ASFA Victorian State Forum

On August 11th, McGing Advisory & Actuarial were proud to be the event partner for the 2022 Association of Superannuation Funds of Australia Limited (ASFA) Victorian State Forum.

A selection of leading superannuation and financial services industry experts gathered for a day’s discussion and dialogue – as some of the industry’s most knowledgeable and experienced explored hot topics and challenges facing the superannuation industry.

The format of the event, being in-person rather than online, created a welcoming and positive buzz in the atmosphere for all attendees.

As a provider of services to the superannuation and larger financial services industry, the knowledge and insights provided were invaluable. However, even as a neutral observer, the messages that the presenters shared are worth reflecting on.

To give you a flavour of what was presented on the day, here were my key takeaways, ordered by the sessions that were covered:

 

An insider’s view of Canberra
Discussion on how the current political climate, recent election and legislative and regulatory change may influence the super industry over the next three years.

Key takeaways:

  • The suspected hot issues for this new federal government concerning Superannuation are:
  • Addressing issues of inequity in super–paid parental leave, etc.
  • Red tape issues such as the Choice performance test being deferred by 12 months and a review of the performance test.
  • Risk – Superannuation Guarantee compliance and crackdown.

 

A new page for financial advice
Exploring the use of technology and member self-service tools in the provision of financial advice.

Key takeaways:

  • Using technology to provide financial advice should aim to educate, support and provide effective guidance.
  • Metrics for success in rolling out financial advice tools could include:
  • Usability and action rates – number of members using the tool.
  • Execution rates – number of members who act based on advice.
  • Evidence of higher FUM balances when retiring because of action taken from advice.
  • Many people retire early involuntarily, particularly carers and members with hazardous occupations. Superannuation and insurance advice for these members should be a focus of advice models.

 

Climate risk and long-term performance
Exploring the considerations, opportunities and challenges faced by super funds in the development and implementation of a net-zero carbon emissions strategy.

Key takeaways:

  • Greenwashing (when a company advertises itself or its product(s) as being environmentally conscious for marketing purposes but isn’t taking any notable action in the area) is an interesting subject. Could we see more penalties in the future for this misleading conduct, and is ESG investing in the best financial interests of members? Watch this space.

 

Your future, Your Super – A look at the first year
A reflection on the expectations and experience of the YFYS reforms including the performance tests and what might change under the new government.

Key takeaways:

  • The APRA performance test is a test of the implementation of strategy for a fund. But there are key elements that aren’t tested, and a big one is member outcomes. High-performing funds can still fail the test.
  • Common sense has prevailed in the implementation of the members’ best financial interest duty so far – not all fund expenditure has required a business case as some previously speculated. We may see some “materiality threshold” legislation developed in the future to help clarify when business cases are required to justify fund expenditure as being in members’ best financial interest.

 

Differentiation in a world of commoditised super
A discussion on how players from outside the super industry with similarly commoditised products, have sought to differentiate their offering to consumers, to increase attraction and retention.

Key takeaways:

  • In the insurance industry – AIA’s Vitality program is leading the way when it comes to offering a member personalised and engaging product with improved wellbeing outcomes.
  • As always – data utilisation appears to be a driving factor in creating member engagement through the personalisation of product offerings. Think of Apple, Netflix, Spotify and Amazon – who offer “you might also like,” “because you watched,” “because you brought” or “because you listened to” types of marketing strategies on their platforms.

 

What lessons can APRA-regulated funds learn from SMSFs?
A discussion on what APRA-regulated funds can learn from the flexibility in options provided in SMSFs?

Key takeaways:

  • Recent research is showing that SMSF returns for balances with around $200K may be comparable to APRA regulated funds – contrary to previously released ASIC Guidance (INFO 206), suggesting that SMSFs with balances under $500K have lower returns after expenses and tax than RSEs.

 

A younger member’s perspective on how super could work better for women
A discussion on the challenges and opportunities for women in super.

Key takeaways:

  • There is still a way to go in the general education of financial literacy and superannuation for members. But the adoption of proposed reforms to address the gender gap in super can create direct change without the need for further education.
  • In an ideal world, we would see both education and reform be a focus of the government to improve the inequity in super.

 

Inflated expectations
Views on the considerations to be made for super funds and members in navigating recent economic uncertainty and the rise of inflation.

Key takeaways:

  • Inflation is high and consumer confidence is low.
  • Recent projections estimate that it will be 2024 before we see inflation brought back down to the top of the target band.

 

Investing in crypto for super funds
A discussion on the opportunities and risks for superannuation funds in considering crypto assets in investment strategy and operations

Key takeaways:

  • Crypto assets remain an under-regulated area and probably too much so for APRA-regulated super funds to invest in.
  • Interestingly, a “show of hands” poll on the day showed that no participating attendees believed that it was appropriate for APRA-regulated superannuation funds to invest in crypto assets!

 

So, we have a retirement income strategy – now what?
Discussion of the considerations for super funds in developing and maintaining a retirement income strategy that allows their members to achieve the key retirement objectives.

Key takeaways:

  • Five key customer Insights from Deloitte’s recent D5 Retiring Australians open innovation research are expected to shape the future of Super offerings:
  • An acceptance of technology – older generations are becoming more technologically literate and confident.
  • Staying healthy to be able to do planned activities in retirement is a focus for customers.
  • The fear of running out of super still concerns customers.
  • Customers want to ensure their families are cared for when they are gone.
  • Customers want to be proactively contacted when opportunities arise for which they might qualify.

 

We look forward to partnering with ASFA again to help bring to the super community the latest expert insights to help super funds and individuals achieve better outcomes for their members.