Technology and digital advice increasingly important with RIC approach
Allowing around 500,000 Australians to retire over the next five years is one of the biggest challenges facing Australia’s super funds, says the director of the industry’s largest IT services provider.
Dee McGrath, CEO of Link Group Retirement and Superannuation Solutions, expects technology and digital advice to become increasingly important for funds to engage with new retirees and offer simple, affordable and accessible advice .
The ASX-listed company supports 25 Australian super funds with its proprietary technology, including AustralianSuper and Hostplus, serving an underlying stakeholder base of approximately 8.8 million account holders, or 39% of the market.
Link has spent millions preparing to hire members of its fund clients as the Retirement Investment Covenant (RIC) comes into force on July 1 requiring funds to develop retirement income products for retirees and those approaching of retirement, McGrath said.
“Our immediate goal is to leverage our scale to create a foundational platform infrastructure from which we will launch in the second half of this calendar year, the first in a suite of services – a digital planning and forecasting for funds seeking to support members preparing to retire,” she said.
“It will be the convergence of products, services and information integrated into personalized experiences and delivered through different channels.
“It will be informed by member needs, curated by funds and we see our role as a catalyst in achieving these results through the provision of platforms and capabilities in a flexible architecture ecosystem.”
UniSuper chief executive Peter Chun said his fund had embraced technology to “enable its members to make better decisions”, but that laws needed to be updated to account for new technological solutions for members. members.
“We recognize … that an overreliance on technology is dangerous, especially when individuals’ financial circumstances are so nuanced and varied,” Chun said in a statement.
“UniSuper would never expect robo-advice to replace advice from our advisors, but we would appeal to the quality of advice review to consider updating the law. The current law predates technology solutions that exist today and should be updated to take account of new technological solutions.
Chun said it was “time to refresh” the laws that “squeeze hard” on even the simplest online calculators.
“It should be obvious that this regulatory approach stifles innovation, because today digital tools should be powerful – if regulations could allow it,” Chun said.
“Imagine if we could get a digital tool that could do all the work of bringing together all your financial information from all the different organizations. It would simplify and reduce the ‘too difficult’ barrier to getting financial advice.”
Meanwhile, Curium Data Systems regional manager for APAC, Jason Warlond, said the industry could go further in merging offerings from investment and member engagement teams.
Curium works with Australian super funds to generally provide data management for investment teams, but provided member engagement data management for a $194 billion Dutch pension fund, Warlond said.
Its enterprise data management (EDM) service included data quality management, data translation and integration, as well as the generation of “fund analytics” for investment managers, their giving an overview of their holdings at the stock level.
“I think there’s a great opportunity for funds to take this ‘viewing’ capability to the next level,” Warlond said, adding that members may be able to access this information.
He says the member investment and management teams rarely spoke to each other outside of providing unit prices and cash flow information and that there was room for improvement with the super fund members not having only a high-level view of their investments in the super account with percentage investments, for example in cash, stocks and fixed income securities.
“When you consider all the things at stake, like transparency, ESG and sanctions checks…again, there’s an opportunity for a fund to say, ‘we can tell you what you’re investing in up to. at the equity level,'” he said. .
“It is not difficult to provide a better breakdown of the number of BHP shares or Russian oil shares held by a fund, for example. They have the data, it could be relatively available any day, but no one is really doing it down to the member level. There is great pressure for transparency and that funds are ESG aware.”
Warlond says the super industry has been good at technological innovation in the past, but more could be done to engage members and focus on its sole purpose for members, which is to provide member benefits after retirement. .
“The super industry can do better. I think they did well but there are more opportunities to go even further,” he said.