An ASIC report notes the boom in demand for this asset, saying it heightens the need for “better-quality data” about the size of this sector where estimates range between $1.8 billion and $188 billion.
CPA Australia has weighed into the debate about the cost to oversee the industry, adding its voice to those who argue the fee structure favours the larger funds.
ACCC and the Pillar sale: an insider’s response
(pictured: David Orford)
The ACCC this month signalled that it may oppose the purchase of the NSW Government’s Pillar super admin business by Link Group. In an analysis piece last week, Investor Strategy News expressed the view that the industry would be better off if Link was able to bid. David Orford* begs to differ.
Orford says: “It is true that with one less aggressive purchaser in the bid process, the NSW Government may make less money.
“But a sale is not needed to make gains for Pillar and its client funds and their members. Pillar’s focus on systems and process efficiency can be expected to deliver great things that will be directly attributable to lower operating costs and improvements.
“These gains are worth quite a lot to a potential purchaser and are worth paying for. In time, more of these will be realised.
“In my view, the potential cost reductions and efficiency are much more potent for increasing the sale price than an additional bidder in the process with propensity to pay more than market value – knowing that it will get that over-payment back by way of future cost reductions and revenue increases.
“Members’ interests are paramount. And in the interests of our country there needs to be a competitor that can challenge Link’s dominance. None exists now at scale. Self-administration is an alternative – but a significant decision [for an individual fund to make].”
*David Orford is the chairman and founder of Financial Synergy, the systems partner of Pillar, which is in the process of being acquired by IRESS.
