AMP urges super funds lift their game on engagement with their members

Super funds must work harder to improve engagement, digital advice options and service outcomes for members, says AMP head of superannuation and investments Melinda Howes.

AMP head of superannuation and investments Melinda Howes. Picture: Jane Dempster

Domestic superannuation funds must work harder to improve engagement, digital advice options and service outcomes for members, who are often finding the $4.1 trillion system “daunting and overly complex”.

That’s the view of AMP’s head of superannuation and investments, Melinda Howes, who told The Australian apprehension around super was often weighing on the ability of members to enjoy their retirement.

“We’re pretty fortunate here in Australia to have one of the best super systems in the world, particularly in the accumulation phase, and we know that as that system reaches full maturity, benefits are only increasing for Australians,” she said.

“But we know we’ve got a lot more work to do in helping our growing number of people that are either already in retirement, or approaching that age, take better advantage of the system.

“We do a lot of research in this space and we know that three out of four Australians over 50 find the retirement system complex, and so that leads to a whole series of flow-on effects.”

Her comments come as a fierce battle plays out among large retail and industry super funds over how they can serve members through digital advice channels. AMP Super on Friday rolls out a new algorithm-based digital advice tool for members, providing an online retirement health check to help with things like estimating income in retirement and figuring how much is required for that phase of life.

The tool, which includes a number of inputs and scenarios, can also provide a score relating to whether a member is on track to hit a retirement income goal.

“What we expect to see is a lot of people will actually be in a better position than they thought,” Ms Howes said. “It’s helping build that confidence and remove some of that fear.”

AMP, which is not charging fees for the tool, went out to tender before selecting software provider Bravura Solutions to assist on its digital advice project.

The wealth company claims it is providing members a market first in enabling them to personalise a retirement income goal and compare it with other benchmarks, including the age pension and the Association of Superannuation Funds of Australia’s retirement standards.

More broadly, it’s set to be another big year for super funds and the financial advice sector. Legislation to develop the second tranche of sweeping financial advice reforms is being drafted by Treasury, ahead of a planned consultation phase. That follows angst in the financial advice industry about layers of regulation markedly pushing up the cost of advice, and leading to the exit of thousands of planners and advisers from the sector.

The push into digital advice also comes as regulators crack down on super funds that aren’t providing adequate services to their members. The Australian Securities & Investments Commission last year began legal action against Cbus over the alleged mishandling of $20m in insurance money owed to grieving families and people with disabilities.

Colonial First State moved in October to launch its personalised digital advice tool – designed by ­financial advice app firm Otivo – for its FirstChoice members. It was provided at an annual cost of $88, deducted from a user’s super account.

Colonial also signed a deal with advice firm Viridian Advisory to provide members access to low-cost personal financial advice.

Under that transaction, CFS FirstChoice superannuation, pension and investment members can receive access to Viridian’s adviser network spanning topics such as investments, debt, super, pensions, retirement planning and Centrelink.

A block of advice was priced at a minimum cost of $500, which could be capped at $3000 if multiple blocks were provided.

Industry funds have also made forays into digital advice. Aware Super has a tool dubbed My ­Retirement Planner that allows anyone to check if they are on track to meet their retirement goals and provides a confidence score around achieving a preferred retirement outcome.

The fund also facilitates free video calls with advisers, and hosts in person and online seminars and tutorials to boost member engagement with super.

AMP’s new tool will also present the super member the option of speaking to a qualified adviser to discuss the results provided ­digitally.

“We can help a lot more members through a digital journey even if they then later want to come and talk to someone,” Ms Howes said.

She said it was the first in a ­series of digital advice tools AMP planned to release in coming months. Those would span pre- and post-retirement strategies, ­investment choice, super contributions, insurance and pension management.

However, AMP did retreat somewhat from its under-pressure financial adviser network last year, when it sold its advice licensees and Jigsaw to Entireti.

AMP retained a 30 per cent stake in a new company that owns the ­assets, and separately the wealth group offloaded minority stakes in 16 advice practices to AZ Next Generation Advisory.

“We’re choosing not to play in the comprehensive advice space,” Ms Howes said.

“But we just felt that … this (digital advice) is an integral part of the fund, and that people shouldn’t have to pay extra to get this advice, around what they should actually do in their super fund.”

About 4 per cent of AMP’s super customers are in the retirement phase, although they represent some 8 per cent of funds under management. AMP has around 600,000 super members in the fund that has access to the new digital tool.

Originally published as AMP urges super funds lift their game on engagement with their members