With Catholic Super and Equipsuper set to officially merge at the end of the month, chair Andrew Fairley will hand over the reins - but he has "no interest in going home to mow the lawns".
After more than 12 years at the helm of Equip, two of which included its joint venture with Catholic Super, Fairley will depart at the end of the month. In doing so, he makes way for deputy chair Danny Casey - Catholic Super's chair prior to the JV - to take over.
Reflecting on his decision to step down, Fairley told Financial Standard he has always agreed with APRA's view that 12 years is the maximum amount of time one should remain on a super fund's board.
It's also good timing as the successor fund transfer that Catholic Super and Equip have been working towards since 2019 is set to complete at the end of the month, perfectly bookending the Equip chapter of Fairley's career.
"I had always envisaged I'd be leaving around this time. I possibly could have left a year or two ago because I felt the fund was in good shape, but the opportunity to bring Catholic Super in and, at the same time, have an opportunity to bring a skilled chair on to follow me was pretty compelling," he said.
The joint venture model which created Togethr Trustees was made possible by the fund's extended public offer (EPO) licence, which enabled Catholic and Equip members to reap the benefits of scale long before they would have with a traditional SFT; almost 50% of the estimated benefits have already been delivered.
Fairley wouldn't have done it any other way, saying: "SFTs are very expensive and, by doing it this way, we've been able to pay quite a lot of the expenses using the savings that we've achieved through the joint venture."
Uniquely, even after the formal merger, the fund plans to retain the separate brands with which those members identify will remain.
"That's a well-trodden path in commerce; you can run a business that sells multiple different products under different brands and we're working through how we do that," he said.
"The Catholic Super brand means a great deal to the members of that fund. It's been a distinguished fund over many years, and it has a strong following, so I think it would be folly for us not to want to retain that."
In his time, Fairley has overseen his fair share of mergers that have contributed to the growth of both Equip and the joint venture, including those with Rio Tinto Superannuation Fund, the Pitcher Retirement Plan, the Dow Australia Superannuation Fund and, most recently, Toyota Super and BOC Super.
Fairley was first appointed chair of Equip in 2009 when the fund had less than $4 billion in funds under management. Under his stewardship, the fund has now grown to about $30 billion, including Catholic's FUM.
Despite the regulator saying $30 billion is the threshold for a super fund's survival, Fairley believes Equip and Catholic Super still have a way to go, adding that while the fund has its hands full for the next six to 12 months, there are plans for more mergers thereafter.
"I find myself very attracted to the views of Helen Rowell and her encouragement of industry rationalisation, but $30 billion is not enough... You can't achieve the real benefits of scale and be able to compete until you're over $50 billion," he said.
"There are a lot of underperforming funds, no question... I think with the Your Super, Your Future legislation passing, there's going to be a much greater focus on this. The letter you have to write to members after two years of underperformance is pretty condemnatory of your stewardship of the fund.
"If I got that letter, I'd be moving my money the next day. In fact, I probably wouldn't leave it until the next day - I'd be moving it that day."
While he's confident Equip and Catholic will have no trouble in meeting the obligations of Your Future, Your Super, something that will help is the skills matrix it uses to select its board directors.
Seven years ago, Fairley led the Equip board in determining what skills existing directors had and what skills were required to ensure the sustainability of the fund. The board was then refreshed in line with those findings.
"I think it was one of the most important things that we have done in the development of the sophistication of our trustee. Clearly, it is essential to have investment skills, legal, accounting and governance capabilities. Of course, knowledge of the industries you represent is vital too," he said.
"But an increasingly important skill to have on your board is an understanding of technology and how you can disrupt the existing communication models to access members across old and new media, as well as general sales and marketing skill."
Flagging that he plans to maintain an active role in the super sector, Fairley is looking forward to navigating an industry "driven by scale", with the largest industry funds already commanding more than 40% of new member accounts.
"There is a challenge for smaller funds, including Equip and Catholic, where there are rollouts. Those rollouts are making a number of funds - mercifully, not ours - cash-flow negative. That is a major concern for them and an imperative to have conversations with larger funds to merge," Fairley said.
"The larger industry funds outperform smaller ones by 70 basis points... It is a consolidating environment at every level... There is a minimum efficient frontier and that is at least $50 billion, and if you're not $50 billion then you're not in the game and you better start having conversations."
He will also maintain his existing directorships, including that of super industry representative on the board of the Australian Financial Complaints Authority.
Outside of super, Fairley plans to spend more time on the Yarra Valley cherry farm he bought seven years ago. The grandson of one of the founders of SPC, Fairley's orchard produces about 100 tonnes of fruit per year and is now a boutique premium producer.
"I'm not short of things to do and I have no interest in going home to mow the lawns," he said.
But for any super fund chiefs or chairs finding themselves reaching for the phone, think again.
"I would not take on a chair of a fund that was going to be in competition with the fund that I've been at for more than 12 years," Fairley said.
"But I'm certainly open to discussions with anyone who thinks they can use my experience and expertise to their benefit and isn't going to be anything other than complementary to the work I've done in building Equip and Catholic up to where it is now.
"I'm not about to do anything that would prevent that fund from going on to become the logically scaled fund that it should be."
"equip" - Google News
June 18, 2021 at 09:43AM
https://ift.tt/3iMOyId
Catholic, Equip SFT to see Fairley exit - Financial Standard
"equip" - Google News
https://ift.tt/35zdBFR
https://ift.tt/3fgZnOp
No comments:
Post a Comment