Tom Garcia has big shoes to fill. His predecessor, Fiona Reynolds, had the rare combination of qualities that made her very influential, persuasive, knowledgeable and liked. As the new, and only second, chief executive of the Australian Institute of Superannuation Trustees, Garcia has the challenge of continuing the good work of its old head and creating a new way of his own. While there are many differences between the individuals, they do have the common drive of wanting to make a difference.
Tom Garcia is relatively new to superannuation. His history, as an engineer, senior manager of a global company, para-planner, financial planner and superannuation policy manager, is both varied and unique. A new perspective on the Australian superannuation industry is rare and welcomed. Most senior positions in this industry are filled with stalwarts, who bring knowledge and history, but arguably also legacies that may prohibit critical thinking and new ideas.
A fresh view brings with it an honesty and candidness; he has nothing to hide or defend. Garcia is direct on the fact there should be full transparency and disclosure. For him, it’s a simple right of the member to know where their money is invested, who manages it and how much it costs.
“I’m a believer in full disclosure, you’ve got to do it. It’s public money and it’s legislated to look after it as a trustee of that money. They have a right to know. I’m passionate it is an impossible argument to not disclose where they’re investing,” he says.
When it comes to pay or performance disclosure, Garcia believes the act of simply writing it down and publishing it encourages a thoughtful and questioning mindset.
“It may end up being legislation or regulation to make service providers disclose,” he says. “Service providers need to understand what trustees are required to do. They are being asked where they’re investing and that needs to be answered.”
The first few weeks on the job, Garcia has been visiting super fund chief executives, getting to know them more intimately and how their interests can be best served.
“The idea will be to continue what AIST has built on in the past. We have come a tremendous way especially in the last year. We have had better general engagement with members, government and regulators,” he says. “I will work on further building relationships and cementing that. We need to understand the policies of both political parties better, and I’m trying to make the meetings strategic and regular.”
AIST has a good working relationship with the regulator and is in constant contact, a position made possible from the recent regulatory consultation process.
It also makes a point to have a close relationship with the other industry organisations, Industry Super Network, SMSF Professionals’ Association of Australia, Association of Superannuation Funds of Australia and the Financial Services Council.
“I want to continue that; a consensus view is something we’re proud of,” he says.
For the past two years Garcia has been policy manager at AIST, a background that serves him well for this CEO position, which comes with it the member voice with policy makers.
And if anyone thinks the interaction with policy makers is over, it seems it’s only just begun.
“Last year AIST did 70 submissions, this year we have already done 10,” Garcia says. “There are small bits of legislation constantly going through, we’re now into the detail, and what we are trying to do is minimise the unintended consequences and communicate the small changes with our members.”
A conduit between industry and the regulator
Garcia sees one of AIST’s roles is to be a conduit between industry and the regulator, and to interpret the messages, in both directions.
“We will produce timelines and updates as to what’s due. Every fund approaches it differently, so it will be a guide. The MySuper application needs the full input of the fund, so they can demonstrate they ‘own it’, as APRA has requested.
“It’s helpful I’ve got policy background. I have a real understanding of the legislation, the changes that have been made and those still coming.”
He says that some funds still “haven’t got their head around” the requirements of Super Stream or the data collection requirements from APRA, pointing out that the resources, both human and technological, are huge.
“I intend to meet with every CEO of our membership as soon as I can to communicate the information about the regulatory and legislative requirements, and what to be aware of. APRA been really good and our relationship is on an all time high.”
The back office
Internally, Garcia is adamant the organisation will not need any wholesale structural changes and he was part of the team that wrote the current strategic plan. He has great respect for the management team and will work with them to set a three-year strategic plan this year. Part of that plan will include branching out to the network within superannuation, and the “tremendous reach” that AIST has within its fund membership.
In particular he wants to continue to nurture the culture that has been built, which he describes as friendly, cooperative and explorative, a “can-do” attitude.
“[In] the last two years Fiona has built the team, and I was part of that, to bring strategic and commercial thinking.
AIST is by far the best place I have ever worked. There is a willingness to try new things; people want to have a go; they won’t die wondering.”
Continuing education and diversity
Events and education will continue to be a big part of the work of AIST, in particular trustee training. “We want to have better engagement with our members and understand what they want in education. And [to] ensure they get what they want, that department is going through change.”
In developing the new trustee-training program, AIST did more than 80 interviews with trustees to examine where the gap is and how to improve it.
“Our aim is to drive best practice,” he says.
Garcia is a believer in the equal representation system, but also believes there is always room for improvement. “The last thing you want is a board of the same people. And we have launched the Super Springboard to encourage more women on boards, diversity makes a difference.”
AIST has a predominantly female management team, a stark difference from Garcia’s 10-year working history with tyre company, Michelin. “Everyone is male in the tyre game,” he says. “I honestly enjoy working with our management team. It’s a very different way. We get outcomes and agreement, we achieve a lot. I see the benefit of diversity first hand.”
Complication, communication and confidence
AIST’s achievements, including adequacy of superannuation and equity among women and low-income earners, is something that Garcia will continue to be an advocate for.
He also sees some serious issues with regard to indigenous Australians, which he describes as “very complicated but not impossible”.
There is also some “low-hanging fruit” with regard to the post retirement offerings, and the need to open up regulations and allow product providers to innovate.
He will also push for better communication of super among the wider community, and is passionate about gaining public confidence.
“The public doesn’t understand the interaction of the aged pension and super, and that they work together. We want to get back confidence the system is working. I think the interaction of super, the aged pension and health care and aged care, and how it all fits together is a good message,” he says.
“Modifying super for a short-term budget doesn’t send a good message, but you can’t discount making changes to super so it works better with aged and health care. In 20 years we don’t want our children to say we knew the problems of longevity and did nothing about it”
How he got here
Garcia came to AIST from Industry Funds Financial Planning where he spent four years, and worked with clients such as AustralianSuper and First Super.
After 10 years at Michelin, culminating in a job as head of engineering for Oceania, Garcia, a trained engineer had his “fill of rubber” and was looking for a change.
He had a property at Docklands that was positively geared but he says nobody could explain what that meant. “I researched it and worked it out myself, and then decided to make the move into financial services and studied financial planning.”
His first job in financial planning was for Dukes Financial Planning as an administrative assistant.
“Dukes was the largest seller of Westpoint in Australia and my first job was to say to clients you’ve lost a lot of money, do you want to come and talk to a financial planner. It was heart-wrenching in a lot of ways,” he says. “I came from the tyre industry where rebates and commissions are normal and I could understand commissions, but when you buy a consumer good, you pay a price and that is it. With financial products, you kept paying them. I looked into it and thought this can’t be the industry, so my aim of going into financial planning was to make a difference. IFFP caught my eye because it was about fee for service and strategic advice.”
For Garcia, the evolution of his career and his skills has also been personally satisfying.
“One of my friends is a policy adviser in a local government and he gave me some advice. He said, ‘As an engineer you’ve spent your whole life on the what and how, and now this is the why, it’s the high level thinking. Then if you can put the how and why together, and you’ll be a better you’.”
The journey Garcia has encountered to get to this position is a lesson in simplicity, and demystifying super is high on his agenda.
“Super is incredibly important in the economy and people’s lives, but as an industry we get so deep on the details. We dive headlong into telling people about liquidity risk. Many might ask if they can drink it. We are communicating with each other but not the wider community. We presume they understand what we are talking about. I do the mother or brother test. My brother is an actor, he says ‘honestly what are you talking about?’ If I get them to understand, I’ve done well.”