Industry funds learn good advice doesn't come cheap
By
Charlie Corbett
Sun 01 Jul 2007
Not so long ago the average industry fund employed one chief executive and, perhaps if they were lucky, someone to lend a hand with making the tea.
News last month that Australian Super is to hire a third asset consultant to look solely at international opportunities in private equity highlights just how much the world has changed.
Here is an industry fund that now employs three external asset consultants on top of its own internal investment team headed by Mark Delaney.
Not so long ago the average industry fund employed one chief executive and, perhaps if they were lucky, someone to lend a hand with making the tea.
These days superannuation chiefs inhabit state-of-the-art offices and have a myriad of investment professionals reporting to them. In fact, the average super chief nowadays generally has a background, not with the trade unions as in days of old, but in financial services.
Take Tony Lally, the new chief executive of Queensland-based industry fund Sunsuper and the topic of this month's trustee profile. He is a perfect example of the new breed of industry fund executive.
A former Olympic cyclist who represented Ireland at the 1980 Moscow Olympics, Lally moved on to forge a highly-successful business career.
Before joining Sunsuper he worked as an investment consultant at Deloitte, he led Deutsche Asset Management's Asian business and also spent time as head of retail financial services at Commonwealth Bank of Australia (CBA).
He is a very driven man with a mountain of experience in financial services and he can't have come cheap. This is the whole point. In the brave new world of industry consolidation and sweeping superannuation reforms, pension funds are being forced to compete.
There is a war for talent out there and industry funds are learning good investment advice doesn't come cheap; especially when the mega returns of the past four years start to shrivel up.
How will all these extra costs affect fees? This is the question everybody must now ask. Where on earth is all this money coming from to lure these hoards of investment wizards away from their lucrative funds management careers? The answer could be: members' balances.
Only time will tell. But this month's cover by Christine St Anne, which focuses on recruitment and includes a comprehensive industry salary survey, may go some way to enlightening our readers on how much pension funds are paying their professionals.
While we're on the subject of large salaries and high fees, the feature this week looks at the thriving hedge fund industry in Australia. James Dunn attempts to explain exactly how we define a hedge fund these days and how super funds are integrating them into their alternative asset portfolios like never before.
As always, if you have any comments please don't hesitate to call on (02) 9004 7133 or email corbett@investorinfo.com.au.
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