While the superannuation industry may be undergoing significant regulatory upheaval its administrators are still searching for innovation and a competitive edge.
As the superannuation industry heads towards what may well be a ‘brave new world’, an administrator’s focus on that changing legislative environment is inevitable.
But that is not to say that efforts towards innovation and finding that competitive edge stand still.
As with all aspects of superannuation industry service provision, administrators must constantly look to provide clients with that value-add, and for Peter Beck, chief executive officer of Pillar Administration, it is most likely to stem from adequacy.
“Most of the good research we’ve seen on members tells us that the biggest issue for members is adequacy,” he said.
We can see the industry’s attention shifting to adequacy and these sorts of issues – addressing how we can actually give members greater value in making decisions about their super.
“So the most important question for most members is ‘have I saved enough for my retirement?’
“Virtually all research leads you to that being the most important question,” Beck continued.
“And all of the other questions that they get asked to make decisions on relate to that one fundamental point.”
Beck said that when superannuants were asked which investment option they wished to have, their answer had to be guided by adequacy – by their retirement goals.
“Their answer needs to have context,” he said. “What they need to know is that X investment option will give you this outcome and Y investment option will give you that outcome.
“How much insurance?” asked Beck.
“Again, you can determine how much insurance you want, but if you take a lot more insurance, you’re going to have less in your account come retirement.
“It’s all about adequacy and all of these outcomes need to constantly be defined by it.”
Naturally, to execute the sort of strategies defined by Beck, member engagement is mandatory, and according to Russell Investment's Siva Sivakumaran, that will continue to be administrators’ main challenge within all innovation.
“The constant challenge for clients and administrators is to better engage with members so that they can retain those members,” he said.
“Going forward, there’s going to be severe competition between funds to survive, and the only way they’re going to be able to survive is if they keep their members.
“So here will inevitably be tremendous pressure on administrators to develop ways in which they can better engage their members,” Sivakumaran continued.
“And the sort of areas that I can think of, the things that we’re working towards at the moment, are putting our investment products and our non-super products all on the same platform.”
According to Sivakumaran, anything that made it easier for individual members to access their superannuation, their investment and their options, had to be a positive.
“They can then treat all of their investments sitting on the one platform the same,” he said.
“They can access things online using the same website, the same customer reference number and so on.
“And that’s one type of innovation that I think we’ll see a lot more of going forward,” Sivakumaran continued. “It makes superannuation a more unified experience.”
Reiterating his belief that administration’s next series of innovations would be focused on retirement income, Beck said that member engagement would come from ensuring that the question of adequacy was front and centre on annual statements.
“It’s about getting on to annual statements and getting into the conversation, and the point isn’t how much the lump sum is going to be on retirement but instead how much income those retirement savings are going to generate,” he said.
“And all of the single-issue advice questions will be related to that same question.
“So when somebody asks how much money will you have when you retire and you say $500,000, our view is that that doesn’t mean anything,” he said.
“It’s really how much retirement income will that generate. If you say: ‘well, if I’m more aggressive with my investment option, what’s that going to do?’
“Well, your $500,000 will become $600,000, but what does that mean to anyone? The more important point is that $50,000 per annum will become $60,000 per annum.”
Jason Gracanin, manager of product development for Pillar, said such thinking was part of an overall member engagement strategy looking at how Pillar, as an administrator, could add value for its clients’ members.
“Today, it’s about being able to process that piece of paper or that request a little bit quicker, and that is SuperStream's focus,” he said.
“But we can see the industry’s attention shifting to adequacy and these sorts of issues – addressing how we can actually give members greater value in making decisions about their super.”
