Super’s biggest problem likely lies within funds themselves, with many using legacy operational infrastructure ill-suited to the needs of the major financial organisations they’ve become.
The race to the bottom on low cost, benchmark aware solutions for a post-YFYS world has pretty much been run. But while the perception of value currently sits on price, that might not be where it ends up, according to Fidelity’s Simon Glazier.
Backcasting: a new form of research for super’s future
Around every corner of Australia’s roughly $3 trillion in super industry assets, you’ll find a forecaster, says one of the industry’s leading researchers, Raewyn Williams. Investment teams forecast market direction, engagement teams forecast new member flows and finance teams forecast what seem to be the regulators’ favourite topic: fund fees and other costs. “But where can you find a “backcaster”, she asks. Where indeed.
Williams is the Sydney-based head of research for Parametric, a Seattle-based global manager which specialises in implementation efficiencies. She is a former head of after-tax investing at Russell Investments, and is well known for producing learned white papers on the nuts and bolts of investing. She has recently started to mix these up with shorter, more futuristic or speculative, research notes, called “ResearchBites“. The most recent one, to be published this week, examines the recently studied field of “backcasting”. In this instance, it involves someone who imagines what super could be, then the research works back to figure out the steps required to get there.
“Backcasting is a real term, right out of a futurist’s playbook,” Williams says. “Invented in 1990, it’s a different way of thinking about where the industry is at and what its priorities should be… Present-day hallmarks, challenging enough, are themselves parts of complex longer-term world-shaping trends that include climate change, artificial intelligence, distrust of experts and institutions and the demise of Western democratic leadership of the international order,” her research note says.
Williams believes that, as an industry, we can spend a lot of time reading and, actually, getting caught up in an historic bubble. “I think we need to think of things a bit differently,” she said. “I love the idea of helping both myself and our clients to raise our eyes above the present. The present and future are blank states when viewed from outside the bubble. I wanted to write something about what is plausible to exist in the future.”
She said that Parametric was seeking out the exemplars in the super industry who rose above self-interest and were looking for new ideas. “There are plenty of people like that, who we tend to do business with,” she said. “There is no doubt that the politicisation of super has been harmful, and one wonders how that has come to be. But we could also, too readily, use that as an excuse to sacrifice bold, visionary thinking and [to do nothing].”
“Backcasting means that someone could identify with both a political alignment and a big idea,” she said. “There are plenty of ideas that don’t require you going to Canberra to explore… As an industry we have people with some wonderful skills. Why not put our hands up and show our society what real leadership and courage look like?”
– G.B.
