Determining salaries can be prickly in superannuation funds which need to balance attracting talent in a competitive market with their fiduciary duties and the compulsory nature of how they accumulate assets.

And even more so today, with funds seeking new skillsets as they internalise a growing range of functions, travel restrictions making the local talent pool even tighter, and the Australian Prudential Regulation Authority turning its eye to the weighting of non-financial measures in remuneration.

Discussing how funds can navigate the challenges of recruitment in today’s landscape in a podcast hosted by Investment Magazine in partnership with AIA Australia, Michael Moses, principal and human resources consultant at Mercer, said funds are increasingly looking more broadly at the financial services sector for peer comparison to determine salaries.

“Mutual banks, insurance companies, those are going to have a very member-first focus and so I’d suggest that those would be an initial area to begin looking,” Moses said. “But it can span across to banking, to any other financial services roles.”

Melanie Munro, Associate Director, banking and finance in HR at specialist recruitment firm Robert Walters, said experience working for one of the big four banks in Australia is also very attractive to increasingly complex superannuation funds, so naturally funds need to consider the salaries paid for these roles as well. But super funds do possess other levers to attract talent in addition to just salary alone.

“Certainly when you are looking at the wider financial services market, super funds are still a little bit behind in some of the systems and processes, so somebody can actually come in and really make a difference within a super fund and actually have more exposure to different elements of their role.”

Significant growth

CIOs’ salaries in particular have seen significant growth, with Investment Magazine’s 2021 super fund salary survey finding aggregate pay for the top 10 CIOs increased more than 16 per cent compared to the previous survey period. Pay for the top ten CEOs, by comparison, declined slightly.

CEOs have either taken pay cuts or seen a freeze in salary increases over the Covid-19 period, said Munro, but the CIO role has conversely been much more in demand.

“A lot of funds are obviously looking at in-housing of their investment functions and not necessarily had that skillset internally,” Munro said. “If you look then as well at external investment managers, their salaries are naturally higher than…profit-for-member funds, so what they needed to do was increase that salary level…to attract and retain the best possible talent in the market.”

Additionally, some CIO roles are paid based on fund performance, Moses said, and frothy stock markets may have pushed up the benefits from performance incentives, in combination with a shortage of talent in the market that has been exacerbated by Covid-19-related travel restrictions.

Investment Magazine’s salary survey also saw a leap in female executive salaries–which Munro said probably reflects the industry’s focus on gender diversity and a greater number of women moving into higher executive roles.

Podcast host Stewart Hawkins asked if funds should be seeking to attract superstar investors. Moses said despite funds stating clearly that past performance is not necessarily indicative of future performance, a lot of members do indeed see historical performance as a motivation to join a fund, and a well-known investor at the helm can also help with this image.

“I do question if they can sustain that superstar status over long periods of time, and I think historically it’s unlikely that you’ll find very many people who can consistently, every year, outperform the market,” Moses said. “But for certain firms that are looking to have the opportunity to attract more members, I think it could be–in addition to obviously a fund performance benefit they could also see–it potentially is a marketing or good publicity angle for them too.”

To what extent will the industry be impacted by APRA’s draft prudential standard that looks to increase the weighting of non-financial measures in determining remuneration? A lot of funds won’t be impacted at all, Moses said.

“Not every single super fund is using variable pay,” Moses said. “These weightings and [non financial] measures requirements that are going to be put in by APRA only apply to a select few.”

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