Opening up early access to super for housing would have a negative effect on the balances of even those members that don’t dig into their savings, with funds forced to adopt more conservative investment strategies and hold more liquid assets.
The circa $88 billion industry fund for workers in health and community services reckons that alleviating the affordable housing crisis will boost its other investments by easing the cost of living and inflation.
Mass customisation taking hold as FNZ expands in Asia
FNZ, the investment platforms systems and administration provider, is expanding into Asia with the decision to open a Singapore office, according to the chief executive for Australia, Martin Jennings.
Jennings told the Investment Operations & Custody “Best Practice” conference in Shanghai last week that the Singapore office would be opened soon following receipt of the various approvals.
He was speaking about the worldwide trend to “mass customisation” for investors, which is particularly strong in Australia with the move by super funds to introduce their own member-directed platforms under the funds’ trustee umbrellas.
FNZ, together with partner UBS, supplied Australia’s first member-directed system, which was developed for the $A64 billion Australian Super in 2011. It subsequently won Telstra Super, a part of the Challenger International business, and several other fund contracts.
FNZ has offices in New Zealand, where it was founded, the UK and Australia. The New Zealand business includes a full administration and call-centre service, while the UK is concentrated in the life insurance industry.
Jennings told the IO&C conference that investors’ preference for more control, flexibility and perceived ability to outperform were the main reasons for establishing a do-it-yourself (SMSF) fund.
Compounding the issue for big super funds, which are losing their high-balance members to the SMSF market, is the demographic shift of an ageing population, a lack of retirement solutions and an under-investment in administration systems.
“Members should not have to ‘self manage’ to receive the choice they want,” he said. “And choice doesn’t have to mean increased cost. The technology is out there to deliver individualisation and deliver on the product possibilities.”
At another session at the conference, Patrick Liddy, principal of consultancy MSI Group, said that custodians needed to be aware of the trend for super funds to establish member-directed platforms, otherwise they would miss out on a big opportunity.
In Australia, for instance, Macquarie Bank is offering to provide super funds with access to its retail platform for high-balance members at negligible prices, including “free” custody.
As super funds “move up the value chain with these platforms” there were also implications for fund managers, he said. Managers would need to market to the member as well as the fund.
