In the wake of the Hayne Royal Commission, industry funds reigned supreme. It has taken more than five years, but the for-profit funds are finally back in the game as the not for profits increasingly struggle to service members nearing or in retirement.
Central banks have performed admirably to get economies back on track, but a public that is far less-trusting of big institutions and traditional asset classes remains unconvinced. US President Donald Trump’s trade policies are simply fuelling their fears.
ISA, AIST explore merger for ‘a single voice’
It’s the long running rumour that surfaces every time CMSF or ASI rolls around again – that the AIST will eventually merge with the Association of Superannuation Funds of Australia (ASFA). But it’s Industry Super Australia (ISA) that’s now emerged as the more likely dance partner.
“As part of their commitment to act in members’ best interests, ISA and AIST are exploring a merger to create a single voice for profit-to-member super funds in Australia,” AIST CEO Eva Scheerlinck (picture at top) said in a statement to ISN.
Rumour has it that the ancient conflict between commercial and industry/profit-to-member funds has prevented merger discussions with ASFA. Still, sources question whether cornerstone AIST practices like member education and conferences will be subsumed by ISA’s more direct and more political approach. ISA, which handles collective media campaigns for the industry funds as well as some research activities, has attracted controversy for advertisements attacking retail funds (“The Vultures in the Trees”) and the government and big banks (“The Fox in the Henhouse”).
ISA is also responsible for the creation and running of the industry fund collective campaign. The AIST has usually taken a more measured approach to superannuation advocacy. The AIST itself subsumed another association, the Industry Fund Forum, in 2017. At the time, Scheerlinck said that the association “would not shy away from other mergers in the future”.
In recent times, CMSF and ASI attendees have questioned whether maintaining multiple superannuation associations passes the elusive ‘pub test’ at a time when funds are under pressure to reduce cost to member and marketing expenditure. Still, the issue goes back years. In 2018, then minister for financial services and revenue Kelly O’Dwyer told Investment Magazine: “Given the superannuation industry has the privilege of managing the compulsory deferred wages of millions of Australians, the government is concerned with ensuring that funds spend members’ money only in the best interests of their members, including where that expenditure is on involvement with industry representative bodies.”
The ISA/AIST merger discussions also follow the decision by financial advice bodies the AFA and FPA to explore a merger in the face of declining adviser numbers. Nearly all superannuation associations are under some financial pressure because they’ve come to rely so much on their events – which are often similar – to generate revenue from ticket sales and sponsorship. All superannuation associations have also seen declining membership bases due to funds merging. Only one financial industry association is in very good financial health – the Actuaries Institute.
ISA was contacted for comment.
