In late November, investment administration advisors Morse Consulting facilitated a roundtable workshop with senior operations managers from large fund managers. They discussed the impact of the global financial crisis on the operating models supporting their respective businesses.
What sort of funds management industry will be left?
The ramifications of the global financial crisis are broad and deep, especially for the financial services industry, and super funds need to be well aware of how their service providers are being impacted. One of the least-well appreciated ways that funds may be affected, according to Stephen van Eyk, is in the breakdown of certain … Read more
What sort of funds management industry will be left?
The ramifications of the global financial crisis are broad and deep, especially for the financial services industry, and super funds need to be well aware of how their service providers are being impacted. One of the least-well appreciated ways that funds may be affected, according to Stephen van Eyk, is in the breakdown of certain … Read more
Just like lay-by, hedge funds will be back
Would you like to know how many times Investment & Technology published a story including the word ‘after-tax’ in 2007? I’ll tell you anyway. 29. And how many do you reckon we’ll run in 2009? This editorial could well be it. One fundie recently cheered themselves up by reminding me that such were the losses … Read more
Just like lay-by, hedge funds will be back
Would you like to know how many times Investment & Technology published a story including the word ‘after-tax’ in 2007? I’ll tell you anyway. 29. And how many do you reckon we’ll run in 2009? This editorial could well be it. One fundie recently cheered themselves up by reminding me that such were the losses … Read more
Happy medium for private equity as baby boomers cash out
As funds managers wait anxiously for super funds to start spending their stockpiles of cash, Ian Macoun is betting that at least some will see opportunities in what might seem an unlikely place – the mid-market private equity sector.
Happy medium for private equity as baby boomers cash out
As funds managers wait anxiously for super funds to start spending their stockpiles of cash, Ian Macoun is betting that at least some will see opportunities in what might seem an unlikely place – the mid-market private equity sector.
Pure-play asset managers to benefit from crisis
Asset management M&A activity is expected to rise this year, with continued distressed sales by investment banks and insurance companies, but the good news for pension funds is the emergence of a strong independent sector in Europe.
According to the latest report by Jefferies Putnam Lovell, an asset management researcher and corporate advisor, pure-play asset managers and private equity firms will be the biggest beneficiaries of a “massive reshaping of the industry”.Pure-play asset managers to benefit from crisis
Asset management M&A activity is expected to rise this year, with continued distressed sales by investment banks and insurance companies, but the good news for pension funds is the emergence of a strong independent sector in Europe. According to the latest report by Jefferies Putnam Lovell, an asset management researcher and corporate advisor, pure-play asset managers and private equity firms will be the biggest beneficiaries of a “massive reshaping of the industry”.
REST’s group insurance revolution: death and TPD separated
Industry fund REST Super revolutionised its insurance offering in December by unhooking death cover from total and permanent disability (TPD), coming closer than any fund has thus far to solving the problem of creating a default cover to suit a diverse membership.
REST’s chief executive Damian Hill described the fund’s redesign of its insurance offering as “the biggest change to superannuation since the introduction of Choice”.REST’s group insurance revolution: death and TPD separated
Industry fund REST Super revolutionised its insurance offering in December by unhooking death cover from total and permanent disability (TPD), coming closer than any fund has thus far to solving the problem of creating a default cover to suit a diverse membership. REST’s chief executive Damian Hill described the fund’s redesign of its insurance offering as “the biggest change to superannuation since the introduction of Choice”.
A house divided: industry battles over clearing, lost member framework
It is probably nothing on the ‘default funds in awards’ debate, but responses to the Rudd Government discussion paper on a national superannuation clearing house and improved framework for reducing ‘lost’ accounts revealed some deep divisions among industry players.
SuperChoice, which is already the country’s largest clearing house, handed in a proposal which retains an element of current industry practice, in that it allows a multiplicity of providers such as banks and payroll offices to continue competing for contribution capture work from employers.
However under SuperChoice’s model, it would become the central data exchange to which all those contributions were transmitted, and the so-called ‘Superannuation Industry Exchange’ (SIX) would carry out the subsequent validation, clearing, reconciliation, aggregation and distribution of the monies, acting as a single source of truth.
“This hybrid model combines the industry scale and manageability of a single infrastructure along with the wide distribution and employer value-added capability of a multiple provider model, with minimum disruption to current market norms,” the submission says.
SuperChoice sees the SIX evolving beyond choice transaction validation and clearing services to perhaps become an automated rollover hub, or support a lost or multiple member reunification framework.
SuperChoice says the SIX should be industry-owned and governed, and be able to interface with a “variety of communications protocols”.
There is a faint echo of Superchoice’s proposal in that from the Association of Superannuation Funds of Australia (ASFA), which says that all existing clearing houses and payroll systems should be permitted to perform their current functions, but with reference to an industry-owned and operated “central data exchange” to which all funds would be required to provide and update information.
The ASFA proposal says an industry-standard electronic format for accepting and delivering contribution information and payments should be an operating condition for every clearing house.
The AIST, meanwhile, has come out against the need for any centralised clearing house at all, but has backed AusFund’s proposal that it be the default national ERF provider.
The centralised clearing house would be irrelevant to a major source of higher administration costs – small businesses which remit by paper – and according to AIST, those businesses large enough to run a payroll system are already able to electronically transact with multiple super funds through those facilities.
It does admit the upfront validation promised by the centralised clearing house is an attraction, but argues it can be achieved by other means.
AIST’s submission derides clearing houses, arguing their typical business plan depends on delaying the payment of employer contributions to the destination funds, so that a ‘turn’ may be taken on overnight money markets, with a sizeable opportunity cost borne by fund members.
The “interposing” of a monopoly clearing house between funds administrators and employers would “seriously impact on their current capacity to interact to resolve issues around contribution payment”, the AIST submission says.
It also suggests APRA’s current power to audit administrators be extended to a power to licence them, with the capacity to transact electronically and efficiently a licence condition.
