POWERED BY MOMENTUM MEDIA
(February-2004) Industry fund groups beef up
In what represents one of the most far-reaching changes to the industry super fund environment, two of Australia’s largest eligible roll-over funds will be integrated into Industry Fund Services which will eventually be integrated into the industry superannuation funds bank — Members Equity.
The changes have been announced by the executive chair of IFS, Garry Weaven who says the ultimate objective is to create an organisation with the genuine capital scale needed to move forward.
Describing the initiative as “a major milestone”, Weaven says the integration of the Development Australia Fund (DAF) and AUSfund into IFS will occur almost immediately, with arrangements having been put in place to enable Members Equity to take the reins in 2006, “thus creating a single, unified institution of considerable substance”.
He says the proposal has been under discussion by the various parties for much of the past 12 months and was born out of a common recognition of the synergies which exist between the four organisations.
The far-reaching integration was announced barely a month after Members Equity announced it was launching a multi-million dollar advertising campaign aimed at attracting more industry superannuation fund members to use its service.
Weaven says the absorption of IFS into Members Equity makes good sense in circumstances where a financial institution of scale requires a wealth management division.
He says that at least a part of the reasoning behind the strategy lay in the mutual realisation that scale was necessary to move to the next level.
“As things stood, each of the organisations were relatively small and not unnaturally, were risk averse,” Weaven says.
He says this, in turn, created issues with respect to growth and obtaining and retaining the best possible people.
As well, the nature of DAF and AUSfund meant that competitive pressures were likely to emerge.
“If one takes a holistic view of the industry fund movement and its related organisations, what emerges is in fact a diversified financial institution of some scale ultimately owned on a mutual, all profits for members, basis by Australian working people,” Weaven says.
He says that in addition to superannuation funds covering half the workforce, the movement has a bank which is comparatively tiny but which has a faster growth rate than any other bank and which has already passed the three smallest listed banks in terms of assets under management.
“Collectively, this network represents an enormous opportunity to build for the future,” Weaven says. “The network is however, barely a network. While most of the organisations are well run, the business objectives are fragmented and it is difficult to identify any clear collective agenda, apart from the very general shared objective of providing value to members.”
He says that the challenge, therefore, is to:
n Unite the network to maximise the growth of banking services, including the roll-out of a full business banking capability, leverage
n Leverage the clout of the super funds to build a major funds management institution.
n Rapidly expand our financial planning capacity and other quality membership interfaces
Based on the above, to rapidly grow our non-superannuation investment products for fund members based on the same low cost, high quality principles as for superannuation
AUTHOR
Mike Taylor
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