SuperRatings: how funds are coping under merger mania


by Greg Bright

Superannuation is complex. The big challenge for participants – not just the big funds’ executives but also consultants, managers and custodians – is to develop new strategies to deal with member expectations. This is the backdrop to the revamped premiere industry event: SuperRatings and Lonsec Annual Awards night.

According to Kirby Rappell, executive director at SuperRatings, there is much more focus on funds today than ever before. And the Royal Commission into banking has meant there is a heightened critical interest from members. There is also a lot of discussion, and activity, around fund mergers, partly prompted by APRA, the regulator.

“What makes a good merger?” Rappell says. “At the end of the day the merger trend will continue. But we should try to make sure they are ‘good’ mergers. That’s important.” What he means is that there should be a high degree of commonality and potential value-add for members between merger partners, which is not always obvious.

In New Zealand, for instance, where SuperRatings has been researching KiwiSaver funds for several years, most of the performance differences between the products have been competed away, and their promoters now compete mainly through member engagement capabilities.

SuperRatings, which in 2002, was the first of the three fund research houses to launch its services – by current chair Jeff Bresnahan – has combined its former ‘Day of Confrontation’ conference with the black-tie Awards night in Melbourne. It will be a sell-out.

Senator Jane Hume, the assistant minister for superannuation and financial services, will address the dinner. But don’t fret. The famous SuperRatings Awards night entertainment will still be on. Often, the entertainment is more of a surprise than the award winners.

On the industry generally, providing the backdrop for the super fund awards selection process, Rappell says: “We spent two months on the road talking to super funds. We sent them a 1,600-question survey to complete before our face-to-face meetings. It is a big effort from the funds’ point of view and also from ours… Even though there are fewer funds [due to mergers]we find we are spending more time in total with them.”

He says that, with respect to mergers, one fundamental question is whether you take a sectoral or geographic approach. “There is no one formula for mergers,” he says. “The fund has to be able to compete in some way. A lot of the big guys are spending a lot of money on systems. But we have to wait and see if that provides a difference.”

Rappell offers up the example of the small Mercy Super, Queensland-based catholic church fund. “It’s front office is inside the main hospital,” he says. “They hold barbeques and talks and provide member servicing that most funds could never dream of.”

See separate report, this edition, for the finalists for each of the Awards. The Awards themselves have also been revamped.