The rapid growth of the self-managed superannuation sector has naturally attracted technology providers eager to tap into its success.
As the acknowledged area of superannuation growth, self-managed super funds (SMSFs) have drawn their fair share of attention in recent years.
Indeed, with more funds under management than any other sector, its appeal to technology providers is obvious, and yet for Darren Stevens, global head of product, wealth management for Bravura, it has been interesting to watch the SMSF technology story play out.
“So what we’re seeing is self-managed super funds and retail providers doing two things,” he said.
“The first thing is creating a wrap-like functionality on their existing platforms and administration systems.”
“So it’s not true SMSF, it’s really saying that the bulk of the reason you might do this is that you want more control, you want broader asset types, so we can provide you with broad equity trading, securities trading, trading on various exchanges and so on,” Stevens continued.
“They’re looking to give customers flexibility in choosing how they can actually manage their money.”
“But, most importantly, they’re putting these things in reasonably rapidly to stem the tide of money out towards SMSFs,” he said.
Stevens said that the second play was best evidenced by the recent moves of AMP.
“So we’ve seen them aggressively buying up and building a self-managed super funds business that sits alongside their existing platforms,” he said.
“It’s standalone, it’s focused on self-managed super funds – they’ve purchased a large administration company to support it and they’ve got a joint venture with a company called SuperIQ, which provides a holistic solution to advisors.”
“So their multi-pronged approach is firstly to have their platforms able to retain the business upfront because they need to maintain scale in those and maintain profitability,” Stevens added.
“But secondly, if it’s going to leak, and if it’s going to leak because of our advisers, make it come to an AMP-based company.”
However, while moves such as those outlined by Stevens are undoubtedly occurring, such moves are made necessary by the key differences in SMSF technology requirements.
In fact, for Wainer, though there were synergies between the large administration platforms and the software employed by SMSFs, the differences were just as telling.
“Some of the fundamental engineering of quality, large scale solutions applies across the whole industry,” he said.
“Whether you’re doing industry super or public sector or retail, the large scale policy engineering is critical.
“However, the delivery mechanism between those points is entirely different, and though the self-managed super fund space is maturing, I’d go so far as to say that we don’t really have a self-managed super fund space yet,” Wainer continued.
“We may call it that, but what we really have is a whole lot of other intermediaries imposed in managing the funds.”
According to Wainer, those intermediaries – a trustee’s advisor or accountant – managed the fund to the point where it was more self-managed investment than self-managed fund.
“What we really have is actually a self-managed investment model,” he said.
“I can buy my own shares and I can buy my own property, but I’m not actually managing it myself.
“Yet if you can harness the $100 million investment from those big technology engines, if you can provide an interface for somebody to really manage their own super, you will then have the next generation of self-managed super.”
The reality, according to Stevens, was that there were very different relationships at play requiring different software and software environments to cater for it.
“So while a lot of the super rules are similar, while it looks similar on the surface, there are distinct differences in those systems,” he said.
“Even so, you are seeing super administrators trying to consolidate that very fragmented marketplace, and they are looking for ways in which the core processing component can be done across those multiple funds.
“And they’re looking at a technology change as well,” Stevens added.
“They’re looking to go from what is typically a small, desktop-operated, highly configurable piece of software into something that is broader and more robust and more generic for those back-office features.
“They’re looking to make it efficient.”