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Pension TechWelcome to The Unretirement Era

The global blueprint for pension innovation

Jessica EllermCEO, Zuper

January 2019

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Introduction 3

Australian pension fund digital readiness 5 The sole purpose test - time to innovate 7 Innovation opportunities for startups 9 Opportunities for incumbent funds 11

Welcome to the unretirement era 13

How to reinvent global pensions for millennials 19

Summary 29

Contents

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In August 2017 journalist Teddy Wayne penned a

prescient article for the New York Times

titled ‘Grandpa Had a Pension.

This Generation has Cryptocurrency.’

The article, written at the peak of the crypto

boom, perfectly captured the zeitgeist of a

new generation desperately in search of an

alternative path to financial freedom and

wellness.

While the headline may have been a little

tongue in cheek, for industry watchers

like us it was yet another star in a growing

constellation of research that we had been

collecting over the past two years - research

that pointed to a pressing need to reimagine

the world’s outdated pension products for a

new generation.

Our insights over 2 years ago led to the

creation of Zuper. During that time the

Trump administration has challenged the

foundations of democracy, Brexit has

shaken the global economy & the #MeToo

movement has fractured the ceiling of the

world’s established power structures. This

social upheaval is trickling through into

the financial sphere, and pensions cannot

remain static in the face of change.

It is time to acknowledge the old ways of

creating wealth simply no longer work

relative to how millennials and Generation

Z are choosing to live, and pensions are

part of this. It is time we unpacked the

traditional concept of retirement, and

created a new pension architecture that

creates financial freedom in the here

and now. It is also time to create a new

language around money - one that stops

alienating the majority, and democratises

and demystifies a fundamental human right.

This is our vision at Zuper. To move

pensions from the sidelines and into the

herd of young people’s lives, all over the

world.

We believe this new financial journey will

be underpinned by architecture that is an

interplay of experiential, behavioural and

financial data streams that together will

create personalised, low cost and helpful

wealth creation journeys that enable any

lifestyle choice. This ambition is what must

be on every pension provider’s product

blueprint right now, but almost inevitably is

not. It is most certainly on ours.

The time has come to go back to first

principles in order to uncover what real

innovation in pensions is. Australia is an

ideal pilot market to start this process in,

and from here we can bring innovation to

the world. By open sourcing our thinking

in this white paper with the global pension

community, our intention is to fast track

this process. A rising tide lifts all ships,

and together we can ignite a revolution in

pensions that will change the world for the

better. Let’s get started.

Jess Ellerm

CEO & Co-Founder, Zuper

Introduction

“We don’t actually want to retire and do nothing. We just want to

do something we love.”- Neil Pasricha

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‘The thing that impresses me about Zuper and its band of Millennial co-founders is that it is evidence of “the next generation” taking an interest in, and responsibility for, their financial future. Here is a generation famously critiqued by some for their alleged spend-now philosophy, but who in reality are vitally interested in long term financial security. And this white paper continues the theme of finding ways, and a language, that engages youth in managing the super of ‘tomorrow’.

Bernard Joseph Salt AM, Author & Columnist

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Australians under 30 now have, on

average, more money in their super

account than in their bank account.

Australia’s mandatory $2.7 trillion

retirement savings system is looked upon

with envy by the developed world. While

it may punch above its weight when it

comes to pension pot size per capita, the

system as a whole shows serious signs

of strain, and those bearing the brunt are

arguably Australia’s youngest and most

financially vulnerable.

Legacy infrastructure, intermediary

platform oligopolies and a lack of

C-suite appetite and understanding

around innovation has seen products

stagnate. As a result there has been little

to no innovation on the pension front in

Australia since the the superannuation

guarantee was introduced in 1992.

Innovation aside, a lack of basic

digitisation has resulted in younger

generations becoming almost completely

disengaged from their retirement savings,

with many today tragically ignorant about

their biggest pool of wealth.

