We want to be able to compete against those boutiques.” The Australian arm of Russell Investments has likewise undergone an organisational restructure in response to more complex demands from clients, which has seen three client silos created – corporate super (under Linda Elkins), institutions and government (under Keith Knapman) and retail (under Patricia Curtin).
The idea is that the services Russell provides can now more easily be accessed by all clients. “It used to be that if an endowment client wanted, say, actuarial services, that function was embedded within the corporate super area and it was difficult to bring across; there’d be ‘blue dollars’ (transfer pricing) involved,” says managing director Chris Corneil. “Now we’ve separated the functions from the client clusters so that our functional specialists are accessible to everybody from an industry fund to an SMSF.” Explaining its recent decision not to re-tender for some headline asset consulting posts (for example FuturePlus and Westpac Staff Super) Corneil says Russell wanted to focus on relationships where it could create “high levels of value”, and simple “data delivery” of its recommended manager lists for each asset class did not fit this bill.
He points to the implementation services area, headed in Australia by John Moore, as an example of the services Russell will increasingly offer to large institutions. “We don’t just talk theoretically to our clients about the frictional costs of changing managers; we have a transition management team that trades US$2 billion every day,” he says. “That’s a competency that none of our competitors have.” Corneil said advisory consulting remained important to Russell, but ideally as just one part of the “smaller number of deeper relationships” it would like to have in Australia in future.
“I really liken it to us being the investment architect, working with our clients to define their goals, creating the strategy to reach them, and then actually bringing the ideas to fruition,” he says. According to David Chessell, partner at alternatives consultant Access Capital Advisers, the key is to develop a business model that can withstand any market environment. Access advises on around $6 billion in unlisted assets, most of which is held directly, and about $6 billion in listed market assets.
“The danger is getting structures that are not suitable across all time periods,” he says. “It’s good to have specialisation when you actually want to invest in a particular area but part of what we’re trying to do is be across the whole universe and to be assessing what’s the best area to be in, especially in the alternatives space. “The size of the firm is going to be a much more key consideration when super funds are deciding who they want as their investment adviser.
