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Rapid growth in Self Managed Super Super Funds largely result of low satisfaction with performance of other Funds

Source: Roy Morgan Single Source (Australia), 6 month moving average, average sample size = 15,500.

Satisfaction with the financial performance of Industry Super Funds in September 2012 was 48.9%, ahead of the 42.5% shown by Retail Funds, but still well below the 64.2% of Self Managed Funds. It is this relatively low satisfaction of Retail and Industry Funds that is a major contributor to the rapid growth of Self Managed Super Funds (SMSF’s). These are the latest findings from the September 2012 Roy Morgan Research ‘Superannuation Satisfaction’ report based on over 30,000 people with Superannuation.

The consistently below average result for Retail super funds in terms of client satisfaction with performance has been seen over the last 10 years. As a result the sector is struggling against the increasing market share of Self Managed Super Funds and Industry Funds.

In terms of customer satisfaction with financial performance of superannuation the top Retail Fund was Colonial First State with 47.6% but even this was below the result achieved by seven Industry Funds.

Roy Morgan Single Source (Australia), 6 month moving average, average sample size = 15,500.

Base: Australians 14+ with Work Based or Personal Superannuation.

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

“Our research shows that the major reason that people are switching to SMSF’s is associated with the poor investment performance and the level of fees and charges and as a result their funds are moving from retail and a to a lesser extent industry funds into SMSF’s.

“While a great deal of discussion over recent times has been about the level of fees associated with super and the need to minimise these, the question of looking at fees in conjunction with performance has not received so much attention.

“Although there are various industry tables of performance and fees published it is doubtful that the majority of people holding super would be aware of or understand these.  For this reason we have been measuring what people think about the financial performance of their fund because it will be this which will ultimately determine their action.

“With growing competition between the industry and retail funds for market share and the rapid expansion of the SMSF sector, satisfaction with financial performance is increasingly a factor that fund managers should be taking notice of. Our research shows that there is a strong correlation between satisfaction with superannuation financial performance and the likelihood of switching funds.

“The ease of switching super funds and the increase in people using SMSF’s means that the retail sector will increasingly rely on their adviser network and advice to retain customers, but at the same time be acting in the best interest of their client.”