The transition to Hesketh, who was also recently promoted to Partner at NMG Consulting, will be seamless. According to Mark Prichard, CEO of NMG Consulting; “Trialogue and Super Funds Review will continue to be published and not only will all of the big and little things clients have come to expect from Tria continue to be delivered, they will continue to get even better over time.”

Mr Hesketh has been with Tria since 2007, and has the distinction of starting as a consultant and rising all the way through the ranks. He is known for his deep expertise in asset management, and has become a leading part of Tria’s strategy proposition. Over the past 18 months, Mr Hesketh has taken on an increasing role in running the Tria business and has been integral to the recent integration of the two businesses. Mr Hesketh commented “I’m excited about the opportunity to lead and continue to grow Tria. We have an exceptionally strong team in place and I’m confident that Tria will continue to be a formidable and leading player in the consulting industry.”

Mr Hesketh will be supported by Mark Watmore who has been with Tria since soon after its foundation. Mr Watmore leads the implementation focus team and is also a Partner. His role has been expanded to include responsibility across NMG Consulting’s business lines in Australia, particularly identifying and executing opportunities for cross-collaboration between the NMG Consulting divisions.

A related change is Principal Consultant, Chris Hurst, moving to the London office of NMG Consulting in early March. Mr Prichard commented; “The addition of new perspective and experience to Chris’s already formidable asset management knowledge, strategy expertise and passion for the industry will be a real asset for our clients in Australia and beyond, in the years to come.”

Mr Baker will continue to be involved as a non-executive director of NMG Consulting and its parent, NMG Holdings, and as such will continue to support the ongoing success of the business and its people. Mr Baker concluded that “the main reason we are able to make these changes is the strength of Tria’s foundations. Tria is not built around any one person, including me. Although this transition is an important milestone, it’s really just another logical step in Tria’s progression and our aspiration to build the best consulting firm in the wealth, asset management and insurance industries. We’ve been able to hire outstanding people over the firm’s history and retain the great majority of them for the long term; their time to lead has arrived.”

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The new Tria Investment Partners Super Funds Review creates a single view across all major segments – Retail, Industry, Government and Corporate – and reveals the extent to which funds are increasingly reliant on merger and acquisition activity to stimulate growth or remain competitive.
 
“One of the surprises to come out of the report is the extent to which funds have employed M&A to fuel growth in a difficult market environment,” said Tria Investment Partners Managing Partner Andrew Baker.
 
“Beneath the headline growth numbers, organic growth generated by net inflows remains a clear challenge. Strip away growth achieved from expensive M&A exercises and we are left with some market participants struggling to keep pace with system growth.
 
“Those who have invested heavily in growth by acquisition have taken market leading positions, but face the further challenge of fund retention. Market share leakage remains a present risk.”
 
The Super Funds Review defines and applies key business metrics to competitors in all segments, which allows fair comparisons to be made between the relative health and position of Australia’s leading industry and retail funds, for example.
 
“The Tria Industry Fund Review established Tria’s research credentials in the large fund space.  The degree of change in the market has resulted in our clients asking for something even bigger and better which covers the entire superannuation market,” Mr Baker said. 
 
Tria seeks to establish the Super Funds Review as the leading source of information regarding large super fund business performance with senior management, boards and strategy groups of funds together with observers of the market.

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Tria Managing Partner Andrew Baker urged sector players to remain positive about future opportunities, despite the industry experiencing tough market conditions – “perhaps the toughest we have seen in the past 20 years.”

“We are seeing severe cyclical and structural forces at play for the Australian wealth management industry, where for the past three or so years it has been difficult to remain positive unless you are selling cash deposits or index funds,” Baker said.

“Other forces, including industry regulation, new technology and rotation away from collective super to Self-Managed Super Funds (SMSFs), and from managed funds to direct assets, remain some of the challenges and opportunities we see ahead.

“Relatively straightforward improvements to client segmentation and communication can result in a more client-centric firm, while improvements to development and rationalisation processes can greatly improve efficiency,” he said.  Mr Baker was speaking at the Tria Investment Partners’ “Spring into Strategy” presentation attended in Sydney by a large contingent of the Australian wealth management sector.

