The managing director ofFrank Russell Australasia, Alan Schoenheimer has predicted a shakeout in the superannuation administration sector at the same time as announcing a new alliance betweenTowers Perrinand Russell to jointly market their “SuperSolution” bundled outsourced offering to clients.
Explaining Russell’s decision to enter into the alliance, Schoenheimer said the company had sought an administration partner which would be there for the long haul, and Towers Perrin had represented a company where fund administration was the key competency.
The Alliance also represented a follow-on from BHP Billiton’s decision earlier this year to award its $2.7 billion superannuation mandate to SuperSolution and a broader assessment by the two companies of what clients want and where the sector is headed.
The Australian alliance arrangements were reached independent of a similar arrangement reached between Towers Perrin and Russells in the UK earlier this year.
In announcing the alliance, Schoenheimer and Towers Perrin Managing Director, David Solomon described the deal as “bringing together the leading provider of multi-manager investment solutions and the leading provider of superannuation services in Australia”.
Under SuperSolution, Towers Perrin administers the fund, provides all actuarial and member services, insurance management, secretariat and trustee services for those clients seeking a pooled investment approach. At the same time, Russell will provide access to their expertise in manager selection, manager monitoring and multi-manager fund construction.
Schoenheimer said the alliance represented a “neat fit of complementary competencies” but made clear that the SuperSolution in “no way represents a master trust offering”.
“There is a distinction between what we’re offering here and a master trust solution,” he said. “This is much more flexible and the client is not locked in – there are two separate parts to the business; two separate skill sets.”
Both companies indicated the thinking behind their alliance by pointing to an increasing number of funds coming to the market looking not only to outsource but also to enter into bundled arrangements.
However, while both companies will be jointly marketing SuperSolution, this will not preclude either of them selling their wares independently.
“But where a client wants a bundled solution this (SuperSolution) will be the bundled solution,” Schoenheimer said.
Both Solomon and Schoenheimer were quick to point out that the alliance would not be significantly altering their traditional asset consulting businesses.
“While both organisations will be utilising Russell’s manager research, each of us will be adding our own unique value through our respective strategy and portfolio construction services,” Schoenheimer said.
Solomon said the two companies expected to have the alliance fully bedded down in reasonably short order.
“From there, both Towers Perrin and Frank Russell will actively market SuperSolution to clients who are looking for a better outsourcing solution,” he said.
