Over the coming weeks, I will have the pleasure of sitting down with many of Australia’s leading FinTech CEOs. Each will be discussing the specific vertical of Financial Services they are looking at and share their insights.
Matthew Parker (MP): There have been a few new “disruptive” superannuation businesses launch over the past 2 years. Why is this happening now? What has created the right circumstance for this to occur?
Josh Wilson (JW): Firstly, the technology is now there to create a super fund affordably. Until 2-3 years ago, everything was paper based and you needed an enormous administrative operation to deal with the paperwork. But the introduction of Super Stream democratised the space making it easier for new entrants.
There is also a social movement which has seen a realisation that there are fundamental flaws with our established superannuation funds, and the industry as a whole. It’s a combination of ideology and technology that was the catalyst.
MP: Expand on that, what do you mean by a change in ideology?
JW: The established players have never had to work for their customers. Compulsory super was introduced in 1992 and since then people have been put in default super funds without an understanding of what they are doing. There is a distinct lack of opacity for what you are signing up for. But there is also no real competition; no-one is building a better, more customer-focused product, and the increased price doesn’t reflect quality at all. The average Australian is falling $330,000 short of what they need in their retirement under the current model, and customers aren’t being told that they’re going to be short. The industry needs to educate customers on what the real goal is of their super and what they need to achieve those goals.
MP: In the context of an increasingly competitive market, why is GROW’s approach different?
JW: I think we need to be careful in this new age of super, with all of these new businesses coming out. If managed improperly, you put your entire retirement at risk. You also need to make sure you’re seeing value. If you’re just slapping a funky app on the front end, is that really enough?
I feel we’ve taken a very different approach to super. We know we don’t know more than the best and biggest fund managers in the world, so we’ve joined forces with them. We chose Dimensional Fund Advisors to manage our users’ money. To put some context around how much of a powerhouse Dimensional are, Aussie Super (Australia’s largest industry super fund) have $100billion under management. Dimensional have more than $600 billion globally. For the average Australian, Dimensional is not an option for them because the minimum investment with them is $1 million. By aggregating our fund together, we are able to give the average Australian access to one of the biggest and best fund managers in the world.
MP: I’m squarely in your target market. I use an industry super, why should I change to GROW Super or any other new super fund?
JW: Everything comes back to the “Why”. What is the ultimate goal of putting your money away? If you’re going to do it, you should do it properly. We want to help everyone get to that number which will help them be comfortable in their retirement. So communicating with them, helping them realise what that goal is and what they need to do to close that gap is vital. Depending on what that looks like, our Super Spare Change feature can really help (it helps save spare change directly into super].
MP: But how are you convincing young professionals that super is something they should care about?
JW: It really is a war of attrition. We’ve been very active and focused on social. We have tried to be witty and engaging in order to break down barriers - super has this horrible reputation of being boring. But it doesn’t need to be that way. Ultimately, if you put enough of the right facts in front of the right people you will eventually make them care, and that is our ultimate goal. Whether they go with us is neither here nor there, but people need to wake up to their super. Being broke is not funny. So it’s about creating brand equity, and then having the facts and results underneath. So far it’s been really well received with nearly 10,000 early adopters and $50million under management in just under one month, so we’re really excited about that.
MP: If the super is being managed by Dimensional, how much control do you / I have over how the super is being invested?
JW: “Control” is a funny word when it comes to super… Globally, only 7% of individual active fund managers perform better than the index, so who are any of us to think we can do better than them? So control isn’t really about what funds you want to put money into, it’s more about controlling whether you’re going to reach the financial goals you need to get to. That being said, with GROW you do have an option to put up to 15% of your super into industries you are passionate about including green energy, sustainability, and industrial tech.
MP: Pivoting the conversation slightly, startups often struggle to hire. How have you built your team so far?
JW: Some people have been with us on this journey from the start. But most people are coming for the “Why” and believe in the mission of the business. We’re really looking for renegades, people who have fantastic raw talent, who are a bit different, who we can shape and grow. We don’t really look at CVs, it’s more the intangibles and oddities that are interesting to us. Everyone here at the moment has approached us (hint).
Check out GROW Super here, and stay tuned for my next blog with another one of Australia’s leading FinTech CEOs.