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Super funds can stop SMSF defectors
Super funds need to modify member behaviour to stop them defecting to the self-managed super fund space, according to Umberto Mecchi, director of client services for The Shannon Company.
“At the end of the day, what we are trying to do to stop people defecting from the fund is centred around the aim to get people to behave in a certain way,” Mecchi said at the Australian Institute of Superannuation Trustees member services symposium.
“Our objective is to get members to stop doing something damaging, prevent the adoption of potentially negative or harmful products, or change or modify existing behaviour, and central to being able to do that is having the insight of data,” he said.
“If a member thinks they can take more control, or have more flexibility, or it’s cheaper and easier to set up ... we want to move members to an attitude where they think SMSFs aren’t for them, are too hard, or they don’t have enough on their balance sheets,” he said.
One method was to use the recent Australian Taxation Office crackdowns on SMSFs as a way of highlighting the growing complexity of running a SMSF, Mecchi said.
A focus on complexity and confusion creates doubt and makes it difficult for the consumer to make a decision, Mecchi said.
Mecchi said that while the approach sounded “evil”, when Simpler Super came out, more investors sought out advice to help them through the complexity of super fund investment.
Mecchi warned that super funds needed to decide whether they wanted to compete directly with the SMSF space.
Competing in the SMSF space will require not for profit super funds to adopt capabilities such as more sophisticated advice and services, or more investment options, that they may not have, Mecchi said.
“And we all know how time consuming, how costly, and how labour intensive that process can be, Mecchi said.
Super funds should analyse what the real risk to their membership was, Mecchi said.
Most members of a SMSF were retired or close to retirement, while a super fund member was in their 40s on average, he said.
AUTHOR
Mike Taylor
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