If you want a decent metaphor of how fast the business world has become, then there isn’t a much better metaphor than the mobile phone industry.
It seems almost impossible to remember that just five years ago the market was dominated by giants which looked unshakable: Nokia, Motorola and RIM (Blackberry) who between them claimed 64% of the market and a complete lock on brand value and distribution.
Now they are all but gone, with Apple and Samsung – businesses that weren’t even phone manufacturers – holding better than half of the entire phone market and almost 80% of the smartphone market.
But it’s not just the phone market that is being disrupted. Publishing, retailing, health and education are all in motion and companies like Groupon and Zynga have erupted from nothing to multi-billion dollar businesses in seemingly the time that it takes to make a cup of coffee.
And it seems everyone is feeling the heat – one of the rumours that are driving Facebook’s float is that they think their business might have peaked as a new entrant Pinterest (like Facebook but a lot more visual www.pintrest.com) will start to erode their market share.
It’s only a matter of time before financial services get swept up in these changes, in fact, it is already – oddly in countries like Mexico, Spain, and Africa rather than America, Europe and Asia – and its needs to learn how to cope.
While Australia’s banks and super funds can resist change as much as they like, their customers are starting to embrace it with surprising speed, which means they are going to be forced to adapt and probably adapt fast.
This isn’t so much of an issue for the banks, which have in a lot of ways already become a virtual presence, but it’s a really, really big deal for super funds.
The first clue in the data that this is an issue for super funds comes from the way that late Baby Boomers, Gen X, and Gen Y are behaving around their jobs.
These generations are considerably less likely than early boomers to consider the idea of a career for life, and employment data from around the world is starting to bear this out.
The average job tenure has fallen substantially – from 8.4 years in 1987 to 4.1 years in 2011.
Granted this is US data – but it’s pretty clear what is happening; a whole series of generations see work as not so much a career but a portfolio of careers – their ideas, their skills, and their ambitions are completely portable.
Added to that Australia’s average retirement age is falling – not rising as everyone expected. In the past, the average age for retirement was in the low 60’s and now it’s fallen to 57.2 years.
What’s curious about this is that fewer and fewer Australians are retiring because they choose to and more and more are doing so because of work restructuring (they were made redundant or dismissed) or because of health reasons. So while the stated age of intended retirement in Australia remains stuck at 65, it’s not actually happening.
This means two things for Australia’s super funds: within the next 15 years, while there will be a lot more people with super, they will be changing employer every four years,– and that means super funds are going to have to work really hard to keep their members and to explain to them why they should stay with them.
The other implication is that it’s probable that their customers are going to move from the accumulation phase of their superannuation cycle to the spending phase quicker than they intended, which means a whole new series of services, products and a vastly different relationship with the fund.
As keen observers of the industry we can see a small number of funds dealing with this looming change and getting ready for it, but for the bulk of Australia’s retirement businesses, as far as management is concerned the future not only looks much the same as today but pretty similar to 1982.