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Smaller funds not forced to merge: legalsuper
legalsuper chief executive Andrew Proebstl has rejected views that small super funds under $5 billion would be forced to merge or be wrapped into large funds in the near future as they struggle to stay competitive.
His comments come as media reports suggested about a quarter of the sector, worth $143 billion, is for the taking, with funds worth less than $5 billion being forced to improve their offerings or face the threat of merging with bigger players.
But Proebstl believes most funds with less than $5 billion are specialist industry funds that can provide a personalised service and keep costs low when compared to large funds.
"Like with any issue, nothing is ever one-dimensional," he said.
"The question of whether funds merge or not needs a much more sophisticated consideration than just whether you're above or below $5 billion or any other magical numbers you might pick.
"It just needs to look at the whole picture and by doing that, form a complete view of whether a merger is in the best interests of the members or not."
Proebstl said both large and small funds were finding it difficult to grow membership as increasing awareness among members was reducing the level of growth in multiple accounts.
"If people have an existing account they'll take that account with them when they change jobs. There's growing awareness and funds are becoming more competitive in terms of trying to attract new members," he said.
Larger funds have a membership with a non-uniform risk profile and may only access generic and uncompetitive products at a greater cost, he said.
Proebstl posited that funds need to look at whether there is a similarity in offering and "equivalence in benefits" before merging. They also need to make sure members do not lose the benefits they receive with their current fund.
"I think there's also the brand question as well. If the fund that's been merged has a brand now, how will that evolve in the merged environment? Will the brand continue?"
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