Industry funds record highest customer satisfaction

21 June 2018

Industry superannuation fund high-balance members were the most satisfied of all super members with balances over $100,000, with self-managed superannuation funds (SMSFs), the historic winner for this segment, trailing by 7.3 per cent in satisfaction levels, according to Roy Morgan.

Roy Morgan’s Single Source survey for the six months to April 2018 showed industry super funds had the highest satisfaction with members of all account balances over $5,000, including members with $700,000.

In contrast, SMSFs saw declines in satisfaction for most higher balances, losing 11.6 percentage points among members with $100,000 to $249,999 and 4.3 per cent for those with $250,000 to $699,999. Satisfaction with SMSFs grew by 3.5 points for members with over $700,000.

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Retail super funds provided the highest levels of satisfaction for members with balances under $5,000 at 59.6 per cent, but struggled to impact other customer segments.

The largest segment by market share, the $5,000 to $99,999 range, saw industry fund members most satisfied with 58.4 per cent, with retail funds suffering a drop of one percentage point since the last survey to 55.3. This segment comprises 38.3 per cent of the total super market.

Roy Morgan industry communications director, Norman Morris, said funds should consider the size of the market when working out priorities.

“Deciding which customers to prioritise is ... important, given the heavy skew of the market towards high balance account holders. Despite representing a small segment of the population, the industry super fund satisfaction lead among the $250k-$700k category is likely to be more valuable for them than the satisfaction for accounts under $5,000 will be for retail super funds,” he said.

“Arguments could be made for developing loyalty with low-balance members to help them grow into larger account holders, though this will require super funds to invest not only in the market, but in their own customers, in the long term."

VicSuper saw the highest growth in satisfaction of individual funds, having grown 15.4 percentage points since April 2017. Other high gains in satisfaction include HOSTPLUS with 7.1 points, First State Super with 6.3 points, and Cbus with 4.9 points of growth.

Funds with declining satisfaction include QSuper, dropping 0.9 percentage points, One Path (-1.3 points), SunSuper (-1.7 points) and MLC (-4.4 points).

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Were the survey respondents in the Industry Funds informed of the millions and millions of dollars sucked out of their super funds as donations via Directors Fees to the Trade Unions, Labor Party and their associated entities and if so, did this increase or decrease their satisfaction ?
The vast majority of the members would be oblivious to this process, so imagine how satisfied they would be if the s fees that are obviously not retained by the Directors were retained within the funds for the members benefit !

You mean fees labelled as "marketing allowances" paid to Unions in order to access members on the shop floor. Fees which then end up in the hands of political parties. Some would call that a....commission.

Agent 86, the funds would still have to pay these fees to other Directors if they were to replace these "union" directors. Not going to make one difference to them. The avg. directors fee would be around $50k/year. Let's say there are 5 union board members that's 250k. Where are you getting millions & millions from? You sound very informed.

See the Nov 2017 research paper titled: "Rivers of Gold: How The Trade Union Movement Is Funded By Industry Super"
Between the 2013-14 and 2016-17 financial years, trade unions received $18,438,516 ( in 2017 dollar terms) directly from Industry Super funds paid in the form of directors' fees. In addition to this amount, employer or industry groups received $2,076,756 and other third parties received $5,633,099.
The top 5 biggest union recipients were:
CFMEU $2,884,168
United Voice $2,386,164
ACTU $2,050,363
AWU $1,796,158
AMWU $1,495,898
The total distribution of all third party payments from Industry Super funds between the 2013/14 to 2016/17 totaled $26.14 million of which trade unions received almost 70% of this amount.
I trust this clarifies your question.

You failed to disclose that the 'Rivers of Gold: How The Trade Union Movement Is Funded By Industry Super' was published by the Institute of Public Affairs (IPA) - that well known right wing lobby group and well known for seeking to reduce working conditions and wages for Australian employees. That clarifies your position.

Thanks for suggesting 'Rivers of Gold' for it is an apt title for the 'rivers of fees' that have flowed into the hands of the retail funds.

Now you need to present or do some research showing how much the retail funds are donating in money and in kind to the other side of politics. Your research is only half done.

It must galling to you and IPA that industry funds keep getting better results than retail funds and strong endorsement from members of industry funds.

Let's hope that surveys like these give a kick in the pants to the retail funds to do better, to deliver more satisfaction, and to reduce the rip-off fees.

So again if that's correct re the IPA then again we have the politicisation of superannuation. I guess if there's money on the table both sides will have their snouts in the trough. It's no wonder SMSF's grow in numbers.

