Enabling about 500,000 Australians to retire over the next five years is one of the biggest challenges facing Australian super funds, says the head of the industry’s largest IT service provider.
Link Group Retirement and Superannuation Solutions chief executive officer Dee McGrath expects technology and digital advice to become increasingly important for funds to engage with new retirees and offer affordable and accessible, simple advice.
The ASX-listed company supports 25 Australian super funds with its proprietary technology, including AustralianSuper and Hostplus, servicing an underlying stakeholder base of about 8.8 million account holders – 39 per cent of the market.
Link has spent multiple millions in readiness for engaging its fund clients’ members as the Retirement Investment Covenant (RIC) takes effect on July 1 compels funds to develop retirement income products for retirees and those nearing retirement,, McGrath said.
“Our immediate term focus is leveraging our scale to build out a base platform infrastructure from which we will launch in the second half of this calendar year, the first of a suite of services – a digital planning and forecasting tool for funds looking to support members preparing to enter retirement,’’ she said.
“It will be the convergence of product, services and information embedded in personalised experiences and distributed through various channels.
“It will be informed by needs of members, curated by funds and we see our role as an enabler for achieving those outcomes through the provision of platforms and capabilities in a flexibly architected ecosystem.”
UniSuper chief executive officer Peter Chun said his fund had embraced technology to “empower its members to make better decisions” but laws needed updating to take account of new technology solutions for members.
“We recognise … that overreliance on technology is dangerous, especially when individuals’ financial situations are so nuanced and varied,’’ Mr Chun said in a statement.
“UniSuper would never expect robo-advice to replace advice from our advisors, but we would call on the quality of advice review to consider updating the law. The current law pre-dates the tech solutions that exist today and should look to be updated to take account of new technology solutions.”
Chun said it was “time for a refresh” on laws which “clamp down hard” on even the simplest online calculators.
“It should be obvious how that regulatory approach stifles innovation because today digital tools should be powerful – if the regulations could allow them to be,’’ Chun said.
“Imagine if we could get a digital tool that could do all the running around to collate all your financial information from all different organisations. This would simplify and reduce the “too hard” barrier to getting financial advice. “
Meanwhile Curium Data Systems Regional Head of APAC Jason Warlond said the industry could go further in merging investment and member engagement teams’ offerings.
Curium works with Australian super funds to typically provide data management for investment teams but has provided member engagement data management for a $194 billion Dutch pension fund, Warlond said.
Its enterprise data management (EDM) service included data quality management, data translation and integration as well as generating “fund look through” for investment managers, giving them stock-level insight into their holdings.
“I think there’s a great opportunity for funds to take this ‘look through’ capability to the next level,’’ Warlond said adding that members could be able to access this information.
He says investment and member management teams rarely talked to each other apart from providing unit prices and cash flow information and there was room for improvement with super fund members have only a high-level view of their super account investments with percentage investments in say cash, equities and fixed income.
“When you consider everything that’s in play such as transparency, ESG and sanction screenings … again there’s an opportunity there for a fund to say: ‘we can tell you what you’re invested in down to the stock level’,’’ he said.
“It’s not difficult to provide a better breakdown of how many BHP shares or Russian oil stocks a fund owns, for example. They’ve got the data, it could be relatively available on any given day yet no one really does it down to a member level. There’s a big push for transparency and that funds are ESG-conscious.’’
Warlond says the super industry has been good at technological innovation in the past but more could be done to engage members and to focus on its sole purpose for members, namely to provide benefits to members after their retirement.
“The super industry can do better. I think they’ve done well but there’s more opportunity go even further’’ he says.