The introduction of MySuper products is expected to commoditise the superannuation industry. The launch of these products with essentially the same features is expected to continue to blur the traditional lines between industry and retail super funds. Add to that the likelihood of banks and financial institutions cross-selling super to their client base and competition for members will be intense.

Read the full article in Superfunds Special Edition 2012.

Chris Dvoracek contributed this feature about how to ensure stakeholder buy-in to the December 2011 issue of SuperFunds. 

Careful communications is vital to the success of any fund merger. My experience working with funds on their merger communications tells me it pays to follow a seven-step process:

Step 1: Identify and prioritise relevant stakeholders

First, ensure you have a complete list of all relevant stakeholders. Ask yourself, who is potentially impacted if we merge? Then prioritise according to:

• How important the stakeholder is to the success of the merger, and
• How will that stakeholder view the proposed merger?

If you have individuals or stakeholder groups who are critical to success but not expected to be in favour of the merger, it becomes essential to ‘woo and win’ them with extra communications effort.

Fund Boards and CEOs will typically have members at the top of their stakeholder list. Consider segmenting members as for other marketing communications: for example, active members and pension members may view a merger differently.

Next on your list may be participating employers, again segmented, usually by number of members. Many funds use an account structure so that their largest employers get special attention.

Ensuring the ongoing support of your sponsoring bodies – both employer and union – can be critical to preserving the value of the deal. Board members who have relationships with those sponsoring organisations can play a key role with one-on-one, targeted communication efforts.

Your employees are another key stakeholder group – particularly member and employer facing employees. If they are not on board, you risk inconsistent messages getting out into the marketplace. Your employers will ask your field staff what they think and may want reassurance that the merger won’t disrupt existing relationships.

Your employees will need to continue business as usual as well as handling additional merger-related work. It’s essential they understand why the fund is merging and what it means to them.

If the plan is for no job losses then your employee communications are easy: it’s a bright future ahead.

If the merger will mean job losses then you’ll need answers to questions such as:

• Will there be a transition period during which jobs are guaranteed?
• How many and what roles are likely to be made redundant?
• What support and benefits will be on offer for people who are made redundant?
• How will you ‘lock in’ critical employees?

Your communications to suppliers will depend on how important they are to your business and if the relationship is likely to change after the merger. At a minimum, all suppliers will need to be informed. Those who are critical to your business will need extra attention.

Sponsorship recipients are similar to suppliers. They are relying on your fund for support. They’ll want reassurance that the relationship will continue unchanged in the short term.

APRA and ASIC will be on your list of interested stakeholders. They need to be notified of the fund’s intention to merge. Other industry or regulatory bodies will also be on the list, typically on a ‘keeping you informed’ basis.

For some funds the government, state or federal, is a stakeholder. If you are a major player in your state, your state government may have an interest in the likely impact on jobs and the local economy. Public sector funds typically require changes to government or state legislation for a merger to proceed.

The media will also be on your list. Announcing your intention to merge is generally done via the media. A media strategy is essential to your merger announcement planning. As well as your ‘Plan A’ for announcement you may need a ‘Plan B’ for early news leaks, or media enquiries fishing for news. You may even want a ‘Plan C’ for if the merger is announced, but doesn’t proceed.

Chances are you have been in discussion with more than one super fund. If so, you’ll need to consider how and when to let your other potential merger partners know you’ve selected a partner, and it’s not them. Doing so respectfully and in a timely way (so they don’t find out via your media release) is important. You may also consider likely negative responses: is there any chance of competitive retaliation after you announce your intention to merge with someone else?

Step 2: Set communications goals and success measures by stakeholder

When setting goals it’s useful to ask what you want each stakeholder to think, feel or do as a result of the merger announcement.

For members the communication goals may be to ensure members believe the merger is in their interests, feel positively or neutral about it and ‘do nothing’. In this case your success measures might be expressed in terms of achieving positive or neutral feedback gathered through the Contact Centre and field staff and/or 100% member retention and/or no loss of members beyond natural attrition.

