Crossing over

News analysis

By Christine St Anne
Mon 02 Apr 2007

Superannuation fund chiefs are increasingly offering their services to the fund managers they once had a say in appointing

In March, two superannuation fund chiefs left their funds to take up jobs in funds management.

Qantas Superannuation chief executive Jeremy Edmonds moved to Colonial First State Global Asset Management as a business development manager, while MTAA Superannuation trustee John Rickus accepted the job as chair of strategic adviser Principal Advisory Services.

These moves are not entirely new. Back in November 2004, former chief of AV Super Denis Carroll moved to fund manager Ixis Asset Management and in July 2006 REST Superannuation chief executive Neil Cochrane accepted the job as deputy chief executive of Colonial First State Global Asset Management. Indeed it was Cochrane who announced the appointment of Edmonds to the market.

"We are talking about a real shift of executives moving from superannuation funds to funds management businesses. With these recent appointments, we have not seen the last of it," Johnson Executive Search principal Lynn Muirhead said.

Culturally, superannuation funds as a business are different to the institutional market.

Muirhead said the institutional market valued the skills, expertise and values fostered in the superannuation sector.

"These individuals have a strong fiduciary responsibility. They possess a fundamental and intimate understanding of the needs and requirements of their members. They have a high degree of professionalism and integrity," she said.

This ability has seen super fund executives successfully grow their funds under management (FUM). Edmonds began with Qantas Superannuation in 2003 and since then the fund has grown to $6 billion. Similarly, in the 10 years Rickus was at the helm with MTAA Superannuation, FUM grew from $400 million in 1996 to $4.2 billion at December 2006.

The trade union roots of industry funds had given them the strong leadership skills the institutional market valued, Muirhead said.

"Executives in the superannuation sector have both the technical competency of understanding finance as well as the strong leadership skills, which for some businesses finding that sort of background is still a challenge," she said.

By the very nature of the industry, superannuation funds have essentially been the buyers of investment products. For fund managers this can give them a valuable insight into how industry funds tick.

For Principle founder and managing director Les Fallick the hiring of Rickus to the company was a "bit of the gamekeeper-turned-poacher story".

"We will gain immeasurable insight from his counsel across a range of industry issues that he has encountered as a trustee over the past 11 years. Principle sees the super funds as our real clients, and John knows how these funds tick, what services they require and what they will need going forward," Fallick said.

It is also an opportunity for businesses to capitalise on particular skills developed by superannuation fund chiefs.

As Principle specialises in infrastructure and private equity, Fallick said Rickus' investment background was of most value to the company.

"It's particularly his advice on alternative assets that will prove an enormous value to Principle. The MTAA fund has been one of the more innovative funds. It has invested in this asset class with 43 per cent of its assets investing in alternatives," he said.

Cochrane established REST's advice business, a first in the industry, by joining forces with financial planner Money Solutions.

"It was part of my commitment to world best practice and it's what I am going to do at Colonial," Cochrane said.
He said he believed there would be more executives like him who would make the move in the future, particularly as the industry began to look more like one sector.

"I suspect that it will happen more. It's actually an easy move to make if you find the right organisation," he said.

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