Because members retire at different times, funds should aim to generate returns above inflation across shorter time horizons, Cooper says. This involves a more dynamic approach to investing and less reliance on strategic asset allocations. “Anything that has a fixed asset allocation and doesn’t take into account the vagaries of asset pricing is not going to succeed over time,” Cooper says. But as members mature and their savings peak they need investment strategies and advice that can preserve their capital for as long as possible, Thawley says. IFS will focus on providing such services to people aged 45 years or older, Thawley says, who are more likely to have tamed personal and mortgage debts and are at mature stages of their careers. “With adequate planning they will be ready in a decade or two to consider transitioning to retirement,” Thawley says. Such transitions usually take 15 years and benefit from frequent contact with financial planners, she says. Reductions in concessional contribution limits for super make planning in advance more important. Advisers become more important as people age, Wilson says. “The ability to make informed decisions becomes less acute over time,” he says, adding that advice should be “embedded” in investment products.

Cooper says the super industry has an excellent opportunity to develop investment products for retirement without “politicking”. “All of the reviews of super have not touched on the primary aspect of super – which is building sustainable retirement incomes,” he says. Thawley says the major opportunity for industry funds in the post-retirement market is to improve their relationships with members. She will gauge IFS’s success by the volume and quality of advice it provides to members. This needs to increase by a factor of 100 to provide more than basic advice but financial planning that suits them, she estimates. IFS’s “scoped advice” offering, which targets specific financial needs rather than providing a comprehensive plan, is the beginning of this. Launched in mid- 2010 it now accounts for 80 per cent of the advice provided by IFFP. Thawley says IFS will provide late-stage accumulation and retirement investment products and advice models as blueprints for funds. These can be shaped for their memberships.

“We can be a source of investment tools, advisers and member education,” she says. Funds can draw on this “toolkit” to better serve members. They will also need to offer additional investment products, such as capital guaranteed funds or hedging strategies, to make industry super funds more appealing for the long haul. The additional services will incur an additional fee. “We have no desire to subsidise costs,” Thawley says. Catch and keep Saving retirees from financial hardship is also a matter of survival for industry funds. Many funds have lost older members with large account balances to competitors offering customised services. This is illustrated by the stunning popularity of self-managed superannuation funds, which now account for more than $432 billion of retirement assets in Australia. “Industry funds are conscious that members are vulnerable and leave – whether they take their cash out and use it or swap providers – when they reach retirement,” Thawley says. Wilson says the investment strategies of funds could, in theory, become compromised if they lost a lot of large accounts held by people of 65 years of age or older. Retail super funds are consolidating their advice businesses to prepare for the phasing out of commission payments. This shift, which being driven by the Future of Financial Advice.