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Technology
www.fssuper.com.au Volume 13 Issue 03 | 2021
CPD Earn CPD hours by completing the assessment quiz for this article via FS Aspire CPD. Worth a read because: Low member engagement is an ongoing issue for superannuation funds. With the rising use of digital products and services by Australians, this paper explores how superannuation funds can employ digital technology to improve both their members’ engagement and retirement outcomes. Visit www.financialstandard.com.au and click ‘FS Aspire CPD’ in the menu or call 1300 884 434 to gain access to the platform.
Digital advice key to keeping members engaged
D Steve Davison
igital advice is set to play a vital role for superannuation funds wanting to engage their growing memberships and steer them toward better retirement outcomes. The era of the mega super fund has just begun, and it is quickly reshaping the value proposition superannuation funds offer their members, including their investment in capability to provide financial help, guidance and advice to more members. There are now at least seven super funds that each serve more than one million members, and more are likely to be created by mergers over the next one to two years. Australian Prudential Regulation Authority deputy chairperson Helen Rowell, in a speech to the Australian Institute of Superannuation Trustees (AIST) Conference of Major Superannuation Funds in May 2021, said funds with less than $30 billion in assets will be uncompetitive and should consider merging. While that level of minimum assets is debatable, there is no question that large funds will increasingly dominate the industry. Effectively engaging and supporting hundreds of thousands, if not millions of members is an opportunity for business growth, and more importantly, an opportunity to set more Australians up for a better retirement. The future of retirement will likely depend on how these mega-
THE JOURNAL OF SUPERANNUATION MANAGEMENT•
funds communicate, engage and help their growing memberships through digital and hybrid channels.
Member engagement: The new frontier The problem of low member engagement is not new. The Productivity Commission dedicated 48 pages of its 2018 industry report on this issue alone. The compulsory, or non-discretionary nature of the superannuation guarantee, combined with a preservation age often decades in the future does little to help people make decisions today that could improve their outcomes later in life. The retirement system is also inherently complex, and low levels of financial literacy do not help. This, combined with the perception that professional help – advice – is too expensive for many people, means members will often turn to avenues such as friends and family for help. The result is little engagement, which can have material consequences on retirement outcomes. Superannuation providers also have a good reason to boost member engagement—to attract and retain members. The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 passed both houses of Parliament on 17 June and includes several major reforms to the superannuation industry. The introduction of ‘stapling’ and fund performance reporting are additional incentives for change.
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