Superannuation funds may have focused too much on the delivery of MySuper products and forgotten the main game – members who choose their own funds, according to actuarial consultancy Rice Warner.
In an analysis published on the consultancy's website this week, consultant Nathan Bonarius suggested that super funds had been distracted by their default system obligations.
"Rice Warner believes that developing a good default option should be a key objective of every superannuation fund. However, to focus product development solely on MySuper, at the expense of Choice, has created certain commercial limitations," he wrote.
Bonarius pointed out that choice members made up the majority of assets in the superannuation industry and the average account balance for a choice members was four times that of the average MySuper member.
"A quick look at the rapid rise of self-managed superannuation funds (SMSFs), which represent one-third of total industry assets, tells us that some one-million fund members are now managing their own retirement savings, despite a general lack of investment expertise and certainly the absence of any scale benefits," he wrote adding that the industry fund sector, despite its strong brand, had attracted only 2.5 per cent of retirement assets.
However, Bonarius suggests that change is occurring and that funds are recognising the value of retaining high balance choice members via retention strategies such as expanding the range of choice investments available, member direct services, pension product transformation, and the offer of financial planning services.
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