The corporate super market faces cost pressures as the intra-fund movement from industry funds gain momentum, an industry specialist says.
The intra-fund advice race has been embraced by industry superannuation funds, however controlling costs has become a significant barrier to corporate funds providing this service to members, an industry specialist has said.
Many corporate and retail superannuation funds have been reluctant to offer intra-fund advice because they don't have a cost-effective advice model designed to service huge numbers of members, Provisio Technologies director Cameron O'Sullivan said.
"Corporate superannuation funds in particular are now under pressure to build an advice model that they don't have," he said.
"The only way to sustainably reduce costs and commissions is by lowering the cost per customer of providing intra-fund advice."
O'Sullivan said industry funds now offering intra-fund advice without the adviser fees were encroaching on corporate funds' turf.
"Corporate funds have always justified higher fees by giving more value to members," he said.
"But with industry funds starting to deliver quality financial advice without the adviser fees, a key benefit of staying in a corporate fund is being diminished."
With major industry funds already rolling out strong advice solutions the superannuation landscape is changing rapidly, O'Sullivan said.
"If corporate super doesn't change their advice model accordingly, this may be the final ring of the death bell that has hung over corporate super since choice of fund."
O'Sullivan said the logistics of providing a statement of advice to many thousands of members, many of whom may have low fund balances, is something that most superannuation funds aren't equipped for.
"A successful intra-fund advice strategy will depend on telephone or web-based advice, which can provide a quality statement of advice in minutes while minimising the costs of producing that advice," he said.
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