Russell is paying the price for its new dependence on asset-based fees, with 20 Melbourne staff and 16 Sydney staff retrenched last Wednesday including the director of investor services and all but two of the institutional business development managers, while it will not re-tender for one of its largest asset consulting contracts.
The chief executive of FuturePlus, Richard Powis, said the consultant had indicated it would not have the capacity to continue to service the $4 billion adviser to the Energy Industries Superannuation Scheme (EISS) and Chifley investment trusts.
“We understand [Russell is] re-thinking their model and the commitments they will be making, as it is prudent for everybody to do in this environment,” Powis said, adding the consultant had given many years of “great service” to FuturePlus.
Powis said that FuturePlus’ general manager of investments, Michael Block, was leading an internal review of consulting arrangements in tandem with the EISS and FuturePlus boards.
A Russell spokesperson confirmed Russell would not be re-tendering to provide “advice-only” services to FuturePlus, but was hopeful it could continue to work with the manager in “other ways”. Russell remained in the traditional asset consulting business in Australia, the spokesperson said, and indeed it has re-tendered for its AvSuper contract, which is currently up for review (see separate story in this newsletter).
In line with a global cut of 20 per cent of staff, Russell’s Australian redundancies last Wednesday claimed the head of investor services, Joanna Davison, one of her senior staffers Andrew Lane, and business development managers Laird Abernethy and Paul Taylor.
None of the Australian investment team was affected, although some consulting staff went, including Graeme Bibby, who had joined from Mercer in September 2007 at the time Russell won a five-year consulting contract with the ACT Treasury. A company statement said “very few” portfolio managers, and no senior research analysts, were made redundant globally.Powis foreshadowed the fund would be looking for lower overall investment management fees, a consolidation of managers in some asset classes, and less risky investments in line with member demand.
“We’ll also look at greater clarity around the naming of products,” he said, pointing to the potential for members to think ‘enhanced cash’ is the same as ‘cash’, and the lack of clarity around an option named ‘trustee selection’.