If super funds can’t support members well enough as they move into retirement, they run the risk of being perceived as “just big rapacious engines” and no better than the banks and insurance companies of the early 2000s.
Aware Super chair Sam Mostyn told the Investment Magazine Chair Forum in Sorrento, Victoria earlier this month that technology will be critical in helping funds make the fundamental shift they need to deliver retirement solutions. If they don’t do it exceptionally well, they could find themselves as front-page news.
“It won’t be because the percentage of problems is relevant, it’s just that the quality of the problem will be compelling,” she said.
“It will be a human story, it’ll be a tragedy story. Our reputation as a sector could end up like banks or insurance companies in the early 2000s as just being rapacious, big engines of something; that we don’t care about people.”
Mostyn said “a lot” of Aware’s members do not have complex advice needs, but even so, the fund had invested significantly in a technology transformation program, dubbed Catalyst.
“I just can’t emphasize enough that everything leads to the idea that we are now in the business of standing beside our members as they retire, or they think about retirement, or actually seeing their parents and family members retiring,” Mostyn said.
She said it is a completely different set of skills and commitments being made to members.
“It is a fundamental shift in the role we’re playing with people’s lives,” Mostyn said.
“We’re going to be standing beside them or with them for maybe 10 years or 20 years or 30 years in their retirement, given life expectancy.”
Look outside for lessons
Trustees of super funds could learn a lot from how to implement technology solutions by observing how it is already used to support financial advisers outside APRA-regulated funds, said Catherine Robson, chair of Equity Trustees Super.
Robson said Equity Trustees is trustee for about 600 small APRA funds and 14 public-offer funds, most prominent of which is HUB24, and “one of the things that HUB has done exceptionally well is [to] be very strategic in terms of their technology investment”.
“It’s very heavily focused on the adviser experience,” she said.
“It’s constantly trying to make them more productive. There’s not enough human-being advisers… but thinking about how advisers are best enabled to deliver excellence, not only just in service, but also in data quality and insights, some of the investments that HUB have made [are] in technologies that allow a really easy and compelling single view of wealth, which is relevant for the sort of clients that HUB service.”
She noted these clients are higher-balance clients with complex needs beyond superannuation.
“And having that single view of wealth means that you’re much more able to provide the sort of sophisticated advice that’s required,” Robson said.
Allianz Retire+ non-executive director and former Labor MP Bernie Ripoll told the forum that super funds are dealing with a ferocious pace of change.
Changes of the scale that have taken place in the past 30 years in the accumulation phase will need to materialise in much shorter timescales in the decumulation phase.
“We’re all in furious agreement about where we need to be and unlike the past 30 years to get to today, I think if you characterize that for the next 30 [years], it’s actually going to [happen in] 10,” Ripoll said.
“There’s a really big task ahead. I think we all agree that we need to do it, but how do we do it? We need to look at, obviously, product development. You can’t offer retirement products if there aren’t any in the market.”
Culture change
Ripoll said super funds are grappling with how to change their internal culture and how people interact with the superannuation system when they retire.
“It’ll only happen with technology,” he said.
“Call centres need to be improved, there’s a whole range of things, but you can’t service a million members through a call centre, it’s just not going to be possible. Whether we talk about AI technology, or platforms, or algorithms and how that works.”
Ripoll added he’s less concerned about adapting to technical and regulatory changes, but more concerned about how it can be delivered at pace.
“Unless you’re 100 per cent focused on this one big thing now, retirement, then you’re really going to miss out, or your members are going to miss out,” Ripoll said.
“I know, there’s a lot of funds who have really focused, they’ve got somebody dedicated to retirement, a person whose job it is, and others that are yet to do that. There’s a really big sort of awakening and I’m really happy that we’re starting 2024 from this framework, because I think it is the big shift this year. We’ve literally got a year to really get serious about how we deliver.”
Mostyn said the fund is integrating artificial intelligence models into its technology platform to enhance the experience for members and “clear away the stuff that’s been clogging up our system with things [where] we’re using humans”.
Many members of Aware “don’t have nine-to-five jobs, and can’t ring a call centre all the time,” she said.
Ripoll said that good-quality advice has always been supported by access to good data.
“Without that [information] on an individual, you’ve got nowhere to start from or to provide the solutions, time and resources and the skill set,” he said.
“We’ve got maybe only 16,000 advisers in the market. They’re really good and they deliver a great service. But that can only take care of a very small percentage of the market.”
“Obviously the solution for that is technology. But there has to be some courage.
Ripoll said the solution for expanded advice coverage is technology, but “courage” is needed.
“What’s really held back the sector today has just been, understandably, making really big leaps forward,” Ripoll said, adding he believes there’s enough quality in the market now.
“We talked about just a moment ago about algorithms and how do we test… [if] you actually have all of the [algorithms] audited and tested. There are companies that do that. It’s really expensive, but it’s really critical to outcome.”
Are trustees skilled up?
In a question from the floor, one delegate suggested trustee boards should be “starting to think about the different skills they need through their management team” as the focus of funds shifts away from investment, and operations supporting investment, to retirement.
“If we really are facing into engagement, and member services and a whole bunch of new services involved in technology, do we have the right skills?” the delegate said.
“I’d be interested to know whether the boards [of big funds] are turning their minds to this, or whether there’s a bit of a shift? Because those skills could well be quite different to what’s incumbent in a lot of funds at the moment.”
Mostyn replied super funds don’t get the flexibility to design a whole board and undertake skills analysis in the way that public company boards are able to.
“You have nominated representatives from employers and unions, and that works very well for the because historically, it’s been very important,” Mostyn said.
“But I think the overlay in talking to the nominating parties [is] about what are those really important skills? And do you have people in your union or in your employer groups [with those skills]?”
She added this is the question being asked of the NSW state government at the moment.
“When they make their calls on a couple of positions, we need technology people who understand technology in practice [who] can ask those big questions, from the board of management, that that really gets to the heart of the strategy of technology,” Mostyn said.
