Super disruptors crash à la neobanks

Yasmine Raso

Senior Journalist, Financial Newswire

13 February 2023

The ramifications of neobank collapses on the financial services industry in recent years has now spread to the superannuation sector, after it was found half of up-and-coming challenger brands had seen their demise in the last decade.

While disruptor numbers stood tall at 30 during its peak, 2022 closed out with only 14 disruptors remaining and several more closing in early 2023.

Despite their intentions to challenge the established and traditional industry and retail funds, the challengers collectively amounted to only $3.8 billion in funds under management (FUM) or 0.12 per cent of the market.

However, while less than half the number of original brands remain, their overall FUM has climbed by 124 per cent since 2017.

“The threat to shake-up incumbent superannuation funds posed by the businesses and promoters behind these disruptor products largely appears to have passed,” Alex Dunnin, Executive Director of Research and Compliance at Rainmaker Information, said.

“The segment began in 2014 with the launch of products such as Future Super and Virgin Super, which were followed by Grow Super, Spaceship, Crescent Wealth, Human Super and Zuper.”

Only Future Super, Virgin Money, Spaceship, Crescent Wealth and Verve Super have survived.

“These five funds account for 82% of the market’s FUM, with Future Super currently growing at the fastest rate. The major characteristic of these surviving disruptors is a clearly delineated product theme – four of the segment’s five largest products are heavily identified with ESG with others heavily focused on technology investments.”

Dunnin also said emergency measures introduced during the COVID-19 pandemic allowing members to withdraw up to $20,000 out of super accounts also left these challenger products vulnerable to closure.

“More surprising, however, was that the highest fees were associated with superannuation disruptors that emphasised ESG investing. As important as ESG is as an investment theme, there’s no reason why it should cost more,” Dunnin said.

“But what was most disturbing about the superannuation disruptor segment was how few of them regularly published accessible, comparable performance information.”