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Retail superannuation funds once again higher than industry funds in the satisfaction stakes, after trailing for a decade

Source: Roy Morgan Single Source (Australia). 6 months to July 2016, n= 16,297; 6 months to July 2017, n=16,245. Base: Australians 14+ with Superannuation.

New research from Roy Morgan shows that in July 2017, satisfaction with the financial performance of retail superannuation funds (58.7%) was higher than industry funds (58.2%) for the sixth consecutive month, after having trailed them for more than a decade. Satisfaction with self-managed superannuation funds maintained their overall lead with 73.8%, up 2.8% points in the last year.

These are the latest findings from Roy Morgan’s July Superannuation Satisfaction Report covering over 30,000 superannuation fund members per annum.


High balance super accounts show biggest satisfaction gains with SMSFs and retail super funds

In the six months to July 2017, the satisfaction with SMSFs where account balances were $700,000 or more was 85.2%, up 7.7% points in the last 12 months and well ahead of retail funds in this segment with 77.6% (up 4.1% points) and industry funds on 76.9% (up 0.3% points).


Satisfaction with financial performance of superannuation funds

Satisfaction with financial performance of superannuation fundsSource: Roy Morgan Single Source (Australia). 6 months to July 2016, n= 16,297; 6 months to July 2017, n=16,245. Base: Australians 14+ with Superannuation.

Although SMSFs are the clear satisfaction leaders in the $700,000+ segment, they are not so dominant in the $250,000 to $699,999 segment where competition is very close among the three major fund types. In this segment, industry funds lead with 72.6% satisfaction, followed by SMSFs (71.8%) and retail funds (68.9%).

The overall lead in satisfaction among SMSFs is a result of the fact that they really only operate with larger balance accounts, where satisfaction for all super types is higher. By contrast, industry and retail funds also operate with lower balance accounts such as the under $5,000, where satisfaction is less than 50%.


Superannuation market heavily skewed

The headline figure of over two trillion dollars in superannuation is very significant but account must be taken of the distribution of balances, rather than simply looking at averages.

This chart shows that 59.8% of fund members have less than $100,000 in super and they account for only 14.7% of total superannuation funds. At the top end, those with $700,000 or more in super account for only 3.9% of members but they account for nearly a quarter (23.8%) of superannuation funds.


Share of superannuation customers and funds by balance

Share of superannuation customers and funds by balanceSource: Roy Morgan Single Source (Australia), n= 50,000 + per annum, six months to July 2017, includes 16,245 superannuation customers. Base: Australians 14+ who have superannuation.

This data highlights the need to analyse satisfaction levels by dollar values because of the much greater significance of retaining and attracting the higher balance fund members.


Major variations in satisfaction across superannuation funds

Although retail funds overall performed marginally better than industry funds, at the individual fund level among the majors, they did not rank in the top five performers. The following chart shows that across the fifteen largest super funds (based on number of members), Qsuper had the highest satisfaction with 73.3%, followed by Cbus (65.7%) and Unisuper (64.8%).


Satisfaction with financial performance of superannuation – 15 largest funds1

Satisfaction with financial performance of superannuation - 15 largest funds1. Based on customer numbers. Source: Roy Morgan Single Source (Australia). 6 months to July 2016, n= 16,297; 6 months to July 2017, n=16,245. Base: Australians 14+ with Superannuation.

The best performing largest retail funds were Colonial First State (59.0%), MLC (57.8%), OnePath (56.5%) and BT (55.5%).


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

“With the increasing complexity of superannuation as a result of many rule changes, it is important that funds keep track of how their members perceive their funds are performing. Although performance tables are produced and published regularly, it is unlikely that the majority of fund members will be sufficiently engaged to follow these tables but rather act or not on how they feel about the performance of their current fund.

“This research has highlighted the need to measure members satisfaction by account balance, because for example the $700,000 and over group although only accounting for only 3.9% of fund members holds 23.8% of all superannuation funds. It is in this segment that SMSFs are having major success against industry and retail funds.

“Although industry funds have held a lead in satisfaction over retail funds for a decade or more, it now appears that retail funds have closed the gap and in fact taken a narrow lead mainly as a result of gains where fund balances are $250,000 or more but also showed some improvement in the $5,000 to $100,000 range. Industry funds have lost some ground in satisfaction over the last year in all segments under $700,000 but made some minor gains over that amount.

“With continued gains being made by SMSFs in satisfaction and funds under management, it is worth noting in the $250,000 to under $700,000 segment, where 36.7% of all superannuation funds are held, that industry funds hold a small lead in satisfaction over retail and SMSFs.

“It is important for super fund members not to be influenced by short term fluctuations in performance across funds, for what is a very long term investment. This fact is highlighted in the research which shows that of the fifteen largest funds measured for movements in satisfaction over the last year, eight showed an improvement and seven showed a decline. We have seen over the years that these movements are often reversed, making the chasing of short term winners rather precarious.”


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