Welcome to that super show, the podcast. We talk about all things super from the inside. I'm Neil Benson, founder of Novagentic.

And I'm Sarah Penn, CEO of Mayflower Consulting. Each week we unpack what's changing in the industry, what funds are wrestling with and how tech and regulation are shaping the landscape.

Sometimes we bring in expert guests, but mostly it's just us having a real conversation about how super is working and what could make it even better.

Let's get into.

Sarah.

It's only been a couple of days since you asked for conference. How was it for you?

It was a lot of fun actually. I had a great time reconnecting with everybody.There was more than a thousand people there, which was fantastic because it cost a lot of money to go, so I want to see a lot of people.

Good.

Had lots of excellent discussions with people and saw some interesting sessions as well. How about you?

Well, I started on Tuesday.I came up, went down to the Gold coast from Brisbane on Tuesday afternoon, really just for the welcome reception and then I went on to the Chandler party. That was very good. And I spent a lot of time with a lot of the exhibitors, catching up with friends and people in the industry.So I just thought I'd call out a few of those. It was great to see Nuvigi and catch up with Ash and Anthony and Rob and Kevin there. So shout out to those guys.You and I met Rachel from MUFG and learned not to call it Muffchee.

Yes, we're not allowed to call it Muffgi or mufug.

Mufu.

Interesting conversation about why they have a platinum sponsorship, a gold sponsorship perhaps. No stand and instead they choose to sponsor the opening keynote. So it's good to catch up with Rachel.I spent a lot of time with Joel and Mike in the IQ group. I did my bioimpedance check at the AIA stand. Did you try that?

Sadly, I did. Sadly, I'm not Benjamin Button, unlike you.

Well, just for the record folks, I am 9 years younger than I look according to AIA, so thanks very much the guys there. Anybody else you saw of interest in the exhibition hall?

Oh, exhibition hall wise, I did get an excellent umbrella from the AIA stand.I spoke to so many people, ran into lots of people I've known for a long time, had lots of other excellent conversations with new people and I cannot remember any of their names. Absolutely not. But I have sent everyone. I caught up with a message on LinkedIn, I think, so that's my attempt at, you know, there's A couple of.

People I'd love to get onto the podcast to chat more about what they do and the value proposition they have for a superannuation. So we had Aaron from willd.

Yes, I spoke to him too. Very interesting. Yep, good guy. Made me think I should go and look up that business myself and fill some things in.

Very good. With Ben from Super API. Have met before. And then Sarah and Marielle from Estate Exchange. Yes, that's interesting business.

It is a very interesting business. And they have a fascinating backstory, actually, about how they came to be doing what they're doing. Hey, Zen, lovely to see you.Would you like to introduce yourself?

So, Zen Elhasan. Now, I've got many titles, but the one that I really like at the moment is Regulatory Engineer. Ooh, sounds very exciting, doesn't it?And the reason for that is in terms of like tech and innovation, I just want to mention two things. One is chatbots, which are being used in financial advice. And so I was working with a sort of a new innovator in that space.And they've got algorithmic based digital advice modules which they use in Super.And they were experimenting with AI and they created this chatbot which would then sort of get the financial advice that was generated by the modules and better explain it to customers.

Nice.

Yeah, it was really interesting. And they sort of said, well, okay, well can you have a look at it and can you review it to see whether it complies?And within five minutes of reviewing it, I broke it. And in real time they went in and fixed it.

Wow.

Yeah. So the technology is so agile that literally in real time you can go in there and fix it.So that was the first thing and eventually it sort of got to market and so it's actually currently available in market as a chatbot that aids digital financial advice.

That is very cool. What's the company? What's your company? You didn't say. So Zen is a lawyer. Your official title is.

Oh, I'm a partner in Mill Soakley.

Excellent.

And what's the name of the company that's doing this chatbot thing?

Otivo. Otivo, It's Spanish and means. Oh, I don't know what it means, but it's a fantastic organization.

