Funds chase Gen X and Y with tickets, travel prizes

SUPERANNUATION funds are resorting to throwing parties, giving away overseas trips and helping their members meet celebrities to attract young customers.

By InvestSMART · 22 Sep 2012

By InvestSMART ·
22 Sep 2012

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SUPERANNUATION funds are resorting to throwing parties, giving away overseas trips and helping their members meet celebrities to attract young customers.

AustralianSuper, recently sponsored the reality television show The Voice, and offered some of its members tickets to the finale and a "meet and greet" with judges Seal, Delta Goodrem and Keith Urban. It also paid for a trip to Kenya for the winner of its Kick Start competition.

The fund said no members' fund profits were used to advertise the show on its website. "We believe that partnering with The Voice to offer the Kick Start competition helps connect with young people and gets them more interested in their financial futures," it said.

CareSuper also threw a party for its young members in June at Melbourne's Campari House, complete with canapes, alcohol and gift bags. The former Olympic swimmer Giaan Rooney was a guest speaker.

The head of super at research consultancy CoreData, Kristen Turnbull, said such giveaways were aimed at drawing attention to super brands as more people moved away from joining their workplace's default fund and became selective about their super.

"These short-term incentives are really just trying to get people interested in super, which is, let's be honest, not a very sexy topic," she said. "It's about trying to make people more aware of their super, educate them a little bit, give them some short-term incentives to pay attention and then hope that will result in increasing engagement in the longer term."

Funds were increasingly competing for their share of Generation X and Y members as the ageing population made long-term growth a new battleground for the super industry.

"As the baby boomer generation moves into retirement, they're going to start drawing down on their superannuation nest eggs and funds are recognising it's really important to have a balance in getting that growth at the younger end and younger people into their funds," Ms Turnbull said.

She said funds were tapping into the fact most people - particularly younger workers - tended to join a new super fund when they changed jobs, without closing down their old account.

Ms Turnbull said competition between super funds for younger members would heat up in the next few years as the industry shrunk. A CoreData white paper forecast that the number of Australian super funds would fall by 40 per cent by 2020, with many looking to merge and some planning to take advantage of a broader demographic customer base.

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Frequently Asked Questions about this Article…

Why are superannuation funds offering parties, travel prizes and celebrity meet-and-greets to attract young investors?

Funds are using parties, overseas trips and celebrity tie-ins to grab Gen X and Gen Y attention and make superannuation more visible. As CoreData’s head of super Kristen Turnbull said, these short-term incentives aim to spark interest, educate younger people a little and hopefully boost longer-term engagement with their super.

Which funds have used promotional stunts like tickets to TV finals and trips overseas?

The article highlights AustralianSuper sponsoring The Voice — offering some members tickets to the finale, a ‘meet and greet’ with judges Seal, Delta Goodrem and Keith Urban, and a trip to Kenya for the winner of its Kick Start competition. CareSuper also hosted a young-members party in Melbourne with canapés, alcohol, gift bags and guest speaker Giaan Rooney.

Are member funds being used to pay for these entertainment and marketing activities?

According to the article, AustralianSuper said no members’ fund profits were used to advertise the show on its website. The piece reports funds making statements like this when describing their sponsorships and promotions.

Do giveaways and events mean a super fund is a better choice for young people?

Giveaways are described in the article as tools to raise awareness and nudge younger people to pay attention to their super. The article presents them as short-term engagement tactics rather than a direct statement about a fund’s long-term investment performance or suitability.

How does competition for Gen X and Gen Y change the superannuation landscape?

Funds are increasingly competing for younger members because baby boomers are moving into retirement and beginning to draw down their nest eggs. The article quotes CoreData saying funds want a balance of younger members for long-term growth, and that competition for younger cohorts is becoming a strategic battleground.

What does the article say about people who change jobs and their super accounts?

The article notes most people—particularly younger workers—tend to join a new super fund when they change jobs without closing their old account. Funds are tapping into this behaviour when targeting younger members.

Will there be fewer super funds in future because of this competition?

The article cites a CoreData white paper forecasting that the number of Australian super funds could fall by about 40% by 2020, with many funds looking to merge and some planning to broaden their demographic customer base. It suggests consolidation is expected as the industry evolves.

Are short-term incentives expected to increase long-term member engagement with super?

Industry observers quoted in the article, including Kristen Turnbull from CoreData, say the point of short-term incentives is to make people more aware of their super, provide a bit of education, and give them reasons to pay attention now in the hope that it will translate into greater long-term engagement.