Sunsuper is utilising its new alliance with Vanguard to develop guided advice for members as an alternative to robo-advice.
With a low average account balance of $31,000 Sunsuper has been examining cost-effective ways of delivering personalised limited scope financial advice to members and thinks that Vanguard’s guided advice model “works incredibly well”.
“Vanguard’s experience with robo-advice is that it gets some take up but it is not the be-all-and-end-all. Robo-advice is advancing, but it still has its limits. Each individual’s circumstance is different and complicated, and it’s very difficult for robo-advice to take those permutations effectively into account. Members still benefit strongly from having someone guide them through,” Scott Hartley, chief executive officer at Sunsuper said.
Guided advice uses multiple channels to engage members, working across online, phone and web platforms to streamline and simplify the process of providing limited scope advice, using the respective strengths of humans (ingenuity and comprehension) and computers (computational power and ease of access) to increase efficiency and decrease costs.
“This alliance is unique in the Australian market and we are have access to full and deep aspects of their capabilities in the US. Vanguard is a more mature version of us and works on a much bigger scale – we are 1 per cent of their size! There’s a lot we can learn from them,” Hartley said.
Hartley said the Sunsuper would also utilise Vanguard’s vast experience in servicing large US-based corporate clients in their 401(K) business for the ultimate benefit of Sunsuper’s own business customers.
“Both Sunsuper’s members and staff are set to benefit from the expertise and the $3 trillion global investment scale Vanguard brings to the alliance,” Hartley said. “It will give Sunsuper direct access to Vanguard’s investment management expertise plus the ability to draw on a broad range of functions, including member services, product development, digital and technological development, and economic and market insights.”
As part of the arrangement, Sunsuper will also direct mandates for passive investment management to Vanguard as appropriate and subject to favourable market conditions.