Andrew Godfrey
Mercer this morning (November 23) launched its new initiative to advise on the big changes in the super industry – mainly consumerism and technological disruption. It involves five new customer platforms.
The ‘Super Genome Project’ follows two years of business transformation, and involves a shift from the “age of administration to the age of engagement”.
Super admin is no longer a record-keeping service. Administrators, such as Mercer, have to partner with their client funds and corporate clients to achieve growth in an increasingly competitive industry, Andrew Godfrey of Mercer said today.
The project involves a range of programs including: Mercer Edge, a data analytics service; a CRM and marketing solution; new member registry; a new digital capability for mobiles; and the Mercer multi-manager offering configured in a user-friendly fashion.
Mercer published last week a series of thought-leadership pieces under the heading ‘Reimagining Super – including how to avoid the ‘race to the bottom’ – in which Andrew Godfrey and Renee McGowan discussed the changing face of super administration.
Godfrey, the leader of Mercer Financial Services in the Pacific, looked at how funds can avoid a race to the bottom by enhancing the customer experience rather than competing solely on price. McGowan, Mercer’s chief customer and marketing officer in the Pacific, looked at the impact of the digital age on member engagement in super.
The commentary is on the Mercer website.
Godfrey wrote, in part: “Super funds and administrators have become bigger in recent years on the back of consolidation and the need for scale.  The overheads of running a super fund and the investment in technology that’s required are significant, so scale is critical, but the competitive landscape for super administration has reached a peak of consolidation.  To transform, the industry needs to invest in new technology and operations where people are at the heart of the process.
“The super industry is facing a crossroads and funds and administrators have to choose to continue with an ‘old school’ approach, or choose a ‘new school’ strategy. Either the industry responds to the digital revolution and empowers funds and members, or it continues to drive out costs and engage competitors in a price war…
“In the super industry, cost leadership is a viable strategy for larger companies because they can use their size and big reserves of cash to take advantage of economies of scale, delivering a cheaper product or service to more people.
“However, a cost leadership strategy can force the competition to match the price or fees the leader has set, creating a price war – similar to a ‘Coles versus Woolworths’ scenario. Companies in this situation must innovate cost-saving solutions and try to attract a larger portion of price-sensitive customers. This often leads to ever-eroding margins and an increased importance on volume sales. Further, cost leadership can lower customer loyalty because they’re attached to the price, not the brand, and can reduce the company’s reputation as a provider of high-quality services or products.”
The alternative competitive strategy to simply reducing price is enhancing the customer experience while continuing to deliver value.
“Superannuation administrators cannot escape the reality of needing to continue to reduce our cost to serve, but more importantly we need to continue to innovate.  There will most likely always be pressure to reduce fees.  However, the industry, government, and members have to let the Stronger Super reforms do their job and fees will come down.  Funds absolutely have to keep one eye on the current and future policy landscape, but they also need to keep one eye firmly fixed on the member…
“Super companies can protect their margin by differentiating themselves with innovation such as digital capabilities that provide their members with more control and access to information and tools they need to engage with their super when, where and how they want to.  By providing a more comprehensive service to their customers they can avoid a protracted and painful price war with competitors.
“’New school’ super administrators will recognise the value of the customer; provide customer-focused technology solutions; simplify super while ensuring people are at the centre of process; provide an innovation pipeline to power future growth…”