Retail superannuation funds were placed squarely in the spotlight during the recent Royal Commission. While that spotlight was not always flattering, one positive side effect is that many consumers are now taking a greater interest in superannuation.
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We asked a senior industry leader, who is participating at The Summit next week, to reflect on the new consumer landscape for retail super funds.
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How would you describe the value of retail super funds in Australia?
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Retail super funds have done very well at providing choice for consumers. That’s both in choice of fund and also choices beyond being in a default arrangement. There’s also a very wide choice of investment styles and types within those funds.
Retail super funds have also been very good at enabling the more efficient delivery of advice. They are compatible with the processes and the back office arrangements that advisors use. That makes the delivery of advice simpler for the members, most importantly, and also for the advisors.
Retail super funds have also been particularly good at developing more flexible options – and facilitating advice – for people once they're in the decumulation or retirement phase of their lives.
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During the Royal Commission, there was a lot of criticism of retail super funds. Since then, have you seen any reasons for optimism?
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We have to acknowledge the findings of the Royal Commission and use this as a catalyst to improve the system overall. We must have a singular focus and passion for delivering transparent, identifiable, better outcomes for members. That could be the thing that unites everybody in the debate, because we've had the Royal Commission, we've had the findings, we've got the regulatory
agenda. The final part is to ensure that we are communicating the member outcomes that derive from that, while getting on with the job of getting that reform agenda done. That's no easy task. The Treasurer has announced the timeline for that. It's a very ambitious timetable with a lot of reform, but we have to get on with it.
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Besides regulation and remediation, there are plenty more challenges for leaders of retail super funds right now – keeping pace with evolving technology and changing consumer expectations, to name just two. When everything feels urgent, how can leaders prioritise?
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It’s a very valid observation. There is no simple answer to the complexity that industry leaders face right now. The mountain in front of us is very big, but I think that the regulatory agenda and the remediation agenda, and the focus on member outcomes, just has to be the priority. Good leaders, of course, will not be taking their eyes off those other competitive pressures, but clearly owning the regulatory reform, and of course owning remediation where that's required, will be the priority.
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Australians are notoriously disengaged from their super. How can retail super funds help address that?
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It sounds strange to say this but, actually, the Royal Commission has increased engagement. Now, some might say for the worse, but engagement is engagement and it does create an opportunity to have a conversation. There's really the opportunity for retail funds to tell their story and explain the benefits to members of their membership within the retail fund, or their prospective membership within the retail fund.
This has to be part of the member-centricity that every fund is striving for. I'm not going to pretend there are easy answers, but I would say engagement in superannuation probably is at an all-time high because of the Royal Commission, the Productivity Commission review etc.
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What are you looking forward to at the FSC Summit?
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It’s an opportunity to have an evidence-based debate. The Summit agenda reflects the whole-of-industry discussion, looking at all sides and being willing as an industry to face up to our shortcomings, as well as being able to articulate our strengths as well.
The industry is at a crucial moment and everyone needs to respond – whether you're a regulator, a consultant, or a fund. We are the generation that's going to determine tomorrow’s retirement income system for Australia. Therefore the quality of retirement Australians are going to have is in our hands right now. We must get this inflexion point right.
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Financial services leaders will discuss retail super funds in more detail at the The Summit in Sydney on the afternoon of 28 August. See the program here.
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