The various species of humans, evolution and Energy Super

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Robyn Petrou… ‘most potent learning experience was birth of her triplet boys’

While industry super funds have grown, merged, built up their capabilities and played an integral part in the provision of universal coverage of Australian workers, the journey has been an evolution similar to that of mankind in general, argues Patrick Liddy. He spoke with Robyn Petrou, the chief executive of the $5 billion Energy Super about the past and future for her fund.

“There is grandeur in this view of life”  (Charles Darwin – ‘On the Origin of Species’)

Scientists speculate that the first humans appeared on earth around seven million years ago. As Africa’s jungles retreated toward the centre of the continent, troops of apes were left scattered over hundreds of thousands of square kilometres to adapt or die. It is thought that around twenty-six other human species once lived on earth. Amazingly, they lived side by side. They had no tools and their genes better fit the jungle than the environment they now faced.  Plus, given that the dominant predators of the day had developed quite a taste for early human, staying alive demanded a great deal of energy, mobility, toughness and cunning.  

Their evolvement that took place over the next two million years was simply astounding.  Much of it was convergent evolution between the 26 different species of humans (convergent evolution can happen when similar creatures develop nearly identical traits, but travel along separate evolutionary paths). With early humans one of these was the ability to stand up and walk upright. When keeping an eye out for sabre-tooth cats this can be very handy. Those that failed to come by this trait were wiped out.  The ‘deformed’ big toe was next.  An ape born in the jungle with a straight big toe was at a distinct disadvantage in the trees. Having this deformity on the grasslands was lucky indeed. Our big toe supports 30 per cent of our weight. Without it we would not be able to walk as we do today. This deformity would enable our grassland friend to be better at standing, walking and running.

However, the most fascinating evolution was that of our brain size, why it would happen, what we would go through to get it, what we give up and why it was worth it.

One of the major reasons our brain increased in size was scarcity of resources. The more scarce the resources the more the body will contribute to the brain. Going from jungle abundance to grassland scarcity triggered this. But there was one major down side of large brains that can come into sharp focus through childbirth. The head became too large for ‘normal’ birth. To accommodate for this increase in head size all human babies are born prematurely and head first. This ‘adaptation’ is the opposite of all other primates. Childbirth today is still associated with many risks, back then the cost was horrendous. This cost is out borne by DNA testing that tells us we are all descended from only six women.  Whilst all other primates are born fully functional, humans are born defenceless. Both individually and collectively we paid a very big price for a large brain. However, without this high risk we would not have been able to develop a brain that was both highly adaptive and generalist concurrently. In time this is what led us to dominate the globe.

Businesses can learn from evolution. One which is highly adaptive and generalist is greatly beneficial, plus learning to thrive in scarcity helps – it makes you think harder and make every dollar count.  Energy Super, the Queensland-based industry fund, fits that description. With 49,000 members and $5 billion in assets it is a super fund that uses it’s members money wisely, has been ‘forced’ to evolve quicker than its peers and clearly understands what is good for the member is good for the fund.

CEO of Energy Super, Robyn Petrou, really gets this. She works hard to ensure the best for her members. And as ‘CEO Magazine’ puts it, she has utilised her experience over the past 23 years in the superannuation industry to engage and retain Energy Super’s members. Petrou’s work in driving the growth, performance, and product development at Energy Super saw efforts rewarded when she was named the 2013 Fund Executive of the Year by the Fund Executives Association Ltd and Financial Services Executive of the year by ‘CEO Magazine’.

But when asked about her most important achievement and her most potent learning experience she reckons it was the birth of her triplet boys.  “Raising triplets taught me resilience, patience, organisational skills and empathy,” she says. She adds with a wry smile “My biggest challenge is yet ahead of me – teaching 3 boys to drive, all at the same time!  ’” If she can be cheerful about that daunting moment then the challenges facing Energy and other super funds should appear very manageable.

Serendipity has also played its part. The chairman of Energy Super, Bob Henricks, is her ideal foil. He is a man of lacerating wit and has a disdain for dissemblers. Scurrility and Queensland wrap themselves around his frame in equal parts. He is also a man who understands the value of relationships, knows his fund intimately and values the member highly. He likes nothing more than having a member come up to him in the supermarket, say, and ask about the fund. Being both highly engaging and knowledgeable, he is one of the fund’s major assets.

This knowledge and fund enthusiasm would have been put to good use during the merger of ESI Super and SPEC Super in 2011.  The merger of these two funds created the country’s largest energy industry fund. And what a festive name Energy Super is – so many plays on it – it is easy to see why the joint board came up with it quickly.  No doubt during the merger discussions, the chairman was in his element. Now these mergers are not easy. There have been a number of notable failures. But Energy got it right. It took a lot of planning and two years. But they dealt with the most important issues upfront and at board level. The boards were aligned, a vision drawn, due diligence done and a merger completed. Other funds have left the board engagement till the last; invariably this had lead to failure. Energy got it right.

Whilst many other funds do not even have a pension option, Energy Super, with its member demographic, is at the forefront in the industry when it comes to adapting to the pre and post retirement needs of their members. The fund has a high average member balance and it has a relatively large number of members reaching towards retirement. These two attributes make it a prime target for the retail funds. Put simply, it is a mature fund and must have solutions for these retiring members and keep them highly engaged. It has tackled this situation with remarkable dexterity and clarity. The basic trick though is that they actively seek out the needs of the members. Whatever their secret is, it is highly effective. The fund’s retention rate is a remarkable 80 per cent.  The fund takes the lead in solutions for ‘retired’ members. The Energy Super Income Stream is one such product. This is a retirement product that capitalises on existing fund infrastructure and perfectly satisfies the needs of Energy retirees.  A cunning use of existing resources that cuts down production and execution costs, whilst sating a genuine member requirement. That’s great adaptation.

The $5 billion Energy Super model with its already-built retirement and accumulation infrastructure is way ahead of many other national industry funds. It has made use of its scarce resources and wisely reuses and adapts. Because of its member demographics it has been forced up the evolutionary curve before other funds. This and the fact that whilst the fund continues to grow, it is in the fortunate position to be able to consider all options in the growth space. It makes it an ideal partner for those funds wanting to get up to speed quickly in the pre and post retirement stakes.

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