Fintech and superannuation – making the aspirational attainable

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Lately I’ve been reading a number of articles that speculate on what the next big thing will be in fintech here in Australia.  “Is there an Uber or Amazon of wealth management?” by Graham Hand at Cuffelinks is well worth a read on this exact question, including the article’s comments section.

One big thing possibly ‘ripe for disruption’ that garners significant interest across a number of blogs, including Graham’s, is Australia’s $2 trillion dollar superannuation industry.  The piggy bank is likely to continue to fatten, with compulsory contributions expected to raise the total amount to around $7 trillion by 2033.

In 2050 I’ll be 65, retirement age by today’s standards.  While the age for retirement is creeping ever upward, though I may not be ready to hang up my hat by that stage, it would be nice to have the option.  Naturally after reading a few posts and comments on the topic of super, I started thinking about my own relationship with my super, or perhaps my lack of a relationship.  Given my current super growth rate, will retirement at 65, or 75 for that matter, even be possible?

Well, a slightly scary thought is that I don’t have the answer to that question.  In fact, I’m the first to guiltily admit I only ever really look at my super balance come tax time.  On occasion I’ve given cursory thoughts to switching funds, yet the actual act of delving into what seems to be a market full of undifferentiated products that all have 4 or 5 ‘stars’ is for me a consumer nightmare.  I have enough trouble trying to differentiate between health funds as it is.

Yet even though super is a dull as ditchwater product, I have a sneaking feeling I’m probably not getting the best return on my investment and that I should probably do something about it.  One day I fear I’ll wake up aged 50 in a cold sweat, wishing I’d been a little more proactive when I had the chance.

I’m not the first millennial to have a dangerous level of complacency when it comes to my superannuation.  Here are some statistics from the Grattan Institute that are certainly food for fintech thought:

  • The average Australian (me) pays $1300 per year in fees to their fund
  • A 30 year old (me again) could be $250,000 worse off by the time I retire
  • The average Australian cares more about $2 ATM fees than super fees

Yes, I can definitely concur with the last statement.  However an inconvenient $2 fee pales in comparison to a staggering $250,000 I and many others stand to lose over the coming decades.  So what’s to be done?  This is a real problem, it’s related to finance and it could be improved through technology…see where I’m going?

When it comes to empowering and engaging people with their super, I think fintech has an immense opportunity.  While there’s no doubt it’s harder engaging on long term goals, perhaps a clever, agnostic, super comparison health tool could help engage people like me on shorter term goals that build into longer term success?  Instead of tackling the problem as one of long term engagement, maybe we need to disrupt the problem by turning it on its head.  How can we make people engage on a shorter term scale, which is what we are biologically wired to do?

So if I had a magic wand here’s what I would want in my Super Superannuation engagement mobile app:

  • Make it easy to compare funds and give me a more real time, tangible view of my money e.g. if my super had of been with fund ABC, I would have earned/lost $N compared to fund DEF.  Give me slick info graphics because I’m time poor
  • Give me aggregated peer benchmarks based on role or salary bracket.  Always good to know how you stack up against ‘other Business Development Executives in the Sydney Region”
  • Take a tip from app game developers and gamify shorter term super ‘wins’, like adding extra money into your account or fund loyalty.
  • Give me the power to aspire to more e.g. on your current super trajectory, you will be able to afford 2 holidays per year in Bali by the age of 70.  Upgrade to New York by saving an additional $30 per month.

If anything has given me inspiration on this front it’s been two very interesting health related apps; Pact and Medibank’s GymBetter, that tackle the obstacle of getting fit and staying fit in unique ways.  With Pact you “Earn cash for living healthy, paid by members who don’t’.  That’s right, every time you work out or meet your goals, someone else in the community who doesn’t pays you for being awesome.  With GymBetter, you can access casual gym visits at over 500 locations for a fraction of the cost.  It gets even cheaper if you’re a customer of Medibank themselves.  I’ve always thought that this type of service was such a no-brainer for a health fund, but it appears so far, only Medibank have a product on the market.

Just like we aspire to be fit and healthy, we aspire to be financially sound.  But the path to both is fraught with self-motivational hurdles and emotional barriers.  If we can make either more attainable, then more of us will do it.  If a fintech startup can break down the long term goal of being secure in our retirement into shorter, digestible chunks, then they may just have a killer product and the elusive ‘next big thing’.

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