We'll look it up.

Yes, indeed. Now the second thing I want to mention is using AI agents to transform regulated activities.So multi agent, centrally governed and orchestration between the agents to perform activities that compliance teams and operational teams.

Yeah, right before. Have you seen anyone doing this yet?

Yes, well, I'm working on it right at the moment. So last week I was given a demo of a breach reporting process using 10 different AI agents. And they. Yeah, it was amazing.And they sort of took me through the process of, you know, getting the facts which were the incident, and then sort of going through the process of determining whether there was a breach, whether it was significant, whether it was affordable.

So it's a different agent or bot for each stage. What was.

Yeah, yeah, yeah. So there were 10 different stages.

Right.

Including a compliance stage at the end of it. And it was really, really interesting. So I'm sort of working with them. They're called Alpha PI, Greek letters. And of course, darling. Of course.And it's really exciting. And I think that is the future of regulated processes in superannuation and more broadly in financial services.

Fantastic. Well, it's time for afternoon tea here at the ASPA conference. Thank you very much, Zen. That is some big ideas to think about. Thank you.

Thank you.

Tell us about some of the sessions you went to. You got to go as a delegate and sit in some of the sessions. How are they?

I did. There were some good ones, actually. What have I got to report? Firstly, APRA are still not happy. It's like being told off by the principal.I know you're all up to something. Year nine. I don't know what it is, but when I find out.

Are they looking for somebody to snitch?

I think, yes. What else did I learn? The opposition doesn't have any super policy. They did a short.O' Brien did a video during which he basically just sort of gave the impression that he thought that we didn't get what super was about and then bagged out Labor Party, which is fair enough, but he didn't have anything to say to counter said Labor Party bagging out. So I would have preferred to see some kind of policy, you know, a written down thing of what you. Anyway, nevermind, move on.

We're many years away from an election, so get into it.

Yes, no one cares. Yes, that's right. We saw Dan Molino, he was quite good.Although he did say, say very annoyingly that DBFO tranche 2 is still a while away because he's still tinkering with it.

That's what I heard. So there's a little bit of frustration with the pace at which Tranche two is going to come along.And this is the implementation of the recommendations that Michelle Levy made in her review of superannuation advice, financial advice generally, not just.

Yes, the financial advice, the Levy review, quite some time ago.Now, actually, so it was all about the getting rid of statements of advice, nudging and this sort of class of mini advisers, although it's all just still a bit unclear.But the part of that that everyone in super industry is waiting for with bated breath is mostly is actually the nudging, which is basically the thing that it will make it enshrined in legislation, hopefully, to say things like, dear Sarah, lots of people who are 50 are thinking about retirement.Here's some things you might think about and having it sort of carved out, that that is not personal advice and the fund will not get in trouble for using the fact that they know that I'm 50 to write something to me about the fact that I'm 50.

Ian Knox from Optivo Today made the point that that review was conducted a couple of years ago and it was on the basis of the financial advice market from many years ago. And the digital advice is going to overtake a lot of the reviews and recommendations.And the action that we're taking because the pace at which AI is improving means that digital and robo advice is just going to be so good in the next year or two or even today that, you know, nudges and things are just going to be overtaken. So it's going to be really interesting space to watch.

Yes, I completely agree and I think one of the, one of the reasons people still go the, you know, the. What about. But. But what about empathy? What about, you know, talking to a real person?But the point is, if you're talking to a financial planner and they've had a bad day, they are going to struggle to show you any empathy. Whereas AI can be trained and AI, so long as it's well trained, does not have bad days.

No.

So, yes, I think that is going to be absolutely fascinating and I still.

Think there's a great place for Australia's financial advisors, but there's only 15,000 of them. It's not enough and there's not enough and they can only serve as about 100 clients a year. Even with.If they adopt AI, then maybe double that, maybe they can serve a couple hundred people a year.

But.

