Australia has been tremendously successful in accumulating one of the biggest pools of retirement savings in the world – an impressive achievement no doubt, but super also attracts a great deal of criticism and consequently, regulation.
More and more, platform providers and service providers are being held to account for charging too much and delivering too little. So, let’s briefly examine what is the best way to manage corporate super as a market segment.
Over regulation is actually damaging super outcomes – it reduces market competition and hampers normal economic forces by inhibiting new entrants. Government regulation of the market should be confined to improving the service models.
The super market is subdivided into distinct market segments:
So which employer super platform is doing it right, or at least better than others?
As with any industry, employer super can be looked at in terms of product offering and service proposition when determining value.
Most employer super products are the same, or very similar. Most successful advertising campaigns on employer super products focus on cost and investment returns, rather than the quality of individual servicing. Most of the market is conditioned to gaining a perception each year of how their product performed from an investment point of view. Many employers and employees aren’t able to readily identify product weaknesses.
From a service point of view, most product providers do the minimum and are reactive rather than proactive, simply answering general questions from their client base and focusing on client retention. They predominantly offer a standard service model, rather than personal scaled advice.
Some product providers have a scaled down product design to minimise their cost structure, while other product providers offer additional (and often underutilised and ultimately pointless) features at a higher cost. Most employer super product providers basically win over their client base based on less than substantive value proposition and retain business by limiting information. Competitive products are not a reliable source of information as they will simply highlight what is wrong with the current arrangement and how they can do it better.
As the employer market is largely uninformed about the quality of the employer plan they are offering to their workforce, it is difficult for any employer to use super as an employee benefit in attracting, retaining and motivating their staff. This is a missed opportunity.
Employers have a duty of care to deliver value around super as an employer funded employee entitlement and failure in this regard might be a future problem for governance. At present many employers do not manage super as a key remuneration benefit and therefore there is a high probability that value is being under-delivered.
At AXIS we have made a point of collating information around different platforms and service options available from different product providers in order to compare different product models on design and performance against their peer group.
Get in touch with us directly at firstname.lastname@example.org or by phone on Freecall 1800 111 299 to access your own free two-page tailored analysis on your current employer super arrangement and learn whether it is providing value as a benefit, or whether there is room for improvement.
This document was prepared and issued by AXIS Financial Group (ABN 21 092 889 579, AFSL 233680). The information contained within it is not advice. It provides general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider talking with your financial adviser before making an investment decision. Information in this publication, which is taken from sources other than AXIS Financial Group, is believed to be accurate. However, subject to any contrary provision in any applicable law, neither AXIS Financial Group, nor its employees and directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it.