In The Office
EXECUTIVE Interview
A Leading Provider
Managing more than $2 billion for over 40,000 members, legalsuper is the
superannuation fund for Australia’s legal profession.
Images by Scott Ehler
A
ndrew Proebstl, chief
executive of
legalsuper (previously
known as the Legal
Industry
Superannuation Scheme), joined
the fund in 2003. Two years later,
the fund embarked on an
acquisitive growth program
resulting in seven other super
funds for the legal profession
merging to form legalsuper.
Andrew spoke with The CEO
Magazine about his time with the
fund and how legalsuper has
become the super fund chosen by
more than 40 per cent of
Australians in the legal profession.
The CEO Magazine: How did you
manage mergers and ensure
cohesion across the newly
formed fund?
Andrew: Our mergers are a big
part of why the fund is where it is
now. We had seven mergers that
we went through, each of them
different and in varying
circumstances, so they required
individual approaches. You need to
be pretty adept at negotiating with
the various parties and understand
quickly what their objectives are to
ensure you structure and
implement the merger to meet
those requirements.
There’s quite a lot of work and
analysis that needs to be done:
due diligence needs to be
thorough so that both parties go
into the merger with a mutually
clear understanding of where
things are before the merger and
where they are going to end up
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The CEO Magazine - March 2014 when the merger is implemented.
The seven mergers have been a
great achievement for legalsuper.
They have evolved the fund into a
national super fund for 40 per cent
of the Australian legal profession,
expanding what was originally a
state-based super fund for the
Victorian legal profession.
The GFC encouraged many
super funds to review their
processes and portfolios. What
has legalsuper done to safeguard
against another GFC?
We continue to review our strategy
and our processes to make sure that
we’re efficient, not just in our
decision-making but also in the way
we implement decision-making as
well. I think we’ve developed a
governance model that is unique.
Most super funds have an
investment committee, but, in our
case, our investment committee is
chaired by an independent
investment expert, David St John,
who is a former chief investment
officer of UniSuper.
We also have Neville Hathaway,
another independent investment
expert, on the investment
committee. Neville has deep
investment experience, having
worked with a number of
investment managers, and is also a
former associate professor at the
Melbourne Business School, so he
has both academic experience and
investment management experience.
In recent years, our investment
performance has improved relative
to other super funds, and we
attribute this to our ongoing review
“We continue to
review our
strategy and
our processes
to make sure
that we’re
efficient, not
just in our
decisionmaking but also
in the way we
implement
decisionmaking.”
- Andrew Proebstl
of strategy and the governance
framework that underpins our
investment decision-making.
I’d attribute our investment
performance to our strong
investment governance, with the
investment committee having direct
access to investment expertise from
both our internal experts and our
asset consultants. I think it’s always
critical to make sure that the
investment committee has the best
available information and advice so
they can make the most appropriate
decisions on the investment
opportunities that are before them.
legalsuper has offered members
a direct investment option since
2007; what was the motivation
behind this move?
Across the industry at the moment,
there seems to be a bit of a rush by
super funds to roll out their
version of a direct investment
platform. Because we have
higher-than-average balances than
most other funds, and higher levels
of financial literacy in the legal
profession, the direct investment
option is an attractive option to our
membership base compared to
some other occupational groups.
The original release of our direct
investment option was only for
ASX-200 shares, but in December
2012, we extended the platform so
members could invest in ASX-300
shares, plus a suite of ETFs and
term deposits. We’re looking at
other securities that we might be
able to put on the platform to
increase the range of options
available to our members.
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Of course, it’s not a complete
alternative to a self-managed fund,
but for those members who want
to avoid the additional compliance
requirements and increased costs
of having their own fund, it may
very well be an attractive option
for them. It’s only been a year
since we launched the enhanced
platform, but assets under
management have more than
doubled in less than a year.
We have also had a number of
members unwind their selfmanaged super fund to join
legalsuper. Some of these members
are in fact re-joining legalsuper.
This trend shows that members
will change the vehicle they use to
suit their own particular
circumstances and needs. For
super funds like legalsuper, it’s
about being in the right place at
the right time.
What differentiates legal
super from other industryspecific funds?
Our mission is to be the leading
provider of retirement-savings
products and services for
Australia’s legal profession. That’s
how we position and promote the
fund. As a boutique super fund,
we’re quite a bit different to the
bigger super funds that often serve
multiple occupational groups. For
example, because we focus on the
legal sector, a white-collar,
lower-risk occupational group, we
have been able to secure for our
3.
The CEO Magazine - March 2014 members high life and total-andpermanent-disability cover at very
competitive premiums.
What that means is that our
favourable claim history has
allowed us to negotiate higher
levels of cover and lower
premiums. This is particularly
topical at the moment as many
funds have been reporting
substantial increases in premiums
between 20 and 40 per cent for
members. In our most recent
insurance review, we’ve been able
to negotiate that our premiums
will be fixed for the next three
years, which is a real tangible
benefit for our members.
We also have high levels of
engagement with our members
because we have a deeper insight
into the expectations of the legal
sector. For example, the industry
average is that 10 per cent of
total assets are invested outside
the default investment option. In
our case, 40 per cent of total
assets are invested outside the
default option—four times the
industry average. This is partly
because our members are
white-collar and many have
higher levels of financial literacy;
but I think it is also indicative
of us being closer to our
members. With a membership of
40,000, we can resource and
deliver higher levels of personal
service. That’s a big point of
difference between us and other
super funds in the industry.
“There’s no
end of change
in the
superannuation
industry, but
as a smaller
membership
with a focus on
a niche market,
I think we’re
very well placed
to navigate our
way through
the many
challenges.”
- Andrew Proebstl
Member research is very important
for us, and it informs our strategy
as well as the initiatives we
implement to improve products
and services for our members.
Every two years or so, we
commission a more substantial
research piece undertaken by a
third-party research house. We get
invaluable insights from these
research initiatives that keep us in
tune with our members and their
retirement-savings needs.
Externally, how does legalsuper
engage with its suppliers and
strategic partners to ensure
ongoing prosperity?
We have a number of forums where
we directly engage with our advisers
and outsourced partners. We talk to
them about the culture we want to
project through to our members, the
things that are important to us as an
organisation, and our strategic
objectives for the coming year and
beyond. So it’s very much about
sharing our strategy with our
outsourced partners.
What does the future hold
for legalsuper?
As an industry, super funds need
to continue to be better and better
at what we do. The landscape
around us is continuing to change:
successive governments have
reformed the industry, there’s the
financial service review that was
recently announced and will be
steered by David Murray. There’s
no end of change in the
superannuation industry. But as
a smaller membership with a
focus on a niche market, I think
we’re very well placed to navigate
our way through the many
challenges of all these changes,
and we might even be better
placed than most funds.
Our smaller membership and close
association with the legal
profession means we can efficiently
achieve higher levels of
engagement with our members.
Ultimately, super is predicated on
trust, and tour objective is to make
each member’s contact with our
organisation a good experience.
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