The CEO of one of Australia’s major industry funds says administrators are in a no-win situation. When they get it right nobody showers them in bouquets but if they get it wrong, they get plenty of brick-bats.
The bottom line for superannuation fund trustees is that they can ill-afford to get the administration equation wrong. Administrators represent the interface between funds and their members. If the administrator is getting it wrong, then chances are that members have a negative perception of their super fund.
Given the size of the Australian super industry and the trend towards corporate outsourcing, competition between the major administrators is intense. Despite this, there has been comparatively little churn in the sector over the past 24 months.
A number of mid-sized corporate funds entered into new administration arrangements over the period, but most of the major industry funds stuck with their existing arrangements.
This means that the shape and texture of the industry has changed little over the past three years.
In terms of number of funds, data compiled as a result of Super Review’s most recent Top 300 survey shows that Mercer leads the way by servicing 83 of the 294 funds that provided details of their administrator. NSP Buck follows with 34 clients and then Australian Administrative Services with 21. This line-up at the top was unchanged from 2002. Together, the three administer 47 per cent of the funds in the survey, including the 56 that are self-administered.
Where industry funds are concerned, AAS has cornered the market in terms of numbers, boasting 19 of the 79 industry funds in our survey as clients. Superpartners is its nearest rival in this market sector, with its 14 clients, all of which are industry funds. And it clearly serves the larger industry funds, having $17.2 billion in assets under administration compared to AAS’s $14.55 billion.
But this picture may change in the event that the Government manages to successfully implement choice of fund legislation in 2004. If so, there is general consensus that the maintenance of service levels and the enhancement of offerings will become crucial.
However, in an industry segment where returns are low, the key for administrators is the pursuit of volume and this probably goes some way to explaining why major players such as Superpartners are opting to get even closer to their clients.
This was evidenced in January when Superpartners entered into a new service delivery arrangement with one of its largest clients — the construction and building industry fund, Cbus.
That arrangement sees Superpartners being brought more closely into the fund’s vision and strategy processes but at the same time being required to meet highly specific service delivery targets.
Superpartners CEOº, Frank Gullone believes that far from making life harder for his firm, it makes life easier because it gives Superpartners a more intimate knowledge of what the client really wants.
“Superpartners’ unique partnership model with Cbus will enhance service standards, tighten turnaround times and introduce database analysis to complement Cbus’s delivery and marketing and communications initiatives,” he says.
It is not without significance that at the same time as announcing its new relationship with Cbus, Superpartners also announced that it had obtained ISO 9001 certification, something which validates its claimed service delivery levels.
Few of the leading administrators admit to harbouring concerns about the impact of a new choice of fund environment, claiming that the necessary technology and service delivery models are already in place.
