POWERED BY MOMENTUM MEDIA
Retirement projections key to super engagement
Research has shown projections are the number one thing that drives consistent action and engagement from members according to Donn Hess, JP Morgan Retirement Plan Services' US managing director and head of product services.
Speaking at the Association of Superannuation funds of Australia (ASFA) conference, Hess said behavioural finance and retirement projections had a large role to play in the battle for member engagement.
When funds shared retirement projections, people were 19 per cent more likely to have income replacement at 90 per cent or more and were 37 per cent more likely to invest in a diversified strategy, he said.
"It is by far the leading thing we can do to get people to first and foremost understand what they have and secondarily if they aren't comfortable with what they have, take the steps they need to," he said.
Super fund trustees in the US struggled with the right metric of success, Hess said, because traditional metrics such as balance, savings rates and asset allocation were misleading.
"As a trustee we look at the absolute value, but the measure that we hold ourselves to is not that absolute value, it's how it changes over time.
"The right number doesn't matter, it's how that number improves that matters and that's the value that you're showing as a trustee, that's the engagement that you want from members," he said.
Behavioral finance could be used to drive members to make the "right" decisions, he said, such as limiting or compartmentalising investment choice.
People would delay the "healthy" option unless they saw the benefit to them - which is where retirement projections fit in, he said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
A major super fund has defended its use of private markets in a submission to ASIC, asserting that appropriate governance and information-sharing practices are present in both public and private markets.
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
36.96 3 y p.a(%)
3
GAM LSA Private Shares AU I
34.22 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.68 3 y p.a(%)
5
VanEck Video Gaming and eSports ETF (AU)
28.89 3 y p.a(%)