The IPA clearly defines as an independent, non-profit public policy think tank and is funded by individual memberships, subscriptions and philanthropic and corporate donations.
The production of their report unveiling and confirming the large volumes of Industry Super monies being given to the Trade Union movement is simply a statement of fact and not a politicisation of superannuation.
It is important that disclosure of these practices are maintained in the best interest of the members of these funds as most would never know how much or at what level the financial support is provided.

You failed to disclose the authoring body of the report. Bit deceitful given that IPA would stick to its strong anti-employee line.

IPA is well funded by media, fossil fuel, tobacco, oil and that gives the clue as to its political and economic learnings. Plus it has those well known from the far right of the political spectrum including Chris Berg, Janet Albrechtsen, David Leyonhjelm, Bob Day and James Paterson. Plus it is friends to those of ultra conservative side of life including Murdoch, Gina Rinehart, Tony Abbott, George Pell, George Brandis and Alan Jones.
IPA hardly has the interests of working Australians in its mantra. IPA would probably like to get rid of compulsory superannuation and therefore the necessity of financial advisors.

Well lets put it this way sure wasn't going to be the Labor Party or the Trade Unions who would produce a report disclosing their own treasure chest of gold now would it ?
In fact, it is irrelevant who, why and how this report was produced as the relevant fact is simply that the Industry Super Funds are a major funding source of the Trade Unions and the Labor Party...full stop.
There is no argument against the facts.
Any other statement you are trying to push is irrelevant as it has no bearing or impact on the numbers.
I think you would be best advised to try and explain how the Trade Unions use these monies in their everyday operations to benefit the retirement incomes of their members.( you know...the purpose for which superannuation is in place).
No doubt these Industry Super Funds also receive a deduction for the Directors Fees as a fund expense, so not only do they elect to fund the union machine and hence the Labor Party, but they can do it at a cost of 15% less.
There is no difference Hedware between the far right and far left....both are at the extreme end of their values and beliefs and both can be dangerous when they lose sight of reality.

Well said A86, Dick Hedware is a known left extremist who will ignore even the most independent of reports to suit his red view of the world. None so blind as those who won't see.

Hedware do you seriously think this gives a real indication of member satisfaction?? These figures reflect the fact that only one group of super funds advertises on TV telling everyone how good they are. People believe what they see on TV and when they're asked questions about whether they're happy with their super fund they just regurgitate what they've seen.

Agreed Brett H.
I reckon HostPlus members would respond as being satisfied with their super fund on the basis they were offered discounted tickets to a rugby game to watch the Melbourne Storm. ( if Melbourne Storm lost, then they might change their mind to dissatisfied !)...what a joke.

Yet again " Hedware", your red rag allegiance shines through like a beacon....almost like an upset trade union head kicker.!
(and there are plenty of those boofheads around to try and emulate).
It doesn't matter what organisation produced this research paper as it is simply factual and available information.
The figures have not been embellished or falsified, so you're carry on about the source is simply meaningless white noise.
You are simply attempting to distract from the reality which is that the Labor Party and the Trade Unions see the Industry Super funds as a cash cow and bleed money from the members retirement funds whether it be in the form of directors fees or not.
It's all about "funding the cause", on behalf of the Labor comrades in order to obtain political power and control.

Comrade Hedware, can you for once not let your open bias bleed out in your comments? Serious question, are you employed or otherwise associated in any form with industry funds? Every time your monika appears it has something very left wing pro union prop labor pro ISA - you can't tell me your not employed or otherwise utterly conflicted or biased.

JJ - just seeking to add a bit a realistic balance to Agent 86 now that we know he is a protege of IPA. He starts a discussion and gets a bit heated. The problem I now have is that the Royal Commission and the APC are taking my best lines on the nefarious, criminal and immoral activities of many in the banking and financial services industries, including the retail fund managers. I don't expect the industry funds will come out all shiny after the Royal Commission has a look. I hope what results will be independent professional and respected financial advisors.

Anyway, look at the long list of comments (many interesting) that Agent 86 and I set off. Sterling service you would have to agree.

Again I declare I have no business, personal or financial interests in the industry fund side, but I do on the other side and I want to make sure those bastards are working hard for me and not ripping me off.

I have no allegiance, involvement or history with the Institute of Public Affairs on any level.
I have never spoken to or communicated with anyone representing that organisation.
I have simply referred to a body of research work they have completed outlining significant concern with the very close financial relationship between Industry Super funds and the Trade Union movement and the Labor Party.
Quite frankly, superannuation as a whole has become a high profile marketing and promotional product, rather than concentrating heavily on the intrinsic structure, service and performance of each and every fund.
Certainly the Industry Super fund marketing machine is excessively aggressive and they use repetition and spend millions and millions of fund monies on essentially a recruiting program and membership drive very similar to a union model.
Kelly O'Dwyer has previously stated she would be investigating whether the Sole Purpose Test is being adhered to or is being breached......but alas, as usual Kelly O'Dwyer makes a big statement and then silence.


