Back in 1988, BT stalked the Earth.
Brian Scullin, misty-eyed as he delivered the keynote address at last month’s Investment & Technology/Australian Custodial Services Association conference, was there at the time and remembered when BT’s annual investor update was big enough to book a convention centre three days straight – afternoon and evening sessions.
But it was not him, nor Olev Rahn, nor Mike Crivelli nor Kerr Neilson or any of the other fund managers that the grey-haired legions of investors had come to see. “After the speeches were over, the queue to talk to BT’s head of retail sales, Terry Power, must have been 50 metres long,” Scullin recalled.
“It was Terry’s signature at the bottom of all their letters, his photo was in the brochures, as far as the investors were concerned it was Terry looking after their money. No-one wanted to talk to the actual fund managers.” Terry Power was of course a product of the golden age for big-brand funds management. A time when BT’s Lifetime balanced fund was as ubiquitous as Vegemite, and as Scullin remembered it, Macquarie Bank was conned by advisors into creating an alternative, just so it would look like their clients had a choice before selecting Lifetime.
Nowadays, when everybody’s top priority is non-correlated beta and repeatable alpha, it’s harder for the big, familiar ‘do-everything’ financial services groups of old. A turning point in the trend towards specialisation, as Scullin saw it, was Merrill Lynch’s sale of its funds management arm to Blackrock a couple of years back. “No-one’s trying to build a global powerhouse in funds management any more,” he said. But the allure of brand is powerful, and even institutional investors may not be completely immune, especially as the world teeters on the edge of recession.
Certainly Tony McFadyen, Colonial First State Global Asset Management’s head of business development, thinks a greater awareness of risk in the investor community will do some good for his shop, where the name might be old but the high level of transparency is comforting. And Scullin, now a director of DB RREEF – an offshoot, fittingly, of the former do-everything Deutsche Asset Management – points out that the current rush for esoteric, often unlisted investments is occurring while only about 2 per cent of most super funds’ assets are in post-retirement products.
“When it’s 30 or 50 per cent in post-retirement, funds are going to take a different approach,” he said, intimating that the funds themselves, swollen by rationalisation and with extensive internal resources, could become the BT Lifetimes of tomorrow.