NSW State Super has abandoned plans to sell the State Super Financial Services financial planning business, instead buying Australian Reward Investment Alliance out of its 22.5 per cent stake, and seeking to revamp the business to exploit a “post-Cooper world”, according to State Super chair, Don Russell.
The board of the $28 billion defined benefit fund originally decided to sell the dealer group of 100 planners in late 2008, amid concerns it was becoming too large a part of the fund’s private equity portfolio, and a feeling it could provide approriate services to more members if it was taken over by a diversified financial services business.
“You have to remember that at the time, we also didn’t have a CEO, so we really weren’t in a position to take the business forward ourselves,” Russell said.
After a bidding process run by Gresham Advisory Partners failed to come up with an acceptable offer, and the subsequent hire of Chris Durack as State Super’s new CEO, Russell said the board decided to restructure the planning business “in a way that would benefit the fund as an investor but also provide a better deal for members”.
Buying out ARIA’s stake, valued by ARIA at about $60 million, gave State Super the focus it needed to revamp the business, Russell said.
“Our planners charge an asset-based fee which is far cheaper than what you see in retail …we think the business has a lot of opportunities in a post-Cooper Review world”.
The chairman said it was too early in the strategic review to confirm whether State Super Financial Services would seek customers beyond the defined benefit ranks of State Super and ARIA.
State Super has long been interested in making a broader spectrum of advice options available to members. State Super Financial Services is a full-service advice channel not set up to provide discrete, inter-product ‘limited advice’ to members, for example. Its adviser fees are bundled into the cost of a set range of investment fund and allocated pension products.