Hed - I hear what you are saying but the 'balancing act' doesn't fly. If that's true, why you are so vehemently in their favour and haven't addressed issues raised in the past about the questionable activities of ISA funds, such as: asset allocation skewed to higher risk, opaque underlying investments, vertical integration using ISA fund managers and pushing ISA banking products, conflicts of interest, undisclosed insurance comm's while cutting member protection benefits (also undisclosed), undisclosed fee routs called 'indirect member fees' worth millions hidden in the fund financial statements (not in member annual statements mind you but in amongst 30+ pages that have to be requested direct from the fund - want a copy? Send me your contact details), blatant cronyism with appointments made from within the left faithful (Shorten's missus was clearly the most qualified person in all Australia for her role, wasn't she?), BID breaches in plainly bad advice from their 'representatives' intent on preservation of FUM at all cost (which I have witnessed personally), hopeless customer service, regularly 'lost' documentation, unqualified union infiltration at a board and trustee level, breaches of the sole interest obligations (you know the guys already labelled crooks and liars in their 2015 RC? Trustworthy lot, eh?), identified 'fee for no service' issues, blatant misrepresentations on fee comparison performances (easy to 'perform better' when you skew results or compare apples with not even oranges but carrots)... my brain & fingers are getting seriously tired about here re-writing all of these already known issues, and those are just the ones within 3 seconds of thought and no effort.

We all know retail land isn't clean or innocent and have dodgy goings on that finally the FS RC is shaking out of the tree, But taking all the above ISA facts into account, the way you go on about them isn't balanced and is exactly like someone always banging on that Colonial or BT or a bank or any other super provider is the 'best' and brainlessly ranting about their virtues at every given opportunity, especially when they receive bad press - absolutely nil difference. And I am sure that would turn your stomach.

If you are product agnostic, or the supposed paragon and advocate of independence and purity of thought that you purport to be, surely the issues raised above, (and numerous times before in far more detail), should give you pause for thought and if nothing else, get you digging further into the reality around ISA. Otherwise, you're simply their mouthpiece, as most on here suspect.

Given there seems to be no easy/clear winner in the Retail v Wholesale/Wrap v Industry debate, is the logical conclusion then to use an SMSF? All other options have clear issues. The retail, clearly exposed. The Industry, as you say. The Wholesale/Wrap, too expensive? or, the adviser has a conflict to retain FUM just as the ISA does. So that leaves you with SMSF, a clear set of accounts, everything is disclosed, you shouldn't use a Wrap except for large FUM, you should invest direct into Wholesale investment products or Direct. Not perfect, but less arguments and more transparency than the other options?

Horses for courses, SMSF mostly wouldn't be appropriate for the majority (most people can hardly handle their own income and expenses and lodge a personal tax return, let alone be a fit SMSF trustee).

We do deal with all funds (SMSF, retail, employer sponsored, and yes even ISA funds), but tbh my personal view is that if we could be sure those most foul of all offal of humanity, the politicians and gov bureaucrats, could keep their filthy lying hands off it, the best solution out of all this is one single nationalised Future Fund that handles all and plays no favourites, like a number of Scandinavian countries do.

No logical conclusion at all.
A vast number of SMSF members either don't really understand how their fund works and the responsibilities they take on as Trustees. Many don't understand how they should be investing the funds and many don't seek the investment expertise and certainly often don't have it themselves.
Many SMSF funds have vast amounts sitting in cash management trusts or term deposits because it is simple and their Accountant has not provided or may be unable to provide financial advice.
For many of these people it is the warm fuzzy feeling they get from the perception of managing their own fund and controlling their own destiny, but the reality is that for the volume of funds there may be other alternatives that could be more than competitive on costs and produce a better return without taking on the Trustee responsibilities.
SMSF's are very good for some,but certainly not good for all and in many ways have been a relatively easy way for Accounting practices to ramp up revenue when in reality, the establishment of an SMSF may not have been in the clients best interest.

JJ - Agent 86 has been doing the hit work on one side and I have been doing it on the other side. There's more critics here on Agent 86's bailiwick than the other, but recently the Royal Commission and APC have come in to balance out the numbers.

And yet again you avoid absolutely all the issues, attempt to write it off with that utter rubbish about what others are doing on here. Bit like my teenage son explaining why he didn't do as well in an exam but justifying by saying something absurd like 'well I did better than my friends", royal kick up the arse for not taking personal responsibility - seems pretty familiar wouldn't you say?

