New high-net-worth retirees are leaving superannuation funds to manage their own retirement as they “bump up against” poor service, according to CoreData chief executive Andrew Inwood.

This comes as Australia’s $3.4 trillion super system transforms from product provider to service provider as baby boomers decumulate and retire, Inwood said following his presentation at Investment Magazine’s Chair Forum last week.

“The baby boomers, who were the drivers of accumulation, the youngest of these is now 57, and they’re now coming to the point where they’re starting to leave the workforce,’’ he said.

“They’re moving from being in a low interest category to a high interest category with a desire for better service and better outcomes.’’

Inwood said high growth in self-managed super funds was due to pre-retirement behaviour for HNW Australians with at least $250,000 in funds.

“They can fund retirement better than any generation before but they’re bumping into poor service and this is going to significantly impact the income of smaller to mid-sized funds,’’ he said.

Inwood cited one smaller fund which had lost 300 of its top 1000 clients to SMSFs, a big hit for the fund despite big inflows from new members.

“The economics of this is substantial,’’ he said.

A 55-year-old with $300,000 in superannuation was worth more to a fund than a new member and this was not being recognised by many funds.

“At the moment members are treated the same if you have $1 million or $10,000 and that doesn’t make any sense,’’ he said.

Look to customer engagement

Inwood recommended super funds to look at industries which excelled at customer engagement such as airlines, banks, travel companies and digital giants like Amazon and Alibaba.

This included frequent flier and loyalty schemes which focused their service provision on those with long-standing ties to the business.

Super funds could also partner with firms like insurers TAL, AIA, GenLife and Challenger to provide retirement products and options, he said.