REST Industry Super, the $21 billion fund for the retail industry, says its 2 million members are largely satisfied with the fund’s performance and its service, contradicting a Roy Morgan Research report that says “customer quality measures for REST are considerably lower than the industry average”.
“That finding is not reflective of the benchmarking we’ve done,” says Damian Hill, chief executive of REST.
“It may be a reflection of our demographic which is very young and less engaged in superannuation,” says Hill. About 70 per cent of REST’s members are under 25 years of age.
Roy Morgan Research acknowledges that customer quality problems at REST may be the result of the type of member the fund attracts. They are on average younger, with lower incomes and typically do not make additional superannuation contributions, the firm says.
“When we’ve done surveys on financial guidance, for example, there have been high satisfaction levels,” says Hill, who has been CEO since September 2006.
Roy Morgan says 50 per cent of REST’s customers are satisfied with the financial performance of its superannuation products compared with an industry average of 53 per cent.
REST, says Roy Morgan, also have a large negative net customer switching rate. This suggests there is a significant level of member turnover within the fund, the firm says.
Hill says later this year REST will upgrade its online facilities , a 12 month process that will bolster its ability to handle member demand for information and self-service.
Hill says many of REST’s members are still at high school or studying at a university. After graduation they then start a career but many are now opting to continue to subscribe to REST.
“One of the focuses of young people is to pay off their study debt,” says Hill.
On other matters, Hill says he expects more mergers among industry, retail and public sector funds as funds seek scale amid an increasing number of retiring members.
“People are demanding more services,” he says. “Stronger Super reforms are putting more pressure on smaller funds.”
He says REST doesn’t feel the need to merge because it is already a large fund.
But Hill says the pace of mergers may not be as rapid as some have speculated without significant capital gains tax relief.
About 80 per cent of REST’s funds are managed externally. The rest is managed by a team of “just under 20” people, Hill says, who invest in fixed interest, cash, direct property and infrastructure as well as conduct currency management.
“As we add assets we’ll need more people to manage them,” he says.
Last year Hill says REST terminated its asset management contracts with quantitative international stocks managers Acadian Asset Management and AQR Capital Management.
REST hired Taub Hodson Stonex Partners LLP and Global Thematic Partners LLC, thematic international equities managers, in their place.
In June REST hired State Street Corp. as its custodian in place of JP Morgan Chase & Co.