Many industry funds faced a serious advice capability gap in meeting their retirees’ members demand for advice, and risked losing members as they approached retirement.
Such was the finding from Tria Investment Partners, which said funds with solid advice networks were pulling in the largest number of retirees, while those lacking sufficient advice networks were fighting to retain members.
Tria principal consultant, Chris Hurst, said an urgent response was critical to resolve the advice capability gap.
“Many industry funds are already being seriously challenged by their members’ demand for advice. For many not-for-profit funds urgent action is needed to develop a practical and effective advice strategy,” he said.
Retail funds with salaried and aligned planners had more than 20 per cent of their assets in pension mode, while industry funds had between five and 10 per cent of their assets in pension mode.
Unisuper, which had 29 salaried/aligned advisers, was the only fund to have more than 20 per cent of their assets in pension mode.
Tria figures also showed the number of fund members per aligned adviser within large industry funds were substantially higher than within their retail equivalents.
Interestingly, industry funds still held a lead in market share compared to retail funds for some time,, gaining just over five per cent, while retail funds fell over minus six per cent over 10 years, but Hurst wondered if this would change as members entered retirement.
“With the forces we’ve outlined above, without any type of response it’s only be a matter of time before we start to see a significant shift in the competitive landscape,” Hurst said.
But retail funds with its large aligned adviser groups were also feeling pressure, with most advisers having less than 250 active clients.