But there's way more retirees who are looking for help, so we cannot service them all with a real human.

Yes, absolutely not. It's just unworkable. It's unworkable for a real human. Not just advice, but also actually what we're seeing at the moment.If lots of people are calling the call centre, it takes ages to get through, the lines are long, the Wait is long.If it could be much shorter because you could talk to an AI agent that was able to show empathy and give you a good chunk of the info that you needed, well then, you know, happy days.

What other sessions did you go to?

I went to various other ones. I must admit, I did do a little bit more of hanging out in the Expo than going to sessions than I have done in previous ones.But I think one of the my other real take, my other big takeaway, my big idea takeaway from it is which we all know if you think about, but the expectations of retirees or what people want from their fund when they're retiring or heading into retirement is so different from what they want from their fund when they're just accumulating and not thinking about retirement.And at the moment we're still seeing retirement as kind of being from an operational perspective, as being something that same call centre does, the same product people do, the same marketing people do, just another set of products, same advice people do. It's just another set of products.And I think we need to start actually pulling that apart a bit more and really thinking about whether when we think about retirement we need to come at it completely differently rather than just trying to modify accumulation to be what retirement needs. Because that just doesn't work.

Yep. I love your idea of having a superannuation fund that specializes in accumulation.And they are great at engaging younger members, helping them with the contributions, helping them with their investment strategy and seeing them on the way to retirement. But when it comes to that point, there's a different superannuation fund that specializes in retirement that helps you with that transition.Tell us more about this idea. I love it.

Yeah, so you could have a fund that literally just does retirement. It would just look completely different. And there's a whole lot of other things that play into that as well. A lot of people.That was one session I went to Linda Elkin.She was saying that in the fund that she's on the board of, they've done research and found that on average people wait to claim the age pension about a year and a half or something later than when they could have started claiming it. And as she rightly said, no amount of fiddling around with investment returns will get members in that fund.Cause it was a low balance fund anywhere near the money that they are losing out by not getting the pension for a year and a half.And so while we talk about, oh, best financial interests, duty, if you had a retirement only fund, you could help every single member make sure they were maximising their age pension.

So that's not just transitioning from accumulation to an account based pension a year and a half later than they could have.

No, I mean the government pension claiming.

The age pension from the government.

Yeah, the government pension. And so people are just missing out on huge amounts of money.

They don't get back paid.

No, you don't get back paid. And for. And some of these funds, a year and a half of pension money is say for a couple a year and a half is what, about 60k or a bit less than that?That may well be more than they have in their entire super fund. And so no amount of fiddling around with getting an extra half a percent return makes up for that lost money.So I think it was things like that that made me start to think about if you just had a fund that was just for, was just for people in drawdown, you would manage it different.The post retirement IBRC conference that I was at a little while ago, they were talking about the CEO of State super was talking about the impact of volatility on accum versus decume.And in accumulation volatility means you end up with more money because of the meths and in decum when you're regularly taking money out, you end up with less money. So smoothing things out is incredibly important in retirement and incredibly unimportant or the opposite of important in a cum.And there's just things like this that they are so different. Which just made me think about what you could do if you had a fund that was just for retirees.

Yep. So yeah, I like that idea of disaggregating the specialties that we see exist.

Inside super would make doing a retirement income covenant damn, so easier.

So when I grew up in the UK there were big banks that offered insurance and we called them bank assurance. They did both. And then we realized in the 90s and 2000s it was a really bad idea and we should split them apart.So we ended up disaggregating these organizations. And I think it's a really interesting thought experiment.

Yes, I think it's the thought experiment which is helpful because there's reasons why it's hard to actually disaggregate a cuma from pension.But the thought experiment is interesting because it makes you think about if you were starting from scratch, what would you do and how would you do it differently and what would you have on each side of the fence and where would you maybe have shared services versus where would you have completely separate, separate parts of the machine?

So there must be some funds that have quite a young cohort.

