A lack of digitisation and unnecessary friction points are key drivers that push people away from their superannuation funds and cause them to seek alternatives, including SMSFs, a financial services technology provider has stated.
Bravura wealth and advice managing director Nicole Kennedy said many members of Australian Prudential Regulation Authority (APRA)-regulated funds were still interacting with paper-based legacy systems that create slow processes with limited updates for the end user.
“At some of the most critical points in people’s lives, whether that’s interacting with their super fund or seeking advice, the process is still so much harder than it should be across the industry,” Kennedy said during a media briefing late last week.
“In parts of the industry today, processes are still paper based. If you want to make a withdrawal, get insurance, interact with your superannuation fund, it’s not like other industries where it’s seamless and frictionless.
“Sadly, it does mean that processes are slow, fragile and unreliable, and that matters because this is when people are needing funds the most.”
Midwinter advice product manager Michelle Lusty said super funds that were addressing these issues were starting to differentiate themselves from their competitors, including retail funds, which were now being considered more widely by financial advisers.
“Profit-for-member funds, most of them are in outflow, and the leading ones are recognising they have got to up their game with retirement and advice as that’s the way they’re going to build trust and keep members, otherwise advisers will continue to pick them off and take them to the retail funds, [particularly] the high-balance members that are needing retirement help,” Lusty stated.
She added SMSFs were also the beneficiary of this shift.
“What I see is for people who are more engaged, an SMSF is going to give them more flexibility. Obviously, you need a certain amount of money before you can consider it, but service and flexibility also plays into it.”
To stem this movement to SMSFs and retail funds, Kennedy said industry funds had to ramp up their engagement models.
“What we’re seeing through our clients is those who have members who do interact with the tools see much higher retention rates,” she said.
“If you have met their needs, they feel confident and the less likely they are starting to look for alternatives.
“They haven’t had a huge friction point that said: ‘I could do this better, I should be considering my other options.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason