Naomi Edwards, chair of the $9.5 billion Hobart-based superannuation fund Tasplan talks to Investment Magazine, about industry consolidation and the fund’s proposed tie-up with MTAA.
Q | What is the most important conversation you’ll have around the board table this year?
A |Tasplan has had a massive 12 months. We’ve had a full year of leveraging off the scale of our earlier mergers to deliver many new solutions for our members. In June this year we rolled out a new retirement income product, rolled out a new reduced fee structure, went live on full Protect Your Super implementation and introduced a completely new insurance design. These changes have been very significant for our members although they get less media coverage than our merger discussions.
Our biggest challenge this year will be to keep up this pace while navigating merger and regulatory changes. We are determined to leverage off our internal systems architecture to deliver better member experiences, and not to let external events slow us down. So the board is discussing how to manage the balance between our staff running at 110 per cent all the time and getting external assistance for some projects.
Q | How important is scale in the industry? What will the landscape look like in five years? If the nature of superannuation is overwhelmingly a scale game and the landscape increasingly defined by strongest competition, what is scale these days?
A |If you have a unique value proposition, and fantastic technology solutions, then you can thrive with a small scale. However, I think many super funds kid themselves over how unique their value proposition is. For example, I don’t think that distinct geographies or industries necessarily create a unique proposition. I do think that distinct values and ethics can create a niche super fund, such as Australian Ethical Super’s extremely deep green investment portfolio.
For the majority of funds, however, I think scale is necessary to maximise member outcomes – through lower fees, more in-sourcing of investments, and greater investments in technology. Scale can also enable the delivery of customer-centric solutions that differentiate our product offering.
Q | Mergers are always tough to complete because of differences in culture systems and governance. What challenges are you facing? In talks with MTAA what turned out to be easier than you thought?
A |It was a privilege to get to know Statewide Super and WA Super through our merger discussions. Super funds located outside of Melbourne and Sydney tend to have a slightly different culture – we are very open to trying new things and being nimble on our feet. Being more isolated geographically can build self-reliance. Ultimately, though, a 3-way merger across four states was a very challenging proposition with a lot of execution risk. Our discussions with MTAA are at an early stage but there is enormous goodwill and the potential for significant member outcomes. We are excited about the possibilities.
Q | The super industry is facing a raft of changes. Does that mean boards will look for a different skill set in the chief executive?
A |The basics for a great CEO never change – the ability to build a quality team, the ability to create a member-centric culture and the ability to communicate a vision to the team. But with things changing so fast, super funds also need CEOs who can create nimble cultures and cultures that embrace change. At Tasplan we now have a very change hungry executive team, I think they would be bored if we ever got to BAU.
Q | There has been a demand for more transparency and clarity as a consequence of massive cash flows moving to industry funds. How do you think about governance now given this?
I don’t think the increased cash flows have changed my attitude to governance. What has changed is that members are demanding more transparency, regarding both the fees we charge them and also how we invest their money. Funds need the technology to enable members to track both of these things. We also need the courage to listen to what members want and to see things through their eyes, including the appropriateness of our fee levels.
Q | What are the most pressing governance issues for super funds (note the members outcome requirements coming in from January) and the ‘fit for purpose’?
A |Funds need to self examine the way we have always done things, and cross check if this approach still makes sense. The APRA CBA report is still a useful tool for this, if approached openly and with a spirit of learning.
Q | What are some practical ways the fund provides transparency to its members, and have you made any changes during your tenure?
A |In the last few years Tasplan had worked hard to come to our members, rather than relying on them coming to us. By this I mean we have segmented our members into very fine segments and built engagement strategies around their distinct needs. So we now go out to shopping malls (where we run pop-ups), we hold investment seminars all over the state and we phone and text our members regularly to educate them about initiatives and keep them engaged. This has driven our engagement levels to record highs. Because of our members’ mixed financial literacy and moderate balances, transparency is not about dumping all of our policies onto our website (though we do this). It’s about making sure members’ understand what level of risk they are taking, what returns they are making and how they can squeeze an extra dollar out of their super.
Q |What is your commitment to ESG and how does this translate in a practical way to your fund?
A |Tasplan was an early adopter of UNPRI but has been a late adopter of other ESG initiatives such as exclusions (which we have rolled out this year in the tobacco and weapons spaces) and climate change monitoring. We are currently employing our first ESG specialist, which will be a great addition to our investment team and enable us to make faster progress in this crucial area. Climate change is the most important issue to our members, when we survey them, and we need to be responsive to this, as well as the investment risk side.
Q | The post-retirement phase of a member’s life is increasingly taking centre stage What are Tasplan’s plans in this space?
A |On 1 July this year Tasplan introduced a new default retirement product which holds different “buckets” for members’ cash needs and longer term investment needs. We are not the first fund to offer such a product but we think it is an important addition to our post retirement product suite.
Q | How would you describe your leadership style?
A |It’s hard to talk about yourself but the leadership surveys say I have a propensity to take risks, a love of change and an infectious enthusiasm. On the bad side, I have a propensity to take risks and a love of change. It is a testament to Tasplan’s chief executive Wayne Davy, his executive team and our board that they join and even outpace me in this exciting journey.