Data collected on super fund members does not go far enough in revealing what members actually need or desire in retirement, research house Milliman has warned.
According to a statement by Milliman practice leader Wade Matterson and senior consultant Jeff Gebler, super funds must understand their members more deeply beyond the aggregation of data.
“Funds already have the core building blocks: name, age, address, super balance, insurance coverage and an income estimate (based on employer contributions),” the statement said.
“This core information is bolstered by other data sets, such as industry analysis by APRA, population analysis by the Australian Bureau of Statistics and other industry surveys.
“This leaves a huge gap for big data to help reveal the actual retirement needs and desires of members.”
The Productivity Commission, with its How to Assess the Competitiveness and Efficiency of the Superannuation System report, and prudential regulator APRA have already pushed for super funds to do more “regarding the way funds are collecting member data”, the statement argued.
“The question is, how are [super funds] making that judgement, and are they doing enough to actually really understand what their members want?” APRA deputy chair Helen Rowell said at a Financial Services Council Leaders’ summit panel.
“That's where we see the gap ... but we're not seeing the concrete evidence of how trustees are turning their minds to that and translating that into an objective assessment.”
Funds that had access to “more accurate” insights into retirees’ behaviour were better placed to create superior products, the statement said.
“The industry is littered with retirement income products that have never attracted significant inflows because they were based on incorrect assumptions about member behaviour,” it said.
“There is often a huge divide between what members say they want (such as retirees who say they want guaranteed income) and what their actual behaviour shows they want (such as more flexible retirement products).”
The statement also pointed to organisations such as Facebook, Google and Amazon, which have sought to “deeply understand” the behaviour of its members.
“We are now in an era where it is commonplace for organisations to deeply understand customer behaviour,” the statement said.
“APRA is demanding that super funds also understand their member behaviour at a more fundamental level, and funds which ignore that advice will do so at their own peril.”
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