Fund and superannuation administrator MainstreamBPO listed on the Australian Securities Exchange (ASX) earlier this month and the milestone promised some exciting announcements. Darren Snyder talked to SuperBPO chief executive Michael Houlihan about where he and the boutique administrator have been, and what the future may hold.
There is a case to be put that MainstreamBPO is one step ahead when it comes to superannuation administration. Having already listed on the ASX, MainstreamBPO has arguably jumped large administrator Link Group who is currently progressing through its IPO.
Although it was no race and rather a natural progression for both businesses, being one step ahead almost tells the story of MainstreamBPO super boss Michael Houlihan. His 30 years in super administration began with a company looking to leap ahead.
Houlihan has been in the industry since 1985. Back then it was with insurance company Australian Eagle Insurance, which was one of the first to go into the superannuation industry before the compulsory super regime.
"Australian Eagle morphed when compulsory superannuation came along and a lot of companies were setting up their administration arms so I have been involved in the back office of superannuation funds for 30 years in various guises," he explains.
"It was really one of those things that I fell into and have been in that world for the last 30 years."
SuperBPO began in 1999 when Group Benefits was established by a group of former executives of The Australian Superannuation Group. In 2007 Group Benefits was acquired by MainstreamBPO before being renamed SuperBPO in 2011.
As SuperBPO chief executive, Houlihan oversees a team of 14 and relies on a wealth of industry experience to deliver on the boutique administrator's long standing reputation.
"We employ and have a very high level of administrators. They're not button pushers, they're very good at superannuation law and the way we deal with our clients. It is a career. I've done all the courses and diplomas and whatever else but to get into the industry now there are educational requirements," Houlihan says.
The chief executive holds a certificate of superannuation management from Macquarie University and a graduate certificate of business administration from the University of Southern Queensland.
He had to call on his vast industry experience in order to secure the role at MainstreamBPO.
"It leads back to my time at Buck Consultants. I was there for eight or nine years (after Australian Eagle) and worked very closely with a guy named Greg Taylor. Greg was the CEO of SuperBPO, or Group Benefits as it was known. Before then he and I had known each other for a long period of time and he was retiring. He rang me and said would I mind having a chat."
Prior to joining the super division of Group Benefits (now SuperBPO), Houlihan spent 10 years as head of product and technical services for both JBWere Investment Management and Vanguard Investments Australia. In between there were a couple of roles as head of product and technical services for both Vanguard and JB Were Investment Management looking after superannuation and managed investment schemes.
Houlihan explains the technical side meant he was often responsible for running personal development days for financial advisers on superannuation law, tax, social security "and all those fun things."
Being among the superannuation industry since it began to evolve in the late 1980s and early 1990s, Houlihan has the advantage of overseeing that entire transition from a back office point-of-view. Technology and legislation have largely progressed the operations of super administration and Houlihan says it has in many ways made the job easier.
"If you start in 1988 with the award superannuation system, super was pretty easy. There wasn't a lot to it. Prior to '87 the governance of superannuation was done within one very small part of the Tax Act - in fact it was about three of four paragraphs," Houlihan says.
"Then what you had was the Occupational Superannuation Standards Act 1987 which then became the first really chunky bit of superannuation law. In 1994 it became the Superannuation Industry Supervision Act and etcetera.
"Back then there were very few complexities so the technology piece was quite easy. In fact setting up a superannuation administration company was very easy.
"Your client set was huge because back in those days every company had their own superannuation scheme and of course over the years with [added] complexity and the mood of the industry super movements saw all those corporate funds move in to industry funds or master trusts."
Houlihan says it would be a lot tougher for a new super administrator to enter the market today.
"It would be very difficult to come in from scratch now. You've got one very large player, not a lot in the middle and then a lot of boutique players at the bottom which is where we fit in," he says.
So where does super administration sit now? Houlihan says nowadays the number of super systems providers has diminished to "where you can probably count them on one hand."
Houlihan says that to their credit, each super administrator has had to follow the significant changes in legislation to keep their systems up to date. The transition, he believes, has made super administration easier than it ever was.
As with most major changes to established systems, there will be hiccups. Houlihan says the most recent transition to SuperStream is one example but the end result will be beneficial industry-wide.
"SuperStream is a little bit messy at the moment but give it five or six months and we'll be seeing straight through processing. From our staff point-of-view what we're doing is thinking about moving from contribution processing to exception reporting - so rather than entering every contribution it will be looking at what went wrong or didn't go through," Houlihan says.
"I think what we're evolving to now will make administration a little bit easier. What we've focused on for a number of years is solutions. It might be consulting from a client point of view and helping out with a compliance structure, or writing policies and procedures and making sure everything is in line with prudential standards."
The chief executive began his role at SuperBPO about five-and-a-half years ago where technology was always going to be a major component. Houlihan said his main focus was to ensure SuperBPO had a business that was "highly efficient and scalable."
"We've done a lot of work to make sure systems are in place, and we're being forced if you like legislatively to put systems in place," Houlihan says.
When quizzed about some of the learning over his 30-year career, Houlihan says most importantly he has learnt to be patient.
"I think being patient with the staff and making sure they are appropriately trained. What I've been blessed with - at all the firms I've worked - they've all been highly-educated, well-trained staff. We're a client facing organisation as well. It is important you communicate to those clients," Houlihan says.
MainstreamBPO has seen considerable growth since its inception nine years ago and now provides administration services to more than 270 funds with assets in excess of $50 billion, supporting more than 110,000 investors.
Speaking about the ASX listing, Houlihan says "there's some very exciting things happening at MainstreamBPO. It's all part of the next step for the business."
Apart from his role at SuperBPO, Houlihan is also the chief executive at Combined Super - a Victorian-based industry fund for workers in education and related sectors. It has about $650 million in assets under management and more than 10,200 member accounts.
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