The value of digital advice: perspectives from three super funds

What does digital advice look like for super funds and how are they leveraging technology to support better member outcomes?

The cost of providing advice in Australia is increasing, shutting out more and more Australians who need advice now more than ever. This unmet demand for advice represents a significant opportunity for superannuation funds. At Iress’ Super Efficient Conference in Melbourne, Emily Chen, Iress’ Global Head of Product, Technology Platform, hosted a panel alongside Joshua Parisotto (Chief Advice Officer at HESTA), Andrew Gregory (Head of Advice and Education at UniSuper) and Maurizio Lombardi (Head of Financial Planning and Advice at HostPlus) to discuss the case for greater focus on digital advice. They exchanged insights on the digital advice models available and shared practical case studies of how they’re leveraging technology to support better member outcomes. Here are the key takeaways.

A shift to digital engagement models

The pandemic accelerated the shift to digital engagement models for a number of superannuation funds in Australia, which included the adoption of digital financial advice. HESTA, UniSuper and Hostplus are all leveraging technology to support their members with digital advice journeys, while providing them with options to speak to a human adviser. The panel participants agreed that advice is becoming more important than ever before, with the retirement income covenant bringing advice to the forefront for many superannuation members. Advice was not seen as optional but as expected - the super sector is large and mature, with the capital, scale, and ability to invest in capability like advice so they can support members to achieve their goals and reach a comfortable retirement.

While not all super members will want advice, what’s important is that members who do want it are aware that the fund can provide the tools, information, insights, and referral networks for members to access advice. Importantly, members should be able to access advice on their terms - whether that be digital, in person, or over the phone.

Digital advice options

Digital advice is not designed to replace phone-based or face-to-face advice, but to complement it and reach new members that otherwise wouldn’t have sought advice. You’ll see an option set available for advice in super funds that includes:

  • Offering advice in-house through your own AFSL;
  • Working with a related party through third party distribution models;
  • A hybrid of these two options.

When considering different advice options, super funds should look at their member base, the basis of the fund they’re surrounded around, and how the option set applies.

Different funds have different membership profiles - ages, balances, occupations, industries - there is no “one-size fits all” advice model that each fund can roll out to their membership.

Advice models for different demographics

For HESTA, a fund whose membership base faces common challenges around casualisation and low incomes, the focus is how to get members help and guidance to support them all the way through to retirement. HESTA’s advice model has digital interaction as the very first point of call through their ‘Future Planner’ tool, offering members the option of intra-fund advice in addition to comprehensive advice via a third party. Since launching their ‘Future Planner’ tool, HESTA has seen advice demand double on the personal advice side and quadruple on the general advice side, with the majority of advised members being over the age of 45.

In contrast, UniSuper’s membership base is generally more educated, affluent and seeking complex answers to questions about their financial futures. Based on these membership demographics, advice has been central to UniSuper’s proposition and they’ve invested in the full spectrum of advice. This includes a general advice team through 34 super centres across the country, a centralised intra-fund team, and a full inhouse comprehensive advice team. The fund delivers around 4,000 instances of advice per year through their intrafund and comprehensive advice channels, with the majority of advised members between 55-64 years of age.

For Hostplus, 60% of the members using their digital advice tool are between 25-44 years of age, which is a reflection of the fund’s demographic base combined with the fund’s decision to deliberately engage and market to this cohort. As Hostplus moves to a more advanced comprehensive advice model, they’re hoping this data becomes more spread across their member base.

Advice for competitive advantage

Panel participants agreed that from a competitive perspective, offering advice can be a key differentiator for a super fund. The competitive landscape means members are looking for the best value options from their super fund, which includes both the fees they’re charged and the quality of education or help members can get from their fund. Digital advice is the new frontline and where the battleground will be for super funds in the future.

From a member outcome perspective, UniSuper found that their advised members are generally more active, engaged, and highly satisfied. Often, these members have rolled in external FUM, their average balances are 5 times higher than an unadvised member, and they’re promoters. UniSuper’s NPS ranks 91 in their comprehensive advice business, 84 in their intra-fund advice business, and 80 in their general advice business. Similarly for HESTA, they’re seeing up to 15% conversion rates from their digital advice tool (versus industry average conversion rates of 2-6%), with 21,500 members making a contribution to the fund after going through the tool. The importance of digital shouldn’t be underestimated.

Looking to the future

HESTA, UniSuper and Hostplus all agreed that the members who tend to use digital advice are often the more prepared and engaged members. There’s still a challenge to solve around capturing the unprepared members who aren’t engaged. How do we get the relevant advice, education, and insights to these members so they can retire with confidence?

For all three funds, ultimately what’s important is being able to provide a member advice experience that is channel agnostic, where the member is in control of what that engagement looks like. The experience has to be as good digitally as speaking to a human and it has to be education-led. In order to do this successfully, you need to have a good understanding of your member profiles and demography and ensure the information and services you do provide them with are relevant, targeted, and in common language.

Best practice examples include developing guided advice frameworks based on the most frequent enquiries from the fund’s member base. Other successful tools include digital calculators and non-fluid content such as video-on-demand, which is resonating much stronger with members and actually making them want to engage. Considerations around the UX of digital advice are also key - there’s a lot of design-thinking needed to take us to the next level of digital advice, which can engage members in the same way they engage with the best apps they have on their smartphones.

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Iress’ digital advice solutions enable the delivery of limited personal advice on-demand and at scale, backed up by member education to improve financial literacy, in a solution which fully integrates with super funds’ member portals and registry. Our software will help you retain and win new members with digital-first technology that drives operational efficiencies and scalability for funds, members, employers, and trustees. For more information, visit: