Retail superannuation funds need to focus more on fund members below the age of 45 as the Baby Boomer generation moves into the drawdown phase, according to Tria Investment Partners.
The retail super industry has primarily focused on clients over the age of 45, the company said, as younger clients’ balances are “mostly too small to be economic” and younger people are less engaged with the superannuation system.
While this approach has “made perfect sense” so far, Tria Investment Partners cautions this “will change in the not-too-distant future”.
“The Baby Boomers can’t continue to support the growth of the retail wealth industry; they are starting to draw down their wealth, rather than add to it, as they reach retirement. Thus they will make up a smaller part of the industry over time,” the company said.
The average account balance of super fund members between the ages of 35 and 44 is $90,000, Tria Investment Partners said, meaning a significant portion of this age bracket will have “commercially attractive” balances above the average.
“Just as importantly, that same group of people will see their balances double in the next 10 years, at which time they will have more than $700 billion in superannuation assets in aggregate,” the company said.
“For this reason alone, retail funds and financial advisers will begin to broaden their target market to incorporate the 35 plus age group.”