Frontier continues winning run with ESSS advisory mandate

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Frontier Advisors has notched up its fifth big client win in the past 12 months, with its appointment to advise ESSSuper, to be announced today. The win continues a recent trend for Frontier, whereby its client tally has gone from 17 to 35 in three years, losing only two small ones along the way.

ESSSuper is a $30 billion fund for, mainly, emergency services workers in Victoria and related state employees. The Frontier three-year contract covers the $6 billion-odd in the fund’s defined contribution component. The incumbent advisor was Willis Towers Watson.

Interestingly, of Frontier’s 35 clients, only 17 are super funds, following a long-term program of diversification among the sorts of organisations it advises. The program is one of two ways Frontier, owned by a group of big industry funds, has sought to meet the challenges it faces with increasing concentration and retailisation in the super industry.

The other way has been a big investment in technology to provide a new revenue stream among investors who are looking primarily for data and information rather than advice. Funds can buy its online data service separately from traditional consulting, in the same way they can buy Mercer’s GIMD global performance database, which was first developed in Australia.

All of Frontier’s main competitor consulting firms have sought to combat the consolidation trend by also offering implemented services. The most recent to do this is Willis Towers Watson, which has introduced its global outsourced CIO service to Australia.

Frontier likes to call itself “the only unconflicted asset consultant” in Australia but this is probably unfair on its competitors, each of which has managed the potential conflicts of offering advice alongside product pretty well, it should be noted. Mercer in Australia was the first to do so, more than 20 years ago, with the formation of its trusts, and this model was followed by Mercer offices in other countries. If Mercer’s advice business hasn’t grown as much as it could have (in fact it has shrunk), it’s probably not because of the potential for conflict, it’s because the firm’s main board and senior management are putting their resources and focus elsewhere. Russell Investments, the first pure asset consulting firm to set up in Australia, in 1986, has exited the consulting business altogether, at least in Australia and New Zealand, to concentrate on its own funds.

Andrew Polson, Frontier chief executive, said in a statement: “Although around 40 per cent of our clients now come from outside of the superannuation sector, working with superannuation fund members as our end-client remains a key part of why we operate. Our heritage lies in industry superannuation, our team is highly experienced in the field and, indeed, many of our consultants have operated in the superannuation space for 20 years or more. So, it’s very pleasing to have a fund like ESSSuper complete a competitive market assessment and make a decision to appoint Frontier based purely on achieving the best outcome for their members.”

Frontier celebrates its 25th anniversary next month.

– G.B.

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