Super the biggest source of millennial

wealth

Australians under 30 now have, on ave-

rage, more money in their super account

than in their bank account,1 yet a stagge-

ring 56% of those surveyed in a recent

Mercer report do not believe super is

important.2

To compound this, younger Australians

have little understanding of fees, some of

which are the highest in the OECD.3 They

are often oblivious to insurance products

and premiums wrapped up in their fund,

and, as a result of a higher propensity to

AUSTRALIAN PENSION FUND DIGITAL READINESS

THE LONG ROAD AHEAD

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continued reliance by funds on non-digital

means to communicate with members, a

disconnect from the preferred communica-

tion methods of what is widely considered

to be the ‘mobile first’ generation.

- Only one third of funds use a mobile app

to communicate with members

- Only 15% of funds believe mobile res-

ponsiveness is important when delivering

digital advice

- Less than 30% of funds have started to

implement an enhanced mobile experience

for members

switch jobs, continue to be burdened with

multiple unnecessary accounts, a leading

cause of balance erosion. Nearly a quarter

of 26 - 35 year olds have two accounts,

with a smaller proportion having 3 or

more.4

Super funds lack digital fluency

A lack of engagement from younger

generations on super, how it works and

the benefits it offers should come as no

surprise when we consider a recent 2017

ASFA survey5 into the digital readiness

of large super funds. It demonstrated a

In 2015, the fourth annual ASFA/PwC

CEO Superannuation Survey6 - which

captures the opinions of more than twenty

of the industry’s leaders across a range of

topical issues - found that only 3 res-

pondents named Data Analytics as a key

strategic priority over the next 3 years.

Given we know how important tailored

and personalised journeys are in creating

engagement across all types of customer

journeys outside of super, this highlights

a key strategic vulnerability at the C-Suite

level when it comes to understanding the

millennial market.

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“limit the provision of superannuation

benefits by regulated superannuation

funds to a range of prescribed or

approved retirement or retirement

related circumstances. The test is the

legislative expression of the retirement

income objective which is the key

rationale for superannuation savings.”

The sole purpose test has seen a majority

of funds shy away from, or actively protest

any involvement of super funds in helping

millennials achieve the primary financial

goal they care about the most at their life

stage - first home ownership. Many funds

consider any involvement of super funds

in the housing market a breach of the test

and broader legislation.

While the Australian government has

recently opened the door to bringing home

ownership and superannuation closer

together, via the First Home Super Saver

Scheme,7 the implementation is clunky

and access to funds is limited to money

invested over and above compulsory

contributions. Super funds have been

vocal critics of the scheme, however they

have also failed to publically provide

any alternative proposal, or demonstrate

any serious empathy towards the wealth

creation conundrum young Australians

find themselves in.

Across the ditch in New Zealand, the story

is markedly different with KiwiSaver, the

country’s superannuation equivalent. First

time homeowners are actively encouraged

to use their early working years to build

THE SOLE PURPOSE TEST

IT’S TIME TO INNOVATE

Today many superannuation funds limit

their involvement in the overall wealth

outcomes of their members through their

interpretation of the sole purpose test, a

fundamental pillar of the Superannuation

Industry (Supervision) Act 1993 (SIS).

According to an APRA guidance note,9

the Sole Purpose Test is ultimately

designed to:

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up their KiwiSaver,8 with the intent of

withdrawing practically all of their savings

during this period to purchase their first

home. Speaking to financial professionals

in New Zealand, they indicate it

encourages two types of key life saving

conversations, both of which ultimately

translate into healthy money behaviours

- one around planning your first home

purchase and then another post this,

around income streams for retirement.

With home ownership such a critical

component of the overall wealth and

retirement story, it is counterproductive

for new super funds to continue to ignore

the housing problem, especially when

targeting the millennial market.

Pension Tech to start a fresh housing

conversation

Innovation can come from digital

transformation, but thinking outside the

legal box and creating new frameworks for

the modern world should also be on the

innovation agenda for any new super fund.

The time has come for us to start a fresh

conversation about housing and super, and

what wealth for life looks like - a great

career, mini-breaks, flexible housing and

debt free home ownership. Super funds

brave enough to have these conversations

will be the future of the industry.

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A digitally barren landscape, along with

a Goldilocks regulatory environment and

mandatory contribution scheme makes

Australia an ideal pilot market for Pension

Tech innovation.

Thanks to the near compulsory nature of

the Australian superannuation system,

over 75%10 of Australians are estimated

to be currently covered by pension plans.

