Posted In: Wealth Management Administration
Sean Fannin, GBST Technical Legislation Consultant, looks at the Protecting Your Super Package and system readiness for compliance, data management and customer experience.
There’s significant changes on the horizon for the financial services industry that are much closer than many of the Banking Royal Commission recommendations. The Protecting Your Super Package takes effect from 1 July, with a 1 April deadline for the identification of accounts that have been inactive for six months or more.
The package introduces a 3% fee cap, a ban on exit fees, opt-in life insurance for inactive accounts, and sets new guidelines for transferring inactive low-balance accounts to the Australian Taxation Office (ATO). It’s likely the shift will highlight the duplication in the market; at 30 June 2018, over 15.6 million Australians had a superannuation fund account and almost 40% had more than one superannuation account. The sheer volume of inactive low-balance accounts that will potentially be consolidated poses a risk for superannuation fund trustees, and the scale of the change to business operating models is still being digested.
With change comes the challenge of managing costs and retaining members. Prioritising your compliance, data management and approach to customer engagement via systems you trust is crucial to navigate your fund through the change.
Seamless implementation of the changes is even more important in the shadow of the Royal Commission; member management by funds and advisers will be under immense scrutiny. The two most important steps to Protecting Your Super Package compliance:
If your system isn’t equipped – at the very least – to identify low balance or inactive accounts, a plan is long overdue. Especially if you are maintaining legacy products; the last thing you want is a compliance update that works moving forward but leaves your legacy products in a mess. Migration onto a single platform for all your product types ensures compliance for specific fund types and keeps your competitive edge by consolidating costs.
Compliance is only one of the reasons to take the temperature of your data management analysis and insights. As well as using the right systems to identify inactive or low-balance accounts, making the data accessible to marketing and product development teams is at the heart of a data-driven response to retaining active members, looking for new ones, and targeting customers at right time to warn of account closure or loss of insurance.
Accessible data insights provide opportunities to develop products to match genuine customer need and provide the ability to apply APIs to group data sets into trigger points that encourage action. For example, everyone who has life insurance within an inactive account.
Part of the package flying under the industry radar is the impact on members who maintain a superannuation account to access “cheaper” life insurance, such as a person who has their own self managed superannuation fund. These members are the most likely to top up rather than exit the fund, so targeting members with large sums insured who have inactive accounts is a smart move.
The MySuper dashboard provides members with better access than ever before to their superannuation profile – creating customer expectations that superannuation information should be accessible and simple to understand.
Removing the barriers to changing funds (exit fees) is likely to create an environment of experimentation; people may look at their superannuation more often and shop around for the best deal, making it harder to retain existing members let alone market to new ones. In an industry notoriously difficult to engage customers, the Protecting Your Super Package shifts the focus to customer experience as the backbone of your member engagement.
There’s no magic bullet; customer retention marketing is a journey of cumulative effect. However, to get closer to your customers as the sector competes for members, it’s likely more funds will re-invest in a slick and seamless self-service front end with STP, tools and calculators and access to other digital products.
There is a clear opportunity for funds to think about the broader financial literacy of their membership and reeducate their customers on superannuation as one of the biggest assets most people have in their lifetimes.
If you’re still sticking band-aids on legacy systems, the Protecting Your Super Package might be the best reason you have to switch to a system powered by a reliable, secure engine that connects you to the entire market.
Talk to us about your system compliance and getting the data you need to engage your members.