Are modern disruptors leaving traditional super funds behind?
Q. What impact will disruptors - such as the funds targeting millennials - have on the super industry?
There has never been so much innovation in the superannuation market.
Established super fund providers, worried they will be left behind, are slashing fees and adding new features in an attempt to reinvent themselves, make it easier for investors to find them, transact with them and deliver better investment returns.
Meanwhile, new players are entering the market on the back of new technology and new alliances to directly challenge these established funds, which used to think they owned the market.
Superannuation for tech-savvy, disengaged millennials might be the battleground but this war is much bigger.
This is because it's going to take more than a few smartphone app-based products winning a few thousands members to shake the stranglehold these established funds have on the brutally competitive, 10 million-strong millennial segment.
Competition from these new products will, however, trigger a super fund transformation because the next generation of superannuation savers will be the wealthiest Australia has ever seen and they will force every fund serious about surviving to modernise.
Alex Dunnin, executive director of research and compliance, Rainmaker Information
New funds entering the market are the sign of a diverse, competitive and evolving superannuation sector.
Engagement has traditionally been a challenge for superannuation funds, particularly with younger members for whom retirement is a long way off and we should recognise the market is responding to this challenge.
While new entrants are attracting profile, particularly in terms of younger members, we should also recognise existing funds are working hard to deliver their members the comfortable retirement they deserve, particularly through the growing provision of financial advice.
Martin Fahy, CEO, ASFA
We are seeing a number of new products coming to market seeking to disrupt incumbent providers.
A strength of super funds has been their ability to deliver strong outcomes to members in a highly regulated market. However, the market is changing as new providers seek to make super more relevant to younger members with greater levels of convenience.
I think that members should reasonably expect greater levels of convenience from their super provider but, as with many things in our digital lives, consumers should not expect to pay an unreasonable premium for this.
On average, these new products have higher fees than many traditional providers but they do offer high levels of convenience.
I think the market will continue to evolve relatively quickly but more competitive fee levels and returns will be needed to truly disrupt the market.
Kirby Rappell, general manager of research, SuperRatings