Monday, 22 December 2014
Australians are more likely to be engaged and satisfied with their self-managed super fund (SMSF) than with traditional super funds, according to new industry research.
The 2014/15 Superannuation Benchmarking Study, conducted by Engaged Strategy, surveyed more than 3,720 Australians about their super under the Net Promoter Score framework.
The superannuation industry as a whole did not score well, with funds recording an average Net Promoter Score of negative 29% (which equates to 29% more detractors than promoters). The worst performing fund scored a Net Promoter Score of negative 53%.
However, those with SMSFs reported the highest level of engagement and satisfaction, despite these often attracting higher fees. SMSFs as a group scored a Net Promoter Score of negative 5%.
Engaged Strategy Managing Director Christopher Roberts said the results were a wake-up call to super funds about the growing appeal of SMSFs.
“What’s missing with traditional super funds is the perception of value among members,” he said.
“Because of the compulsory nature of super, Australians see super funds as essentially offering the same commodity with very little differentiation and low product involvement. This makes it very hard for members of funds to gain a sense of value.
“It is important to note that people with SMSFs also rate their satisfaction with SMSF fees highly – despite these fees being quite high in comparison to traditional super funds. This means people with SMSFs are seeing and appreciating the value, rather than the cost of SMSFs.”
The research found that wanting greater control over their super (49%) and being unhappy with their previous super fund (22%) were some of the reasons why respondents had opted for a SMSF.
It also revealed that 32% of respondents said they had made the switch to a SMSF based on the recommendation of an accountant, while 52% had conducted their own independent research into SMSFs before making the move.
Mr Roberts said the findings showed that super funds were grappling with issues of control, transparency and trust, enhancing the appeal of SMSFs.
He said super funds needed to offer a more engaging super experience and demonstrate their value to members today, not just in the future, to generate more supporters.
“By having more detractors than promoters, super funds are failing to capitalise on their most valuable marketing tool: their customers.
“The research shows a substantial drop-off in stated loyalty between the leading and the worst performers in the industry. This has real consequences for member retention, especially as many Australians simply join whatever default fund their employer at the time happens to use.
“Interestingly, only 58.3% of Australians across all age groups said they were likely to contribute to their current super fund if they were to change jobs.”
Twelve of the most widely used super brands were assessed in the study, including AMP, Australian Super, BT, Colonial First State, First State Super, Hesta, HostPlus, MLC, OnePath, QSuper, REST and Sunsuper, in addition to an amalgamated analysis of self-managed super funds.
Engaged Strategy is a strategic consultancy that focusses on helping businesses grow by developing fresh customer, marketing and organisational strategies. Engaged Marketing is an approved Net Promoter Score Loyalty Partner. Christopher Roberts is an Industry Fellow at the University of Queensland, Australia.
Net Promoter, NPS and Net Promoter Score are trademarks of NICE Satmetrix Systems Inc., Bain & Company and Fred Reichheld.
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07 3245 7372