“I used to have a view that we needed to grow by becoming a multi-employer fund like an AMP, AXA, or an AustralianSuper. But it soon became abundantly clear to me that one of the competitive advantages we had was that we dominated our sector, and it was a rapidly growing industry. If we could hold on to the members we already had, and tap into growth opportunities that the sector offered us, then the fund would naturally continue to grow,” he says.

And grow it has. Over the past three years, HostPlus has added about 100,000 members to the fund every year.
“Ourselves and REST Super have what I have often called ‘first fund advantage’,” Elia says, referring to the tendency for most young Australians to enter the workforce through the retail or hospitality industries.

Because so many young hospitality workers naturally enter their employers’ default fund, the challenge for HostPlus was to become the default fund for as many employers in its industry as possible.

MARKETING

In trying to build its membership, both through securing big employers and holding on to existing members, Host Plus undertook the most aggressive marketing campaign yet seen by an industry fund, sparking much criticism from competitor funds that believe member money should not be ‘wasted’ on advertising.

“It’s interesting that the focus [of criticism] is always entirely on marketing,” Elia says. “It is not on investment fees, it is not on administration fees, it is not on trustee fees. Are they arguing the principle, or are they arguing the quantum? Saying that funds cannot spend on marketing is a nonsensical argument in a choice environment where competition is widely promoted and encouraged. Advertising works, that is why so many companies do it. Our competitors have sought to deny us the chance to market ourselves through various forums, including most recently the Grant Chapman inquiry into superannuation.

“Clearly we are mindful that at the end of the day it is the members that ultimately pay for everything we do. But if you have a look at our fee structure, we increased our fees from a $1 to $1.50 in December 2004. Since that time we have been investing heavily in terms of services back to members, but we have not needed to increase our fees [shortly after this interview, HostPlus announced it was placing a moratorium on raising fees for at least two years]. Because the fund has continued to grow, and because we are now keeping members longer, we have been able to achieve economies of scale,” Elia says.

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