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Don’t wait for Cooper to inspire change
Superannuation fund trustees should not wait for Cooper Review recommendations to be implemented in order to focus on improving their services, according to eo Financial Services.
Trustees should be able to rely on market forces, rather than the Cooper Review, to drive improved efficiencies and differentiate their offerings, eo chief executive Megan Bolton told delegates at the Association of Superannuation Funds of Australia (ASFA) conference in Adelaide.
Funds are responding to the increased volatility seen during the global financial crisis (GFC) and adjusting to the new landscape and improving costs and services for members, she said. Some funds are increasing their investment options and some are reducing them. Some are also improving their efficiencies of scale through mergers and acquisitions.
Outsourcing can be a function of minimising member expenses and third parties can provide specialised services, but efficiency should be the aim, rather than outsourcing to save money, Bolton said.
Cooper had a strong focus on expenses, but this should not be the only criteria for outsourcing, she said.
"We are all victims of the Government's changing mindset. After it outsourced super to the private sector, and watched us generate significant value to members, it appears that the Government may want to in-source it again - which is essentially what the MySuper model proposes," Bolton said.
Outsourcing had traditionally been viewed as a way to minimise expenses whilst adding specialist knowledge and value, but Bolton questioned whether Cooper would lower costs or impact services to members.
"Outsourcing should be about maximising value - not just cutting costs. And this, in turn, depends on productive business relationships. Trustees need to have a high level of confidence in their provider [and] set clear expectations."
Insourcing some functions may also have the potential to provide competitive advantage, Bolton said.
"Knowing your members is becoming a driver of differentiation, as it influences the ways in which a fund interacts with and provides services to members. In this context, we predict a growing trend to in-source key member touch-points, such as call centres and financial advice, where the fund can have more direct control over how its culture and values are communicated," she said.
AUTHOR
Mike Taylor
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