As a fresh young economics and statistics university graduate, Mal Smith very quickly discovered that the intricacies of superannuation fed his thirst for solving analytical problems. After Smith graduated from Adelaide University in the early 80s, he took on his first role at AMP Corporate Super.
“Super was really just taking off at that time. Those were the days of companies establishing corporate super arrangements for their employees,” says Smith.
After a few years with AMP, Smith moved back to Victoria and took a job with National Benefits Consulting Group. The business was in turn acquired by consulting firm Noble Lowndes, and following two further mergers, Smith found himself working for Mercer Marsh.
“I’ve changed jobs a few more times than I’ve actually resigned. Often that change is good fun … there were different opportunities, management styles and challenges in each organisation.”
While working at Mercer, Smith was a client relationship manager, consulting to various corporate funds.
“At that time, the first wave of corporate funds were deciding if super was an HR benefit for staff. Many organisations decided that super was no longer a differentiator, so they outsourced their funds and got out of the business.”
Smith credits an MBA from Melbourne University in the mid-1990s with equipping him with the critical and decision-making skills to take on his current role as CEO.
“The course gave you the armoury to be able to ask experts the right questions, and think critically.”
“When the role at REI Super became available, instead of consulting to funds about their strategy, I had the opportunity to actually implement my own,” he said.
Smith said the variety in his work at REI Super remains intellectually stimulating and keeps the job fresh, which is one of the reasons he has stayed with the fund for 13 years.
“What I like about it, is that about 50 per cent is relatively routine, but the other half is solving new business problems,” he said.
Smith believes technology, including SuperStream, is modernising the super system, and that other technological advances have created both new jobs in the industry as well as challenges.
“Members now want to be served through their preferred channel, including digital, which wasn’t as prevalent five or six years ago. A decade ago in my role, we didn’t focus as much on what cyber risks meant, or how we would deal with them.”
Being the CEO of a smaller fund means Smith enjoys working across different functional areas of the business, and still enjoys contact with members.
“There have been a lot of highlights along the way, and sometimes they’re the unexpected ad hoc member contact where you realise the difference we have made to our members’ lives,” he said.
Smith said investment cycles and the reactions they provoke from members have remained a constant during his 30-year career.
“Reactions are still charged by fear and greed during downturns, and exuberance when outlooks are better. Human nature does not seem to change.
“Reflecting a decade on, the global financial crisis (GFC) was an intense time for us. While it wasn’t particularly pleasant at the time, I can still say that it was probably a highlight, or at least memorable, because of the work we undertook to help members navigate successfully through those events without making irrational investment decisions.”
REI Super continues to grow and extend its teams and capabilities. The fund currently has 30,000 members and $1.7 billion in funds under management.
“We’re one of a group of funds that have been able to double our members’ money since the bottom of the GFC. Back in 2007, we probably wouldn’t have thought we’d generate 100 per cent accumulated return over the next decade.”
Smith says that his role as CEO is to remain open to new ideas, and never be complacent. He explains that as the fund’s members work in the property and service industry, their experiences and expectations around service are high.
“We’re dealing with a group of people also engaged in a client-service industry, so therefore have a pretty keen eye on what they regard as high quality client service.
“The members are a great bunch. People in real estate and property are motivated, positive and engaged, and we find our members are loyal to us. They appreciate what we do and it’s good to get feedback from them.
“Members are becoming increasingly demanding of their fund, as they should be. Super is an important investment for them, and we want them to be engaged.”
Over the last year, the fund has launched an online member joining tool and a mobile app to refine the customer journey. It works to relay relevant information to members in ‘bite-sized chunks’.
“While there’s a lot of potential complexity in this industry for people with very high balances, the majority of our members have moderate super balances.
“We need to reinforce the message of reassurance: make contributions early, invest well, consolidate your super, and some of these other changes in relation to super, and for members not to be overly concerned, because they may not generally affect them.”
We need to reinforce the message of reassurance: make contributions early, invest well, consolidate your super
REI Super encourages members to conduct a yearly super health check to make sure they are on track to meet their goals, have chosen the right investment option and insurance cover, and are keeping an eye on fees.
“Then they can get back to their day job knowing that someone who is a trusted partner is working with them, and whenever they do need advice, we are there and happy to help.”
Smith explains, “Super is something we don’t expect everyone to care about passionately, but REI Super wants to be ready to interact, and in the members’ preferred channel, to support their super decision making and information needs”.
The nature of the property industry means REI Super members are sometimes tempted by self-managed superannuation funds (SMSFs).
“Our members love property and they sometimes think property might be as good an investment as a well-diversified, balanced fund. SMSFs have been somewhat oversold in the market, and we do see a number of members who have had bad experiences seek to unwind these vehicles and return to us.”
A year ago, REI Super became a public offer fund, reflecting the fact that some people working in real estate are self-employed, and move in and out of the real estate industry.
“Families more often see themselves as a single economic unit, so the public offer strategy involves attracting the family members of those working directly in property so they can jointly manage their superannuation,” Smith adds.
“The take-up and feedback from members has been encouraging. It’s an evolution, not a revolution to our strategy.”
The fund will soon be offering additional retirement products, as a result of Baby Boomers moving from accumulation into retirement. It is also focused on generating returns to meet the living costs of those retiring members, many of whom have insufficient super saved.
“It is a question of generating long-term returns in an investment environment that’s carrying lots of debt, and yields in future may be lower. It is going to be quite challenging to produce those returns with an acceptable level of volatility, I think.
“The financial security of our members is important to all of us who work at REI Super, and early engagement with members to help maximise their outcomes is what we are seeking to achieve.
“Since two thirds of REI Super’s members are women, the fund is acutely aware of the gender pay gap and broken work patterns of their membership, so we attempt to engage these members early in the journey.”
Since two thirds of REI Super’s members are women, the fund is acutely aware of the gender pay gap and broken work patterns of their membership, so we attempt to engage these members early in the journey
Smith says his motivation to find these ongoing solutions is driven by his trustee office team, an engaged and committed board, and the service providers REI Super works closely with.
“The ideal work environment is where you can surround yourself with motivated smart people who challenge your thinking.”
Smith’s professional goal remains: “A happy cohort of members who’ve been with the fund for a long time – who you have taken through their savings journey, and helped transition into a dignified retirement.”