This is shaping up to be the year of the three Cs: choice, consolidation and compliance.
Choice
This year, choice of fund is going to give the superannuation industry one of the biggest opportunities it has ever had. At its most obvious level, choice will mean the general public is targeted with more advertising and information about super. Who knows, superannuation may replace property as dinner party conversation for a while.
Research suggests that, while just 10 per cent of customers are likely to change funds, these customers will be high-net- worth clients. Therefore, one thing is certain: communication with clients has never been more important.
While the industry pundits are saying that both master trusts and industry funds will be the winners of choice, industry funds in particular, have some good news for customers and prospects. They have a solid membership and have been delivering excellent returns off a low fee- base. The challenge for them will be to communicate their advantages to employers and members, while keeping their costs under control.
Technology, such as web-based customer relations management (CRM) tools, will be key to these communications. Creating targeted and personalised marketing campaigns with highly relevant information will be critical. In addition, many of our clients are also considering ways of integrating effective financial education, guidance and coaching with their CRM systems to empower their members to take control of their money.
Consolidation
At the same time as the industry adapts to greater choice, the wheels of consolidation are also in motion. Several funds are expected to merge before July 2006, and as a consequence, competition between remaining funds will intensify.
Competition, spurred by the introduction of ratings by independent bodies, is likely to drive the funds’ boards to raise their performance in key areas, especially in the support services provided to clients. For KAZ, the mantra for 2005 will be to adapt and innovate to help clients and provide new levels of support. For instance, using new technologies to predict member churn and take-up of new products and services.
KAZ is looking to this and other new technologies that will help drive greater value.
Superannuation is a big enough market to carry these new technologies; all it needs are the players who are ready to push its boundaries, and choice will be opening the field.
Compliance
One of the issues I keep hearing about from clients is that Registrable Superannuation Entity licensing requirements means that a trustee’s job is more involved and time consuming as compliance pressures increase. This will be another area in which funds administrators must innovate to help ease the burden.
In short, this year has the potential for great change — and with that comes unprecedented opportunity for finding new ways to drive value. At KAZ, we are expecting a very busy year.
— Stuart Korchinski is the chief executive of KAZ
