Research into members is crucial for success and engagement for retirement products, but so far it has been lacking, industry leaders agree.
The data currently available to funds does not allow for effective development of products or communication with members because it is too general detracting from tailoring and sectorisation, participants at the 7th annual Post-Retirement Conference said.
“We think we know our members because we know their name, their age, their address. We are not even close. If the super markets move into the financial sector they will have a wealth of data they can use which will be a challenge to every fund,” Russell Mason, lead partner of superannuation at Deloitte, said.
Michael Mulholland, executive general manager of business growth and advice at Sunsuper, said that data science and behavioural bias were needed to understand members while Paul Schroder, group executive of membership at AustralianSuper, said that as a community not enough is known about retirement and retirees.
He said that a comparison can be drawn with the structure of childhood. Everyone knows the process of children going to preschool, primary school, secondary school, and university. People are aware of the pattern of childhood to adulthood because there has been a lot of effort put into understanding that.
“I don’t think there’s been anywhere near the effort needed put into understanding the retirement phase. We get together and talk about volatility risk and inflation risk and a whole host of other risk, but I think the single most important risk we don’t really understand is retirement – we don’t really understand what happens with retirees. We don’t know what it’s like. We don’t know what they think about, what they feel,” Schroder said.
Graeme Mather, head of investment consulting Australia and New Zealand at Mercer, highlighted the disconnect between entrenched thinking on members and data. He said that a recent survey revealed 94 per cent of people between the ages of 50 and 80 know that superannuation is there to create an income in retirement, but the industry hasn’t created the solutions or even changed its thinking to accept that.
He also cautioned against the prevalent assumption that low account balance holders would take the full value of their account balance out in a lump saying that in his conversations with super members he’d found this not to be the case.
“We need to remember the member,” Mather said. “And avoid becoming self-obsessed.”
Michael Pennisi, chief strategy officer at QSuper, said that part of the problem was that the messaging had been inappropriate, with members often not understanding what the industry was talking about and that mass communication had been a poor delivery method. He added that funds need to communicate “how members want” and QSuper had been making strides to address the lack of data and poor communication.
“We’ve been building a data and analytics team of some very smart people, we’ve looked at our data and created some systems, and the next step is to look to predictive models. If certain patterns are emerging then there’s a high likelihood that the member needs a certain type of engagement. We are seeing great benefits, primarily in member outcomes, and the other one is that by really honing in our messages and our engagement we’ve got much better response rates,” Pennisi said.