In the face-to-face or phone interviews – with 12 chief executive officers and fund leaders – they found that funds see consolidation and disengagement as the likely outcomes of MySuper reforms.
“While they agree that MySuper will provide a simple, easy-to-compare default investment vehicle, most fund leaders did not see MySuper, or the broader Stronger Super agenda, as a clear way for members to add to their retirement savings with less risk,” said Tom Buchan, principal at Buchan Consulting.
The report found that most surveyed funds were ‘re-badging’ their current default products as their MySuper offer. However, many believed that this ‘re-badging’ would not encourage more engagement among these members.
“MySuper will encourage disengagement, and that may mean that funds disengage as well,” said one fund leader, while another stated, “Why are we bothering? Engaged members will still be engaged; the disengaged will stay disengaged”.
According to the research, the most likely outcome of the legislation will be accelerated consolidation – with the industry sector becoming dominated by ‘mega funds’ and small, specialised funds. Meanwhile, medium-sized outfits will largely disappear through mergers or acquisitions.
Interestingly, the surveyed leaders also believe that MySuper will not be instrumental to market success, but rather the communication strategy and the value proposition of funds will ultimately determine if they are viable vehicles for members.
“We can expect the leaders in this sector to invest more in researching members’ needs, concerns and behaviours, in order [to] improve the conversations they have with them,” Mr Buchan said.
He added, “Whether they use direct communication, advertising or social media forums, funds have recognised that it’s crucial to influence individual member behaviour in order to boost retirement outcomes.”
Mr Buchan, who is also a communication adviser to the superannuation industry, believes there are signs of this practice being implemented.
“The more progressive funds realise that the best way to get Australians to think about superannuation is to make it part of a broader conversation,” he stated. “Australians do want to talk about their careers, their interests and their future. If a super fund can deliver the more prosaic messages alongside the aspirational ones, it is easier for them to build a connection with members.”
