Many super funds do much more than just help you save for retirement. Some also offer insurance, home loans, financial planning and shopping deals.
By Andrew Keevers
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- Super funds do much more than just offer super as most now offer insurance, advice support, online services, retirement products, home loans, non-super investments, access to direct shares and even shopping discounts.
- Their main job is nonetheless long term investments, so choose the fund with the best investment deals then worry about the extras.
- Funds that aren't adding extra services are lazy and you should find ones actually wanting to expand their services to meet your changing needs.
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The ultimate objective of a super fund is making money for its members. It is the reason they exist. But can super funds do more for their members without impeding this fundamental mission and so you shouldn't have to wait until you retire before you start claiming at least something back from your super fund.
Super funds are doing this because they have created strategic alliances with insurers, banks financial planners, travel companies and other product providers and are using these to transform their products into almost one-stop-financial-shops.
The battle for your loyalty that this race has ignited is now so intense that some funds are updating their features lists and offerings to you nearly every month
Latest research
The 2010 Rainmaker survey of extra benefits offered by super funds is both startling and unsurprising because it confirms what we already know while also foretelling the new world of competition between that funds that just keeps getting hotter.
This is because super funds have been actively competing for several years now and steadily increasing the range of services and features they provide to their members — so much that the quantity and level of these services has matured and stabilised.
But funds have also realised that the competition is not just about the provision of these services but about doing them better and in cleverer, more innovative ways. This means the next frontier for funds is not, say, offering insurance or direct equities trading but doing it in ways just as sophisticated as the best wealth management groups.
To illustrate this new direction, suppose two super fund already offer income protection insurance. But while one may conduct a deep rooted review of the philosophy behind its default insurance offer and matching it with their members’ lifestyle needs, the other fund just continues to offer group insurance and every few years looks to shave say 5 per cent off the price.
The leading fund in our example, however, is so far ahead of its competitor in its thinking that it is already integrating its member administration system with the insurer’s claims management system, and intertwining this with the fund’s associated financial adviser officers and call centre representatives. The other fund is so far behind it still thinks adding a web calculator to work out the premium prices is a big deal.
Another example. Two super funds are offering their members a direct equities investment option. One does it through the current popular method of weekly batch trades through one of the popular equities brokers for an attractive very low flat fee.
But the other now offers direct equities through a managed account that is bundled with its super fund to empower members to make real-time trades complete with full tax reporting. The breakthrough to achieving this was when the super fund suddenly realised it is actually a distribution portal point through which it can link interested members with high value services but to do this fairly it needed to first insulate other members from these costs because not everyone is interested in these services.
Two super funds offer financial advice services. One does it through the three financial planners it has employed who wait in the call centre for maybe the 2 per cent of members to telephone them with their questions when the annual statements are mailed out with the bad news about the market correction.
The other fund, however, has segmented its membership according to the propensity to need particular types of advisory services and has already developed a graduated program of standardised investment newsletters, targeted seminars for pre-defined and pre-qualified members who are invited — using highly selective techniques — to attend tailored one-on-one advice seminars and interviews.
What makes this fund even smarter is that this is happening while in background the fund is also developing a new regimen of limited advice delivered through a mix of phone-based and online delivery platforms. The fund is even supplementing these with social media campaigns.
Two funds offer non-super banking and investment products. One does it by offering a suit of standard managed funds which are manufactured by their asset consultant. The other creates an online account management portal that can be integrated or work in parallel with the member’s web banking facility.
For members these examples illustrate how it is no longer good enough for funds to claim you should support them just because they are not-for-profit, low cost or are run by their members. Being big doesn’t much matter either if your fund isn’t able to assemble packages of services as cleverly as smart thinking smaller funds.
Results from the 2010 survey
The key finding from Rainmaker’s latest research in 2010 into super fund extra benefits survey of 284 funds was that the number of these extra services has stabilised with little change from last year. For example, as shown in Figure 1, regardless of asset size funds are now averaging about 15-20 extra benefits with the most sophisticated funds having up to 26 extra benefits.
Driving home this stability theme even harder is that boutique super funds with less than $5 billion in assets average 18 extra benefits which is only three fewer than large mega funds which average 21 extra benefits. This near universal approach to extra benefits also explains how all segments of the superannuation market offer common benefit ranges.
Table 1: Super funds and their extras
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All Funds
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Segment
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Channel
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Workplace |
Personal |
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NFP |
MT |
WP |
Pers |
NFP |
MT |
Ind |
Govt |
NFP |
MT |
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Maximum |
26 |
25 |
26 |
26 |
26 |
25 |
26 |
25 |
20 |
25 |
25 |
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Median |
16 |
17 |
15 |
15 |
15 |
16 |
15 |
17 |
14 |
20 |
15 |
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Minimum |
3 |
3 |
6 |
3 |
6 |
3 |
6 |
4 |
8 |
11 |
7 |
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Number of Funds |
284 |
131 |
153 |
154 |
55 |
99 |
55 |
64 |
20 |
32 |
98 |
Source: Rainmaker Information
The implication is that if funds offer low numbers of benefits it is because they have chosen this level of under servicing, not because they are unable to offer such services. See Table 1.
Despite this neutral impact of fund size and segment, the list of leading funds for extra benefits is nonetheless dominated not-for-profit funds as they make up 14 of the top 20. This re-affirms findings from previous surveys that shows NFP funds as the headline entity must offer services directly while retail funds can offer them indirectly through associated wealth groups.
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Fastest growing services type
Figure 1 shows the incidence of extra services, with the leading services being having a website, a call centre, investment choice, online account access and insurance which are available in 90-100 per cent of super funds.
The next tier of services being that of offering financial planning, EFT contributions, income protection insurance and being able to choose asset allocations are offered by about 60-80 per cent of super funds.
The third tier are miscellaneous services like having non-super managed funds, banking products, and shopping discounts. Unsurprisingly, these services are not overwhelmingly popular and in some cases seem only to be offered if a particular strategic relationship materialises.
The low incidence and likely low take-up of these lower priority services also suggests these are non core for most super funds, serving primarily marketing and product differentiating objectives.
These mixed dynamics reflect themselves in how the fastest growing extra services are retirement divisions, income protection and health insurance, travel discounts, spouse accounts, financial planning, home loans and being able to handle defined benefit arrangements.
Despite the topicality of these services, particularly financial planning, their low incident growth rates further implies that funds are now not simply adding services as their end game but trying to evolve and develop them.
For example, funds several years ago began adding financial planning but this in the main meant just having a staff financial planner. Today the same funds are developing their advisory services into facilities capable of actually providing real advice just as professionally and comprehensively as regular financial planning firms but delivered much more efficiently. Indeed some funds are even going further and moving to establish their fully fledged advisory networks.
Regardless what extra benefits package super funds are offering, the important thing is still that funds must tell their members. As ridiculous as this statement seems, it remains too clear that not all funds follow this simple rule and members often don’t know all the services their funds have on offer.
While members should be confident enough to ask their fund about all the deals and services they offer, they shouldn’t have to. Smart funds should instead be easy to understand, and if your fund isn’t one of those then what else aren’t they telling you?
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Source: Rainmaker Information |
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