Steve Merlicek, the former CIO of IOOF and Telstra Super, is joining forces with Patrick Liddy’s consulting firm, MSI Group, and others to form a new funds management and advisory business which will encompass the experience of each of the main players.
Joining the two are Christina Liosis, a former Mercer accounting and tax specialist and finance officer at Telstra Super, and Sachin Naidu, a lawyer and principal of Sydney firm Law Hub.
The new business will be separate from MSI Group, Liddy said, but would overlap in some areas. “We want to play to each of our strengths,” he said. Merlicek would be the CIO, Liosis the CFO and Naidu the senior counsel.
“The three main areas of focus are: capital introductions for fund managers looking for distribution in Australia and New Zealand; an investment advisory service; and, setting up structures and fund vehicles, such as LICs, LITs and managed ETFs,” Liddy said.
“We will provide an end-to-end solution for fund managers and also funds. I can foresee a day when big super funds will set up LICs and other exchange-traded products for their members. They need to retain members into their retirement and we know from experience that self-funded retirees, at least half of whom have their own SMSFs, like those sorts of vehicles.”
Liosis said there would be a lot of opportunities for hands-on advisors that would follow the results of the Royal Commission and more changes flowing from APRA regulations. She said that there were potential ways for smaller super funds to save money through services-sharing arrangements in their backoffices.
“When I went from Mercer to Cbus in 2002, the fund still had its accounting and some other services outsourced to SuperPartners, as other funds did, because they couldn’t afford to set up their own or hire a CFO. I set up that infrastructure for them. What I remember, though, is there was a tremendous sense of sharing among the industry funds then, with IFS and IFM playing their parts. I think, rather than merge or shut up shop, smaller funds could become more viable by sharing some of their important but non-competing functions.”
She saw her main role at the new business to support Liddy and Merlicek, set up the backoffice services part of the offering and to help provide fund clients with strategy and implementation advice.
Merlicek, who has several non-executive roles in the industry, said that he thought his investment advice would be best used assessing the managers which the new business sought to represent. “It’s something I’ve spent decades doing,” he said, “but you get new ones coming through so you have to stay up to date. There will always be opportunities in that space.”
He would also assist the others in providing fund services, where investment advice was required. “I bring the investment, rather than business, expertise to the table.”
For Sachin Naidu saw his role as twofold:
- He has some overseas contacts through his legal services activities who are looking to invest in Australia. They tend to be sovereign private funds and private companies with large cash reserves.
- Advise on the structure of the new business and general day-to-day functions from a legal perspective. No decision had yet been made on the corporate structure.
He said that a European client recently said to him that the main reasons his organisation found Australia attractive was because it was not in a negative interest rate situation, and had never been, and because of its stable political environment.
He also thought he could help, through those clients, with introductions to offshore managers too. The investors might also need some investment advice on specific opportunities in Australia.
Liddy said that because of MSI Group’s background – he is a former custodian who also ran a previous business, known as Implementation Efficiency Group – the new firm would ensure cost efficiencies in all aspects of the products to be built and other aspects of the processes.