Key findings of the Investment Trends 2015 Member Sentiment & Communications Report:
- Members satisfaction declined slightly as lack of confidence about the future remains a weakness
- Good investment returns over the last financial year should have a positive impact on member sentiment when statements arrive. MySuper funds are set to have outperformed SMSFs
- Industry switching is on the rise and the fastest growing funds are the new generation Direct to Client (D2C) funds
- Mobile technology is finally breaking into super with one in five members who use the internet reaching out for their smart phones to engage with super
Members satisfaction declined slightly as lack of confidence about the future remains a weakness
Super funds have been working very hard at engaging with their base with a quarter of all fund members (23%) reporting useful innovations from their main fund including personalized retirement projections (AMP and AustralianSuper), online fund consolidation (Kinetic Super) and visibility of super from my bank account (NAB/MLC).
However, there are still big issues to be addressed. Members overall satisfaction ratings declined industry wide with ‘Helping members feel confident about the future’, ‘direction on what to do next’ and ‘advice offering’ receiving the lowest satisfaction ratings among all service areas.
“Member are asking the manager of their retirement funds to provide direction and reassurance about their individual retirement situation,” said Irene Guiamatsia, Analyst at Investment Trends. “Our research also shows that when super funds are able to engage their members’ interest, they are more satisfied and also more confident about the future, and there lies the opportunity.”
HOSTPLUS (+6%pts), AustralianSuper (+5%pts) and Commonwealth Superannuation Scheme (+4% pts) improved their members’ overall satisfaction ratings the most.
Good investment returns over the last financial year should have a positive impact on member sentiment when statements arrive. MySuper funds are set to have outperformed SMSFs
Australian shares have provided good returns this year when dividends are taken into account but not as well as overseas markets. Super funds with a significant allocation to unhedged overseas assets have a very strong story due to the strong growth in overseas sharemarkets and the decline in the Australian dollar. These positive returns should have a positive impact on sentiment when statements arrive.
Many SMSFs are likely to underperform MySuper funds this year, as their average exposure to overseas listed equities is just 7% of assets on average, far less than MySuper funds which have 31% on average and SMSF cash holdings are much higher (21% vs 4%).
Industry switching is on the rise and the fastest growing funds are the new generation Direct to Client (D2C) funds
One in ten members switched super funds in the past year, the highest level of switching since 2010 and the proportion intending to switch in future also increased.
The clear beneficiaries of the switching activity are the new generation of retail funds that are marketed directly to (banking) clients: BT Super for Life, ANZ Smart Choice and CBA Essential Super. Punching above their weight by attracting 12% of switchers, D2C funds appeal to a significantly younger demographic, with half of those who actively chose one of these funds aged under 30.
“Existing banking relationships are, overwhelmingly, the strongest driver of the D2C growth, and some banks have been very successful at using their retail banking channel to grow a base of young members” said Guiamatsia. “If they become ‘customers for life’, like transactional banking customers have been, then these funds could transform the Australian superannuation space quite radically in the next few decades.”
Mobile technology is finally breaking into super with one in five members who use the internet reaching out for their smart phones to engage with super
20% (up from 16% in 2014) of members using the internet say they use a smart phone or a tablet to access information from their super fund. Another 12% (up from 10% in 2014) expect to start within the next year.
ANZ Smart Choice, Commonwealth Essential Super and Cbus are the undisputed leaders in uptake industry-wide, although when it comes to satisfaction with the content delivered, ESSSuper, AMP and Cbus received the highest members ratings.
“Mobile technology is becoming a powerful tool for driving engagement among younger members” said Guiamatsia. “Many funds now support mobile redirection and scalability of their website, but only a handful actually have a dedicated app. ”
Source: Investment Trends
