The superannuation industry has spent "hundreds of millions of dollars" trying to court direct consumers over the years, but it turns out the pool of 'direct' money is surprisingly small, says Tria Investment Partners.
In its latest Trialogue article, superannuation consultant Tria Invesment Partners pointed out that direct consumers (excluding SMSFs) comprise only $50 billion of the $2 trillion superannuation sector (2.5 per cent).
"Our industry has a long track record of building products for unadvised customers – ‘direct to consumer’ propositions," said Tria.
"We are inundated with claims of the rising power of consumers, inciting a fear that we are on the cusp of losing our customers to those cheeky disruptors with cool websites and slick videos."
But the reality of the current superannuation landscape tells a slightly different story, said Tria – which defines a direct consumer as someone who has not received regulated advice, and has not been signed up to a superannuation product by an employer.
"After hundreds of millions of dollars of capital expenditure over the years, who are these direct consumers apparently waiting agog for us to put a new superannuation or investment proposition under their noses?" Tria asked.
Breaking down the $2 trillion superannuation industry, Tria said there is $838 billion in employer-directed funds, $738 billion in 'advised' products and $407 billion in 'direct' funds.
But once SMSFs are excluded from the direct segment, only $50 billion remains – most of it in non-super and retail funds.
"There just isn’t much professionally managed ‘direct’ money around," said Tria.
"This is in stark contrast to the experience in many offshore markets where the equivalent to Australia’s superannuation system is not nearly as mature (which means it’s up to individuals to independently save and invest).
"And it raises an important point: if you’re building a direct proposition that isn’t for SMSFs it’s critical to understand exactly who your target customers are.
"If you are going to target direct, have a clear strategy, a viable proposition and be realistic about acquisition costs," said the consultant.
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