“People will wake up”: Meet the fintechs bringing social justice to superannuation

innovative super funds

Verve Super co-founders Alex Andrews, Zoe Lamont and Christina Hobbs. Source: supplied.

As we reel in the wake of the banking royal commission, and the Aussie fintech trend continues to rage, we’re also seeing a swathe of new, innovative super funds springing onto the scene.

Rollit Wealth, for example, was created when founder Mark MacLeod discovered an underperforming fund had cost him $64,000 in savings. Spaceship allows members to choose the focus of their portfolio, and Zuper allows people to pick and choose their preferred investments.

There are also products such as GigSuper cropping up, which help self-employed and gig-economy workers to manage their super savings.

But, we’re also seeing the rise of a further subsector in the space: companies meeting the demands of ethical sentiment and dedicating themselves to investment for good.

The trend can be linked to something of a social awakening among the general population.

There’s an increasing trend of people spending their money with companies that align with their own core values, and steering clear of those that don’t.

This speaks to the mission of Verve Super — a fund created specifically for women in a bid to help close the gender super gap. Verve also focuses on ethical investment, avoiding fossil fuels, tobacco and gambling, and investing in healthcare, healthy food production and renewable energy.

It also only invests in companies that have at least one woman on their board.

There has been a lot of attention, historically, on other areas of economic equality between men and women, Verve co-founder and chief Christina Hobbs tells StartupSmart.

“Retirement savings is one of the final frontiers, where we’re not really seeing much movement.”

In the past few years, however, there’s been increased awareness of poverty among older women, and the super gap that exists no matter how wealthy an individual is. And that attention has driven action.

Launched in December 2018, Verve Super now has more than 2,000 members — and about $70 million in funds under management.

“We’re tracking way above what we’d hoped,” Hobbs says.

And, the startup has seen “a huge surge” over the past month — something she partly attributes to people’s reaction to the bushfire crisis and related conversations about climate change.

“We’ve seen an enormous demand from people wanting to invest their money not in fossil fuels,” she says.

“We don’t see that slowing down. I think people are really waking up to what they can do to make a difference.

“How you invest your money is obviously a key decision.”

Engaging the disengaged

Just this week, Elevate Super also entered the market. Launched by fintech AtlasTrend, Elevate invests in companies that contribute to the UN’s Sustainable Development Goals, and uses a third party to analyse which businesses truly make the cut.

The fund then provides this data to members, allowing them to visualise where their money is going, and how it’s actually making a difference.

Kent Kwan, founder and chief of AtlasTrend, tells StartupSmart one of his aims is to get people to acknowledge and engage with the power of their superannuation funds.

They’re acknowledging their spending power; acknowledging their investment power is “the final piece of the puzzle”, he says.

“More and more people are now asking the question of what that money actually invested in,” he explains.

“That’s a lot of investing power that could be directed towards companies and industries that align more with their core values.”

Many Australians, particularly young Australians, are disengaged with their superannuation, as it’s not money that’s accessible to them anytime soon.

“It’s not really an asset that they value,” Kwan says.

But, in 2018, research from Nuveen found that some 92% of millennials care more about having a positive impact on society than about doing well financially.

Super fund

Elevate Super co-founders Kent Kwan, Jade Ong and Kevin Hua. Source: supplied.

For Kwan, there’s no reason they can’t have both.

“Building wealth for your superannuation, and building a sustainable future for Australia and the rest of the world … they really shouldn’t be mutually exclusive,” he says.

“While they can’t use it at this current point in time … it doesn’t mean it’s a meaningless asset,” he stresses.

“You can use that money to really help shape a positive future for Australia and the world, and still build your retirement nest egg.”

An antiquated industry

The fact that these modern super funds speak to millennials is partly indicative of the stuffiness of the super industry of the past. Historically, it’s been the domain of middle-aged men in suits, and one where customer service or innovation hasn’t been front of mind.

“It’s an industry that has survived for a very long time by providing very little, because of the nature of superannuation being compulsory,” Hobbs says.

It also wasn’t a system built to support women, she notes. In fact, the financial services sector as a whole is still heavily dominated by men.

When you ask women how a superannuation fund should operate, “they would expect it to be ethical”, Hobbs says.

“They would expect these companies to be trustworthy and they would expect that their money is being invested similarly,” she explains.

“There’s a really big gap between what the expectations of people are, and of women are, and what is being delivered.”

This trust deficit in the whole financial services industry was largely brought to light via the royal commission last year.

And in the fintech space, that was “a real turning point”, Hobbs says, opening up opportunities for new financial providers to prove their points of difference.

It’s an opportunity they’ve jumped on. Several new digital banking players are jumping on anti-big-four sentiment and offering alternative consumer options, and 2019 saw fintech startups such as Airwallex and Athena bag enormous funding rounds, with the latter also securing unicorn status.

Are fintechs going far enough?

If nothing else, the royal commission highlighted problems in the ways some incumbents were acting, Kwan says. Often, those actions were far from being in the consumer’s best interest.

“That provided a lot of encouragement for some innovation in the industry to really take products to people that they actually want,” he says.

“We get a lot more transparency in other aspects in our lives,” he adds.

“People don’t feel they have that in financial services.”

For Kwan, transparency in finance shouldn’t be a nice-to-have. People shouldn’t have to ask their super provider how their money is being invested, or whether it’s being used in a way that’s aligned with their values.

“There should be readily accessible information that informs them of that,” he says.

“Whether the large incumbents do that well or not, I think that’s for each consumer to judge for themselves.”

That said, Hobbs argues some fintechs could be going further to change the status quo. People are paying attention to their finances like never before, and that comes with some responsibility.

“I don’t think the startup scene has really proved itself in terms of demonstrating better models,” Hobbs says.

“We’re still seeing a number of startup companies that have deployed, or continue to deploy, some of the really unethical practices of the old companies, but in a much more technology-savvy way.

“I truly think the only way for startup companies to succeed over the long term is to demonstrate themselves to be more trustworthy.

If you don’t demonstrate that, people will wake up to it,” she adds.

NOW READ: “My own superannuation was invested in weapons”: A Q&A with Christina Hobbs, co-founder of Verve Super

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