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(October-2001) Eyeing the big end of town
With $9.9 billion in its total corporate master trust business at the end of June 2001, AMP clearly tops the master trust rankings.
And, according to Greg Healy, national manager of AMP Corporate Superannuation and Employee Benefits, AMP intends to keep its top slot by growing this business by 20 per cent a year.
Much of this growth, he says, will come as AMP clients move to its master trust following the group’s recent decision to abandon its consultancy and administration services to corporate funds — a move seen as a significant vote of confidence in the future of master trusts.
AMP managed 95 mostly medium-sized corporate super funds with a combined membership base of almost 105,000.
Healy says over the past 18 months, 26 corporate funds, which together had 7,400 members and assets of $250 million, have been transferred from AMP’s traditional superannuation business to its master trust. And, the numbers are set to accelerate.
It’s still early days and a host of clients are currently working their way though the decision-making process, says Healy.
In the past, superannuation was the domain of large life companies like AMP, AXA and ING and these players still are among the top five players in terms of funds under management (see table p45).
But they also face intensified competition from all sides.
Tender consultants note that when it comes to meeting the needs of very large funds with assets of $500 million or more, Towers Perrin is the clear stand out. Its total outsourcing solution — which isn’t a master trust — scooped the record breaking $650 million OneSteel tender.
Also making inroads with large corporate funds with assets of $100 million to $500 million are William M. Mercer and Plum.
Mercer’s Retirement Trust has just over $3 billion in assets and has been growing by around 50 per cent a year after scooping the tenders for some pretty large funds like the $350 million Age/Fairfax plans, the $142 Ericsson fund and the $140 million Lion Nathan fund.
Plum’s master trust has 33 clients, almost $1.5 billion in assets and has grown, on average, by a whopping 80 per cent over the last two financial years. Its major wins include staff plans of companies like WMC, Western Australia Newspapers, Societie Generale and Capral Aluminium.
Deutsche Bank, the newest entrant into the master trust market, is also eagerly eyeing the medium to large end of town.
Its DirectChoice master trust now has funds under management of $75 million, having attracted three new clients: the bank’s own $40 million staff fund, the Melbourne based BMW fund and the staff plan for Mincom, a Brisbane-based software house.
Ken Lockery, head of corporate superannuation at Deutsche Asset Management, says: “There’s a long lead time in this business … we are quite pleased with how things have been going.”
But some players question whether Deutsche is too late into the market, despite its highly competitive offering.
“At the larger end of the market, you get asked who else in your master trust is of our size and capability and some funds clearly don’t want to be the first big plan in,” says a tender consultant.
Chant West principal Warren Chant notes that to target the bigger players, a master trust has to be able to handle defined benefit plans, a move that eliminates players like AMP, AXA and BT from this end of the market.
Among those snapping up business in the medium-sized market, where funds have assets of between $20 million to $100 million, are ING and CitiGroup. An emerging force in this side of the market appears to be Aon consulting, which is relaunching its master trust with several enhancements.
And, those making waves with funds under $20 million are MLC, BT, Asgard and AM Corporation.
Also on the prowl for business are the banks, which many players believe have a special advantage because of their longstanding relationships with corporate clients.
“The banks certainly haven’t been amongst the leaders, but they are lifting their game,” Chant says.
Because they have a captive market, the banks are not big bidders in tenders, but ANZ, in particular, is seen as becoming more proactive.
At the time of going to print, Commonwealth Bank hadn’t finalised its structure following the Colonial takeover, but it appears to have taken a giant step forward by appointing Towers Perrin as investment adviser to its master trust business.
And, following its purchase of MLC, National Australia is putting its smaller customers into MLC’s master trust and recommending Plum to larger corporate funds with defined benefit components.
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