see a refresh as a waste of resources,” he says. “To limit member attrition, super funds must ensure some semblance of their current identity and values is retained before rebranding to appeal to a wider member base.”

The research comes as Australia’s superannuation landscape prepares to ramp up merger activity. If all planned and announced mergers proceed, the country will consolidate to 12 funds with each having assets under management of more than $50 billion.

The three largest of those, Commonwealth Super Corporation, the new QSuper and Sunsuper combined entity and AustralianSuper all have more than $191 billion in assets.

Below the top dozen, the next largest fund will have $26 billion in assets – well below the $30 billion mark APRA’s out-going deputy chair Helen Rowell said was the minimum for a fund to remain competitive.

 

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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