Two simple questions to answer directly and not defray with pointing the finger elsewhere:
Have you properly researched any of the problems stated with ISA funds or any of the myriad others that I fatigued before stating (all have had plenty of public airing)?
Given these, can you in good conscience honestly say that they deserve your utter blind loyalty and endorsement at ever single opportunity and yet still maintain any air of professionalism or personal integrity, with no other personal or professional motive or agenda?

HW - you have to be kidding? This little section where others comment versus the complete BS that ISA spend countless millions of members funds publishing and advertising across all media types of the nation, all twisted figures, complete lies and mismatched comparisons totally unchecked because both APRA and ASIC have their heads firmly up ISA's rectum, and yet you feel compelled to defend them on here??????

WTAF. you have to be a troll or an ISA stooge or perhaps some dopey employee of this publication aiming to get more comments and hence some personal gain or acknowledgement.

...and your point is?

You just made it.

Hedware your silence is deafening... and damning.

Interesting I'd not read that. The amounts of money relative to the FUM may not make much of a difference but the politicisation of super and the disclosure is the real concern, investors should know what they are supporting. It would seem odd for a liberal voter if a client was politically minded to want to put money into these funds.

Thanks Agent86, it's great to see these numbers.So $18m over 3 years for all industry funds. A lot of money for sure. Still though, I think the general public would be far better off being in the default industry funds products when compared to retail. The returns far outweigh these directors fees being paid. In general fees for Industry funds usually lower or on par with retail. Cheers

That was a very quick analysis Joseph!!
"Far better off " and the " returns far outweigh these directors fees being paid" !
Isn't this a matter of principle Joseph ?
So, what you are saying that if the amount being paid to trade unions was $50 Mill rather than $18 Mill as long as the returns to the members were adequate, it would still be acceptable ??
Maybe you and Hedware can meet for Friday lunch today and discuss.

Thank you agent, I'm reasonably well informed in this industry, hence the quick analysis. Personally I think any dollar going to a union is one too many....therefore the $50m is definitely not acceptable. But a fund still ends up paying directors fees. If I look at investment returns over 1, 3, 5, 7 and 10 years (readily available) industry funds outperform retail all the way. Therefore you (general public) are better off in an industry fund.
Anyways, with the changes that will eventually happen (as advised by the Productivity Commission) funds will be forced to merge, accounts will be consolidated (great outcome for members) and less money will go to the unions as there will be less boards! You're welcome to join us for lunch by the way :)

Don't invite him! That agent gets so many free lunches from retail funds that he will expect us to pay.

Can I ask what funds you are comparing Joseph? Its just that the wholesale funds I have my clients in have outperformed the industry funds on every single risk profile. I hope you arent using ratings agencies that compare on funds names and not actual asset allocations as this would really be remiss and not a true indication of the multitude of investments that are available for the general public( you) to use.

Hang, can you provide 3 of the Balanced Wholesale funds you use out of interest that beat the industry funds?

Phil, id prefer you did your own research, I don't like plugging certain products or funds in public. Ill give you a tip though, I take no notice of the names of funds. I compare all funds on asset allocations/fee structure then work from there. Then I can compare them to my own portfolios that are made up of wholesale funds and get some real comparative figures. I don't compare balanced and balanced funds as the allocations are way out and not a true comparison. When the weightings are the same, then the true comparisons can begin. For example I have come across some funds with 95% growth assets calling themselves balanced funds.

ok sorry I thought you were talking about a specific Balanced Fund, you are talking about a portfolio constructed of wholesale funds with a mirror asset allocation, no problem.

A worthy methodology.

Phil, that's Hang On's point, you can compare options just because they are called Balanced. Most of the Industry Fund Balanced options have asset allocations that are either Growth or edging towards High Growth, they're nothing like a true Balanced option and shouldn't be compared against them.

It's not Hang On's point. He puts together portfolios of best fit financial products (wholesale) presumably based on an asset class/return envelope plus or minus volatility factor. He is not going down the balanced line. In this way he is a bit like the industry funds and their placements. Balanced funds are an each way bet and some years they do well and some years not so well. Probably index funds have taken away from the balanced funds and with lower fees. Balanced funds are easy fees by the retail funds. Industry funds tend to invest in unlisted assets and that seems to give them advantage over retail funds.
But the bottom line for a client is which gives the best return on compulsory superannuation. Overall it is better for that person to look at industry funds or advisors like Hang On.

Hedware, your bias is a disgrace. Get off the comments please and back under that ISA rock you crawled from.

Union run Industry super funds should be made illegal. Their administration systems are terrible.

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