The latest research capturing the views of financial services chief executives has revealed their willingness to use innovation to address the lack of consumer confidence in the industry that has manifested itself in the continued growth of SMSFs.
The 2014 Financial Services Council (FSC) DST CEO Survey showed key senior executives in the industry had realised there was a shortfall of product choices for consumers moving into pension or decumulation phase, DST head of business development Rhys Octigan said.
As a result, individuals are now changing superannuation funds more frequently than ever before, including establishing SMSFs.
“Now they’re managing super like the way they might manage a direct share portfolio,” Octigan said.
FSC chief executive John Brogden said in particular Australian Prudential Regulation Authority-regulated superannuation funds were looking to use innovation as a member retention strategy.
“It’s almost like they’re giving the self-managed [fund] experience, without having a self-managed fund, offering 48 investment choices, et cetera, and the ability to move it [their money] around like that,” he said.
Brogden said CEOs of fund managers in general were also looking to use innovation to potentially better service the SMSF sector and the new ASX mFund Settlement Service was an example.
“This along with ETFs (exchange-traded funds) are allowing people to access managed funds in a retail sense in a way they haven’t been able to do in the past,” he said.
He said it indicated innovation and technology would enable fund managers to give SMSF investors better access to asset classes they had found troublesome in the past.
“The research we did for the Murray inquiry showed that 20 per cent, or $1.8 trillion, of super is invested in global shares, but 0 per cent effectively of self-managed super is invested in global shares,” he said.
“So these sorts of innovations provide the opportunity for self-managed investors to access global investments, maybe not shares, but [managed] funds, in a manner they haven’t before.
“That wouldn’t have happened without technology because if you had to pick up the phone or fill out the form, it just wouldn’t be happening.
“There is a latent demand for broader asset allocation from self-managed investors that they can’t get without technological solutions.”
