No doubt now exists that the global financial crisis has hit the superannuation industry hard. As the full realisation of declining member returns becomes clear, funds have turned their attention to preventative measures to stop such a situation re-occurring.
At an industry summit held last week, the discussion turned to the role of the asset consultant and how funds are negotiating this relationship in the current financial environment.
"The asset consultant is one of the more maligned in our organisation," Anglican Church, Diocese of Sydney chief investment officer David Cannings said.
"One criticism is that they don't understand the nature of the operation."
Other criticisms levelled at asset consultants included the problem of conflicts of interest where they are offering both platforms and advice, and the ways of ensuring the accountability of consultant research.
Industry consultant Glen Langton said that with the amalgamation of superannuation funds, more and more funds were appointing CIOs as a way of keeping a handle on their investments and taking a more hands-on approach.
"Historically many funds were happy to outsource this to asset consultants, but now not so much," Langton said.
And this certainly seems to be the case. Australia's largest industry fund, AustralianSuper, has added a CIO as has the Local Government Superannuation Scheme (LGSS).
"My position is a new one that was only created in the middle of last year. This is in line with the industry trend where trustees were looking for someone who didn't have any other conflicts or distractions involved with their advice," LGSS CIO Craig Turnbull said.
"So it's really a way to get independent, dedicated advice from in-house investment staff that has more exposure to the trustees, while at the same time reducing duplication."
Despite this, there are funds that have not chosen to take on a CIO and work closely with their asset consultants to achieve results for their members.
"We rely heavily on asset consultants and building trust with our asset consultant, JANA. We plan and take time out and this helps build relationships with asset consultants across all asset classes," legalsuper chief executive Andrew Proebstl said.
And even funds that have taken on a CIO still see the value of maintaining a good relationship with their asset consultants.
"The global financial crisis has tested the business strategies of the funds we've been involved in, so it is still of great benefit to have an asset consultant," Turnbull said.
