From November 1, it will be more important than ever for superannuation funds to differentiate themselves
From November 1, 2021, Your Future, Your Super will see new reforms introduced to empower superannuation fund members, prevent the creation of multiple super accounts, and hold funds accountable for underperformance. With the introduction of one of these reforms—called stapling—the Treasury estimates that, over a 10-year period, it will save Australians more than $10 billion in excess fees.
While these financial savings might be welcome, the effects of stapling will also have a huge impact on superannuation funds which, more than ever, will need to find clever ways to communicate with potential and existing members. As of June 30, 2020, ATO data shows that more than 26% of Australians have two or more super funds, so member loyalty will become one of the keys to future success.
There will be of course super funds that will be the big beneficiaries of the introduction of stapling; specifically, those funds that have large numbers of first-time employees. These are Australians who, often as students, join their first fund while working in hospitality or retail.
In these early days of having super, younger members rarely seem to care what fund they have joined or check how well it is performing. Retirement is certainly not on their minds.
So, what can other super funds offer these members, who may not even be considering changing funds? And what can their current funds offer to keep them?
In short, super funds will need to differentiate themselves to keep ahead of the competition. They will need to develop clever, targeted marketing programs to attract new members and create tailored retention programs to keep existing members.
In differentiating themselves, super funds will need to keep in mind that the consumer has the right to change funds at any time or select their own fund—so, what will make a new or existing member choose one fund over another?
Education will play a vital role in targeting new and existing members. For example, it will be important to explain to individuals that the insurance attached to a super fund when they worked as a waiter will no longer be appropriate now that they work in the construction industry.
More than ever before, individual communication with members will be paramount for super funds to remain competitive. Likewise, it will be important to target younger Australians who have not yet formed a “relationship” with their existing super fund through individualized digital channels.
For funds to succeed at differentiation, communication, and education, they will need to adapt by leveraging agile and flexible technologies. No matter how simple changes may appear when announced, the changes will have a major and long-lasting impact on the industry. Regulatory change will continue to stretch superfunds and being able to easily adapt is the key to future success. For more information on how SS&C can help you administer these and many future challenges, download our “Future Super: The Need to be Flexible.” whitepaper.
