Fully 75 per cent of new accounts are still originated this way, according to BT’s head of super, Mel Evans. A member’s BT Super For Life account balance also appears alongside their other accounts when logged into Westpac’s online banking site, as well as portals into education about superannuation and retirement savings. Evans, who incidentally chairs the Financial Services Council’s MySuper committee, says Super For Life’s default ‘lifecycle’ strategy fits MySuper criteria, and would most likely form the basis of BT’s MySuper offering, once the group has had the chance to view the final regulations. BT certainly has no intention to join any indexed ‘race to the bottom’, sticking by its active multi-manager approach which aims to add value through both alpha and beta. Evans also believes that MySuper’s stipulation of a single investment strategy is a case of over-simplifying things for the sake of upfront savings, which will prove a false economy in the longer term. “We just don’t think an 18-year-old should have the same asset allocation as a 60-year-old,” Evans says. BT Super For Life’s lifecycle strategy, which switches members to an increasingly conservative strategy as they approach retirement, does necessitate a higher price tag than some of its competitors in the bargain basement – a $50,000 balance incurs up to a 0.99 per cent management fee plus $60 of admin fees a year, adding up to about $560. It remains to be seen whether the scenario of the $150-odd differential between BT Super For Life and AMP Flexible’s Core would be a swing factor in a MySuper world.
Price may not be eve rything For his part, Andrew Baker at Tria Investment Partners is adamant that price is the new competitive battleground. And in a strange twist of fate, industry funds, which have long waged a price war to their advantage, are fighting hard against the rise of “new gen retail”: the simple, low-cost superannuation products unbundled from traditional retail trappings, such as the aforementioned offerings by providers such as AMP and BT. “There are more coming – I can assure you – and financial planners are clamouring for more of these products,” Baker told last month’s Fund Executives Association Ltd (FEAL) forum in Sydney. “As night follows day, Comm Bank will come out with something like that. It’s going to be big, it’s going to be cheap and it’s going to be heavily promoted.” Retail competitors held the advantage of established distribution networks – “and your members are all customers of a bank,” he reminded the assembled CEOs. “We have a price war,” Baker said. “The new battleground is 100 basis points and it’s a battle of defaults, not extra options.” “It’s going to be a 1 per cent super world, and if you can’t deliver at 1 per cent you’re going to be out of the market.” Within the industry, a wellintentioned debate about price versus value is raging, Baker said. But out in consumer land, price will be the focus of competition among providers for some time. “I don’t think that’s a good thing, but that’s the reality.” Baker would find some dissent from Jeff Bresnahan, the founder of SuperRatings, “I still think that price isn’t genuinely all the consumer cares about, they are interested in returns and service too. Look at AustralianSuper and all the scale they are getting, with Westscheme and what have you rolling in. They’re positioned well in that the $1.50 a week looks like it can be maintained for a while, they have fantastic investment infrastructure, but the service experience with them is bad and everybody knows it,” Bresnahan says.
