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Negative media coverage leads to Cbus outflows

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25 November 2024 by Beata Kuczynska

Article link: https://www.professionalplanner.com.au/2024/11/negative-media-coverage-leads-to-cbus-outflows/

Recent research has revealed that troubled industry fund Cbus’ member outflows from advisers is rivalling that of AustralianSuper, despite being a quarter of its size.

Data from ProductRex, which is owned by Adviser Ratings, found that Cbus had $22 million of net outflows, just behind $24.5 million for AustralianSuper, between 12 and 19 November.

ProductRex is used by almost 6000 advisers for product recommendations and tracks the movements of advised flows between various industry funds and platforms.

As of 30 June, AustralianSuper has 3.4 million members and $341 billion in funds under management (FUM), versus 920,000 members and $94 billion FUM in Cbus.

“The surge in the media [has] meant that not only advisers are recommending clients potentially switch, but clients are approaching advisers as well and we just don’t get that anecdotally.”

Woods says this is for two reasons: recent negative media coverage and market forces, with adviser sentiment affecting retiring clients’ choices.

Cbus has been the target of recent media attention having been sued by ASIC for repeated failure to handle insurance claims. The prudential regulator alleges more than 10,000 members of the fund were impacted by death benefits and total and permanent disability (TPD) insurance claims taking over 90 days to be processed.

But the insurance woes for Cbus is just the most recent in a strong of negative news coverage that had come after concerns were raised over Cbus’ governance due to corruption within the Construction, Forestry, and Maritime Employees Union (CFMEU) being uncovered by Nine network and the Victorian arm of the union was forced into administration.

The fund’s connection to the union raised red flags with researcher Morningstar.

However, Woods says he does not know if Cbus’ large outflows are representative of a longer or medium-term trend or whether it is all short-term media driven.

“It’s definitely something to be congizant of I was Cbus and watch and get in front of,” Woods says.

“From a governance point of view how do you separate the [union and super fund] in that respect.”

He suggests the findings can also be attributed to more general market forces, such as the number of people approaching retirement. Questions regarding retirement solutions and capabilities of super funds become more prominent as more people start thinking about their retirement.

While the numbers are comparatively small when considering the inflows, “[the data] thematically shows there’s movement, and advisers are actually willingly moving funds out of Cbus, so in comparison to Aussie Super, which is four times larger,” Woods says.

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