Three quarters of superannuation members are interested in funds offering them access to a direct-investment option (DIO) platform, according to a survey.
Those in corporate and retail funds are most interested in the prospect of being able to make more individual investment decisions within their main super fund, according to interim data from a questionnaire sent to 1585 members by CoreData Consulting in June.
One in five members are likely to move to a self-managed super fund (SMSF) in the next five years to gain this freedom, corporate and retail members again expressing the highest preference for this. However, six out of 10 of the members who expressed an interest in moving to an SMSF said the offer of a DIO would make them reconsider leaving.
And a quarter of those who held both an SMSF and an Australian Prudential Regulation Authority-regulated fund said they would also be likely to make use of a DIO.
Where available, high net-worth members were more likely to want the option of investing in Australian or international shares, while those with less wealth were more likely to invest in term deposits.
The soon-to-be-released CoreData Member Retention Report found that the most common reasons for members wanting to switch to an SMSF were perceptions of lower fees, more competitive returns, hearing of friends or family with better experiences than other super funds and more personalised advice.
Close to half of members considering an SMSF said that advice through their super funds would make them less likely to leave, though members did not expect to have to pay for this advice.
Instead (eight out of 10) most expressed a preference for receiving advice through online advice tools, with tax minimisation, followed by investment options and retirement planning being the most sought-after advice.
Graham Sammells, chief executive of the IQ Group called into question the wisdom of a fund offering a DIO. “Product, solution and implementation needs to be one streamlined process in order for a fund to avoid a bolt-on product that costs more to operate than it returns,” he said.
He added that investors tend to rely on financial advisers and accountants for retirement and financial planning, so the challenge for funds is to find the right mix of credible distribution channels that will reach the target market at the right time.”