This is well ahead of other markets like

the US, where only 47% of the population

is estimated as covered. Taking a cue

from the Australian system, the UK has

seen a dramatic rise in coverage, up from

less than 47% in 2012 to a record 73% in

2017.11

The degree of coverage in the Australian

and UK markets means Pension Tech

startups in both jurisdictions have an

ability to scale funds under management

quickly, with the right go-to-market

strategy and distribution model.

Despite similar coverage levels, the

dynamics of the Australian market are

more favourable to Pension Tech funds

compared to the UK for two reasons - the

high ongoing mandatory contribution

levels under the Superannuation Guarantee

(SG) and the ability for Australians to

self-switch online, enabled by SuperTick

and SuperMatch infrastructure from the

Australian Tax Office.12

The SG ensures steady annual inflows

of 9.5% of an employee’s ordinary time

earnings (wages or salary), and is set

to increase to 10% of ordinary time

earnings by mid 2021. In addition, many

Australians are seeing the benefits of

topping up beyond this.

INNOVATION OPPORTUNITIES FOR STARTUPS

A DIGITALLY BARREN LANDSCAPE

Super funds face a ramp up to get

digitally ready, distracting from deep

innovation.

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1. Super funds face a ramp up to get digitally ‘ready’, which

will distract from deep innovation. Startups who are digital

ready from day one can instead maximise their efforts

towards reinventing the category.

Being mobile ready and data driven are unquestionably the levers

of growth in the coming decade. This is no longer a thesis but a

reality, and many Australian super funds are significantly behind

the eight ball on this front. This places many of the industry’s

biggest providers in a highly vulnerable position. Incumbent super

funds will need to expend significant effort building basic digital

capabilities over the next 3 to 5 years and they will have little

time or executive energy to prioritise deep pension innovation.

On the flipside, Pension Tech startups will be cloud enabled

and highly digitally efficient from day one. While economies of

scale will still be somewhat driven by funds under management,

startups will not face the same embedded costs as incumbents.

This will free them to outcompete on product, and stack the

competitive field to their advantage, plus explore areas like

housing affordability and flexible living.

2. Conflicted and outdated financial advice units attached

to funds are handbrakes and massively increase delivery

costs for funds: Startups leveraging personalisation and

behavioural data will win.

Many incumbent funds have over invested in human led financial

advice capabilities, or non-scalable robo advice platforms. In

the wake of the Royal Commission, these business models

are being increasingly called into question, after a number of

scandals across the sector have created systemic and long lasting

reputational damage.

Millennials now expect immediate intelligence on their

transactional data and ‘Spotify level’ personalisation, as well

as insights into their financial behaviour. Startups who leverage

unconventional data sources to behaviourally profile their

members in order to provide non-traditional financial advice will

x10 their engagement with members. Uncovering correlation and

causation beyond purely binary spending and saving patterns

will transform the digital information and advice quadrant in the

pension and wealth sector.

We see two key opportunities for Pension Tech startups when building out go-to-market and product strategies:

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The moment is ripe for incumbent

superannuation funds to participate more

actively in the innovation ecosystem.

While many funds have made allocations

to local and global venture funds, most

have abstained from building internal

capabilities for self-directed innovation

that benefits them directly. Those funds

that choose to break away from the pack,

and take a more concerted approach to

innovation through direct investments will

secure their future, and pay back to the

next generation and beyond.

There are many case studies of bank

sponsored corporate innovation gone

wrong, so superannuation funds have a

chance to learn from the failures of their

peers and adopt a best practice approach to

Corporate Venture Capital (CVC).

A report titled ‘How the Best Corporate

Venturers Keep Getting Better’, from

global consulting house Boston Consulting

Group,13 has identified 8 key areas that

should be used to establish a framework

for a CVC unit. We have taken each one of

these, and unpacked how they could relate

to an incumbent superannuation fund’s

objectives when implementing a new CVC

unit.

OPPORTUNITIES FOR INCUMBENT FUNDS

BECOME MORE ACTIVE

Funds that break away from the pack

on direct innovation investment will

secure their future.

