The ability to tailor bespoke solutions for members in post-retirement was a key reason for First State Super acquiring StatePlus for a reported $1 billion.
“The idea is to have tailored strategies for members in retirement as distinct from those in accumulation. We were working towards that anyway, but this gives us a lot more capability to deliver on that,” said Richard Brandweiner, chief investment officer of First State Super.
The combination of First State Super’s financial services and StatePlus will create one of Australia’s largest financial planning businesses with more than $21 billion in retirement funds and over than 200 financial planners located in metropolitan and regional centres throughout Australia.
Brandweiner added the acquisition gave First State Super more levers, more capability, and more expertise to be able to work on tailored products.
“We’d already commenced a long journey internally, around how do we evolve as an organisation from a provider of accumulation assets to a provider of retirement solutions, and this accelerates our ability to access the expertise required to do that properly.
“I can’t yet answer exactly how it’s going to be structured, we need to work through all that with the StatePlus team, but certainly we plan on leveraging the expertise that StatePlus has to benefit our members in post-retirement.”
Digital business model
One of the things that attracted First State Super to the business is that StatePlus has been moving to an electronic operating platform, which is likely to improve productivity and the speed with which they can service a member.
Last October StatePlus announced it had spent $50 million on broadening digital access to its advice by making improvements such as web chats, mobile phone access and interactive websites.
Another crucial component of the electronic platform was the move to a new registry system with straight through processing, meaning all paper files could be disposed of after old records were digitised.
“The technology platform StatePlus is building is exciting and is going to cause us to be more efficient,” said Michael Dwyer, chief executive of First State Super.
“In these days of significant technology advances we need to make sure we can leverage off those advances and, while extra planners maybe required from time-to-time, we want to make sure that the technology puts us in a position where we can actually make life easier for the planners, the clients they serve and the quality of the service delivery.”
The increase in efficiency is needed, given the difference in size between the two organisations. StatePlus has more than 60,500 clients while First State Super has a membership of 756,000 – more than 12 times the size. However, while almost all of StatePlus’ clients are in retirement or approaching it, only 41 per cent (313,845) of First State Super’s members are in the 50 and over group.
“The digital operating platform of the future operating model is going to help, but ultimately other channels need to be explored to help increase the penetration of advice across our membership,” Brandweiner said.
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Strong national presence
The combination of the financial planning businesses will also increase the group’s national presence.
StatePlus has 18 offices across five states, including capital cities: Perth, Brisbane, Melbourne and Sydney.
Meanwhile, First State Super will have seven offices across Victoria and New South Wales by the end of the year. It also has a telephone centre, staffed by more than 120 people handling more than 10,000 calls a week.
“Putting those together gives us a very strong national footprint providing trusted advice,” said Dwyer.
Trusted advice is essential for Dwyer as First State Super has a very large cohort of the carers of society, particularly in New South Wales and Victoria, including nurses, teachers, police officers, firefighters and ambulance officers.
“These people are in vocations they are dedicated to for their lives. You’ve never heard of a nurse accused of doing it for the money, and offering them trusted advice at competitive prices is extremely important to us. The best reference we can ever [have] is that they trust our organisation with financial advice.”
Dwyer added the combined financial planning business would also service people such as State Super’s defined benefit members, as well as the wider Australian population.
“It is a game changer for our business, and the strength it will bring to market will be appealing to certainly the sectors we are represent in at the moment, and who knows, maybe others,” Dwyer said.
In the longer term First State Super has no intention of having different fee structures for different members, though a period of review will be taken to find out what is most appropriate and effective for members.
“It’s interesting over the years while we need to be competitive over the fees we charge, the success of the business is more often than not based on the trust and the quality of the advice.
“Our philosophy at First State Super is ‘members first’ and we aspire to that high level of trust. In all levels of our organisation, those human relationships are critical. At the end of the day, technology will assist you in fulfilling the promise you made, but it’s the personal integrity of those who work for us and what they offer the client that makes you stand tall in the marketplace.”
Ahead of the pack
To maintain trust and integrity, First State Super is aspiring to have all of the group’s financial planners qualified to a Certified Financial Planner (CFP) standard.
Currently 55 per cent of StatePlus’ financial planners have this qualification, placing the business well ahead of its peers, as nationally only 25 per cent of planners have a CFP.
“We are committed to the highest standards in both organisations, with both being prominent members of the FPA [Financial Planners Association] and have been working closely with them for some years. There has also been interchange of planners between our two organisations in more recent years,” Dwyer said.
“Both organisations are fully aware that we need qualified and well-credentialed people, because we think that is the important part of the future. It’s not a quick journey, but it’s certainly one we aspire to over the next number of years.”
Established in 1990, StatePlus has been a wholly owned investment of the SAS Trustee Corporation (STC).
The STC is the trustee of a number of public sector superannuation schemes and operates to invest, support and administer defined benefit superannuation schemes on behalf of the NSW Government and associated employers.
Last year a decision was taken by the STC to sell StatePlus, with the trustee conducting a dual-track sale process that included trade sale options and a potential listing on the ASX.
“From a pure investment point of view we did a lot of work on this, and found it to be a very attractive investment,” said Brandweiner. “It is going to provide a very attractive return to members and in so doing it’s going to also enable us to provide many more of our members with financial advice.”
Dwyer added the acquisition was very obviously and appropriately an investment of the fund, as over the past 24 years it had been a successful business and a good investment for the previous owners.
“The second part of that is how do we continue to make the business prosperous as we move forward? Over the coming months we will sit collaboratively with senior reps from both organisations, to decide in each of the critical areas, what is the best way to maintain the prosperous nature of the business; for it to continue to be a good investment; and how do we contribute to that to help maximise it in all the different areas.”