King Loong Cho

Investment Trends has released its flagship 2019 Super Fund Member Sentiment and Communications Report, an in-depth look at the attitudes, needs and priorities of Australian super fund members.

The twelfth annual addition of the report draws on the views of more than 9,000 super fund members conducted in May 2019.

Key highlights:

• Super fund loyalty is on the rise
• There is significant appetite for advice and education
• Responsible investing is an important retention tool – not just for younger members
• ESSSuper, UniSuper and Cbus lead in satisfaction rankings

Super fund loyalty is on the rise

Australians are more likely to stay with their existing super fund when they change employers. The latest research shows that among super fund members who changed jobs in the last three years, the vast majority (63%) said they remained with their current fund instead of joining their new employer’s default option (up from 54% in 2017).

“When changing jobs, more Australians are making a conscious decision to stay with their current super fund instead of passively accepting their new employer’s default option,” said King Loong Choi, Senior Analyst at Investment Trends.

“Increased marketing efforts by industry super funds and recent rumblings from the Royal Commission have further raised consciousness around superannuation, prompting more Australians to move from casual to mindful stewards of their own super.”

“While Australians are increasingly loyal to their existing super fund, the industry cannot rest on its laurels in supporting, educating and informing its members,” added Choi.

There is significant appetite for advice and education

Three quarters of super fund members interacted with their super fund in some way, shape or form in the last 12 months, most often by reading the annual statement (39%), visiting their fund’s website (28%) or reading regular communications (28%).

However, many members wanted to engage with their super fund at a deeper level but were unsuccessful in their endeavours. Across 22 super-related activities observed, the most commonly unresolved member issues were seeking financial advice (face-to-face), comparing their super fund to other funds, accessing their super through a mobile device, attending a seminar and accessing educational content.

“The most commonly unaddressed super-related activities were also those perceived as the most difficult to conduct,” said Choi. “Given members’ significant appetite for advice and education, super funds must improve their access to the services most sought after by their members.”

Responsible investing is an important retention tool – not just for younger members

Responsible investing is gradually gaining traction as more Australians realise they can align their ethical, environmental, social and governance (ESG) beliefs to the investments they hold.

In fact, a third of super fund members (34%) said it was ‘very important’ that their super fund offer responsible investing options among their range of investment funds.

Delving deeper, this perception increases with age, with 43% of retirees saying responsible investing is ‘very important’ versus 28% for millennials – contrary to the popular belief that ESG-factors resonate more strongly among younger Australians.

“There is strong interest in ESG-centric investments within super among Australians young and old. While the current product range is playing catch up to consumer demand, this represents an opportunity for super funds to differentiate,” explained Choi.

ESSSuper, UniSuper and Cbus lead in satisfaction rankings

Each year, Investment Trends measures member satisfaction with their main super fund across 26 key service areas, including their overall satisfaction. In 2019, the highest rated super funds by overall satisfaction were ESSSuper, UniSuper and Cbus.

Across individual service areas, industry wide member satisfaction was highest for the website and quality of the annual statement, while the lowest rated were webinars, seminars/workshops, videos/educational materials and the advice offering.

“An industry wide gap exists for education initiatives, with satisfaction for webinars, seminars and education materials lagging behind satisfaction for fees and charges,” said Choi. “This highlights members’ appetite to learn more in their quest to engage more deeply with their super.”

About the report

The Investment Trends 2019 Member Sentiment and Communications Report provides a detailed analysis of the Australian superannuation industry, examining sentiment, attitudes and needs of superannuation fund members.

Based on a survey of 9,018 respondents, the Report is the largest and most comprehensive independent study of Australian super fund members.

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  King Loong Cho

  Proposed LIF reforms hit planners’ revenue from risk advice

• Insurers must solidify planner relationships: Half stopped using an insurer in the last year
• BT Life achieved the highest user satisfaction among insurers

The Investment Trends 2016 Planner Risk Report is an in-depth study of Australian financial planners’ use of life insurance. The study is based on a survey of 620 financial planners concluded in June 2016. This study highlights a number of interesting trends:

Proposed LIF reforms hit planners’ revenue from risk advice

While the commencement date for the proposed Life Insurance Framework (LIF) remains unclear, many planners have already begun adjusting their business models in anticipation of the reforms. The average planner has seen risk advice fall from 35% of their total practice revenue in 2015 to just 28%, the lowest since 2013. A number of planners have even stopped providing risk advice altogether, with 12% not writing any new risk business in the last year, up from 10% in the previous study.

“The LIF reforms are already testing the business models of financial planners across Australia,” said Investment Trends Senior Analyst King Loong Choi. “Not only are they already reporting a fall in risk business, more than two in five planners expect their practice’s profitability to decline if the LIF reforms are implemented.”

The research shows that if the LIF reforms are implemented, planners will look to provide insurance advice as part of a broader holistic package more often, charge more for holistic advice and focus more on higher balance clients.

