Reading the tea leaves: simple numbers say a lot about funds

You can derive amazing insights about super funds, their health, and their performance relative to competitors from a deep drill into the numbers.

But even some of the most basic data can tell you quite a lot about what a fund is thinking about – or should be.

For example, consider member metrics. You can see an example for QSuper, which is available in the sample slides for the Tria Super Funds Review under the Research tab at the top of this page.

– Member numbers: these are correlated with a fund’s costs, and although there are diminishing returns, reaching 100,000 members is an important milestone. So if a fund has less than 100,000 members, they are likely to be thinking about their cost structure and / or gaining additional scale. This will be especially the case if they are vulnerable to significant member losses from auto-consolidation.

– Average balances: funds with average balances above $50,000 typically have a lot of high value members (balances of $100,000+). This can also be true of very large funds with lower average balances – the percentage of high value members may be small, but in absolute terms there can still be large numbers of them. Both types of funds are likely to be concerned about the loss of members to SMSFs, and to be thinking about premium or SMSF-like offers, and advice.

– Pension members as a % of total members: where this measure is 2% or more, the fund already has a significant proportion of older members. Keep in mind that there may be the same proportion of members again (or more) aged 60+ who are still in the accumulation division. These members account for a much larger proportion of assets because they typically have the largest average balances. Funds in this category will be thinking about retirement income products, the need to manage volatility for the increasing number of members approaching retirement, and the provision of advice.

The above is not universally the case of course, and it is only scratching the surface in terms of the insight that can be achieved. But it does demonstrate that for analysts and suppliers, even the headline numbers can point you in the right direction in terms of what funds’ needs and interests are likely to be.

Members are no longer homogenous, if they ever were. They are certainly diverging rapidly now. This means that as funds try to keep up, the products, services, advice, and technology required to cater to changing needs is expanding and changing just as quickly, creating new opportunities for creative suppliers.