New research by CoreData has revealed 25.6 per cent of retail members are likely or very likely to switch to another APRA fund within five years, with 21.8 per cent likely to move to a self-managed fund.
The research also found that 10.9 per cent of retail members are considering a move to another APRA fund within the next 12 months.
CoreData principal Andrew Inwood said: “Stronger switching intention actually presents growth opportunities for funds if they are able to demonstrate value and utility to set them apart and attract those who are discerning with their super.”
Those surveyed who communicated an intention to leave their retail fund cited high fees and charges and poor investment returns compared as foremost drivers.
For members considering moving to a self-managed super fund (SMSF), 81.6 per cent they would likely or very likely stay with their existing fund if they paid less in fees.
Further, 62.7 per cent of SMSF members are likely to close their SMSF and move to an APRA fund if they paid less in fees.
“As funds fight to grow market share and remain competitive, the downward pressure on fees is likely to continue,” Mr Inwood said.
“The research suggests APRA funds that are able to innovate and find ways to reduce fees could help stem the flow to the SMSF sector.”
The report concluded that “at risk” members want to hear more from their fund. Roughly 73.8 per cent of those with a “high switching” capacity want to receive more communication from their fund.
“However, funds should not just communicate more frequently for the sake of it,” said Mr Inwood.
“Communications have to be relevant, engaging and delivered through the right channels, otherwise funds could do more harm than good.”
