(August-2003) Life on the other side of the fence

29 September 2005

| By External |

R apid growth through merger activity is slated for Legal Industry Superannuation Scheme (LISS) with fund secretary Andrew Proebstl viewing size and scale as a source for success.

LISS has already merged with two funds and Proebstl says that more mergers are on the agenda, with discussions currently under way.

The first to roll into LISS was a $3 million corporate fund from a Victorian law firm; the second a $27 million public offer fund, which joined last October.

Proebstl, who started at LISS in January, says: “This has meant growth, an increase in our asset base, and proved that we can successfully transfer in other funds. This has given us a significant opportunity for fund growth in a short period.”

Fund growth is a key focus for LISS and is therefore “getting a lot of attention”, according to Proebstl. He says: “We see the need to cover costs and believe this can be addressed through economies of scale.”

The inclusion of the public offer fund led to the implementation of member investment choice and a modification of the rules designed to make investment more flexible.

Previously, members had to choose 100 per cent of one of the fund’s three investment plans. Now they can have any combination, which Proebstl says has freed them up significantly. Switches were also previously only allowed quarterly and can now be made on any working day.

Proebstl says the fund has actively made choice work.

He explains the original theory was that “you have to walk before you can crawl” and that the idea was to keep things simple, see the results, measure reaction from members, and then widen the investment rules.

The fund has also been assessing manager performance, resulting in the termination of three contracts. These include Credit Suisse, which managed Australian equities (now with Paradise Cooper), AMP, which handled fixed interest and cash (now with Macquarie Bank), and Citigroup, which ran a tactical asset allocation trust (now with a range of managers). “We are still investigating other products and managers,” says Proebstl.

Performance has certainly been top of the agenda in recent months. Proebstl has overseen a review by the Australian Prudential Regulatory Authority (APRA) and assessment by Mercer.

He says Mercer challenged LISS’s default fund. The consultant also carried out a portfolio construction review, and following its advice, LISS is looking at a range of new assets, such as small caps and long/short funds.

The fund is also focusing on its strategic business plan for the future. Proebstl says this will involve launching new products, such as an allocated pension and salary continuance insurance.

Other initiatives include a drive to vamp up technology to provide members and employers with an online facility. Members will be able to check their accounts, contributions added and details of their nominated beneficiaries. Employers will be able to submit payments and check payment information.

Proebstl is aware that many competitors already have online capability or are looking to offer it. He says: “We are aware of the need to review technology and are on the path to that end. However, we are not in a situation where we administer hundreds of thousands of members, with a database.”

LISS uses the Synergy platform to provide what Proebstl says, “most members are looking for, within a reasonable budget”.

Proebstl joined LISS this year but had a year and a half with the fund before then, as assisting fund secretary and administration manager up until July 2001.

Before joining the fund, Proebstl was an outsourcing tender consultant with Ernst & Young and Arthur Andersen for several years.

He says: “Now on the other side, the new role gives me exposure to all the different aspects of a fund and I get to see across all areas.”