Our retirement system was originally designed for a homeowning couple working hard during their best years to accumulate enough wealth to repay debts, live comfortably for 20 years, and then potentially leave something to the next generation. We’re not debating the merits of this view of retirement however there is a growing group of people whom the system does not account for, particularly those of the younger generation seeking more flexibility in the life journey they embark on…requiring new solutions and strategies to be developed.

Adrian Gervasoni, Strategy Manager, First State Super

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Identified CVC Best Practice Critical questions Consideration for superannuation funds

Set a clear objective Are investments financial or strategic? Strategic:

Can we use CVC investments to develop multi-product lines for different demographic or lifestyle needs?

Financial:

Can we use CVC investments to deliver returns to members and society?

Define search fields Where will we look and where will we not look for investments?

Are we limited to pension innovation locally, or do we see a global or APAC opportunity, in line with an emerging global workforce and economy?

Select a leader from the outside Who has access to the right networks and technical expertise to lead the unit?

What are the new technologies that will underpin administration, custodial and investment services 5 to 10 years from now?

Hire the right mix of talent How do we achieve the right balance of internal and external talent?

How do we evolve our people to think beyond what we know about superannuation, so we avoid self-sabotage?

Ensure independence How can we ensure the CVC unit has the freedom to think disruptively?

How do we shield our CVC team from business as usual work related to legislative and regulatory fra-meworks (Royal Commission findings, Productivity Commission Report etc)?

Foster collaboration with the business units

How do we establish channels to the wider organisation that ensure our investments scale fast?

Where can we provide immediate scale on distribution and investments capability? Can we leverage a startup fund to implement less vanilla investment strategies i.e. SME lending.

Enable lean, agile, and relevant governance

How do we ensure our management style works with startups, and not against?

Should we be implementing agile training and coaching as the executive level to help create shared understan-ding?

Ensure consistent financing How do we take a long term view to support decision making today?

Can we commit $50M to >$100M to this across a 5 - 10 year timespan?

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Welcome to the unretirement era

Money - or lack of it - is only part of the reason as to why retirement is dying

all over the world. Baby boomers have unwittingly

triggered the end of retirement, and millennials

will pick up the baton where they left off.

Baby boomers are leading the way

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The great ‘retirement’ experiment is coming to an end

The first modern incarnation of retirement that comes closest to

the current global status quo was originally envisioned by German

Chancellor Otto von Bismarck in 1889.

Facing a socialist upheaval, von Bismarck designed a policy that

would see German citizens, aged 70 and over, gain access to a paid

pension. The scheme was funded by employers and workers. But

unlike today’s global pension plans, Australia included, Germany’s

retirement age was relatively in line with life expectancy, meaning

accessing the scheme was less of a universal right and more of a

lottery.

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Since then, the cultural movement of

retirement has swept the developed world.

Like most movements, over time it has

become significantly divorced from its

original German roots and execution.

As a result, the baby boomer generation

has been sold a retirement mirage

of freedom, financial independence,

yachts, sunsets, and the idea of spending

their twilight years in blissful financial

cohabitation with their spouse. For many

younger boomers, the reality is now

falling far short of the marketing ideal.

After being financially battered in the post

GFC fallout, increasingly automated out

of blue collar employment, faced with

record divorce rates and squeezed into the

social security margins of once prosperous

Western nations, many are continuing to

work well beyond older boomers.

The average retirement age in the US,

according to Gallup, is now 62 - the

highest since Gallup’s survey began in

1991.14 A key driver in this increasing

retirement age has been a lack of financial

security.15

But interestingly money - or lack of

it - is only part of the reason as to why

retirement is dying.

It turns out many tech savvy and

physically mobile baby boomers are

seeing beyond the veneer of glossy cruise

brochures and timeshares, and realising

work brings a sense of purpose and

intellectual stimulation that is far more

appealing. According to a study by RAND,

a growing number boomers are now

delaying retirement for ‘fulfillment rather

than finances’.16

“Baby boomers are delaying retirement for ‘fulfilment’ rather

than finances.”

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RAND’s study found more than half of

retirees 50 and older would work in the

future for the right opportunity, with the

figure increasing for the college educated.

