Some members are excited for retirement, while others approach it with a “real sense of shame and fear”. Funds are going to have to figure out how to cater to both groups or risk failing them all.
If there’s one lesson for investors from the past five years, it’s that chopping and changing their strategy – even in the face of massive market turmoil – doesn’t always pay.
Northern Trust takes the upper hand in Perpetual custody battle
It’s understood that Northern Trust is the front runner in the custody battle triggered by the Perpetual’s acquisition of Pendal. But while Perpetual confirmed that a review of its relationship with State Street and other service providers was under way it denied that a decision had been made either way and said that the relationship was so far unchanged.
“Following Perpetual’s acquisition of Pendal in January this year and as part of our integration program, we are reviewing all existing partnerships and service agreements across the two groups,” a Perpetual spokesperson told ISN. “Perpetual still utilises State Street to provide custodial and fund administration services.”
Other custodians haven’t received requests for proposals (RFPs), suggesting that the playing field comprises Northern Trust and State Street alone. A small number of sources expect the review to be more granular and to play out over the next 18 months. Generally, both Northern and State Street have been highly competitive with their front-to-back offerings, though State Street has in the past been more amenable to clients using modules of Alpha, its front-to-back platform, alongside the services of their main providers.
It would be a surprising loss for State Street, which took Perpetual just two years ago after its then-custodian RBC pulled out of the market and transferred most of its clients to Citi. Citi didn’t contest the tender – primarily because of additional work it had taken on following the takeover of CommInsure by AIA – and Martin Carpenter, then head of Citi Securities Services for Australasia, described Perpetual as “rusted on” to RBC.
“In our search for a new custodian and administrator, we were looking for a provider who could offer a high-calibre service, as well as a breadth of solutions that were both innovative and customisable to support our strong product offering and our clients,” Perpetual CEO Rob Adams (pictured) said at the time. “In addition to the back and middle office services, Perpetual will leverage State Street’s enterprise data platform to manage data across the investment cycle more seamlessly.”
Pendal and Northern Trust also expanded their relationship in late 2021; Northern Trust had previously provided fund administration and global custody services to J O Hambro, its subsidiary, since it established its first US-based mutual fund offering in 2009. State Street and Northern Trust recently battled it out for the business of Australian Retirement Trust (Northern had QSuper, State Street Sunsuper). The history helped – State Street had administered the two funds at separate times – but one of the decisive factors was the experience it had accumulated conducting successor fund transfers for Sunsuper.
“One of the things we were able to prove as well, throughout the due diligence and the RFP, was the experience we’ve had with complex change with Sunsuper,” State Street country head for Australia Tim Helyar said in February. “By its nature, Sunsuper had a lot more change over time. We’d done close to 20 SFTs into Sunsuper. We managed all of those seamlessly. That ability to manage change – which is aligned to the way they want to move forward as well, QSuper/Sunsuper itself was an enormous SFT – we were able to demonstrate over time that we could handle the change, and I think that was really important.”
