Local Government Super (LGS) has almost completed a long-term restructuring process that involves insourcing its front office operations, having been granted an Australian Financial Services Licence (AFSL) in late November and appointing about 12 in-house financial planners from previously outsourced advice provider FuturePlus.
The developments are the culmination of a process that began several years ago when Peter Lambert was appointed LGS chief executive and the fund decided it was important to take greater control over investment strategies and front office functions, Lambert told Super Review.
Lambert anticipated a transitional period of about three months, where existing appointments need to be honoured, for example where planners moving across to LGS have pre-existing appointments with EISS, but no new business or appointments will be accepted from financial planners that would have previously handled energy industry employers allocated through them.
This will give the fund greater control to ensure planners are located where they can be best utilised, more closely monitor the quality of advice provided and generate a greater alignment of interest, Lambert said.
Other front office functions to be integrated include marketing, product, and client servicing. The fund plans to insource its call centre in two years time, which would complete a move to bring all front office functions in house.
The fund will continue to outsource back office functions including administration, custody services, accounting and paraplanning to FuturePlus, Lambert said.
The reshuffle will also mean a rearrangement of the fund’s premises at Local Government house at 28 Margaret Street in Sydney. Current FuturePlus staff will move from the twelfth floor over the Christmas and New Year period, allowing FuturePlus staff who are joining the fund to be integrated on the twelfth floor, meaning LGS will be able to have all its operations together on one floor.
Once the transitional period is complete the fund will be able to cast an eye towards Cooper Review recommendations, which will have been more clearly defined by the Government by that stage, particularly whether the fund will continue to be able to continue to offer free financial planning advice.
“That has been successful for our model, we’ve had high engagement with older members coming out of defined benefit arrangements,” Lambert said.
It was important to have a good arrangement with those members to increase the likelihood of them remaining with the fund and employing the fund’s post-retirement products, but the free financial advice model may not be able to continue, he said.
“Clearly the days of free advice are numbered, it would be naive to think all members share equally in the free advice, some are frequent users of it, some hardly use it at all, but they all pay for it equally.”
It was something the fund would address within the next six months in order to ensure it remains competitive, he said.