To further solidify this trend, RAND found

39 percent of US workers 65 and older,

had actually come back to the workforce

after formally retiring.

Baby boomers have unwittingly triggered

the end of retirement, and millennials will

pick up the baton where they left off.

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New lifestyle choices no longer

suit today’s rigid retirement,

housing and wealth products.

Millennials might not be fluent in

describing the end of retirement as

we know it, but there are plenty of

generational traits and hallmarks that

indicate they have well and truly given up

on the traditional view once subscribed to

by their parents and society.

No longer content with delaying travel and

life experiences for their ‘golden years’,

millennials and the generations beyond

are increasingly drawn to more flexible

career choices that allow them to achieve

fulfillment throughout their lives, not just

at the end of it.

Today we see this new lifestyle clunkily

explained through yesterday’s language

and financial constructs. Countless global

studies allude to the fact millennials want

to ‘retire early’, with movements like

FIRE (Financial Independence Retire

Early) gaining media attention. ‘Retire

early’ is merely a pseudonym for financial

independence - independence that gives

them the choice to work to live, not live to

work, and to pursue a creative or passion

pursuit. For many millennials, work is

‘passion’ once financial independence is

achieved.

What millennials are teaching the world

is that education, work and retirement are

no longer singular occurrences that happen

in a linear fashion. Millennials now wish

to cycle through multiple iterations of

this trifecta throughout their lives. This

lifestyle choice however does not suit

today’s rigid retirement, housing and

wealth products.

MILLENNIALS WILL KILL OFF RETIREMENT

ONCE AND FOR ALL

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We have identified three macro trends that will in some way

accelerate the end of retirement:

Life Long Learners

- A constantly evolving digital workplace that is creating lifelong

learners rather than specialists, and reducing the dependency on

physical labour, which traditionally limited working life.

- Open access to knowledge via the internet and the automation

and optimisation of complex financial tasks, driven by artificial

intelligence.

Flexible Living

- Emergence of the ‘work anywhere’ digital/gig economy native.

- NoOwnership economy.

Mindfulness

- Wellness and health movements that aim to establish a more

mindful connection to living in the present.

By understanding the ways in which these macro trends are

shaping new lifestyles, we can then identify how today’s static

financial products, pensions included, are significantly misaligned

and designed for another world.

The end of retirement has profound implications on product

design, and it is a powerful idea that can be harnessed to spark

new innovations. Like most structural shifts however, it is also a

harbinger of potential irrelevancy for the current set of pension

products and the wealth management market more broadly,

should they fail to be agile enough to adapt to where the world is

going.

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1. 2. 3.Help the younger generations through education and investment in themselves.

Design products around the new ways of living.

Understand and connect values to money.

LIFE LONG LEARNERS FLEXIBLE LIVING MINDFULNESS

HOW TO REINVENT GLOBAL PENSIONS FOR MILLENNIALS

Against the backdrop of these 3 macro trends, Zuper is piloting innovation and new thinking around pensions in the Australian market, with a view to a future global product.

THE ZUPER PENSION TECH BLUEPRINT PILLARS

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“Younger people are waking up to the fact that they will be responsible for their own savings and starting to take an interest.

In the UK, opt out rates from our auto enrolment system are lowest among younger people, and increasingly they are asking how their money is invested.

It looks like the next generation of savers wants to be engaged and retirement systems around the world need to adapt, fast”

Jamie Jenkins, Head of (Global) Savings Policy. Standard Life Aberdeen PLC

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An investment in knowledge pays the best interest.

Lifelong education and continual skills

enhancement is an almost unavoidable reality

for today’s workforce. To remain employable

or to access higher paid, in demand

opportunities, millennials must continually

upskill. As a result, we have seen a global

boom in edutech platforms that cater to micro

learning for millennials, predominantly in the

digital skills arena. While today’s financial

institutions prepare customers for the financial

inconvenience of being out of work via

products like income protection insurance,

none consider how they can help increase the

employability of their existing customer base.

Case Study 1Zuper Wealthness™ program

A more employable member base, with a skill

base that has a higher earning potential should

be what every superannuation fund hopes to

create to achieve its commercial objectives.

