After watching the superannuation sector here in Australia navigate innovation for many years, the next area of focus needs to be delivering on the promise of member experience. Making sure a member is at the centre of their super account so they can make the most out of super – a need to hardwire member engagement into the administration process.
Apps and other tools can help this challenge building on the impact they have made to date on modernising the member experience. But developments in transforming the member experience have stalled. It’s safe to say designing user-friendly functional processes to check account balances from desktops and mobile devices is something we all now take for granted.
An interesting development during 2020 and more recently with the GameStop trading frenzy in the US is that large numbers of younger people opened trading accounts and became more familiar with managing their investments. According to ASIC, these were unprecedented numbers here in Australia, with almost 5,000 investors a day opening their trading platform at one point. What should the super industry be prepared for as Australians, particularly younger Australians, become more involved in managing their investments? Once they can navigate the tools and apps that help them do this, they will expect more.
And by more, we should expect to see an increase in super members taking more actions for investment choice. Just like you can trade a share, super members may want to participate in more ‘action’ with their retirement portfolio without genuinely understanding the risks around switching, including lower performance by missing market rebounds and higher transaction costs. It’s one thing for the industry to understand the ramifications of locking in potential losses by switching at the wrong time – after all, super is a long term play – but if we need to find innovative ways of addressing education for members around this.
Making headway through innovation is the post-retirement product space, with multiple product providers entering this space. This new, albeit overdue, focus beyond the accumulation phase requires further innovation on easy to use tools that help members determine accurately what future retirement income they currently can expect. Plus what they need to retire with dignity and decide how to meet any gap or overfunding. It needs to align with how long Australians live and how they want to navigate a long retirement. Annual member statements with retirement projections or even half-yearly updates aren’t going to cut it in a world where the internet and apps deliver real-time access and updates. Having that holistic real-time position of your retirement journey will become even more critical.
Sean is Managing Director of McGing Advisory & Actuarial and is currently Deputy Chair of the ASFA Victorian Executive. These views are his own personal views.
Sean and the team at McGing Advisory & Actuarial provide a wide range of Superannuation support services including administration, investment, insurance, risk, governance and actuarial advice.