The turning tides of fund member loyalty

A new report has discovered that superannuation fund member loyalty has reached its strongest peak in three years, driven by trust and competitive fees.

The CSBA FEAL Superannuation CX Benchmarking report, which surveyed more than 7,200 individual fund members from over 100 super funds, saw a substantial increase in loyalty among members over the past six months. 

Intention to switch funds decreased from 25 per cent in February and March to 18 per cent in July and August.

This improvement opposed the previous report, which found the likelihood to switch had risen from 23 per cent to one-quarter of members. 

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“The tide has finally turned with loyalty at its strongest in three years,” said Sam Monteath, CSBA CX director of finance.

Australians who are at the highest risk of changing funds decreased from 9 per cent to 5 per cent, the lowest level reported since 2018.

Monteath highlighted trust (26 per cent) alongside competitive fees and charges (23 per cent) as two key factors driving higher member loyalty, outside of performance and returns. 

Looking at specific segments, members with a default investment mix saw the greatest improvement from 31 per cent to 17 per cent across the six-month period.

The intention to switch for members who had been in their fund for under five years decreased from 32 per cent to 22 per cent, while younger members under 55 declined from 32 per cent to 23 per cent. 

Overall satisfaction rose marginally from 7.7 to 7.9 and the Net Promoter Score (NPS) grew 2 points to +17.

Monteath observed that those aged 45–54 approaching retirement had the weakest member sentiment, therefore providing a large unrealised opportunity for funds to improve upon.

This age group had an overall satisfaction of 7.4 compared to the 7.7 average. Meanwhile, Australians in this age group reported a retirement empowerment of 64 per cent, lower than the 71 per cent average.

“The Retirement Income Strategy is an obvious starting point. However, the critical question that trustees must ask themselves is: how much do I know and understand the members in this segment?” the finance director remarked. 

In August, the Australian Prudential Regulation Authority (APRA) was worried that it “cannot be confident” that super fund trustees are adequately implementing the Retirement Income Covenant (RIC).

The joint thematic review by APRA and ASIC revealed that the majority of trustees were yet to conduct an in-depth evaluation of their members’ income needs.

Additionally, no singular fund or trustee had “fully cracked” the RIC yet, APRA deputy chair Margaret Cole said at the time.

Monteath continued: “Now’s the time for funds to act. They need to dig deep using independent qualitative research. This will allow them to understand the attitudes of all their member cohorts, to deliver exceptional experiences that add value and support.”

She added that the RIC presents a significant opportunity for purposeful fund engagement with Australians in or nearing retirement and encouraged funds to provide more personalised services to the middle-aged segment.