Mass-customisation MySuper approach not working

Five years on from the introduction of the MySuper default arrangements, Frontier Advisors has warned that adopting a lifecycle strategy, which account for around 35 per cent of all funds in the market, can come at the cost a potential lower balance at retirement for clients.

Research by the advisory firm suggested that construction of such strategies to have a retirement income focus rather than retirement benefit could result in the same or better member outcomes, while maintain the protection against sequencing risk that is a key appeal of lifecycle options.

The research paper argued that having better defined member cohorts, an increased focus on the post-retirement phase, and varied fees to reflect underlying investment mixes could help achieve this.

Related News:

“Lifecycle products may well be appropriate for disengaged members, but engaging the members is likely to be an even better outcome,” Frontier’s head of member solutions research, principal consultant David Carruthers said.

“There is also a risk this perpetuates a low level of engagement for the funds themselves who may well think the job is done at a time when they should be regularly checking in with older members to ensure their strategies are fit for purpose at that stage of life.”

Related Content

Super funds face tough year end

Superannuation funds might end the year in negative territory for the first time since 2011 because of the recent market volatility, financial advisor...Read more

Managed Accounts Holdings moves further into super

Publicly-listed financial services firm, Managed Accounts Holdings has confirmed completion of its acquisition of superannuation administration compan...Read more

ISA urges consumers to get super into shape

With duplicate account fees and insurance premiums eroding superannuation savings, consumers should consider getting their superannuation into shape n...Read more



Add new comment