Australia’s superannuation landscape is undergoing significant transformation. Almost three decades after its demutualisation, Australia’s largest wealth manager, AMP, saw its shares close at $23 in June 1998. AMP is a prominent provider of financial services, including superannuation, investments, and advice. While the nation’s superannuation assets have since grown more than tenfold, AMP’s share price has fallen 90 per cent. This period saw the ascendance of industry funds, but new analysis suggests their dominance may now be challenged by a clear trend of members switching to retail and self-managed super funds (SMSFs).
MST Marquee analyst Lafitani Sotiriou posits that industry funds’ best days are behind them. Data indicates older members with growing balances increasingly seek control and personalised advice, moving from “set-and-forget” options. SMSF holdings grow significantly with age, reaching over 50 per cent for those over 75. This trend extends to younger members; ATO data shows 68 per cent of new SMSFs in the June quarter were by members under 50, driven by reduced administrative barriers. Retail funds also benefit, with average account balances increasing 64 per cent over four years.
Despite significant consolidation within the industry fund sector (from 66 to 19 since 2004), anticipated benefits of lower costs or better returns haven’t been consistently proven. AustralianSuper’s expense ratio has increased, and Sotiriou notes internalised asset management hasn’t consistently delivered superior outcomes. While industry funds benefit from favourable policy and substantial marketing, they face pressure to enhance customer service, which has drawn regulatory scrutiny. It remains uncertain if these factors can stem the tide of members seeking alternatives in an increasingly competitive environment.
