IBM Australia has entered the funds management industry following the decision announced yesterday for Russell Investment Group to exit member administration.
The global technology company had been targeting superannuation administration for about two-and-a-half years, according to Jason Nyilas, partner, financial services, IBM Business Consulting Services. Russell acquired its member administration business through the acquisition of Towers Perrin in 2002. Under the agreement, the entire Member Administration Service centre, which includes a call centre and about 200 staff, will be transitioned to IBM. Nyilas said IBM would continue to use the Russell system for the time being. The Russell business has concentrated on corporate super and master funds, providing a high-end service for clients such as BHP Super. It was the first administrator to have qualified financial advisers in its call centre. However, this was never a core business for Russell, which has decided to concentrate on its investment consulting and funds management. The deal means that there is now a major new competitor in super admin and, potentially, other technology-dependent sectors of the funds management industry, such as investment admin and custody. Nyilas said IBM would consider providing custody services, but super admin would take priority in the short term. State Street is Russell’s current custodian but neither party would comment on whether they would expand the current IBM/Russell arrangement to investor services. Nyilas said IBM would continue using the Russell administration system in the short-term and will upgrade and improve the service to members as required, retaining all the Russell admin staff and looking for additional clients. “We will take the system as it is in the short term. In the first couple of years we see no change,” Nyilas says. Although Russell was committed to member administration the firm did not feel it had the required resources to continuously upgrade the service, according to Alan Schoenheimer, Russell’s managing director. “IBM obviously has a lot more to bring to bear in the area of technology,” he said. Russell decided to exit super admin mid-way through last year.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
