KPMG partner Tim Thomas says lower fees of industry funds is a major contributor to the expected exodus of retail fund members. However, he cautions that industry funds risk a similar loss of members if they do not take action to improve the quality of their services.
KPMG has also found that nearly 80% of consumers now prefer to interact with financial services providers via digital channels:
“Industry funds got the free kick from the royal commission, and people are certainly voting with their feet toward industry funds because of the lower fee structures but if they don‘t quickly step up their service quality, including adviser services and digital services, then we think they will also lose members,” he said.
“For now, these results suggest that retail funds need to be more concerned”…
KPMG’s latest Super Insights report showed that retail superannuation funds have lost considerable market share over recent years:
This makes sense, given industry superannuation funds easily outperformed their retail counterparts over the last decade, according to Chant West:
The primary reason for retail funds’ industry underperformance likely relates to their excessive fees.
According to the Productivity Commission (PC), retail funds’ fees are way above not-for-profit funds:
As such, retail funds deliver lower net average returns:
The PC also found that management fees in Australia are much higher than in most other OECD countries, driven largely by retail superannuation funds.
