Consultant Warren Chant, as is his wont, stirred up the Conference of Major Super Funds in March.

His view that funds with less than $5 billion under management, far from being ‘major’, were in fact letting members down on returns and services and should be compelled to merge, was predictably unpopular amongst those in the room from the funds he was talking about.

In a lot of cases, I suspect Chant is right, but there are exceptions to every rule. That became apparent speaking this month to Peter Robertson, the chief executive of the Stevedoring Employees Retirement Fund (SERF), as he announced his fund’s merger with the Seafarer’s fund to create a $3.5 billion entity from January 2009.

Well under Chant’s $5 billion threshold it may be, but there seem to be plenty of reasons why Maritime Super’s modest size in itself creates considerable advantages. Even with the addition of the boaties, Robertson says that most of the fund’s members will continue to be based in concentrated clusters – those clusters being the country’s ports. That makes face-to-face client communication cheap and effective, especially since there are only 27,000 members to reach. Like its predecessors, the merged fund will also have one of the highest average account balances in the country – over $100,000.

Robertson points out that if Maritime Super went down the Chant route and pursued a further merger, it would probably lose that high average, and the dividends of member engagement and administrative cost savings that go with it. “You’ve seen a few of the big funds say how hard it’s been to get everybody’s tax file numbers. We asked our members for their TFNs, they gave them to us straight away, simple.”

Robertson admits that if Maritime Super were to outsource administration, it may be able to save a few dollars. After all, before SERF he worked for potentially the most scaleable fund of them all, the 1.7 million-member REST. But he would argue that the customer care provided by Maritime Financial Service’s call centre gives his members more reason to stay than that which could be delivered by a larger concern.

From Chant’s perspective, that counts for less than, say, the savings to be made on default life and TPD insurance when you pool 1.7 million lives. But while ever modest-sized funds survive in this choice environment, it’s a sign that for many people, scale isn’t everything.

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