Comment by Greg Bright
People of a certain age tend to overstate recent change and look fondly on a fuzzy past of seemingly greater consistency. So, maybe it’s just me approaching retirement age but it looks like there is a generational change happening at the top of superannuation and funds management.
While attempting not to pass comment on whether this is a good or bad thing, there are a lot of experienced people deciding not to go back into the water after either being restructured out or simply getting fed up with their jobs in recent months.
Hopefully, if the Coalition is elected in September and passes its proposed law to make industry funds have three independent directors, these people will be able to resurface and their wisdom will not be lost.
Michael Clancy at MLC is to be followed soon by Paul Ireland, who announced his retirement last week. Gerard Doherty at Fidelity has been followed by John Wilson at PIMCO. Terry McCredden at UniSuper is to be followed soon by Martin Crowe at Tesltra Super. Tim Hughes, who headed up investments for Non-Government Schools Super, also announced his retirement from day-to-day investing last week.
It is at their peril that employers lose their most experienced people for whatever reason. If the reason for leaving is to wind down a bit and smell the roses, employers will increasingly have to accommodate those wishes. Lew Sanders, one of the best known, perhaps best, American value managers of the past several decades presents an interesting case study.
After 32 years at Sanford C Bernstein and finally as chairman and chief executive of Alliance Bernstein, and having orchestrated the merger with Alliance Capital in 2000, Sanders was pushed from his role at the top in December 2008, at the age of 61.
He promptly did what so many funds managers before him have done – he started up his own shop, recruiting several former colleagues to help. Within about a year he had garnered US$3 billion of funds under management and recently has picked up about A$800 million from Australian clients, despite having no representation in Australia.
Sanders was one of several international speakers at last week’s annual Russell Investments conference. He said he tries to get to Australia at least once a year. At 66, he is not thinking of retiring anytime soon.
The Coalition’s proposal for industry fund boards is difficult to fathom. Even their competitors have to admit industry funds have been the best-performing sector of the industry for more than 20 years. Sure, they have a cost advantage by not having to produce a profit, but neither do government funds. The Coalition’s proposal is that industry funds alone – not government, not corporate and not commercial funds – will need three independent directors alongside three industry and three trade union or employee representatives.
McCredden at UniSuper has already been snapped up for a part-time role at the conference and education company Centre for Investor Education. It is hoped that the others, and others like them, have similar success, if they so choose, and the industry does not lose their knowledge too soon.