Entering into the superannuation sector is like walking into the battleground of a multi-decade-long tribal feud.
The two tribes at the centre of the battle seem to have forgotten who they are actually fighting for, possibly even why. Despite this, each week one launches a fresh attack on the other, chucking a somewhat self-serving hand grenade across the press about returns, reports and regulators. They roll out political figureheads, invoke ideaolgies, and claim the odd victory here and there.
But meanwhile, amidst the white noise of this rhetoric driven battle, Australians have staged a quiet evacuation, taking some $712.0 billion with them in the form of self-managed super.
Between 2012 to 2017, total assets in SMSFs grew by 29%, more than retail funds at 22.1% and only just shy of industry funds, at 30.5%.
What exactly is going on?
The causes industry and retail funds continue to fight over are light years away from why Australians are leaving them both in droves. And most of it boils down to one fundamental reason – a lack of understanding and acceptance of the human condition.
Since the dawn of time humans have sought out knowledge, control and autonomy. We want choice about our lives, and a say about our future. Given money is so inextricably linked to our future selves, it stands to reason any vehicle that gives humans power to control their destiny is hugely desirable.
To date idealogical and commercial interests in both industry and retail funds (and the entire advice and funds management industry that feeds off this sector), have benefitted from the slowly increasing suppression of this basic human need. Since superannuation was first introduced, Australians have seen their compulsory contributions increase from 3% to 9.5%. In the latter years, this lack of control over how nearly a tenth of their lifetime earnings is used has fuelled the exodus to SMSFs.
A lack of compassion and empathy from the industry at large when it comes to allowing for control and education led choice is now being compounded by other sociological changes. Changes most super funds are still slow on the uptake on.
A new generation of superannuation members is running head first into a rapidly changing world - a world far different to the one super was first designed for. A rise in unaffordable housing, the need to retrain to stay relevant and, ultimately, the end of retirement as we know it are real challenges that super is connected to, and which must be faced.
These issues should be central to any conversation a fund has with their members. That’s what we all want to read about in the press. These issues should be front and centre when product teams are brainstorming new ideas. But for most part, industry and retail funds draw a complete blank on these challenges. Why would you, when the status quo keeps you in a job just fine, and all you need to do is slap a return on the back of a bus and play the tribal warfare tit for tat in the AFR?
Not all Australians should be in SMSFs, that we know. But claiming the moral high ground by arguing default super is the only ‘safe’ option, and that money ‘decisions’ should always be left entirely to the experts is a lost battle. SMSFs prove that wholeheartedly.
The only way we will collectively move ahead is if we go back to first principles on what super could and should look like when the human condition and the changing world is the centre of our product design journey. We must acknowledge choice and value expression, instead of trying to fight both with an ideaology.
Australia doesn’t need another retail or industry fund – far from it. It needs a platform that brings Australians on a wealth journey that touches on super, housing, education and investments. Money is a serious subject. Money is a taboo subject. Money is an emotionally loaded subject. Money has never been just about dollars, percentages, returns and pie charts.
There will always be a group of people who want to leave all their money decisions to other people. Industry and retail super have a role to play here, beyond doubt. But if the growth of SMSFs is anything to go by, it is diminishing year on year, and we can’t ignore it.
At Zuper we want to help those looking to make a difference with their money and achieve their life goals in a safe, regulated and meaningful way. By helping people navigate money choices and express themselves in the process, then we will have served our greater purpose. It’s really as simple as putting humans back in the centre, where they were always intended to be.
And isn’t that refreshing.
This article is general in nature, and has been prepared without taking into account your objectives, financial situation or needs. You should consider if the information is appropriate and whether you need to speak to an accredited professional.
CEO and Co-Founder at Zuper Superannuation. Loves fintech, writing, pilates, Campari and soda's and, as of 2018, marathon running.More