Industry funds are the biggest losers in the race to keep their most lucrative members, as Australians with the most retirement savings flock to set up their own self-managed super funds (SMSFs).
Around 38 per cent of Australians who set up SMSFs did so by switching from industry funds, according to new research from the Financial Services Council and UBS.
Retail super funds such as those offered by Australia’s big four banks are not spared the exodus of rich members, with around 30 per cent of people establishing SMSFs making the switch from retail offerings.
The research into the $560 billion SMSF sector comes as financial services groups ramp up their efforts to stem the outflow of funds as older Australians leave to set up their own retirement savings vehicles.
Industry funds such as the $13 billion VicSuper are introducing new products such as Challenger’s annuities to meet the income needs of their rapidly ageing member base and to offer more strategies that might tempt members to stay with them.
The assets of SMSFs have grown by more than 70 per cent from $316.5 billion to $547 billion in just five years. Since 2009, the number of SMSFs has grown by around 30 per cent to 528,701 at the end of March.
Typically, the lower the balance of the SMSF, the higher shares, cash and term deposits are in the investment mix, the research found.
Despite the low exposure to international assets, SMSF owners are increasingly recognising the need to diversify offshore, according to UBS. International shares appear to be the asset of choice as they look to ramp up their returns from offshore assets.