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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.
How AussieSuper deal led to pensions opportunity at Equip
(Pictured: Danielle Press)
by Patrick Liddy
Winston Churchill stated that “Meeting Franklin Roosevelt was like opening your first bottle of champagne; knowing him was like drinking it.” You meet people like that in business occasionally. They show different thinking in their industries and are able to apply this to complex issues. It even happens, from time to time, among super funds.
One particular move caught the eye of the investment community last year, when super fund Equip announced it had partnered with AustralianSuper to take over management of the bigger fund’s defined benefits accounts. It was a good win for the members and a tribute to both Equip and AustralianSuper to show a new and effective way of dealing with an old administration issue.
Equip’s genesis was the in the State of Victoria’s old electricity commission. It was founded in 1931 as the Provident Fund of the State Electricity Commission of Victoria (SECV) and, interestingly, has always had it’s own investment team, (way before it started to become the industry norm). From this somewhat stodgy beginning has evolved something very interesting.
The appointment, in 2010, of Danielle Press into the CEO role was something special in itself. The previous CEOs had all been people of distinction, (Ian Ramsay a particular favorite of mine) but they were all men of a certain vintage and industry experience. Danielle was younger, came from a non-industry background and was marketing orientated. Put simply, she has a ‘seller’s perspective’ and a lot of energy. The fund’s chair, Andrew Fairley, made an informed and critical decision.
Five years on and the fund has changed markedly. It is one of those few places that management really works as an effective team. A lot of places go on about ‘real teamwork’ but it is as rare as it is beautiful. And when places get it right there is very little they can’t achieve. When the leadership team become friends and work collectively it’s just wonderful to watch. Under this approach Equip has become more understanding, accountable and commercial. They concentrate on the important issues and accountability amongst the team is paramount. At Equip, the fund has an executive officer of “People & Culture” – Sarah Guthleben – who Press says is critical in this process. Press also praises the contributions of executive risk officer, Nick Vamakas, CIO, Michael Strachan, and EO, Strategic Marketing and Communications, Geoff Brooks, EO, Corporate Relationships, John Farrington, and EO, Member Relationships, Justin Sadler.
The Equip and AustralianSuper deal on defined benefit (DB) is a credit to both organisations. One of Equip’s areas of expertise is that of DB. The fund has 54 DB plans and 105 benefit plans overall. They say it is a sustainable competitive advantage and in many funds it is ‘tail end’ business. Accordingly, not many funds wish to ‘gear up’ for it, but if you have such a base in DB, as Equip has, it made sense for the parties to come together and for AustralianSuper to ‘outsource’ the DB component.
Another innovation is that of its pension product. There is a big gap in the market, fore retirement products and strategies, especially given a number of the larger accumulation funds are yet to come to terms with the deficiency of not having a pension-like capability. The ‘MyPension’ product Equip offers a combination in its investment make-up of growth and a cash component from which regular income payments are made. It’s easy to understand, logical and it works. Again like the DB this solution could be white labelled by other funds looking to emulate this product.
Equip is now looking at the ‘white’ labeling of its pension product. Again this makes a lot of sense and should bring economies of scale in both BD and pension for those wanting to get them quickly. The ‘profit for member’ has in its DNA a high amount of co-operation. And the type of co-operation that reduces costs, increases functionality and decreases risk is always a good thing.
