Commoditising DIY Super

It’s not just industry funds that are putting the squeeze on superannuation fees; self-managed super funds are turning up the heat as well.
The SMSF industry is evolving rapidly with scale and increasing professionalism paying off. In the process, the shonkier promoters are disappearing and there is a rationalisation of key service providers.

The bottom line should be lower costs for investors and better services. The accompanying interview with Russell Medcraft explains the latest offering: a new suite of SMSF products that start with a basic plain vanilla fund costing $520 a year.

Medcraft is the author of Your Super, Your Choice and managing director of Financial Choice and the Self-Managed Super Institute. He reckons SMSF eventually will rank second to industry funds and ahead of the for-profit retail offerings thanks to both lower costs and increasing professionalism.

He sees the relatively expensive part-time SMSF players '” lawyers and accountants '” getting out and leaving the field to specialists who are enjoying a surge in business.

The industry also is attracting the attention of major players, such as Russell Investment Group. Next week Russell is launching new products aimed at the retail level and their offerings form the backbone of Russell Medcraft’s starter level self-managed super.

The interview is something of a free-kick for Medcraft’s business, but it provides a yardstick for what we’re all paying for superannuation.