An ASIC report notes the boom in demand for this asset, saying it heightens the need for “better-quality data” about the size of this sector where estimates range between $1.8 billion and $188 billion.
CPA Australia has weighed into the debate about the cost to oversee the industry, adding its voice to those who argue the fee structure favours the larger funds.
Telstra’s new platform fighting SMSF leakage
@cap: Christina Liosis
Telstra Super, Australia’s largest remaining corporate fund, with more than $US 11 billion under management, has become the latest to introduce a new investment platform targeting members with high account balances.
Like AustralianSuper early this year, Telstra has selected the combination of systems provider FNZ and broker UBS for the new platform which offers a wide range of options, including term deposits, under the fund’s trusteeship. The platform will also introduce a pension option to help retain members in their retirement.
According to Christina Liosis, Telstra Super CFO, who is also a change management expert, the platform is part of a raft of changes over the past couple of years aimed at improving both the cost efficiency of the fund and quality of offerings to members.
A recent survey of 18 super funds by research firm Brand Management showed Telstra Super, along with the $US 38 billion Qsuper, had the “most engaged” membership base. Liosis said that Telstra had also retained an external research specialist to perform and design a member “segmentation model” with a unique capability to interpret member engagement within the fund. This segmentation model identified the different needs of members from various factors such as age, different geographies and life cycles. This was not only to determine what products were most suitable, it also enabled the fund to tailor its communications.
A chartered accountant by background, Liosis’s role is to help set and implement the strategic direction of the fund, as well as overseeing finance, risk and business intelligence units. Prior to Telstra, she was executive manager, finance, at Cbus, and before that, national treasury manager at Mercer.
Other initiatives include introducing an internal audit function, changed reporting and a custody review.
“The main task was with the custodian (National Australia Bank),” she said. “We brought in Patrick Liddy (principle consultant with MSI Group, who is also working on this newsletter’s IO&C Conference) and the work culminated in an RFP process. We used this to drive better outcomes in data flow, a better price, a commitment on risk management systems and other services. We really shook it up and I now meet with a senior NAB person each month so we can track delivery.”
Liosis said that managing risk was very important and NAB proved to be good with unit pricing.
“We unit price daily and we have only had about three mistakes in the past six or seven years. That’s fantastic.”
Most big super funds have been leaking members to the SMSF (DIY) market, so the new platforms are designed to slow that flow by offering members more control over their assets, including direct shares and bank products.
In Telstra’s case, the fund will have a $A50,000 minimum balance for members to go on the platform. The average balance is about $A150,000. The members are also obligated to leave some money in the default option to pay for their insurances.
When the pension option is introduced, this will give a lot of members a “tax kicker”. If the member moves from the accumulation phase to the pension phase he or she gets the unrealised tax back, which is a big incentive to stay in the fund.
“It’s about providing a cradle to the grave service,” Liosis said.
