NMG’s acquisition of Tria Investment Partners and its combination with NMG’s consulting business will produce the leading multinational consultancy focused on Australia’s wealth management, asset management, life insurance and life reinsurance sectors, with an unmatched offer across consulting, research and analytics, and implementation.

Mark Prichard, CEO NMG Consulting (Global) said:  “Today’s announcement is transformative, enabling us to offer our expanded client base a broader and deeper range of sector skills and expertise. Tria has carved a strong reputation for industry insights, analysis, and skilled implementation within the Australian superannuation, wealth and platforms arena. NMG’s capabilities are complementary, being the leading consultancy to Australian insurance and reinsurance institutions, facilitated by a multinational footprint.”

“We expect to see significant growth in Australia via our superior client proposition, while the NMG network will enable accelerated delivery of our combined Australian capabilities to international markets.”

According to Tria’s managing partner Andrew Baker: “Our newly enhanced offer comes during a unique growth phase as the industry looks to move beyond near-term cyclical and regulatory issues, to a longer-term focus on the future needs of customers.”

“Our clients seek trusted partners with original thinking and insights to help solve some of the big strategy, product, distribution and structural challenges that lie ahead. We can now deliver an unmatched depth of resource and talent, sourced locally and from within the global NMG franchise. For Tria clients it will be business as usual in the short term, but over time clients will gain enormous benefits through the addition of new capabilities and expertise.”

Andrew Baker will assume the role of Country Head for the combined Australian NMG Consulting business, including the existing Tria business. Ashwin Field will continue to lead NMG’s multinational Strategy Consulting practice.

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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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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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