Yes.

Even though they're quite big, they might have millions of members, but if the average age is in their 30s, the number of retirees they're seeing every year is dozens.

Minuscule.

It's not very big.And they're all rushing around building retirement solutions, trying to calculate annuities for the handful of members that need those products every year, rather than just saying, actually, we're not going to be a retirement fund, we're going to flick them over to somebody who's much better equipped to deal with them.

Yes. I mean, in some ways, I think the retirement.The principles that APRA have put out, the draft that I've seen says they recommend, not recommend, they suggest that funds should have three different retirement products.Now, if your fund is primarily young people, if you're building three retirement products that you're going to end up with no customers in, where is the best financial interest duty on that? Like, it's. No, it's just impossible. You can't possibly demonstrate.And then you end up with this horrible conflict between what the regulator's telling you to do on one part, which is get an excellent retirement ball, singing all dancing suite of things. And on the other hand, you've got to meet best financial interest duty and they just conflict.

Oh, that's a fun industry to work in.

I know, isn't it? That's why we've got a podcast.

I

am Sean Branston. I look after retirement and wealth business at tao.

And how are you finding the ASPA conference? Are you having fun?

The conferences like these are always great and the best part about it is getting to see all the people that you are mainly only see two or three times a year. So it's great bringing everyone together and doing a bit of learning at the same time.

I agree. So here's our question for you, young Sean. How will the way Australians retire change by 2040?So in 15 years, how is retirement going to look different? What do you reckon?

I think it's going to be very different in 15 years. I think Australians will have a lot more to be optimistic about when they retire.Most Australians would have had decently high super contributions for most of their working career and, you know, hopefully that is then seeing what the ambitions of the system is and letting people have more discretionary money to spend in retirement and really enjoy their retirement. I also think the way that people retire will be a little bit different.You know, I do think people are going to return to work probably a Couple of more times before they actually finalise their retirement. They may even retire a little bit early and then jump back in.We are expecting that people are going to live longer and as people get used to that, they're going to find that their lifestyle that they have in retirement is going to vary quite a lot and they'll go through different periods and want to do different things. And I think part of that will be, oh, yeah, I might jump back in the workforce again.

I will be 65 in 2040, so I'll be retired. Will you be retired in 2040? I'm 50 this year, so it's easy to figure out.

Well, actually, I hope to be retired, but I think I'll also be one of those people who may retire but then need to do something.

Oh, yes. I won't be sitting still.

Yeah, yeah. But I won't have met the age, pension age yet. I'll be a fair few years younger than that.But I'm hoping I'll be at a stage where my wife and I will be getting a bit more free time to choose what we want to do, but not officially retired from the workforce.

That sounds good. Thank you very much, Sean. Hope you enjoy the rest of the conference.

Thanks, Sarah. Have a great day.

Sarah. One of the interesting sessions I went to was Simon Kustenmacher, who's an old colleague of mine from KPMG days.So he and Bernard Salt have set up a consultancy called Its Group, I think call it X now. His X feed always had some great charts in it. Australia's favorite demographer.He painted a picture of Australia's population and then I think, was the population 20, 40, about 15 years from now and how obviously we're going to age.One of the numbers that struck me was there's going to be twice as many people, I think, aged 80 or 85 in Australia, from 800,000 at the moment up to about 1.6, 1.5 million. That's a huge number of people who are all going to be needing help and support and care. Yeah, it's going to be.It's going to be tough because we don't have the people to provide the care.

No, no, we don't. We don't at all.I think a lot of the current discussions about immigration levels and things are completely missing the point that the people who are complaining now are the ones who are going to be going to be needing that care in 15 years time and wondering where on earth all the people are. But maybe that won't matter. Maybe AI will solve it all. We'll all have robot companions and there'll be no problem.

