Success hinges on more research, less hype


By Kristen Crawford

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The Australian financial services industry tends to hype up particular topics or ideas that are generally not deserving of all the attention, according to global actuarial and consulting firm Milliman.

“As an industry, we do this quite well,” Milliman Australia practice leader Wade Matterson told financialobserver.

“We hype up topics or particular things, we get a bee in our bonnets and we focus quite explicitly on them as an industry

“From there, we build products around particular themes, only to discover that the customers don’t come.

“We kind of convince ourselves that this is what customers need or want, and the reality is that we haven’t actually tested it with them enough and it doesn’t translate.”

Industry funds that built in direct investment options were one example of a product type that originated in such a reaction, Matterson said.

“The superannuation industry was thinking that was the reason people were going to self-managed supers, because they wanted to directly trade shares in their superannuation accounts,” he said.

“The reality of these products is that [once they were built], they didn’t really experience a huge amount of take-up.”

Similar examples included longevity solutions for super clients, which the industry had talked up, Matterson said.

“Superannuation providers showed particular attention to deferred annuities and lifetime annuities, whereas if you look at the actual sales volumes of those particular products, they’re very, very low.”

Matterson also pointed to the digital advice trend.

“I quite often wonder out loud whether robo-advice is sort of the next piece of that,” he said.

“Are we going to build and invest in these kinds of things and discover that not a huge number of people really use or want to use them?”

The industry had to consider more carefully what and how to build different products, Matterson said.

“That’s not to say that these particular things are problematic,” he said.

“But I think there’s a lot that can be gained from engaging with the end user of some of these services ahead of time, and trying to understand more effectively how they would intend to use these sorts of products and make it part of a broader strategy.”

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