Instead of being passive in the sidelines of the

digital workplace revolution, what would it

mean for a pension fund to be active? Zuper’s

Wealthness™ program provides one possible

answer.

Zuper has partnered with General Assembly,

Academy Xi and Zambesi, three of Australia’s

largest and fastest growing edutech providers

to offer members discounts on digital skills

courses through the Wealthness™ program.

The combined value of discounts per member

can be as much as $2500, far in excess of

Zuper fees. The increased earning potential

post course completion helps to maximise a

member’s super balance sooner, and in turn

grows the fund faster.

Tracking uptake and usage of the Wealth-

ness™ program against financial outcomes for

mebers allows Zuper to benchmark internally

and provides differentiation above and beyond

market investment returns.

LIFE LONG LEARNERS

INVEST IN ME1.

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The information highway has empowered millennials to seek out the

knowledge they need to solve problems in an autonomous fashion. It

has disrupted information asymmetries between authority figures and

younger generations, causing them to be more forward and direct in

questioning their superiors and decades old, default behaviours.

A similar desire for autonomy is now being sought by millennials

when it comes to their financial lives - no longer are they content to

take ‘advice’ from traditional financial advisors. They expect their

financial institution to enhance their financial lives similar to how

Google and Amazon enhance and curate online shopping, and Face-

book and Instagram connects them to likeminded communities.

Case Study 2Wealthprint™

To help our members better understand their financial behaviours,

Zuper has prototyped Wealthprint™, a behavioural platform that is

built on top of a proprietary financial behavioural modelling tool.

Behaviourally assisted financial decision making

By combining theoretical knowledge from across the behavioural

psychology spectrum, and pattern mapping across transactional and

environmental data, Wealthprint™ explains to members how their

brain works on money. From there, Wealthprint™ is able to assist

Zuper members develop a personalised action plan to modify certain

behaviours that are potentially causing them financial harm, and

nudge them towards positive behaviours and habits correlated with

financial success. Wealthprint™ is built on the understanding that

an individual’s financial personality is influenced by a wide range

of environmental and behavioural factors, many of which when left

unchecked, prevent us optimising for rational outcomes.

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Location independence as the new norm.

An increasing number of millennials

are opting for more nomadic lifestyles,

building careers and even relationships

around location independence. Along with

rising house prices, this structural lifestyle

change has fostered the emergence of

‘Generation Rent’.

While increased flexibility and freedom

has helped millennials stay debt free,

and feel more fulfilled day to day, in

today’s black and white housing market

longer periods renting carries a significant

opportunity cost in terms of their long

term wealth. Given the downstream

implications on society at large of an

entrenched Generation Rent, now is the

time for new housing products that don’t

financially disadvantage those who chose

to live more nomadically.

We are starting to see glimpses of what

these products could look like. In the UK,

Sage Housing’s new Shared Ownership

scheme allows homeowners to part-buy

and part-rent a property, which can lead to

full home ownership in the future.17 This

ability to avoid a traditional mortgage

and retain flexibility fits well with a

new age nomadic career and lifestyle.

In the US, another fractional ownership

startup Divvy18 allows new homeowners

to purchase any property on the market

with a 2% down payment only. The buyer

then pays a monthly amount to Divvy that

includes both rental and equity payments.

FLEXIBLE LIVING

WE LIVE DIFFERENTLY2.

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Case Study 3 Gradual home ownership

There is no question that many millennials want access to home

ownership, but with a more flexible and affordable model than the

current bank led mortgage offering.

With housing increasingly unaffordable in metro areas, being able to

smartly leverage your savings - whether those savings are inside of

or outside of the superannuation system - is key.

We are currently modelling a gradual home ownership product based

around the concept of co-ownership. The Zuper Home product will

have all the benefits of renting and home buying mixed together. If

you can afford to rent a home, you can afford to buy one.

Sole, partner or group ownership will be available through the

platform along with other powerful offers for 100% green power,

electric cars, telcos and the ability for families and friends to gift

home ownership at birthdays and special occasions.

Working alongside a property platform partner, Zuper members will

have access to preferential offers and pricing as well as becoming

part of the movement to help fund young Australians into flexible

home ownership and move away from bank control through their

Zuper investments.

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The intersection of values and money.

