Superannuation is one of the most significant economic reforms of our time. It enables all working Australians to benefit from growth in the economy. Markets usually only within the purview of the ultra-wealthy have become accessible to all Australians. Fierce competition and a clarity of vision has ensured the sector has served members well in accumulation, offering members strong returns, low fees and good governance.
But the features that have served members well for the last 30 years will not define the next 30. Our nation is on the brink of a seismic demographic shift. In the next decade alone, 3.6 million Australians are set to enter retirement.
For the past 30 years funds have focussed almost exclusively on accumulation. A simple measurement where one size really does fit all: keep fees low, keep returns high.
Retirement is not so straightforward.
For every single one of those 3.6 million soon-to-be retirees, there will be a unique combination of circumstances: health, wealth, lifestyle aspirations, caring and family obligations. The full spectrum of human complexity, writ large across multiple cohorts. One size will not fit all.
Where accumulation has been straightforward, members approaching retirement ask simple questions that lead to complex answers. Superannuation funds must have robust responses, stepping into the role of a wise and trusted partner to members through retirement.
Engagement as members approach retirement is crucial. Members rightly expect funds to have a robust suite of options and products to suit their needs, and if they don’t, they will increasingly vote with their feet and their life savings.
Advice, too, will play an important role. But as adviser numbers fail to meaningfully increase, demand on their time and capability is set to far exceed supply.
In a market with finite resources for advice and guidance, and rigorous monitoring of cost, how can funds set themselves up to meet the individual demands of so many members? Technology must be a key solution.
At UniSuper, I’ve set the goal for us to be the ‘Netflix of retirement’. When it comes to hyper-personalisation, Netflix is an industry leader in leveraging data – both individual and cohort data – to best serve its customers content that is highly relevant and satisfying.
If a customer watches lots of sport documentaries, the app knows they will be likely to enjoy shows like Drive to Survive and The Last Dance, but it will also suggest a range of other options based on the preferences of hundreds of millions of other users who have a similar watch pattern. This ensures customers are made aware of relevant options that they previously may not have even known to search for. This approach has strong lessons to share with the superannuation industry.
‘Data is the new oil’
Members increasingly receive this sort of personalisation across the services they access every day. From Netflix to banking to even their library book recommendations, personalisation enabled by technology is the norm.
Members will expect this from us in the decumulation phase. Our members over 60 are more likely to be digitally engaged than those in their 40s. There is a strong demand for this engagement with funds.
So how can funds approach this challenge? As mathematician Clive Humby said back in 2006, “data is the new oil”. Funds can start by modernising data collection and analytical practice, identifying gaps and putting in place the sort of long-term investments that will pay off over time. They can look to partner with reliable external providers to fill gaps – for example, UniSuper has partnered with a major bank to better understand real consumer spending habits for Australians in retirement right around the country. This will help retirees spend more confidently, rather than the ASFA averages.
But even the best data alone does not a personalised experience make. After all, we aren’t necessarily interested in outputs, but rather outcomes. And in 2024, one cannot discuss data analytics without also mentioning artificial intelligence (AI) and the way this technology could enhance outcomes.
AI allows analysis of enormous data sets at speeds that were impossible just a few years ago. Not only does this yield insights that humans would either take too long to glean, or perhaps simply miss, but more importantly it frees up capacity for funds to better deploy their human capital and skill in the areas in which humans excel – creative thinking, problem solving, and above all, providing member services in ways that build, enhance, and cherish trust. Hybrid financial advice will be an example of this – combining technology with human interaction.
Taken in combination, deep member insights and data, a mature suite of products, digital first engagement with people when it matters, AI integration and a robust advice offering – these are the features that will define superannuation for the next 30 years and make a real difference to members.
It’s a far cry from the simplicity of low fees and strong performance, but providing great retirements is the business we’re in. Now it is incumbent on all funds to heed the call, and rise to the challenge. Our members are relying on us.
Peter Chun is chief executive of UniSuper.