Where a stakeholder is relatively unimportant to the success of the merger, the objective could be as simple as ‘keeping them informed’ and monitoring them.

Setting your goals and measures up front help you shape relevant messages and determine the amount of communications effort required.

Step 3: Consider relevant communications risks

Steps 1 and 2 will typically highlight several risks. Now is the time to ensure that your merger risk plan captures communications risks, that they are assessed according to likelihood and severity and that you have appropriate mitigation strategies in place.

Suppose you’ve identified as a risk loss of union support, putting in jeopardy the fund’s default status in an EBA that is about to be negotiated. Your risk management strategy may include targeting specific individuals within the union and arranging for the CEO and that sponsoring body’s Trustee Board member to visit the CEO of the sponsor body.

You might anticipate that one of the union’s concerns will be the composition of the merged fund’s Board. Before you meet with the union sponsor body, you need to establish a sellable position on Board composition with your prospective merger partner. You might also do some ‘warm up’ communications with your sponsor bodies, letting them know the fund is contemplating a merger and why.

Step 4: Articulate simple, compelling key messages

Your topline merger story needs to spell out the high level benefits the merger will deliver and why you have chosen that particular partner. Part of the merger story is inevitably about how members win. It needs to be simple to work across all your stakeholder groups.

Your topline story then gets ‘topped’ and ‘tailed’ according to the interests of each stakeholder group.

For employers, will there be more field staff, improved administration systems? What exactly are the wins? Maybe your participating employers already have employees in both funds, so the merger will make their lives easier.

Step 5: Identify suitable tactics, tools and channels

Sometimes this will be about tapping into existing tactics, tools and channels. For members, it’s your website, Contact Centre script, regular newsletter or next scheduled mailout. For employers, it’s about leveraging your existing account structure, with field officers calling and or/scheduling visits to major employers just after announcement.

You may also need to add new tactics, tools and channels. Ideally, you can piggyback off your next member mailout but, if not, you may decide to do a specific merger mailout or targeted print or radio advertising, or even use social media channels.

The extent of your activity and the tactics, tools and channels used will also be shaped by whether you are the successor fund or not. If nothing really changes for your members except the fund will grow in size, your announcement won’t need as much effort as it would if your members are merging into a larger fund they may not know much about.

If you are looking to influence critical stakeholder groups think face-to-face communications or personal contact. This may mean your CEO calling your top 10 employers on announcement day, with field staff calling your other major employers.

The same for employees: they will want to hear about the change first hand from a credible senior leader, preferably the CEO, and have the chance to ask questions.

Step 6: Put together your activity plan and implement it

The most critical part of this is sequencing: who gets told when and ahead of which other stakeholder groups. There is a clear tension between keeping the announcement confidential until the official media release and having trust in employees and long serving loyal providers.

It’s critical you tell your employees ahead of the media – there’s nothing employees hate more than hearing about a change that impacts them in the news. But how far ahead do you tell them? You need to balance this with the risk of a leak. Don’t forget that your managers will want to know ahead of staff and they’ll need to be equipped to deal with questions from their direct reports.

Now you execute the plan. If you’ve done your planning thoroughly, everyone involved in the communications effort should be clear about the activity, who is accountable for it, when it happens, the key messages and any supporting communications pieces required.

Step 7: Use feedback and measurement to refine ongoing efforts

This last step is simple, but effective. Don’t forget to include de-briefing on activities and to gather feedback and measure effectiveness as you go during implementation. That way you can refine your ongoing communications and improve effectiveness.

For example, have your CEO and HR debrief with managers after announcement: did staff have questions or concerns that weren’t anticipated? Monitor Contact Centre enquiries. Ask field staff to get feedback from employers. This will mean you can act quickly to adjust your communications as required.

Tips for success

• Tell your people ahead of the media. Make sure your employees know about the announcement before your media release goes out. You’ll lose trust and credibility otherwise.