As a result of increased globalisation,

political upheaval and a first hand

knowledge of the effects of climate change

and gender inequality, millennials have a

far deeper understanding of the connection

between money and change. We have seen

this play out already through a propensity

to buy from companies that promote and

live their corporate social responsibility

values.

A 2015 Nielsen study, still widely

referenced, found that 73 per cent of

global millennials were willing to pay

extra for sustainable offerings, up from

50 per cent in 2014 and outstripping

the global consumer average across all

age groups of 66 per cent.19 Deloitte’s

Millennial Survey 2017 also found that

more than 50% of 8,000 respondents said

they feel accountable for social issues

related to environmental protection and

social equality.20

On top of this, countless studies have

shown millennials are actively seeking

out employment at companies that mix

mission and money. A recent American

Express report, “Redefining the C-Suite:

Business the Millennial Way,”21 found

millennials are attracted to companies

that ‘sell well’ rather than ‘sell lots’,

highlighting the complex interplay

between profit and purpose that sits at

the core of how millennials view the

relationship of money to the world around

them, and themselves. They have left

behind the ‘eco-warrior’ of generations

past to embrace a pragmatic, purpose

driven agenda that doesn’t ignore the

commercial realities of business.

MINDFULNESS

THE SHARE ECONOMY3.

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This ethos is now being felt inside the investment community, as

millennials seek out platforms that allow a similar type of ‘value

driven’ expression. Like in the workplace however, the profit and

purpose nexus is central here and cannot be ignored.

In light of this, Pension Tech funds have an opportunity to reframe

their offering as one of the most impactful purchasing decisions

millennials will make during their lifetime. This would see them:

- Place value led investing at the core of the product set, not as a

fringe or boutique subset of the broader investment universe.

- Allow millennials to drive portfolio creation based on their

personal values, and avoid imprinting values, taking a bottom up

approach as opposed to top down.

- Use technology to provide ongoing transparency throughout the

investment ‘supply’ chain.

Millennials have a far deeper

understanding of the connection between money

and change.

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Case Study 4Airloop™ and the Zuper Investment Collective

Investment decisions in pension funds

are shrouded in mystery and board

decisions that influence strategy are

made by panels of non-gender or age

diverse committees (the most recent

quarterly statistics from APRA show

only 32% of superannuation fund

board seats are held by women).22 In

addition, there is scant data available

on the average age of board members,

although it almost certainly skews

towards the over 50s age group. What

is clear is that both the views of women

and younger Australians are absent

when investment decisions are being

made.

To address this, Zuper has established

an investment voting platform for

members, where members can have a

say about the global trends they would like

to invest their money in. The most popular

choices are then presented to the Zuper

Investment Collective for review. Today

this has resulted in Zuper’s Health, Green

and Technology options going live.

The Zuper Investment Collective is an

international investment committee

that includes some of the world’s most

foremost thinkers, fintech visionaries,

financial problem solvers and investing

experts.

In the future, the voting platform and

insights from the Investment Collective

will feed into a proprietary artificial

intelligence platform called Zena,

that is underpinned by an investment

methodology called Airloop™. The

Airloop™ methodology was conceived

by Zuper’s Investment Collective Lead

Lisa Wade. Its purpose is to harmonise the

voice of the Zuper community with the

voices of the experts, and also integrate

the unbiased viewpoint of historical and

forecasted market data.

Using a combination of member voting,

the Investment Collective experts and

Airloop™, a sense of endowment,

ownership and participation is injected into

the member community. The long term

objective of this approach to investment

management is to reduce the overheads

around sound investment decisions and

ensure there is alignment in market appeal,

to drive acquisition.

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Case Study 5The Zuper Investment Universe

Today many millennials have a low level awareness of how their

lifetime savings are put to work. Unlocking how their money

behaves, and its potential legacy in the world, is key to influencing

their financial choices.

One of Zuper’s goals is to reconnect millennials with their money,

by highlighting value misalignment and allowing a correction in a

friction free manner. For example, why buy a reusable coffee cup,

when your money funds deforestation? Or why campaign against

smoking, when your money is invested in tobacco companies?

