The corporate watchdog has issued a timely reminder to top investment professionals in Australia’s superannuation funds that they should not consider themselves immune to or isolated from the issues that continue to generate adverse headlines.
ASIC commissioner Simone Constant told the Investment Magazine Fiduciary Investors Symposium (FIS) in the NSW Blue Mountains on Wednesday that even though investment teams may not be in frontline contact with members on the issues which have led to enforceable undertakings and court actions, all fund employees have a shared responsibility to aim for the best possible outcomes for members.
It was a reminder that all elements of what a fund does are interrelated and interconnected and that any failure of a fund, in whatever dimension, chips away at the social licence of superannuation.
Constant told delegates at FIS that “it is an absolute privilege” to manage superannuation assets – and to regulate it, for that matter – and everyone engaged in the system, irrespective of their role, has an obligation to aim for the best possible outcomes for members.
Constant’s comments followed objections from some delegates at FIS to the suggestion that administration, governance or claims handling issues reflect on their performance as investors. But at the end of the day, investment teams are employees the same as everyone else(albeit generally better paid), and the performance of the organisation as a whole reflects on all of them.
When a superannuation fund fails a member when they need its support most – and it is difficult to think of more salient moments than making an insurance claim, or making the decisions that will set themselves up for retirement – then the work the investment team has done over 20, 30 or 40 years to generate the best possible risk-adjusted returns means nothing at that moment.
“The message should be exactly the same, whatever part of a superannuation fund you work in… whether you are in the investment team or whether you’re in the member services team, or whether you were taking those calls from somebody who’s grieving and wanting their death benefits paid for their loved one,” Constant said.
“Your responsibility is to your end member. And I don’t ever resile from that message, whether it’s talking to people in investment – yes, you are brilliant, you’re intelligent, you do amazing things – [or] whether I’m talking to someone in a call centre [or] whether I’m talking to a member of your trustee board.”
The superannuation system still has some significant shortcomings which require collective responsibility to solve. It might not be up to investment teams directly to solve them, but as long as issues continue to surface and as long as there remains any vestige of a “nothing-to-see-here” or “not-my-problem” mentality anywhere in the fund – but especially at the board or C-suite level – the work of investment teams is inevitably also diminished.
Constant noted that whatever role an individual plays in the system, they have “that same responsibility through to the member, because it is their money, and they trust you with it, and they trust you with it to support their retirement – being the purpose of the system”.
She said that the system has worked well in accumulation, but as more members retire and as a greater call is made on member services generally, “the system is being challenged”.
“The service [expectation] is mounting because people are thinking about retirement; or they are in retirement; or sadly, passing away and leaving retirement savings,” she said.
“So it’s getting more complex. It’s getting more difficult.”
Investment teams can’t think they’re somehow immune to that challenge, or that the only thing that matters to members is that things work well from an investment perspective.
