The Australian financial services market is expected to grow at an average annual rate of 8.6 per cent to $3,756 billion over the next 10 years, according to the latest DEXX&R report.
The Market Projections Report also found the total superannuation market sector will increase at an average annual growth rate of 9.1 per cent to $3,234 billion by June 2022.
Regulatory reforms will cause a significant change in the financial serves and superannuation landscape. Default employer contributions will shift into MySuper products and advice provided to members of super funds will begin transitioning to a fee for service opt-in regime.
"These structural changes will occur in tandem with continuing instability in global markets which will impact on local investment returns," DEXX&R said in its report. "The combined effect of these may make 2013 one of the most challenging years for product administrators since the commencement of compulsory superannuation in Australia."
Funds under management and advice (FUMA) in the self-managed, industry fund and employer-sponsored master trust segments have recovered since the global financial crisis (GFC) and are now sitting at levels higher than in 2007.
The personal super segment has experienced a lower rate of recovery and at June 2012 FUMA was 21 per cent lower, at $147.3 billion, than the $185.7 billion recorded in June 2007, the report found.
"The personal superannuation market segment has the highest proportion of discretionary contributions in the retail superannuation sector," DEXX&R said.
"Discretionary contributions are sensitive to market returns and may recover during 2013 following the positive returns recorded for most asset classes during 2012.
"The change in relative FUMA between these sectors indicates that the personal super segment will be a smaller part of the superannuation market in future years," the research company said.
Retirement incomes have also been boosted owing to an expected increase in the number of retirees expected over the next 10 years.
The retirement income market is projected to grow at 10.7 per cent per annum to $323 billion by June 2022, with allocated pensions then representing 99 per cent of total FUM held in the retirement incomes sector and with the remaining 1 per cent held in annuities.
Individual risk in-force premiums are also projected to grow at a rate of 12.4 per cent, from $6.9 billion to $22.1 billion in June 2022.
Group risk in-force premiums are projected to grow at 11.2 per cent per annum from $3.5 billion to $10.2 billion by June 2022.
