Who won from the RC, heatmaps and performance test? Industry funds
New data analysis has revealed the degree to which the Banking and Financial Services Royal Commission dramatically altered the shape of the superannuation industry, driving up the dominance of industry superannuation funds.
The data analysis, undertaken by WealthData, pin-points the Royal Commission as being the point at which industry superannuation funds began significantly outgrowing not only retail master trusts but self-managed superannuation funds.
What is more, the analysis points to the manner in which the Australian Prudential Regulation Authority’s (APRA’s) heatmaps and the implementation of the Your Future, Your Super performance test also drove up the scale of industry funds.
The analysis confirms that in until about the middle of 2018, self-managed funds accounted for the greatest number of assets held in the industry, with retail master trusts and industry funds neck and neck and neck accounting for around 24% of net assets apiece.
However, this all changed during the Royal Commission with industry funds accelerating to account for 27% of net assets by the first quarter of 2020 while retail funds declined to 22%.
But most significant of all from the data analysis is the leap which occurred with the introduction of the heatmaps and superannuation performance test which saw industry funs leap to 32% while retail master trusts declined further to 20%.
The same WealthData analysis appears to confirm that the scale of the SMSF sector has plateaued with only modest growth having occurred since 2016, rising from 556,525 to 603,449 – an increase of just 46,924 over six years.
The other big winners from the RC were providers of unregulated financial advice. Cryptospruikers, real estate agents, finfluencers, book pedlars, and a whole range of other scammers and con artists have been huge winners from the RC. The RC led to unwarranted persecution and vilification of the honest majority of licensed financial advisers. It eroded consumer confidence in professional advice, and made it much harder to afford. Consequently the harmful unregulated sector has expanded greatly to fill the gap. The amount of bad advice and bad products being provided to consumers is at an all time high.
The biggest losers by far from the RC were consumers. Hayne, Ferguson, Frydenberg, and Hume should be ashamed of themselves.
Whole heartedly agree! But as I’ve said before. The wars lost. For your peace of mind move on.
The trend in assets to the industry fund sector is very clear and unlikely to reverse in the medium term. However, APRA data needs to be interpreted with some caution when looking at trends across sectors.
The graph shows total assets managed by the industry fund sector increasing from 28% to 32% in the March 2022 quarter. APRA’s data has the dollar value of the March quarter increase for industry funds assets as $130 billion ($969b to $1099b). For the same quarter, APRA has public sector funds reducing by $145 billion ($633b to $488b). You can see this in the graph in the article showing public funds losing 4% in market share.
QSuper and Sunsuper merged in February 2022 with QSuper having assets of around $130 billion. I assume that APRA effectively moved the QSuper assets from ‘public fund’ to ‘industry fund’.
The trend remains that industry funds are growing market share by about 1% per annum. YFYS undoubtedly assisted this growth, just not by the percentage in the article.