With its superannuation business hitting $500 million of assets under management and 10,000 members since opening its doors six months ago, US passive investing giant Vanguard is taking steps to further bolster its retail business.
It has created two new executive roles, restructured other roles and expanded its product division. It is also merging its two retail direct businesses – super and non-super – into one streamlined business structure and is looking to Renae Smith to spearhead an ambitious growth agenda in the retail market.
Vanguard Investments Australia managing director Daniel Shrimski tells Investment Magazine the changes will ensure the firm remains customer centred.
“By evolving our organisational structure, we are taking the next step in continuing to enhance the service and experience we provide our clients and advisers,” he says.
He believes Vanguard’s “whole of wealth” offering, which includes super and non-super, is unique.
“It’s not something that the industry funds are able to offer Australians,” he says. “We believe the non-super side is going to become increasingly important [given the recent Federal budget’s] superannuation tax changes.”
The firm has announced just a number of key executive changes after Vanguard veteran Mike Lovett left the firm in February following the launch of Vanguard Super last November. Renae Smith will be joining in July as chief of personal investor from AIA where she was chief customer experience and operations officer. While Vanguard Australia’s current head of risk, Curt Jacques moves to head up a new product offer division. He will be replaced by Lakshi Prabhakaran.
Vanguard plans to launch an account-based pension in the fourth quarter says Shrimski, pointing to the experience and thought leadership Vanguard has had in this area in the US.
“We are excited to get the initial pension offering to the market and will then continue to evolve it.”
Much work is also going into developing the technology that will open Vanguard Super to advisers later this year.
“It’s a technology that we are still building out,” says Shrimski. “We are running a pilot right now with advisers so we are getting close to releasing the technology. As we move forward, inorganic growth is also something we are focused on. But we will be patient and wait for the right opportunities to arrive.”
He believes Vanguard’s yearly fees of 58 basis points is amongst the most competitive in the market. But he adds: “It’s our day one fee. It’s certainly not where we end up. It’s a matter of scale and we will become even sharper on our pricing as time goes on.”
“We think that in the years to come we can be a meaningful player in the Australian superannuation landscape and that’s certainly what we are working towards.”
Vanguard Super’s first six months’ performance has largely been in line with expectations according to Shrimski.
“We are happy with the reception we’ve received, but this is a long-term game, and we are here to stay,” he says.
“We have demonstrated a high operational resilience and have 93 per cent straight through processing. We continue to improve our client experience [and] have a dedicated team trying to reduce friction and make it easier for Australians to deal with us.”
Vanguard Super has an accumulation offering and one direct-to-market channel.
Shrimski says about 60 per cent of its clients opt for its default lifecycle option on the accumulation side. “We are thrilled with that because that’s Vanguard’s best thinking in terms of rebalancing a portfolio as members age. It’s automatic rebalancing at no cost to the member,” he says.
“Around 60 per cent of our members are in the 25 to 44-year-old bracket. About a third of our superannuation clients are also personal investor clients with us on the non-super side.”