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'Mass customising' superannuation
Australian superannuation funds need to offer their members customised post-retirement products that provide specific outcomes, according to Russell Investments.
According to Russell Investments Australasia chief executive Chris Corneil, the industry has been peddling benchmarks for years when what investors actually want is outcomes.
Corneil said an example of a retirement outcome might be purchasing power; or the investor might never want to lose money; or they may want a certain income in retirement.
Superannuation funds need to be far more adaptive at the portfolio level and offer a tailored approach to asset allocation, said Corneil.
Russell Investments director of superannuation Tim Furlan said 'mass customisation' should be the minimum standard funds should deliver to their members - despite the perceived implementation inefficiencies associated with it.
The best example of mass customisation is currently practiced by the computer technology company Dell, said Furlan.
"The idea is that you use an IT solution to take parts off the shelf to build something that feels very personalised. If you go to the Dell website you can say 'I want a computer with this much RAM and hard disk space, this kind of screen and in this colour'," said Furlan.
The challenge for super funds is to take the same industrialised process and achieve the same thing in the retirement space, he said.
"[It's about creating] objective-based portfolios - something that's not incredibly different from what you see in diversified funds at the moment … mass customisation is [about] putting those portfolios together in a way that delivers the right risk/return outcome for the individual retiree," said Furlan.
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