The key to super funds retaining members through retirement will ultimately come down to how they facilitate access to advice, according to research from Investment Trends.
The researcher’s 2024 ‘Adviser Product and Marketing Needs’ report found that super funds have begun to realise a good partnership with independent financial advisers is critical to member retention, and the funds that address adviser needs will be in the best position to maximise member loyalty.
Investment Trends associate research director Ludovic Sevestre tells Professional Planner the advice piece is a common switching driver when people enter retirement.
“Whether it’s industry or retails funds, they both really have to have an advice offering to keep their members staying with them,” Sevestre says.
The results of the report showed that nearly 70 per cent of advisers recommend their main platform’s super fund offering to clients.
Additionally, fees (cited by 73 per cent of advisers), range of investment options (57 per cent), good customer service/support (49 per cent) and online access (42 per cent) are key factors in picking funds for clients.
Sevestre says BT and AMP North are examples of platforms that have stepped up their offering through the adviser channel.
“That dynamic is really changing the landscape, it’s not only about mainstream super funds, we’re seeing more and more platform providers capturing members through the advice channels,” he says.
But despite advisers being critical for member retention, the report also found a slight increase in advisers who view product selection as essential to their client value proposition.
These advisers are referred to as “insourcers” – as opposed to advisers who outsource investment management – and have grown since last year from 32 per cent to 35 per cent with an average of $69.6 million in funds under management.
Similarly, the number of outsourcers – who either have no involvement or minimal involvement in the investment selection process – grew from 14 per cent to 16 per cent.
The proportion defined as “medium modifiers” was unchanged at 21 per cent, but the growth in insourcers and outsourcers came at the expense of “high modifiers”, which decreased from 33 per cent to 29 per cent.
Overall, the research found more advisers are looking to maintain their approach to investment selection, with 35 per cent not intending to make portfolio changes, up from 26 per cent the year before.
ETFs and active unlisted managed funds are being given equal consideration when constructing portfolios, with the former being the preferred product.
Sevestre says the biggest driver of investment selection is diversification, and a big part of that is mixing actively managed and passive products.
“It’s mainly the passive component of the ETF that is capturing the inflow from an adviser perspective, but we see that trend even in the SMSF space,” he says.
Research released this week by ETF provider Global X, formerly known as ETF Securities, notes the ETF market has passed $200 billion for the first time, reaching $204.4 billion at the end of the financial year.
But while it took nearly 20 years to reach $100 billion, the second $100 billion has been achieved in just over three years.
However, while the Investment Trends research notes ETFs and unlisted managed funds had priority over other investment vehicles, these are still followed by management accounts, index unlisted managed funds, and direct shares.