Commentary on the Royal Commission
In February the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was tabled in Parliament.
In keeping with smartMonday’s approach for honest, no-nonsense communication we made a commitment to members to provide a considered response. We are delighted to be able to fulfil that promise in the most open forum we have, our website.
While our internal team evaluated the Commissioner’s report we believed there was also a need to supplement this with independent analysis. smartMonday enlisted the services of leading global advisory firm to garner unfiltered insights.
That summary decided to consider three headline areas
- Governance and the regulatory environment;
- Member engagement and financial advice;
- A greater focus on member outcomes.
Devoting two of their three focus areas to members underlined the important weighting that fund’s must allocate to members. This is a view smartMonday has always shared, as we continue striving to provide enhanced customer outcomes every single day.
Not with big leaps, but with smart, easy actions.
A greater focus on member outcomes
The Commissioner’s report proposed that all super funds should undertake an annual member outcomes assessment against key metrics including fees and investment performance to ensure members are provided with a competitive default product against alternatives. It was recommended this would take place independently, at least every three years and would cover all investment options offered by a fund.
Publicly available research from KPMG states, “This should form the key tenet for the ongoing viability and sustainability of funds going forward.”
smartMonday fosters a culture of financial wellbeing for our members. We know that investment performance is an important member consideration and we’re proud of our global investment pedigree in this area. Over a three-year period up to 31 December 2018 the majority of smartMonday’s investment options outperformed their respective medians. Performance information is readily accessible on our website, but we’re taking steps to give more prominence to investment performance so that all members find it even easier to understand how we are performing in this area - any day of the week, rather than every three years.
Alongside investment performance, fees will always be an important differentiator for members. smartMonday’s maximum investment management fee for MySuper is 0.28% - which is positioned considerably below the industry median of 0.85%.
We remain resolute in ensuring every one of our members can understand their super performance and track their outcomes clearly. As well as enhancements to our award-winning website in 2018 we also launched an interactive statement summary for members to easily and quickly interact with their financial position. There will be further changes to the website, and to our member communications as we listen to feedback from our most important stakeholders - our members - to ensure we are providing the best in breed member experience.
Member engagement and Financial Advice
The Royal Commission highlighted the importance of assisting members with financial literacy to enable them to make informed decisions regarding their superannuation fund.
smartMonday has always believed that member education and greater interaction will help bolster outcomes within superannuation. It’s why we invested in establishing the 8 Habits of a Financially Fit Human seminar series delivered by our smartPartners. It’s also why we launched our nest content hub which houses podcasts, feature stories and smart, easy actions on key financial topics.
It’s programs like these, alongside our quarterly financial education newsletter Monday Matters that are the building blocks our members can continually utilise to grow their financial wellbeing.
smartMonday remains an industry-leader in member engagement, supported by an active member ratio of 92% which according to APRA research from June 2018 is materially higher than the industry median of 81%.
Despite that we acknowledge there is always greater work to do to help members more holistically grasp their understanding and control of money matters and we’re energised by that task.
Our team’s goal is to accelerate the delivery of best outcomes to members across every step of an enhanced, simplified super journey to help individuals better negotiate and understand the individual nature of their super journey.
Governance and the regulatory environment
A central theme of the Royal Commission was the requirement to improve governance and increase regulation of trustees to ensure there is independence in the decision-making process and members best interests remain at the centre of all trustee decisions.
The Commissioner proposed:
- Fund trustees should be prohibited from acting in any other role to remove any potential conflicts of interest.
- The requirement for trustees to have their performance assessed annually and to demonstrate a professional understanding of the superannuation system and investments (either gained from industry experience or via formal training).
- A restriction on the use of members’ monies, such as sponsorship or corporate entertainment and other promotional activities, which are not directly related to enhancing member outcomes.
- Civil penalties applicable to trustees in breach of their best interest obligations.
smartMonday embraces a continual cycle of improvement, with members always at the core of that decision-making process. Given we’re not affiliated with a union or bank - we’re able to continue to put members first.
The trustee of smartMonday is Australia’s leading independent, specialist provider of superannuation trustee services - Equity Trustees Superannuation Limited - who meet industry best practice and remain responsible for ensuring the fund remains legally compliant and always acts in the members best interests.
The Royal Commission dedicated less than two in every ten submissions to superannuation, but it was a catalyst for introspection.
It served to highlight the conflicted nature of commission-driven incentives and the corrosive outcomes that affords, while underlining the importance of independent, accountable trustees and strong regulatory frameworks.
Crucially it illuminated the need to bolster member education and engagement to empower greater transparency around fees and returns, equipping members with clear, comparable information to drive superior outcomes.
smartMonday remains committed to working in partnership with our members to bolster their financial wellbeing and make their superannuation experience positive, uncomplicated and rewarding.
smartMonday is a registered trading name of Aon Hewitt Limited ABN 48 002 288 646 AFSL 236667 (Aon), the sponsor of the Aon Master Trust ABN 68 964 712 340 (the Fund). The trustee of the Fund is Equity Trustees Superannuation Limited ABN 50 055 641 757 AFSL 229757 RSE Licence L0001458. This document has been prepared by Aon. smartMonday PRIME, smartMonday DIRECT and smartMonday PENSION products are part of the Fund.
Aon has taken care in the production of this document, the contents of which has been obtained from sources that it believes to be reliable. Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that this document may be used and accepts no liability for any loss incurred by anyone who relies on it. In any case, any recipient shall be entirely responsible for their use of this document.