“This shift is already underway, and planners intend to continue adjusting their business models in this way if the reforms are implemented,” said Choi.

Insurers must solidify planner relationships: Half stopped using an insurer in the last year

Retention is growing in importance with half of planners saying they stopped writing new insurance business with at least one insurer in the last year.

Insurers need to actively promote the competitiveness of their offerings as the top reason planners switch insurers is because they found a better deal elsewhere for their clients.

“The recent media scrutiny has triggered planners to demonstrate they are picking the best insurers for their clients,” said Choi. “In addition, insurers need to grow their brand awareness among consumers because it is easier for planner to recommend an insurer if the client has already heard of them.”

Insurers can improve retention and reduce attrition by being responsive to planners’ needs and keeping them satisfied. Some of the opportunities for differentiation include addressing any inefficiencies in the application process, providing planners with great support and improving their brand image among consumers.

“There are great opportunities for insurers to benefit from switching activity, but they also need to be careful to not lose out from this.”

BT Life achieved the highest user satisfaction among insurers

OnePath continues to lead the life insurance market by share of planner relationships. AIA Australia, BT Life and TAL saw increases in primary market share over the last year by delivering on the areas that are growing in importance to planners when selecting an insurer.

BT Life received the Investment Trends 2016 Overall Satisfaction – Insurer Award, having achieved the highest user satisfaction score in this year’s study. The top three life insurers by user satisfaction are:

1. BT Life
2. AIA Australia
3. TAL

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King Loong Cho

Key findings of the Investment Trends 2014 Investor Product Needs Report:

• Investors’ appetite for growth is slowly returning, and many investors continue to look overseas for investment opportunities
• Interest in managed funds is making a comeback, particularly among the younger age segments
• The number of investors in capital protected products has stabilised in 2014, after falling over the preceding four years. Looking forward, there is growing interest in these products but planners will play a key role in encouraging greater take-up

The 2014 Investor Product Needs Report is an in-depth study of Australian investors’ investing behaviour and their usage of various investment products. The study is based on a survey of 10,645 Australian investors concluded in Q4 2014. This year’s study highlights a number of interesting trends:

Investors’ appetite for growth is slowly returning, and many investors continue to look overseas for investment opportunities

For the past five years, each year there has been an increasing proportion of investors who have been prioritising income as their primary investment goal. In 2014, this number fell for the first time since we started conducting this study, with 33% of Australian investors prioritising income as their primary investment goal, down three percentage points from 2013.

“For a number of years, particularly between 2012 and 2013, we had been seeing investors becoming increasingly focused on income-focused investments,” said Investment Trends Analyst King Loong Choi. “In 2014, we started to see a reversal of this trend as more investors started to prioritise growth-oriented investments.”

“The increased appetite for growth has been driven by investors’ concern with the world’s financial markets gradually declining over the last 18 months” said Investment Trends Analyst King Loong Choi.

However, investors’ outlook for the Australian stock market remains quite low, with investors’ capital return expectations for domestic equities falling from 6% per annum in January 2014 to 2% per annum in December 2014.

“The difficulty in identifying investment opportunities in the domestic market is fuelling the appetite for more overseas exposure.”

Interest in managed funds is making a comeback, particularly among the younger age segments

Managed funds continue to account for a small proportion of investors’ portfolios, with the average investor allocating only 8% of their portfolio to managed funds.

Looking forward, interest in managed funds has picked up with 46% of investors saying they are open to considering an unlisted managed fund investment, including 7% who intend to make a managed fund investment in the next 12 months.

“Investors’ interest in managed funds started to return in 2014, partly driven by their growing desire for greater diversification – both domestic and international – in their portfolios,” said Choi. “Younger investors are typically more open to investing in managed funds in the future than older investors.”

The number of investors in capital protected products has stabilised in 2014, after falling over the preceding four years. Looking forward, there is growing interest in these products but planners will play a key role in encouraging greater take-up

There is currently an opportunity for the capital protected products market given the current environment of record low interest rates, rising asset prices, coupled with increased uncertainty.

“As more investors look to chase growth opportunities in the coming year, fear of market reversals could drive demand for products offering market protection,” said Choi.

The number of capital protected product investors stabilised at 29,000 in 2014, after falling 46% between 2009 and 2013. Looking forward, there is growing interest in these products with 32,000 investors saying they intend to invest in these product in the next 12 months, up from 22,000 in 2013 (though not all will do so).

“To capitalise on the renewed interest in using capital protected products, product providers can assist greater uptake by helping investors address certain key barriers such as lack of transparency, satisfying certain gaps in the range of products available and improving investors’ understanding of these products.”

“Financial planners will play a key role in helping investors overcome these barriers, with half of existing capital protected product investors saying their adviser played a role in their most recent capital protected product investment.”

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