Tria co-presenter Oliver Hesketh detailed the allure of the rapidly growing SMSF sector, noting that the segment remains large, and largely untapped for the bulk of the wealth management industry.

“The challenge for fund managers here is to regain relevancy and to deliver offers that meet the needs and desired access points for SMSFs, while also stacking up against the simplicity and flexibility they require,” Mr Hesketh said. Among a number of fresh ideas presented to attendees, Mr Hesketh indicated the primary trends to watch include:

• The continued rise of ETFs
• The increasing capabilities of adviser desktops
• The expected arrival of the ASX AQUA II platform in 2012. 

However, Tria remains fundamentally positive about the outlook for the sector, which Mr Baker said is likely to grow to a $3 trillion pool by the year 2020.

“As a consequence the good news about this mandated growth is that it brings a hunger for new approaches to product. The prospects for innovation have improved markedly during this current phase, and so we believe there is very little downside for wealth management organisations to take a long-term strategic view of their product mix, their position in the investor value chain and to focus on the market segments that will really deliver for them well into the future,” Mr Baker said.

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• ETFs ability to make important contributions to investor portfolios thanks to low costs, liquidity, and tax efficiency
• A need for investors to understand the important differences between unlisted managed funds and ETFs
• Significant differences exist between various types of ETF structures, with regulators very focused on synthetic ETFs

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The latest Tria Investment Partners Industry Fund Review shows the top 10 funds account for more than two thirds of total Industry Fund assets under management, and growing.

“The big are getting bigger, applying pressure on trustees of the smaller Industry Funds (IFs) to shore up their respective future positions via growth or consolidation,” said Tria Investment Partners managing partner Andrew Baker.

Overall, the Industry Fund segment grew by 17 per cent in the year to June 30, 2010 – thanks largely to a return to positive investment returns and continued strong net inflows.  The only superannuation sector to outpace this growth was the self-managed category which continues it remarkable growth.

“For industry funds, it was the combination of strengthened investment returns and strong net inflows that delivered a healthy growth environment across the sector,” Mr.  Baker said.

But it was off-market merger activity that has proven most potent.

“The 2010/11 Industry Fund Review confirms our prediction that the market would continue to segment into the categories of leaders, followers, and the tail. We have seen three funds out of the eleven in the followers category (EquipSuper, Health Super and Westscheme) announce consolidations in the past year,” Mr Baker said.

Of the leaders, the largest, AustralianSuper, grew its market share to 15.1 per cent (up from 14.9 per cent the previous year) to June 30 2010. More recently, AustralianSuper has announced its intention to merge with WA-based Westscheme, a move which will further entrench market dynamics while creating a $40 Billion market leader.

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This is the view of leading wealth management strategy and product specialists Tria Investment Partners (Tria), which today released a research report investigating the trends in yield investments.
[to download the full Dimensions Wall of Money report, click here: Report: Wall of Money]

Tria said traditional yield managers face an uncertain future, and that a range of expected measures would include these players: Updating existing product lines Manufacturing new and innovative product solutions Closing down illiquid products caught short by the recent financial crisis.

Tria partner Andrew Baker says the so-called flight to safety and subsequent “wall of money” phenomenon is no urban myth.

“It exists. Our estimates suggest some $70 billion in additional new cash was stockpiled in bank term deposits at the height of the GFC. This is cash that might otherwise have been invested in traditional yield investments such as mortgage trusts, income funds, and the like,” he said.

“The question is: ‘will the wall crack and release cash back to the managed investments industry, and if so, when might this occur?’” Mr Baker said.

The good news for the asset management industry is that the flow of new money into term deposits has eased, despite the rollover rate for existing funds being maintained.

“This suggests some relief in sight with cash being released. But, the next catch for the industry is to devise new means to capture service and retain these funds with products that heed the lessons of immediate history.

In other words, players in the managed mortgage, cash and fixed income fund space must re-cast their strategies to take advantage of new opportunities for second generation yield investments, he said.

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