Aside from simply asking future members where they would like

to invest, Zuper goes one step further by using data visualisation

throughout the user interface to provide transparency of holdings to

members, and their respective weightings.

At any time members can drill down into their portfolio and learn

more about the companies they are invested in.

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The opportunity to be part of the self-actualisa-

tion of an individual and their wealth creation

journey is incredibly powerful, and will re-cate-

gorise wealth and pensions forever.

This opportunity can only be realised if Pension-

Tech funds actively choose to be embedded in

every aspect of a member’s life, caring deeply

about how a member’s values are reflected

in they way their money is put to work, and

empowering them to live life to the fullest. Our

goal must be to fast track financial

independence, and there is no other member

outcome that can possibly satisfy us more than

this.

To do this, global pension providers must let

go of a product first approach and embrace an

experiential approach to financial design. One

that puts an individual’s financial life, and all its

behavioural complexities, at the core of its

offering, then builds from there. We are sowing

the seeds of this first principles pension re-

volution in Australia at Zuper, with a view to

bringing this thinking and offering to the world.

We encourage those in the industry to reach out

to us to learn more - our door is always open.

We are encouraged by our engagements to date

at a C-Suite level, with a number of global

pension funds and startups, including superan-

nuation funds here in Australia. The time has

come to make a change, and history will be

kind to those who choose to lead the pack, and

embrace creativity and fresh ideas and thin-

king within their organisations. Only then, as

Theodore Levitt famously said, can we harness

and unleash the deep innovation that is the ‘vital

spark of all human improvement and progress.’

That is where the magic and human potential is,

that could radically transform the world.

Jessica Ellerm

CEO, Zuper

jess@zuper.com.au

SUMMARY

THE ACTIVE PARTNER FOR LIFE

Pension Tech startup funds have an opportunity to reinvent a

forgotten product and become a vital and relevant life long partner.

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First

1 http://www.superguru.com.au/about-super/youngpeople2 https://info.mercer.com/rs/521-DEV-513/images/Next%20Generation%20of%20Super.pdf?3 https://www.pc.gov.au/__data/assets/pdf_file/0003/228171/superannuation-assessment-draft.pdf4 https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Multiple-super-ac-counts-data/5 https://www.superannuation.asn.au/ArticleDocuments/359/170612_ASFA-Decimal_Digitalreadinessofsuperannuationfunds_surveyre-port.pdf.aspx?Embed=Y6 https://www.pwc.com.au/pdf/ceo-superannuation-survey.pdf7 https://www.ato.gov.au/Individuals/Super/Super-housing-measures/First-Home-Super-Saver-Scheme/8 https://www.kiwisaver.govt.nz/new/benefits/home-withdrawl/9 https://www.apra.gov.au/sites/default/files/superannuation-circular-iii-a-4-the-sole-purpose-test.pdf10 http://www.oecd.org/finance/private-pensions/pensionmarketsinfocus.htm11 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/workplacepensions/articles/pensionparticipationatrecordhigh-butcontributionsclusteratminimumlevels/2018-05-0412 https://www.ato.gov.au/Super/SuperStream/In-detail/Validation-services/SuperMatch/13 http://image-src.bcg.com/Images/BCG-How-the-Best-Corporate-Venturers-Keep-Getting-Better-Aug-2018_tcm9-200601.pdf14 https://news.gallup.com/poll/168707/average-retirement-age-rises.aspx15 https://news.gallup.com/poll/166952/baby-boomers-reluctant-retire.aspx16 https://www.rand.org/blog/rand-review/2018/03/why-unretirement-is-working-for-older-americans.html17 https://www.sagehousing.co.uk/shared-ownership/18 https://www.divvyhomes.com/19 https://www.nielsen.com/us/en/press-room/2015/consumer-goods-brands-that-demonstrate-commitment-to-sustainability-outper-form.html20 https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-deloitte-millennial-survey-2017-executi-ve-summary.pdf21 https://www.apra.gov.au/media-centre/media-releases/apra-releases-superannuation-statistics-june-201822 https://www.americanexpress.com/content/dam/amex/uk/staticassets/pdf/AmexBusinesstheMillennialWay.pdf

Copyright Zuper Financial Pty Ltd 2019.