For most of my career, industry super funds occupied a fairly defined place in my advice toolkit.
I primarily used them for accumulators or retirees with relatively modest balances. When a client transitioned into retirement, the conversation would often move towards wrap platforms because they provided the flexibility, reporting, investment choice and functionality that I believed retirement clients needed.
For many years, that approach served both my clients and my practice well.
This is not an argument against wrap platforms, which remain highly valuable and often essential for complex retirement advice. Rather, it is a reflection on where industry funds may now deserve a more open-minded assessment.
However, over the past few years, I've found myself increasingly revisiting that assumption.
It hasn't been the result of a dramatic change in philosophy. Rather, it has come from spending time with clients, observing evolving product offerings and recognising that some of the traditional distinctions between industry funds and retail platforms are no longer as clear as they once were.
What I used to believe
Like many advisers who already use industry funds, I viewed them primarily as accumulation solutions.
When clients moved into retirement, I generally preferred wrap accounts. The reasons were straightforward: superior reporting, adviser integration, pension functionality, broader investment choice, estate planning flexibility and the ability to efficiently manage strategies such as pension refreshes and in-specie transfers.
From an advice perspective, wrap platforms made life easier. Clients could access comprehensive reporting through a single portal, advisers had greater visibility and control, and there was virtually unlimited flexibility when constructing portfolios.
For clients with complex needs, that remains true today.
What changed?
What has changed is not necessarily the limitations of industry funds, but rather the increasing capabilities of some of them.
Over the last few years, I've worked with a growing number of retirees where we have been able to build thoughtfully constructed portfolios within industry fund environments. These portfolios have allowed us to reduce costs while still maintaining a level of investment flexibility that many clients genuinely value.
Importantly, this doesn't mean replicating everything a wrap platform can do. In many cases, it means accepting that clients don't always need every available feature.
What I have found particularly compelling is the ability to combine industry fund managed diversified investment options with more tailored portfolio construction where appropriate. This creates a blend of institutional investment management and personalised advice.
For many clients, that combination resonates strongly.
Clients often tell us they like knowing there is an experienced investment team managing part of their portfolio while also having an adviser tailoring the broader strategy to their personal goals, cash flow needs and risk profile.
In some respects, it feels like a partnership between professional investment management and professional financial advice.
What we've seen in practice
One of the biggest surprises has been client engagement.
Many retirees have spent their entire working lives invested through industry super funds. They know the brand, they trust the organisation and they are comfortable with the underlying investment philosophy.
Historically, moving to a wrap account could sometimes feel like asking clients to leave behind something familiar in favour of a more sophisticated solution they didn't necessarily understand.
Increasingly, we are finding that some clients appreciate being able to retain that familiarity while still accessing tailored advice and portfolio construction.
Cost is also an important consideration.
While advice should never be driven solely by fees, reducing unnecessary costs while maintaining suitable outcomes is always worthwhile. In the right circumstances, industry fund structures can help deliver a cost-effective retirement solution without compromising the quality of advice being provided.
Another benefit is portfolio management during periods of market volatility. Separating asset classes and utilising different investment options within the available menu can create opportunities for more deliberate portfolio management and retirement income planning than many advisers may initially expect.
The challenges remain
That doesn't mean industry funds are without limitations.
In fact, some of the challenges remain significant.
The reporting experience is still generally behind what most advisers and clients receive from contemporary wrap platforms. Having everything consolidated in a single portal remains a major advantage of retail platforms.
The administration and implementation process can also be more cumbersome. While there has been improvement, adviser workflows are often less streamlined than many of us would like.
Investment choice, although expanding, remains inherently more limited. Access to retail and wholesale managed funds is restricted, and while the growing ETF universe is helping close the gap, there are still situations where a wrap platform offers greater flexibility and a more complete investment toolkit.
There are also certain advice strategies where industry funds may not be the most practical solution.
Where clients require frequent pension refreshes, complex contribution strategies, in-specie transfers, sophisticated estate planning arrangements or broader family wealth structures, the limitations become more apparent.
For these clients, wraps and SMSFs will often continue to play an important role.
The biggest lesson
Perhaps the biggest lesson for me has been a reminder of something we all know, but occasionally need to re-learn.
There is no single solution that fits every client.
The best advice outcomes occur when we remain open-minded and genuinely product-neutral.
As advisers, we have access to a broad range of structures including industry funds, wrap platforms, SMSFs and investments held outside superannuation. Each has strengths. Each has weaknesses.
Our role is not to champion one structure over another.
Our role is to identify the solution that is most appropriate for the client sitting in front of us.
Looking forward
One of the reasons I wanted to write this article is to encourage advisers who may have traditionally viewed industry funds solely as accumulation vehicles to spend some time exploring how the landscape has evolved.
They are far from perfect.
They won't suit every client.
And they are unlikely to replace wraps or SMSFs.
However, for certain retirees they can provide a compelling combination of familiarity, cost efficiency, professional investment management and adviser-led personalisation.
Perhaps most encouragingly, I have noticed a growing willingness from industry funds to engage with advisers, listen to feedback and improve their offering. The relationship between advisers and industry funds feels very different to what it did 10 or 15 years ago. In many cases, there is now genuine collaboration around improving client outcomes.
After more than 25 years in financial advice, I've learned that some of the best outcomes come when we're willing to challenge our own assumptions.
Industry super funds have not become my default solution for retirees. Nor should they.
What they have become is another valuable tool in the advice toolkit.
Mat Tenison, Principal Financial Adviser, Tik Financial Group
