Mass-customisation MySuper approach not working

4 December 2018
| By Hannah |
image
image
expand image

Five years on from the introduction of the MySuper default arrangements, Frontier Advisors has warned that adopting a lifecycle strategy, which account for around 35 per cent of all funds in the market, can come at the cost a potential lower balance at retirement for clients.

Research by the advisory firm suggested that construction of such strategies to have a retirement income focus rather than retirement benefit could result in the same or better member outcomes, while maintain the protection against sequencing risk that is a key appeal of lifecycle options.

The research paper argued that having better defined member cohorts, an increased focus on the post-retirement phase, and varied fees to reflect underlying investment mixes could help achieve this.

“Lifecycle products may well be appropriate for disengaged members, but engaging the members is likely to be an even better outcome,” Frontier’s head of member solutions research, principal consultant David Carruthers said.

“There is also a risk this perpetuates a low level of engagement for the funds themselves who may well think the job is done at a time when they should be regularly checking in with older members to ensure their strategies are fit for purpose at that stage of life.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

1 year 4 months ago
Kevin Gorman

Super director remuneration ...

1 year 4 months ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

1 year 4 months ago

Future Group is set to take on nearly $1 billion in funds under management (FUM) and welcome more than 100,000 new members following two significant successor fund transf...

18 hours ago

The International Monetary Fund (IMF) has issued a sobering assessment of the global economic landscape in its latest World Economic Outlook, dramatically revised after D...

21 hours ago

Growth from the listed company’s key businesses has propelled Generational Development Group to new milestones in the three months to 31 March....

21 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND