Source: Roy Morgan Single Source (Australia), six months rolling October 2002 - March 2017. Average sample n=18,442. Base: Australian population aged 14+ with superannuation.
In the six months to March 2017, satisfaction with retail superannuation funds was 60.0% compared to industry funds with 57.3%. This is the second consecutive month that retail fund satisfaction has been higher than industry funds, which up to now had held the lead for over a decade. These are the latest findings from Roy Morgan’s Single Source survey of over 50,000 consumers pa which includes detailed coverage of over 30,000 superannuation members.
Retail superannuation funds the biggest improvers
Over the last 12 months to March 2017, retail superannuation fund satisfaction increased by 3.0% points (to 60.0%), followed by self- managed funds up 2.6% points (to 76.2%), public sector funds up 1.7% points ( to 68.6%) and Industry funds down 3.2% (to 57.3%). This strong improvement in satisfaction for retail funds puts them ahead of industry funds for the first time since 2003, when the survey began.
Satisfaction with financial performance of superannuation
Source: Roy Morgan Single Source (Australia), six months rolling October 2002 - March 2017. Average sample n=18,442. Base: Australian population aged 14+ with superannuation
Retail funds appear to be more sensitive than industry funds to movements in the ASX, as shown by the fact that they reduced the gap in satisfaction to industry funds considerably between 2012 and 2015, coinciding with a 48.3% increase in the ASX. The relative improvement in retail fund satisfaction over the last year is therefore likely to be partly as a result of a strong performance by the ASX which was up around 17% over this period.
Satisfaction with superannuation needs to be measured by amount held
Superannuation funds held by customers are very skewed to the top end and as a result they can’t be treated as a uniform group. This is an important point to note when looking at satisfaction levels because high-value customers should ideally have the highest satisfaction levels in order to reduce the chances of them switching funds. Brands in the top end will also need to have higher satisfaction levels than competitors if they are to retain their customers and grow their business.
Although nearly six out of ten (59.7%) people with superannuation have balances of less than $100,000, they account for only 15.1% of the dollars held in superannuation.
Share of superannuation customers and funds by balance
Source: Roy Morgan Single Source (Australia), n=50,000+ per annum, six months to March 2017, includes 14,644 superannuation customers. Base: Australians aged 14+ who have superannuation.
At the top end of the scale, where self-managed funds are making major inroads, those people with $700,000 or more in superannuation account for only 3.4% of members but hold 21.0% of total superannuation funds.
People with $250,000 or more in superannuation account for 58.3% of all funds but represent only 17.3% of total customers. This highlights the significance of ensuring that people in the top brackets should be targeted to achieve the highest levels of satisfaction so as to avoid defection of their considerable funds.
Retail funds satisfaction gains coming from lower value members
Retail funds lead industry funds in overall customer satisfaction but more importantly, they only hold the lead for balances under $100,000. Over the last 12 months, nearly all of their gain in satisfaction has come from these lower value members. In the all-important high value market with balances over $700,000, industry funds lead with 85.3% satisfaction, compared to 76.1% for retail funds. This is the segment where competition is greatest from self-managed super funds, which have shown a decline in satisfaction of 2.5% points over the last year (to 75.9%).
Percentage of customers ‘very’ or ‘fairly’ satisfied with financial performance of fund
Source: Roy Morgan Single Source (Australia), n=50,000+ per annum, six months to March 2017, includes 14,644 superannuation customers. Base: Australians aged 14+ who have superannuation.
For those holding less than $5,000 in superannuation, retail funds have higher satisfaction than industry funds (54.5% compared to 47.1%) but this segment accounts for only 0.2% of total superannuation funds.
Satisfaction levels for both industry and retail funds increase in line with balances held.
Norman Morris, Industry Communications Director, Roy Morgan Research says:
“Although satisfaction with retail superannuation funds is now higher than industry funds for the first time in over a decade, it is important to recognise that this has mainly been as a result of gains among lower value clients. This is possibly due in part to the introduction of the no-frills, low-cost MySuper products over recent years which appears to be mainly impacting on the less engaged, lower value customers who didn’t actively select an investment option but are now more satisfied with their returns.
“The relative satisfaction levels across competitors in the $250,000+ group needs to be closely monitored because they hold 58.3% of all superannuation funds and yet only account for 17.3% of members. Currently, self-managed funds lead in satisfaction among this group with 78.2%, followed by industry funds on 70.2% and retail funds on 69.2%. It appears from this that retail funds with balances of $250,000 or more remain under threat from both industry and self-managed funds.
“With continued intense competition between retail and industry funds, it is important that fund members can access competitive performance tables to assist in their decision making. In addition to comparisons often being difficult to access, there are potential problems for members understanding regular rule changes and getting reliable financial advice.
“Superannuation is becoming a very complex area which is likely to lead to lack of confidence and engagement, particularly as it involves very long term decision making which is competing with shorter term priorities like buying a house.”
For comments or more information about Roy Morgan Research’s banking and finance data, please contact:
Norman Morris
Office: +61 (3) 9224 5172
Norman.Morris@roymorgan.com