That would be amazing. Speaking of which. Well, he did. Ryan brings a lot of humor to his presentations.He does painted a picture of each of the generations and some of their defining characteristics. And I don't know how I felt, but he picked Gen X absolutely spot on.Some of his observations were, you know, we're latchkey kids where we used to get sent out after school by our parents, come back for dinner when the street lights come on. That kind of, you know, growing up in the 70s and 80s, I felt extremely heard.He also said we're absolutely dreaming if we think we're going to be working four day weeks. We crushed that dream.

I know. I thought that was dreadful. That was not an inspiring way to end the conference.What's funny though, I was impressed that he put Gen X on the chart at all. My daughter thought that boomers were, was my parents generation and you and I would be baby boomers because we were the babies of the generation.

So it's a really interesting set of characteristics, especially what that means for millennials. Anyway, we've got a huge population coming through. They're quite a big cohort, the kids of the baby boomers.And I think a lot of them are going to retire with substantial mortgages. We're already seeing people are talking about 30, 40 year mortgages, 50 year mortgages. I think Donald Trump was 50 year mortgage.You know, a lot of people are going to be heading into retirement with a nice superannuation balance, but also half the mortgage still getting, you know, paid off. So it's going to be really interesting times ahead.

It will, they will have, and a lot of people won't have a mortgage at all because they will have rented their whole lives and they will have a substantially bigger superannuation balances in real money than we do now. Because we started, I think I was 17 when super came in and was 3% at that point. And it's 12 now, which is amazing.But these people will have 12 for most of their 12% for most of their working lives. So it'll be a completely different mix by then for a lot of people in terms of how much money they've got in super.Whether they've got a mortgage, the size of the mortgage and how that's going to look is going to be quite different, which I think will really change the mix.And in fact I saw a stat somewhere else a while ago actually, but it said around that time is when we're going to hit the point where the amount of money coming into the super system is the same as the amount of money leaving the super system.

Oh.

And yeah, so when you get to a very balanced, balanced system, eventually you do get to the point where the money coming in and the money leaving aren't dissimilar. And that's a completely different looking beast from what we have now where we're still primarily in accumulation.We keep talking about this wave of retirees and the wave of intergenerational wealth and blah, blah, blah, but that's been, that's been talked about for quite some time yet and it hasn't really hit well, certainly not in the way that looks on a chart.

So that tipping point of inflows and outflows, what you're saying is the contributions coming in from people working.

Yep.

And the outflows from people in their retired lives decumulating.

Yes.

Will be equal, but there'll still be growth in the system, right? The growth of the asset values themselves.

Yes, yes. So the asset values will continue to grow, but yes, there will come a point when they get to the tipping point.And in fact there's already, there's actually only a, a small number of funds now that meet all three of APRA's sustainability requirements, which is I think over three years that it's net inflows, net new account numbers and net rollovers all being positive. There's only a handful of funds that meet that already.So the number of funds that are in positive on all those 3 in 10, 15 years time will probably be even smaller than it is now.

My name's Jane Couchman and I'm the Chief Risk Officer and Executive of Sustainability at Aware Super.

It's good to see you here at Ask For Conference. Jane. Thanks for joining us for our series of one minute interviews.Your question is how do you build a culture that balances compliance and innovation?

Oh, great question. I think you've got to start by being very clear what the strategic purpose is of the organisation.So you've got to start with that and from that you can then have a really good and engaged conversation with your executive and board around.Well, what is the risk appetite that you're prepared to have to be able to support and enable that strategy and that then allows you to build the right culture around that. And culture is a very deliberate and multi pronged approach.I think, you know, you've got to look at it both in terms of being really clear how we do things around here. It's what gets done every day.And then you use various mechanisms to reinforce that, whether it's through the tone from the top in your corporate communications, both internally and externally, how you reward and recognise the processes we go through and when things go wrong.But you need to make sure, I think with the appetite that we're clear where we actually are happy to take on risk, some risks actually in a deliberate and informed way to be able to get the strategic advantage.And I think if you've had that deep conversation with your board and exec and there's alignment, it then flows through into the mechanisms to have a culture that is actually aligned to both making sure we meet the regulatory and compliance requirements and manage the risks in accordance with the appetite, but also drive the innovation. You need to drive that strategy.

