Platforms could reduce entry and administrative fees to keep their products competitive after MySuper products are introduced next year, according to Simon Swanson, managing director of financial services firm ClearView.
"I believe platforms will reduce their fees and introduce low-cost limited choice investment options to keep business from going to low-cost MySuper products," Swanson said.
But a number of retail funds are awaiting the passage of legislation through parliament before finalising their low-cost MySuper products.
The third tranche of Stronger Super legislation is currently going through parliament.
This tranche includes the banning of commissions and entry fees on MySuper products, and sets criteria for the charging of other super fund fees.
After MySuper comes into effect from 1 July 2013, Swanson said he expected fees for advice would rise as commissions were banned in a MySuper environment.
"Advisers won't be able to make enough money from a person with a low super account balance, so a lot of advisers will avoid servicing this segment of the market, who as consequence will now miss out on financial advice, even though they'll need it," he said.
"Advisers will move higher up the market segments towards high net worth individuals, who will want a more tailored investment product and advice tailored to seeking higher returns."
Association of Superannuation Funds of Australia general manager of policy and industry practice Margaret Stewart said she expected more retail funds to launch MySuper products after the final laws on super fees were finalised.
Some retail funds, including BT and AMP, have already launched MySuper-compliant products, while others such as Colonial First State have yet to reveal theirs.
"Some funds are waiting on final decisions on fees to be decided and they'll have some catching up to do after it's clear how fees will be applied between MySuper and choice products," Stewart said.
AustralianSuper general manager of growth Paul Schroder said his industry fund would work on three levels to keep costs down for members.
First, administration fees have been frozen at $1.50 per week for all members for three years from 2011.
Second, AustralianSuper has been building scale to drive costs down and, three, the fund offers low-cost life insurance to members.
"We've been building scale and seeking to grow and merge with other funds and attracting more corporate plans so that we can be big, and that means cheaper services for our members, including freezing our administration fees," Schroder said.
Chant West director Warren Chant said while MySuper retail funds would be cheaper than traditional actively managed funds, some were being developed as index funds and "it's not likely such index retail funds will perform as well as not-for-profit funds traditionally have".
Chant said average fees on industry funds with a $25,000 super balance were 110 basis points a year, having risen from 80 basis points in 2005. Over the same seven-year period, fees on retail funds have risen just five basis points to 175 basis points a year in 2012.
"We expect that gap to narrow a little bit. I think, generally speaking, industry funds have some way to go to offer the same level of service as retail funds," he said.
