Suzanne Holden, the chief executive of Link Group’s superannuation fund administration business, has put the mammoth Superpartners deal to bed. Now her sights are set on the next phase of growth.
That is tipped to come from a combination of winning more mandates and selling a wider range of technology products and services to existing clients.
Link, the country’s largest superannuation fund administrator, paid $170 million for Superpartners in September 2014.
Superpartners was a joint venture between five of Australia’s largest industry super funds that aimed to cut out the middle man. However, the project was a disaster. Superpartners was put up for sale after a 2010 plan to spend $70 million on a technology upgrade blew out to more than $250 million and was still incomplete four years later.
All five shareholder funds – AustralianSuper, Cbus Super, HESTA, Hostplus, and MTAA Super – inked separate deals to outsource their administration to Link.
On Monday, December 19, 2016, Link Group told investors it had completed the migration of AustralianSuper to its platform, marking the completion of the Superpartners integration.
Funds lower their costs
Holden told Investment Magazine there had been no hiccups or extended unplanned outages during the migrations.
“Migrations are a core competency of this organisation,” she said. “They are not easy but we are an experienced and safe pair of hands.”
While Link has been integrating Superpartners, it has also been migrating a handful of other clients and expanding into the New Zealand market.
Holden said moving to the Link platform helps funds bring down their administration costs. However, none of the former Superpartners shareholder funds are expected to have the capacity to reduce already low fees, given the pressure to beef up services.
“I can’t comment on what the funds do, but we certainly have been able to deliver value to the funds, both in terms of a lower price and new products and services,” Holden said.
Since MTAA Super, HESTA, Hostplus and Cbus migrated to Link’s platform, all four have begun purchasing additional digital services from their external administrator.
In November, Link launched a new online advice tool, Super Mentor, which Holden hopes a number of funds will adopt in 2017.
Stable fees, better service
AustralianSuper chief executive Ian Silk said the successful migration of the $100 billion fund’s administration to a new platform would help improve its service to members.
“The transition to Link was a major milestone for AustralianSuper and we are pleased that the whole project was completed successfully, on time and with minimal disruption to our members,” Silk said. “Link’s administration platform provides us with opportunities to greatly improve the levels of service for AustralianSuper members.”
AustralianSuper has held its member administration fee steady at $78 a year for the past seven years.
Hostplus chief executive David Elia said the savings from reduced administration costs would allow the $20 billion industry fund to keep its member administration fees steady while ramping up customer service.
“It will be reinvested in enhancing further digital services to match the increasing desires and expectations of consumers seeking greater digital utility from financial services brands,” Elia said.
Hostplus’s member administration fee has been steady at $78 a year for 12 years.
Riding the outsourcing trend
Earlier in December, it was confirmed Link Group had lost its bid to buy the country’s third-largest super fund administration business, Pillar Administration. Rival Mercer, the second-largest player in the market, won the NSW Government’s auction, paying $35 million to privatise Pillar.
Holden said it was always disappointing to lose but that she had moved on.
The biggest source of growth for the business now is likely to come from winning mandates from the almost 60 per cent of super funds that currently manage their own administration in-house, she said.
“The reform agenda is constantly changing and that is a challenge for the industry. We are able to deliver on that challenge cost-effectively, because we can share the burden,” she said.
Many of the funds with internally managed administration are staring down the barrel of a need to invest heavily in their technology platforms.
“I know that many of the funds that are self-administered could get more value from outsourcing,” Holden said. “We continue to talk to those funds and respond to all tenders.”
Holden said Link was on track to have the platform ready to deal with the suite of superannuation tax rule changes due to take effect from July 1, 2017.