Thanks, Jen. Are there any examples Mower super you can share with us?

I think probably the big one was our very deliberate decision we made to internalise administration and to digitise the processes at the same time. There's a huge amount of risk in doing that because you're building your own internal capability.But we knew there was huge advantage for us in doing that to be able to really make sure we had the best possible member experience as well as member protection.So that was a good example of where we absolutely did a huge amount of innovation to be able to have an in house administration that was all digitised. I mean we have 96% of our interaction points are digitised, but as well as lots of moments of personalisation there as well.One that I think I'm very proud we did very safely and sustainably that has been tested on multiple occasions through the various Prudential Reviews audits we've done.But also actually things like the cyber stuffing incident as an example where we were tested but thank goodness we weren't able to be penetrated, which was good. So I think that's a good example and one I'm desperately proud of, that we both got the innovation and the safety in equal measure.

Thanks Jen. Enjoy the rest of us for conference off into the future. The last session we went to was a number of fund CEOs.I think it was chaired by John Leviness, who's CEO of State super. And Diane Stewart from Aware painted this well, she had two pictures of 2050.

I liked one better than the other.

So her first one was rosy as it was 2050. We've all got AI assistants and robots looking after us.The economy's booming, the superannuation system is as strong as ever and everything is fabulous.The other one not There was a big crash in 2040, I think Dan was hypothesizing, and the markets all went to hell in the handbasket and super was done and everybody was. Big spikes in unemployment and entering another massive depression.

Yes, growing your own vegetables, but in global warning when it's very hard to grow them. It doesn't sound good, Nick, let's go back to option A. Yeah, that's right.

Two very different pictures of the future and how superannuation has to be able to withstand whatever shocks are coming. Great run over the last ten years or so. A little blip around Covid, but who knows what the future is going to hold.And the system has to be ready to sustain itself.

Yep. To handle anything. And it has to because it's so enormous.Now that sort of idea of too big to fail during the GFC was to do with individual banks and institutions and things. But I think we're at the point now where the super system is sort of overtaken itself.So yes, I mean there's a lot of people doing a lot of work to make sure that system stability is there into the future in individual funds and at the regulators. I think it's the unknown. Unknowns is the problem now as we're heading into. Because we're only at the start of the AI journey.We're literally only a couple of years in and the impacts of global warming are starting to seriously hit home as well. So the combination of those two things could mean anything.I actually think worst case is it means an amazing existence for a very small number of people.

Quite possibly.

Yep.

I have to say the conference ended overall on a very positive note. That session it did increasingly uplifting, as was Simon's session right before it.And I came out away from the conference feeling, you know, very optimistic about the future. Who knows how it's going to work out in practice. But yeah, it was really good.

Yes, me too. It was a good conference. So, I mean, this is the question, are you going to go next year? Oh, and where is the conference next year?

Well, I correctly guessed Melbourne, Mary was.

You did, you shouted it out. That's right. But yeah, no, Melbourne should be good. Just hope the weather's better than it was this year at the same time. Oh my God.Anyway, I guess it's a convention. It doesn't matter. We'll all be inside.

Anyway, see you mid November next year in Melbourne.

Yes, indeed. Yes, definitely.

And I will see you next week, Sarah. We're going to be at in Sydney for Engage 2025. Looking forward to that.

Yes, me too. A very different sort of conference. Much smaller, much more intimate. Hopefully it goes well.

We'll see you there.

See you later, Neil.

Thanks, Sarah. Bye for now. Thanks for listening to that super show. We hope today's episode gave you something useful to take back to your team.

If you're thinking we should talk, we'd love to chat. You can book a meeting with either of us via the link in the show notes.

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