While the bosses of big organisations around the world scramble to get employees back on the office five days a week, the $16 billion Future Group remains committed to a remote workforce.
Chief investment officer Ed Tomlinson leads a decentralised team and has fostered an environment to support them that vests in them a high degree of trust and autonomy, and he says Future Group’s ongoing commitment to remote working as a potential competitive advantage rather than a limitation.
Tomlinson tells Investment Magazine there are challenges to fostering a culture and keeping a team working efficiently when they’re not in the same office, but they’re easy enough to overcome if a business is committed to the idea.
“It’s kind of obvious: you need to speak a lot, you need to create opportunities to socialise,” he says.
“We dedicate a decent chunk of the work week to calls, which have more of a social element to it than you’d expect for an investment business. There’s a Monday morning, ‘what did you do on the weekend?’ call. On Fridays…while discussing investment markets we also allocate time to just a catch up, and you can just talk about what’s going on.”
Tomlinson says there is a benefit to the business, but it doesn’t happen by accident.
“You have to make the effort, and create norms which facilitate it,” he says.
Tomlinson rejects the idea that managers need to constantly oversee their team’s activities in person, which is “a classic reason why you might want people in the office”. But this approach demands of managers that they trust the people who report to them.
“You need to trust that people can figure out how they want to spend their own time,” Tomlinson says.
“You need to trust that when they’re choosing to run a personal errand, that they’re doing it in the right spirit in the sense that they’re making sure that whatever they’re doing is not to the detriment of their role in the organisation.”
Alignment of purpose
Tomlinson says this comes about through alignment of purpose, and of financial interests. But incentives at Future Group are not in the form of financial bonuses.
“We’re not a bonus culture,” Tomlinson says.
“Everyone is salaried and…every member of the company, regardless of seniority, is given the opportunity to participate in the share plan. This is your community, so you don’t have any of the shenanigans that might happen because you want to protect your bonus.
“Those risks or activities are minor to non-existent. So you’ve got a culture which is just designed to fly.”
Tomlinson says incentives are not financial but could be focused on, for example, funding further education.
“There’s a lot of lifestyle type things which are just good, and people respect that, and they do the right thing,” he says.
“If we look across my team, everyone has got some sort of element of growth on in their life. There’s a person in my team who I’m training up to be a fixed interest portfolio manager. There’s a seasoned equity manager, they’ve been brought in to look at all of our equity portfolios, and they have the opportunity to put their stamp on, their expertise on, an organisation. So we have a range of experience levels, but everyone has an opportunity to grow.”
The $16 billion organisation that exists today represents the amalgamation of Future Super, established in 2014; smartMonday, established in 1993 by Aon and which was acquired by Future Group in 2022; GuildSuper, ChildCare Super and Verve Super, which came to the group in 2023; and Future Group Investment Management.
A degree of complexity
While the growth has generated some scale benefits, it’s also brought a degree of complexity. Each of the funds has its own reason for existing and had a distinctive offer to its respective members.
“Each one of those super funds, when they came in, they came in with their legacy portfolio, whatever that was, and it was the right portfolio for that time and place,” Tomlinson says.
“My task as chief investment officer has been OK, within a firm that is following an acquisition strategy, to set ourselves up so that we can cope with that deal flow and find the natural opportunities to integrate and harmonise portfolios.
“In that sense our approach is slightly different to [successor fund transfers], where the brand or investment strategy just disappears. We can remain sensitive to the heritage and meaning of the brand and product for those members.”
Tomlinson says he thinks of his role as figuring out “what is a logical member’s best financial interests pathway that utilises a platform of $16 billion, has sustainable investing as a core component of what we do, and efficiently gets members’ investments from point A to point B”.
“That means, in practical terms, you don’t just look at the portfolio and say, ‘that’s garbage, don’t like that, get rid of the lot,” he says.
“You look at it and say, OK, which bits are important to be done straight away; and then which bits do you enhance progressively over time?”
To achieve scale efficiencies, Future Group has built a unit trust structure “for the super funds to co-mingle their investments without actually having to merge”, Tomlinson says.
“So we have common building blocks at the foundation of each strategy.”
Tomlinson says Future Group is “definitely on a path” of removing ethical and sustainability risks from its portfolios.
“Removing exposure to burning fossil fuels is a key goal for us,” he says.
“You might consider, well, they’re an ethical investor so of course they will. But in doing so there’s a lot of investment risk there to be managed.”
Tomlinson says these include geopolitical and stranded-asset risks, such as disruption of natural gas supplies in Europe following Russia’s invasion of Ukraine; and the risk that energy reserves are revalued potentially to nil – a “sleeper risk”, meaning it is very real, yet many investors ignore it to their peril.
ESG, DEI long-term benefits
Despite growing political pushback against environmental, social and governance (ESG) investing, diversity, equity and inclusion (DEI) programs and other forms of so-called “woke” investing, Tomlinson says the approach continues to have long-term application and viability.
He says he’s not disheartened by organisations publicly walking back or walking away from previous climate and sustainability related commitments and says that the fact that someone walks back a publicly stated commitment is not the same as them not displaying the behaviours.
“As much as DEI is heavily criticised in the US political environment that stands at the moment, it is underpinned by some really strong qualities,” he says.
“Diversity is a great thing for an organisation. Creating safe spaces is a great thing for staff. I see it around our organisation all the time, and I struggle with the concept that organisations will walk away from such things that just make good business sense.”
Future Group isn’t a big investor, but it has shown a capacity to punch above its weight in forming public opinion and shaping policy.
Tomlinson says direct engagement with listed companies and collective action is central to its strategy.
“For a long time, we have been engaging with Australian banks on their lending to fossil fuel companies, and that is proving highly effective,” he says.
“The reasons why some super funds might engage with a company is a little bit different to the reasons we might. Firstly, we’re not trying to be a highly active manager who needs to know the inside run of a particular company to create their alpha; that’s not what we’re trying to do. We use external investment managers when looking for equity alpha.
“The original DNA of the organisation was as an activist, a climate-change activist, and our impact team is very, very good at being on top of companies and topics where actually influencing their voting, either via our own share ownership or by joining some sort of club, if you will, some sort of collective, and influencing the behaviour of the corporate.”
