Concentration of capital within industry funds

Mike Taylor

Managing Editor and Publisher

30 April 2025

The concentration of capital within industry superannuation and their dictates over how companies grow has been raised as issues impacting confidence in public markets, according to the Stockbrokers and Investments Advisers Association (SIAA).

As well, the SIAA has told the Australian Securities and Investments Commission (ASIC) that the exodus of financial advisers has also undermined what was once a healthy financial services ecosystem.

Responding to ASIC’s discussion paper on the dynamics between public and private markets, the SIAA pointed that “currently there is a concentration of capital in industry superfunds”.

“They will increasingly dictate how businesses will grow. These funds are also internalising investment making decisions. As large superfunds do not typically invest in small companies, this restricts the avenues available for these companies to list,” the SIAA said.

“These small to mid-size companies are important to the economy, providing most of the employment growth. However, not every company starts out as an ASX 300 company.”

“If this concentration of ownership continues, there is a need to consider how to ensure the next generation of companies has access to capital and an avenue to listing,” the SIAA said.

It said that the institutional investor landscape had significantly changed in Australia as a result of the emergence of large superannuation funds

“Typically, large superannuation funds do not invest in small companies that are seeking capital. This has impacted a whole level of capital raising in the Australian market,” it said.” It is important that the investing environment remains attractive. Our members do not consider that the expansion of investment into private markets is to the detriment of public listed markets. The expansion of private credit and equity is attractive to Australian investors and is a reflection of investor demand for exposure to different asset classes.”

The SIAA said a key issue for its members that impacts on making public and private markets more attractive and accessible to investors is the number of Financial Advisers in Australia.

“The decline in the number of Financial Advisers has been precipitous – falling from 27, 959 in 2019 to 15,611 as of 24 April 2025. Financial Advisers are a vital part of the distribution network and a healthy financial services ecosystem, linking investors with both public and private market investments.

“The fall in adviser numbers has been primarily caused by a failed approach by government to the education pathway into the profession of Financial Adviser. The government has pledged to address this failure by creating a more flexible pathway for new entrants to the profession that will hopefully significantly increase adviser numbers. We are hopeful that once this reform has been implemented the number of financial advisers will grow substantially. However, this process will take some time as well as legislative change. In the meantime, a lack of adviser numbers will continue to impact investor participation in both public and private markets.”