How the industry can embrace innovation and tap into data to unlock member engagement with super funds

With an estimated 70 percent of Australians still not accessing financial advice and increasing numbers of financial advisers exiting the industry, we believe there is an opportunity for a scalable, targeted and low-cost advice solution to be implemented across the financial services industry to facilitate an increase in engagement.

Initiatives like superannuation account stapling, where workers take their superfund with them when they change employers, increases the importance of fund selection for all Australians. While fund stapling will assist in reducing duplicate fees and duplicate insurance, and in creating huge savings, regular ongoing engagement between members with superannuation funds becomes paramount.

Regular and frictionless engagement points with superannuation, via periodic payments for example, could enable members to confirm they’re in the right fund, with the right options for their retirement goals, particularly as career and investment goals change over time.

Based on recent discussions regarding the limited reach intra-fund advice currently has, combined with the lack of understanding by consumers and members of their super, we believe this presents an opportunity to introduce an innovative ecosystem that seeks to address the engagement issues which have resulted in working Australians losing over an estimated $17,500,000,0002 worth of superannuation.

Now more than ever, accelerating and significant changes in employment, working arrangements, digital connectivity and e-commerce mean Australians will more frequently have the opportunity for engagement. How can the industry better use these engagement moments to connect with Australians?

Further continuous change in equity and capital markets, mean Australians need to be appropriately informed and advised on what to do with their money to secure their financial future. For most Australians, their primary exposure to capital markets is through superannuation. This often passive and outsourced relationship leaves them relatively uninformed of the full spectrum of investment asset classes available, particularly outside property. Unfortunately, stapling has the potential to further exacerbate this trend if engagement doesn’t improve.

Limited access to advice leads to poor decisions

The high costs of delivering financial services and advice, which cost anywhere from approximately $3,000 to $5,000 for a Statement of Advice and sometimes more, is too prohibitive for most, resulting in the majority of working Australians not engaging financial planners and advisers or accessing other valuable financial services.

Last year, Sunsuper reported an ‘overwhelming flow’ of unadvised members flocking to cash. This resulted in members who switched to cash during March effectively crystallising losses at a low point in the market, and in turn missing out on the Australian share market’s powerful rally during April that lifted the S&P/ASX200 Index to its best monthly performance on record.

According to new data from the Australian Prudential Regulation Authority (APRA), super funds have also now managed to claw back most of the value of their asset holdings lost in the pandemic and bushfires but the damage may have already been done to the wealth of many Australians.

Technology and networking innovation

Legal and technology changes together with customers’ growing expectations, often driven by other digital experiences, create an opportunity to provide additional services at a lower cost for suppliers and workers alike. New technology and interconnected networks also provide a way forward in offering affordable, scalable and tailored financial services and advice to Australians by leveraging new networking capabilities to create advice, insights and specific services to meet individuals’ needs. With the right foundation and data in place, the industry is set to achieve this by integrating a collaborative, engagement platform, which would:

- Enable service providers to access a broader market with their existing services while making it easier to connect additional relevant services and functionality to enhance their core;
- Accelerate deployment of new services to existing and new customers; and ultimately
- Leverage big data to create scalable and specific insights, advice and solutions for workers as and when they are needed.

Hire to retire ecosystem future proofing growing data needs

To reduce the risk of breach to sensitive data in the face of growing ID theft and cybercrime, connecting the hire to retire ecosystem would not only provide enhanced protection for Australians’ personal and private information, but also create a payment and engagement network. This ecosystem would facilitate regular and frictionless communication and transactions with and for workers across payrolls, banking, insurance, superannuation funds, the ATO, employers and other financial service providers. In short, the ecosystem:

- Reduces the risk of breach to sensitive data
- Empowers service providers and workers with access to current, relevant information
- Facilitates seamless engagement from regular payments; and
- Reduces the costs and risks of transferring data and payments

In addition, the effective deployment of this data through such an ecosystem does not only enhance service providers core services, but enables virtually limitless data to be transferred and permanently linked to digital payments, creating a unique platform to develop, market, sell and distribute financial and wellbeing services which are simultaneously scalable and specific to individual’s needs.

The consumer benefit

From a worker’s perspective, through the aggregation and use of financial, preference and payroll data, this platform would power frictionless and regular engagement with Australians to enhance their customer experience, and in turn improve engagement. Under the Consumer Data Right legislation, individuals will be able to share data with trusted third parties, supporting them to easily access financial information, advice and services to optimise key financial decisions.

By simply knowing when and where to access appropriate advice and services based on specific requirements and goals, workers and members are empowered to not only take control of their wealth creation but to seek deeper education and advice when it is most valuable to them.

Interconnected networks working for working Australians

With new technology and legislative changes comes new challenges and opportunities. The prohibitive costs in traditional approaches to providing financial services and advice along with superannuation fund stapling will change the way funds need to engage with their members. Fortunately, enhancements in technology also enable new ways to regularly and frictionlessly engage with working Australians with the introduction of a hire to retire ecosystem seeking to provide a more secure and cost-effective way to offer both scalable and specific services and advice, tailored to individual’s needs, based on their financial, payroll and preference data.

Dean Martin, chief executive, InPayTech