CHAIR’S SEAT | In this Q&A with Investment Magazine, REST Industry Super chair Ken Marshman shares his insights into what remains constant for boards amid so much change, and the challenges he sees ahead for the $50 billion fund under new chief executive Vicki Doyle.
Investment Magazine: What is your best piece of advice for how to chair a constructive board meeting?
Ken Marshman: In my early life, I played and umpired a lot of hockey matches. There are several secrets to good umpiring: realising that the game is not about you; giving clear and decisive signals; and always being consistent. These are great parallels for overseeing good board meetings.
IM: How have your views about what makes a good chair changed over the years?
KM: The adage is true, the more things change, the more they stay the same.
The industry is clearly more complex, more technical and more demanding than it was 20 years ago. But a good chair continues to draw out the talent – from around the table, from management and from experts in each field. The main task of the chair is
to keep the whole organisation true to its core purpose. It has always been thus.
IM: Who have been your most important mentors? Whom do you turn to for advice now?
KM: As a former consultant, I had the privilege of serving, and learning from, many fine boards. It is hard to reduce my mentors to just a few, but outstanding individuals like Bill Kelty, Bernie Fraser and John Nolan are definitely on the list.
I have also benefited greatly from the board buddy system at REST, in which directors can share their concerns and challenges with another.
IM: How do you manage the potential conflicts of interest that come with being chair of REST Industry Super and chair of its asset consultant JANA?
KM: Not a surprising question! REST and JANA each have clearly documented protocols to ensure that conflicts are identified and properly managed. In reality, there has been little overlap in duties. Board roles are largely strategic, meaning there is little, if any, overlap, day to day. Naturally, I remove myself from any commercial discussion involving JANA at the REST board and at JANA, I am isolated from all other JANA-client activities.
IM: What is your top piece of advice to investment specialists about how they could improve their communications with super fund trustees?
KM: What is bread-and-butter for the investment specialist is most likely a foreign subject for the typical super fund trustee. Trustees are less likely to be familiar with the jargon, let alone the state of markets or the concepts of risk. Trustees, if unsure, will naturally be more defensive, which might ultimately cost members of the fund. So, my advice is to speak in simple language, explain recommendations in terms of potential risk outcomes, and always, always understand the true purpose and objectives of the fund.
IM: What is the most valuable professional development or training you have done that has helped you become a better chair?
KM: Coming to the board, there were many gaps in my knowledge relevant to the activities of REST. In my case, these included insurance and technology. Participation in specialist conferences has helped me not just get the jargon, but also accelerate my understanding of the industry’s challenges. I strongly recommend the same approach to others.
IM: Any interesting projects the REST board is working on at the moment you can tell us a little about?
KM: Our goals are to ensure that REST is a powerhouse of talent and that throughout the organisation we are flexible and adaptive. The fund is driving through the journey of digitisation. We want to ensure that our core competitive advantages – being the first fund many young Australians join and having great investment performance – are fully exploited for the benefit of members.
IM: You are an independent chair governing a representative board. Do you feel that board composition model works well for REST? What are the pros and cons?
KM: The track record speaks for itself. Our directors represent members (either from employers or employees) at the board table and in their day job as well. So, the likelihood of the fund sticking to its primary purpose and achieving good outcomes is heightened. No one can deny it is the talent, motivation and willingness to work for an agreed purpose that determines outcomes, not background or lineage. Each fund needs to assess its own circumstances in light of this framework.
IM: REST launched new group insurance arrangements on December 1, 2017. What are the biggest challenges for the fund in this space?
KM: The vast majority of REST members would not be able to afford reasonable insurance coverage if it weren’t a basic part of their super. It’s a simple and clear fact. Convincing politicians and regulators of the enormous social good of insurance, particularly to young people who, sadly, are increasingly making claims for mental health and drug- or alcohol-related illnesses, is one of our biggest challenges.
IM: What do you expect will be the biggest strategic challenge for the REST board over the next 10 years?
KM: I foresee two major challenges for the fund over the next decade. The first is ensuring that our members earn a decent return should interest rates rise from their century-low levels. This means not chasing the last cent of returns today at the risk of giving it all back tomorrow. That takes real courage. The second is responding maturely, in the best interests of members, in the event of a substantial change in the regulatory framework. It might be too easy for a board to forget its obligation to members in a new game of survival and growth. To lose that focus would be to lose our social licence to operate.