• Make field staff your eyes and ears. Ensure they gather feedback from your top employers and members quickly in week one after announcement. Feed that back into your ongoing communications and act to address any issues or concerns.

• Use credible, senior, trusted spokespeople. Select your spokespeople carefully and train them, particularly your media spokespeople. Equip them with Q&A guides and ensure they know the topline story backwards.

• Be consistent. Make sure you have a consistent topline message across all stakeholders and that it doesn’t fall apart in the detail. For example, if your media Q&A says no job losses, then that’s got to be what you are telling staff.

• Be aligned. Typically the merging funds issue a joint media release, with spokespeople appointed from both funds. Share your communications ahead of the release, agreeing consistent key messages, even if they are expressed slightly differently.

Chris Dvoracek, Director, Transform Consulting, has assisted with the mergers of Westscheme and AustralianSuper, Health Super and First State Super, CONNECT Super and Cbus and TISS, FIRST and PPWSF to create First Super.

Super is a critical investment for most people and although someone may be disengaged today, they may choose to engage at a later time. The availability of relevant and up-to-date information for all members is crucial.

Disclosure of the features of MySuper products will also present challenges for funds. The regulators are likely to take a particular interest in the disclosure of fees and insurance and how investment returns are presented. MySuper product providers will also be required to disclose a forecasted target return over a rolling 10-year period as well as the level of risk they have deemed appropriate.

But it is not only MySuper that has member communications implications. SuperStream reforms will see any accounts with less than $1,000 automatically consolidated to the current active account unless the member opts out. ASIC will consider what opt-out disclosure might look like.

The disclosure of investment portfolio holdings is also likely to be impacted by the reforms. Some funds already disclose major portfolio holdings on their website, others provide this information only to members who request it. ASIC may seek enhanced disclosure regarding major portfolio holdings and, as a minimum, for these to be disclosed on a fund’s website.

At present the Stronger Super reforms are only draft legislation. Transform Consulting is carefully monitoring the reforms in order to ensure that our clients are well placed to meet the demands and opportunities that the reforms will present.

The Standard Risk Measure estimates the likely number of negative annual returns over any 20-year period using seven risk bands, ranging from very low to very high. Although its use is not legislated, APRA and ASIC expect that fund trustees will apply the Standard Risk Measure when reporting investment risk to members.

From 22 June 2012 trustees should, at a minimum, include a summary of the risk of their default investment option (or if not relevant, a specified alternative) based on a Standard Risk Measure in their Short form PDS. Trustees may include extra risk information within the Short form PDS or incorporation by reference material but the new Standard Risk Measure is the minimum risk information that must be included.

For disclosure purposes, the Standard Risk Measure means the relevant Risk Band number and Label as set out below.

To provide consistent disclosure to members, funds also need to consider incorporating the Standard Risk Measure into other member communications. For example, in investment newsletters, website information and commentaries.

Superannuation fund trustees will need to implement their own processes for categorising risk under the Standard Risk Measure but Transform can assist you in how best to incorporate the Standard Risk Measure in your Short form PDS and other communications. Please let us know if you would like assistance.

If we have already produced or are currently producing your Short form PDS, we’ll be in touch shortly about how best to incorporate this update for you.

Previously, there was a question as to whether the provision of retirement forecasts to members constituted personal advice. The ASIC regulatory guide and class order relief (CO 11/1227) explains that retirement forecasts will not be regarded as personal advice as long as the forecast is given at the same time as the member’s periodic statement and is included in or accompanies the statement. The member’s estimated retirement benefit must also take into account the required variables and use the default assumptions and mandatory content contained in ASIC’s Regulatory Guide 229 Superannuation forecasts.One of the most common questions members ask is “Will I have enough super?” Personalised retirement forecasts are an excellent way to help members answer this question for themselves and think about and plan for retirement. The ASIC guidance gives super fund trustees certainty about the use of retirement forecasts to assist members achieve the retirement they are seeking.