An ASIC report notes the boom in demand for this asset, saying it heightens the need for “better-quality data” about the size of this sector where estimates range between $1.8 billion and $188 billion.
CPA Australia has weighed into the debate about the cost to oversee the industry, adding its voice to those who argue the fee structure favours the larger funds.
Audience of One spreads its wings outside US
Advances in technology used by custodians is helping them to engage directly with members or unit holders on behalf of big funds, providing detailed investment positions, calculations and projections for individuals.
JP Morgan’s ‘Audience of One’ program, which has been operating in the US since 2005, has had a positive impact on US pension plan participants. JP Morgan says those exposed to the program during the past seven years had shown a 31 per cent increase in income-replacement levels. The number of individuals in those plans who were on track to achieve at least 70 per cent of their income in retirement had more than doubled.
Donn Hess, managing director of JP Morgan Retirement Plan Services, said last week that providing individuals with tangible income projections, and incorporating these into a series of tailored, proactive data-driven communications had helped capture US pension plan members’ attention, encouraging them to take action to build their retirement savings.
Referring to it as “data smarter communications”, Hess said: “We’re starting to have a better idea of what works to reach and motivate people and advances in technology and data analytics is set to empower these programs to achieve real change in the retirement prospects for many Americans.”
He was speaking in Australia at the Association of Superannuation Funds of Australia annual conference and was also scheduled to share member engagement strategies with JP Morgan’s local clients, which include the country’s largest super fund, Australian Super.
Australian Super was the first Australian fund, last year, to launch a separate investment platform for its high-balance members, which is a trend being followed by others in order to retain those members against the lure of forming their own SMSF (DIY fund). The theory is that those members, too, are likely to contribute more into super if they have more control over the investments.
“Triggering member action on retirement savings adequacy and tailoring the message to different investor circumstances is a universal challenge for institutional investors world wide,” Hess said. “Despite the different retirement systems, we see common challenges across US and Australian funds.”
The ‘Audience of One’ program involves the following principles:
. make it personal – marry data with the message
. make it simple – messages should be in manageable pieces
. connect the money to the emotion – motivate individuals to take responsibility
. diagnose before you prescribe – understand the individual’s situation
. cultivate an ongoing relationship – pursue a dialogue with individuals.
Hess said the rapid evolution of data customization meant super funds could now use individual member data to build tailored messages based specifically on each member’s fund profile – taking into account age, income and levels of engagement. These messages could be delivered through all touchpoints: internet, call centres, member statements, print media and face-to-face education meetings.
