Superannuation funds need to be much more analytical about member direct investments (MDIs) and the leakage of members to alternative strategies such as self-managed superannuation funds (SMSFs), according to IQ Group chief executive Graham Sammells.
Sammells said MDIs represented one of the largest challenges outside of ongoing regulatory reforms, with 30 per cent of the Australian superannuation industry now made up from SMSFs as investors seek and/or are advised on alternative strategies for their superannuation.
Sammells said it was for this reason that funds needed to research the issues to clearly demonstrate and articulate whether and how an MDI might address member concerns.
"An MDI otherwise may be simply a 'bolt-on' strategy – an expensive overhead, distracting resources from more significant issues that need addressing," he said.
Sammells said the strategic business case for an MDI was paramount, with funds carefully needing to address the potential threats of SMSFs and other funds that offer MDIs to decide whether it applied to their membership base.
Originally published by SMSF Essentials.
