Satisfaction with performance of industry and retail funds continues to fall

Satisfaction with the financial performance of industry and retail super funds has continued to fall, after falling as the Financial Services Royal Commission turned its attention to superannuation.

According to the latest Roy Morgan figures, 61.8% of industry fund members as satisfied with the financial performance of their fund, compared to 58.2% of retail funds. This is down 0.3% for industry funds compared to August 2018 and down 1.0% for retail funds. Though compared to a year earlier industry funds are up 2.7% and retail funds up 1.3%.

Norman Morris, Industry Communications Director for Roy Morgan, suggested the change in satisfaction could be in part due to the current Royal Commission.

“Retail super funds and their providers have been taking the brunt of the adverse publicity regarding superannuation and wealth management generated by the Finance Royal Commission,” he said.

“This publicity has the potential to adversely impact satisfaction ratings relative to industry funds which have received very little attention. In addition, published performance tables on superannuation generally show industry funds have been performing better than retail funds.”

“Despite these negative factors having the potential to impact on relative satisfaction ratings between retail and industry funds, satisfaction for both has actually improved over the last 12 months. It is worth noting however that satisfaction to date is unlikely to have fully factored in the current declines in the stock market and property values.”

“Superannuation satisfaction plays a vital part towards understanding the behaviour of fund members as it is unlikely that the majority will be actively engaged enough to be reading performance tables. It is more likely that it is how they feel regarding the performance of their fund that will ultimately determine their actions.”

Satisfaction with industry funds by people with balances over $700,000 has been falling recently – down 4.4% August 2018 to October 2018 (up 0.1% for retail funds), after falling 2.6% June to August (down 2.0% for retail funds).

The only segment in which retail funds have higher member satisfaction is for balances under $5,000, though the gap has been closing – satisfaction with retail fund balances in this bracket fell 11.1% in June to October 2018. Though Roy Morgan notes that this segment is of “little current value as it only holds 0.1% of the total market value, despite having 10.9% of the customers”.

“As a result of this skew we can see that improving satisfaction among the lowest value groups is unlikely to gain significant funds in the short term.”

“At the other end of the market only 4.3% of fund members have balances of $700,000 or more but they account for nearly a quarter (24.4%) of the market value.”

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