Member interests the ‘north star’ for super fund trustees

Various superannuation fund trustees have shared their thoughts on the dangers of being over inquisitive, on holding firms accountable, and why member interests must remain at its core.

Speaking at the Association of Superannuation Funds Australia (ASFA) Conference in Brisbane, Damien Frawley, independent chair of Hostplus, highlighted the dangers of being over-inquisitive as a trustee.

A former chief executive of the Queensland Investment Corporation (QIC) and former country head of BlackRock Australia, Frawley drew on his own experiences being on both sides of the board.

“As an executive, you find some directors and some trustees who are a little bit over inquisitive,” he noted.

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“There’s a principle of, as they say, ‘noses in and fingers out’ and that’s an important principle to adopt as a trustee and director.

“As a director, you’re only as good as the information you’re given or the question that you asked about the information that you want, and if you can’t do that, you’re in a very compromised position.”

Frawley continued: “I’ve been on boards where the executives have told you what they thought you wanted to hear and [it] clearly isn’t right.

“When you uncover that, you’ve got to act, and that’s an important part of being a trustee - making sure you hold them accountable. Give them the opportunity and oxygen to go and do what they’re supposed to do as an executive, but hold them to account as well.”

Speaking alongside Frawley on the trustee panel, Michael Bargholz, chair of the Rest Board Investment Committee and a former senior executive at both Pendal and Fidelity, agreed that there were many moving parts in running a super fund, compared to his experience in investment management.

“Superannuation funds appear to be in a process of rapid evolution. When you’re managing an investment management business, there is change, but you’re often following the clients and if you’re working for a long-established firm, the idea is to not change too much,” he observed.

“Whereas in a super fund, there is a lot of change. The regulatory environment is changing, the scale of the funds are changing, the funds in Australia are growing in their maturity and they have to evolve their operating models… Then the members are changing and the way they want to be interacted with.”

Ultimately, though, governance roles boiled down to stakeholder management, the super fund trustees agreed.

Bargholz elaborated: “If you think about 1.9 million members [at Rest] with varying views on so many things, and the regulators, the pressure groups, and the industry associations, the goal for any trustee is to zero-in on what is in the best interest of members, and not be torn from that goal.

“There’s one thing I know and that is there’s a duty on me to put members’ financial interest first as a sole purpose. 

“That’s really galvanizing because the temptation to try to chase everything down is overwhelming if you don’t have that north star.”