Rob Coombe
BT Financial Group chief executive Rob Coombe has called upon the superannuation industry and the Government to develop a simple, accessible, engaging and low-cost business model to service neglected low to mid-net-worth consumers.
Speaking at a presentation in Sydney to Association of Superannuation Funds of Australia (ASFA) members and media yesterday, Coombe said the industry was doing so-called average Australians a disservice in failing to encourage and enable them to get the most out of superannuation.
He highlighted what he considers one of the industry’s greatest paradoxes. Although the Australian regime is commonly regarded as one of the best and most sophisticated in the world, the majority of Australians do not understand how to make it work for them.
“For all this phenomenal mandated growth, large numbers of Australians are completely disengaged around their superannuation … BT’s own research shows that consumers describe superannuation as confusing and complex. They tell us they feel indifferent, bored, sceptical, distrustful and even annoyed … What other industry evokes these sorts of descriptions?”
Coombe went on to say that 24 per cent of participants in the BT research regarded superannuation as a con and only 54 per cent saw benefits.
He described these unmet consumer needs as “a walk of shame for the industry”.
In Coombe’s view there is currently no incentive for the industry to service low to mid-net-worth clients. He said that it needs to work with the Government to develop a simple, accessible, transparent and — importantly — low-cost business model to provide these consumers with advice in three key areas, namely:
· how much they need to contribute to super for a comfortable retirement;
· which fund best meets their needs and expectations; and
· how much insurance they should include in their super.
Coombe said that, ideally, such a model would not cost consumers more than $200.
He said young people are particularly disengaged with superannuation and that the industry needs to find a way of making it more compelling for them and as a accessible as, say, Internet banking.
“Seventy-two per cent of members salary sacrificing into super are aged 40 and above. For younger people, it just isn’t happening.”
He said that including an investment option within super funds could be a good solution. He pointed to the New Zealand superannuation scheme Kiwisaver, which enables participants to put aside money for a home deposit, as an example of how this could be put into practice.
Coombe said competition within the industry is bound to increase and that those who provide consumer-friendly solutions will be the ultimate winners.
“[The superannuation industry] has spent far too much time sizing up the competition and not nearly enough time sizing up consumers … Consumers love choice — it’s the essence of consumerism — and those organisations with good brand values will make the decision-process much easier. The organisation that can demystify super, that can make it easy to understand, accessible, relevant, transparent and simple will go a long way to winning the hearts and minds of its customers and accordingly to building a great brand.
“It’s up to all of us, industry and government, to make super not just simpler and easier to understand, but top of mind. We have to find a compelling way to connect with our customers to make sure they have the income they need for a self-sufficient retirement.”
