A key architect of the compulsory retirement savings system lauds its many achievements, stretching from the national economy to the individual. Where it’s double faulting is in serving members – and it needs to be addressed promptly.
With performance and diversification driving demand, these funds are expected to experience four-fold global growth over the next decade to nearly $AU65 trillion.
Every little helps when it’s money for nothing
(Pictured: Patrick Liddy)
Many super funds and other investors are foregoing incremental investment returns which can add up to hundreds of basis points due to either lack of diligence or awareness, according to Patrick Liddy. “There is money for nothing to be had if you are prepared to look,” he says.
Liddy, the principal of consulting firm MSI Group, says that many CIOs are focused on “the big-ticket items” in their fund, such as asset allocation and active versus passive management and the resultant fees.
“That of course is what they should be doing but often they are missing out on large savings through better operational efficiencies. These include after-tax management, smarter stock lending, buy/sell spreads, better tax reclaimation and higher returns available in less fashionable asset classes, such as cash, by constructing their portfolios differently,” he says.
Liddy, the co-producer of the “My Platform Rules” conference on the Gold Coast, February 22-24, 2015, has put together a session at the conference titled “Money for Nothing”. While canvassing various ways to save on costs, the session includes a brief presentation from Goal Group, a recent entrant to the Australian market which looks to recover members’ money by monitoring withholding taxes and also taking part in appropriate class actions against investee companies.
Liddy says: “In a low-return environment, as most people expect in Australia over the next couple of years, the ability to eke out additional basis points is very important. In total, efficiencies which are not particularly difficult to implement can add more than 100bps a year to a fund’s returns. And that is at zero additional risk.”
