Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Lure of helping people to retire with dignity
Jacki Ellis, portfolio manager for retirement strategies at Aware Super, says she is passionate about issues relating to retirement. The big challenge for the industry is to engage with members earlier to make retirement seem “real”.
Speaking last week (October 15) at the first of a series of webinars by Women in Super (WIS), called ‘Women in Leadership’, Ellis said she was concerned about the lack of “guard rails” placed around the Government’s early access to super scheme – the Early Release of Super (ERS) – when asked by Sandra Buckley, moderator and chief executive of WIS.
“Financially they will be much better off leaving their money in the super system if at all possible. At Aware we have been engaging with members through the whole COVID period, including over the ERS. Where ramping up our communications, Ellis said. “There is so much regulation with super that it’s not an easy thing to nail the member experience.”
Buckley said that while many women had “decimated” their super balances through the scheme, she was, in a way, pleased to see that more men had than women. “This shows some recognition that super is seen as being very important by women,” she said. “To me it says: women have taken note, because they know they won’t earn as much as men and need to start saving early. [The ERS] could have been a lot worse than it was.”
Ellis, who became this year only the second woman to win the ASI (AIST’s Superannuation Investment conference) ‘Rising Star Award’, said that members would not engage and make additional contributions to their super until retirement became real for them.
“With the chance to start saving earlier and make additional contributions you allow the compounding interest to help the balance grow. By the lead-up to retirement it’s too late for that,” she said.
After obtaining a double degree in Psychology and Commerce from the Australian National University in Canberra, Ellis had a short stint at the Government’s Australian Office of Financial Management, and then joined asset consultant Access Capital Advisors, also in Canberra, before moving to Sydney with Mercer, which she says is where she discovered what part of finance she was most interested in – how people can maximise their retirement.
“Retirement is an individual journey,” she said. “We can often lose sight of the individual member because of our focus on accumulation.”
In her role at Aware, which she joined in 2018, she reports to Michael Winchester, Aware Super’s head of investment strategy, who was previously investment strategist and acting CIO at StatePlus, the NSW Government’s financial planning network acquired by what is now known as Aware Super in 2016.
The ‘Women in Leadership’ series of webinars will run over the next 12 months. It involves conversations with up-and-coming women leaders. The next, to be held on November 4, is with Georgie Obst, the general manager, customer loyalty, at HESTA.
– G.B.
