At Sunsuper, Lally says the best retention strategy the fund deploys is to satisfy members while it has them in the accumulation phase. By the time a member rings up to roll their balance into an SMSF, it’s too late to stop them. The decision to go it alone has been made. “The percentage you keep is tiny; it’s not worth it,” Lally says. It is up to the fund to reinforce the value of their offerings – such as risk management and diversification in investments, and advice services – throughout the bulk of members’ accumulation years. Sunsuper boasts a retention rate of more than 98 per cent. Lally says this is largely attributable to financial planning arm and modelling performed by its marketing team, which drives targeted communications and marketing campaigns to segments of its memberships. The fund’s marketing machine has dissected Sunsuper’s 1 millionplus members into 140 segments. Based on this member-specific information, “we know when people are likely to put more money in, buy more insurance or go to an SMSF,” Lally says. To stem the flow to SMSFs, the fund targets members with balances of $50,000 or more, who are most likely to command an income stream in retirement.

In 2008, the fund cut its pension fees by 10 basis points to 0.25 per cent on the first $300,000 of an account. But Lally says this alone has not been an effective retention strategy. “Fees are not a huge part of it. People like to have a financial planner, someone they can communicate with about their specific circumstances.” But the best service funds can provide is to convince members not to abandon their investment strategies during market routs. “The big challenge is to get members to stay the course,” he says. Martin Stevenson, a partner at Mercer, says it’s possible for funds to instil loyalty in their members throughout the accumulation journey. “If members feel their fund has looked after them well pre retirement, they’re going to be happy with them post-retirement. That’s brand building. That’s powerful,” Stevenson says. That’s a wrap It’s irrelevant whether it was Sun Tzu, Machiavelli, or Michael Corleone who enjoined their audience to keep enemies close and friends even closer – it’s a maxim on the art of turning a threat into an opportunity that retail super funds, such as MLC and AMP Capital Investors, have embraced with profitable zest.

Both MLC’s David Wappett and AMP Capital’s Ben Harrop are upbeat about the DIYers, seeing them as a business opportunity to be welcomed rather than as defectors. MLC has wheeled out two big guns in the past month: a full-service wrap platform unsurprisingly named MLC Wrap, and a retirement solutions team headed by AXA veteran Andrew Barnett. David Wappett, who is head of product for MLC Wrap, says the appeal of the new platform is its combination of investment portfolios and compliance services. The importance of this offering is indicated by the fact that, since June 2009, he estimates MLC has invested $125 million in technology integration and the project has, at its peak, had more than 200 people working on it. AMP Capital sees a complex picture, in the post-financial crisis distribution market, in which investors’ demand for choice converging with Government legislation on accountants which may curtail the growth of the SMSF sector. MCL Wrap does not herald its parent company’s entry into the DIY market.

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