Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Costello warns: don’t take good times for granted
(Pictured: Peter Costello)
Peter Costello, former Treasurer and current chair of the Future Fund, warned last week’s annual SuperRatings and Lonsec conference – Day of Confrontation – that “all things will have to be justified” in future. “I wouldn’t even assume dividend imputation is a permanent feature,” he said.
The conference was SuperRatings’ first in Sydney and the first where the holding company, Lonsec Fiscal, brought together the institutional and retail parts of its business.
“By and large the industry does a good job,” Costello said, “but you shouldn’t take anything for granted. Everything will have to be justified in future. Mostly, the returns for super funds follow the equity market… Some people in the industry show all the self-awareness of spoilt brats.”
He said that its own governance was something that the industry had to get serious about, suggesting that it needed a similar level of governance as the banking industry.
Sam Sicilia, the CIO of HostPlus, said that the industry needed to think more about what people really wanted from it.
“There was a time when industry funds had the high moral ground, with low fees and good performance, but today they have changed their value proposition… If we’re fighting a war on fees – and I don’t believe we are – we have to go away from promoting ourselves as a low-cost provider. We have to demonstrate we are interested in the net benefits to members.”
He said there was still downward pressure on fees and this had to be the case because super funds were getting bigger. He said lifecycle funds, where asset allocation shifts were made automatically as a member got closer to retirement, were problematic.
“They move more people from growth to conservative [allocations] relatively early in life as they approach retirement. If we weren’t concerned about politics and marketing we would have them in growth assets into their 70s,” he said.
He believed that members expressing their individual preferences with investment choice was not generally a good idea because “ultimately people will be in the wrong bucket at the wrong time”.
He said: “The only thing we should be doing is giving people the appropriate growth strategies so they don’t run out of money before they die.”
The super fund of the year award, announced at a dinner after the conference, went to Telstra Super.
