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Australians with industry superannuation funds are more satisfied than those with retail funds

Source: Roy Morgan Single Source (Australia), n=50,000+ per annum, six months to August 2016, includes 16,114 superannuation customers

Industry superannuation fund customers continue to score higher than retail funds for satisfaction with financial performance on a rating of 59.7% in the six months to August, ahead of retail funds with 57.0%. They have had higher satisfaction than retail funds every month since 2007. These are the latest findings from Roy Morgan’s Single Source survey of 50,000+ consumers pa.

Industry funds increase satisfaction lead over the last year

The lead in satisfaction by industry funds has varied considerably since 2010 but over the last 12 months, industry funds increased their lead over retail funds from only 0.7% points in the 6 months to August 2015 (59.6% vs 58.9%), to 2.7% points in August 2016 (59.7% vs 57.0%).

Percentage of customers 'Very' or 'Fairly' satisfied with financial performance of superannuation

Source: Roy Morgan Single Source (Australia), n=50,000+ per annum, six months rolling March 2010 - August 2016, average data point represents n=15,548 Australians with superannuation

Retail funds are more sensitive than industry funds to movements in the ASX, as shown by the fact that they reduced the gap in satisfaction to industry funds considerably between 2012 and 2015, coinciding with a 48.3% increase in the ASX. The widening of the gap back in favour of industry funds over the last year appears to be largely due to a drop in the ASX of around 10% from its peak in 2015.


Superannuation funds show a major skew to the top end

The superannuation funds held by customers are very unevenly distributed and as a result they can’t be treated as a uniform group. This is an important point to understand when looking at satisfaction levels because high-value customers should ideally have the highest satisfaction levels in order to reduce the chances of them switching funds. Brands in this top end will also need to have higher satisfaction levels than competitors if they are to retain and grow their business.

Although more than six out of ten (60.8%) people with superannuation have balances of less than $100,000, they account for less than a sixth (16.4%) of the dollars held in superannuation.

Share of superannuation customers and funds by balance

Source: Roy Morgan Single Source (Australia), n=50,000+ per annum, six months to August 2016, includes 16,114 superannuation customers

At the top end of the scale, where self-managed funds are making major inroads, those people with $700,000 or more in superannuation account for only 2.8% of members but have 17.6% of total balances.

People with $250,000 or more in superannuation account for more than half (54.5%) of all funds but represent only 15.7% of total customers. This highlights the significance of ensuring that people in the top brackets should be targeted to achieve the highest levels of satisfaction so as to avoid defection of their considerable funds.


Industry funds lead in satisfaction for all balances over $5,000

Industry funds lead retail funds in overall customer satisfaction but more importantly, they lead  for all balances of $5,000 or more. In the all-important high value market with balances over $700,000, industry funds lead with 83.3% satisfaction, compared to 80.5% for retail funds. This is the segment where competition is greatest from self-managed super funds, with a current satisfaction rating of 81.5%.

Percentage of customers 'very' or 'fairly' satisfied with financial performance of fund

Source: Roy Morgan Single Source (Australia), n=50,000+ per annum, six months to August 2016, includes 16,114 superannuation customers

For those holding less than $5,000 in superannuation, retail funds have marginally higher satisfaction than industry funds (48.0% compared to 47.5%) but this segment accounts for only 0.2% of total superannuation funds.

Satisfaction levels for both industry and retail funds increase in line with balances held.

Norman Morris, Industry Communications Director, Roy Morgan Research says:

“Lower value customers and their problems have been a major focus of the recent banking inquiry and as such will require more attention by financial institutions in order to improve their satisfaction levels.

“With intense competition between retail super funds and industry funds, it is important to understand what fund customers think regarding the financial performance of the two groups. It should ultimately be the customers who decide where their funds are best directed but there may be difficulties for many understanding or accessing performance tables, and advisors may also influence a less-than-optimum choice.

“Of particular significance is the fact that satisfaction among industry-fund customers has remained ahead of retail-fund customers for many years, and also poses a real threat in the higher balance segments. It is important to note that both groups face potential losses to self-managed funds from their higher value customers if satisfaction levels decline. Currently however, satisfaction with self-managed funds in the $700,000 and over group is 81.5%, only marginally ahead of retail funds on 80.5% but behind industry funds with 83.4%.

“The relative satisfaction levels across competitors in the $250,000+ group needs to be closely monitored because they hold over half (54.5%) of all superannuation funds and yet only account for 15.7% of members. Currently, industry funds lead in satisfaction among this group with 78.7%, followed by self-managed funds on 76.1% and retail funds well behind on 69%. It appears from this that retail funds with balances of $250,000 or more will be under threat from both industry and self-managed funds.

“This data is drawn from the Roy Morgan Single Source survey of over 50,000 consumers pa and covers only a fraction of the finance information that is available. Over the last 12 months alone we have interviewed over 34,000 superannuation customers, enabling an in-depth understanding and brand analysis of this key segment of the Australian market. This unique database provides detailed insights for anyone involved in the superannuation industry in Australia.”   

                                                                     

For comments or more information please contact:
Norman Morris, Industry Communications Director
Office: +61 (03) 9224 5172
Norman.Morris@roymorgan.com


About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2