LOVE him or loathe him, you have to admit there is something about Virgin boss Richard Branson.
Whether he is “swanning into town”, as the Financial Planning Association described his recent visit to launch Virgin Superannuation, or on his latest ballooning adventure, he certainly knows how to capture the public’s imagination, not to mention the headlines.
Which is why everyone in financial services is chattering about the plans for Virgin Super.
Virgin, as a rule, does not meander into markets, hoping for a bit part.
Instead, it picks its targets fastidiously — those sectors characterised by high costs, high fees and high complexity — and tries to shake them up completely, usually by aggressively marketing a simpler, low cost, low fee Virgin alternative.
If the approach was well suited to airline travel, credit cards and mobile phones, you can see why many believe it is tailor-made for superannuation, a sector known neither for its simplicity nor its economical approach to fees and charges.
Will it work? Certainly the Virgin brand has major traction, particularly among younger consumers. There are also the thousands of employees in Virgin’s music, airline and other businesses in Australia who would no doubt be potential targets for the new superannuation fund.
Who should be worried? Large, established institutions that trade on the complexity of superannuation, and charge the fees to match, should be watching over their shoulders. Branson has proved time and again that he enjoys nothing better than tearing strips off the establishment.
But the lower fee end of the superannuation industry, namely industry funds, should also watch out. With its low fee, low fuss mantra, Virgin is essentially in industry funds’ territory, except it has an instantly recognisable brand and no baggage about being union backed.
Will Virgin completely transform superannuation? Its impact will probably not be as dramatic as all that.
But its entrance into the sector does signal that one of the world’s most cluey entrepreneurs believes superannuation in Australia is over priced and too complex. And he plans to profit by taking on those who have made it that way.
