Vanguard to step up super sales after $500m in super sales: CEO Daniel Shrimski

The $11 trillion global funds giant is looking to supercharge its business in Australia after a solid start.

Global funds giant Vanguard is set to step up the sales of its superannuation offerings after taking in more than $500m in Australia since its launch five months ago, according to chief executive Daniel Shrimski.

In an interview with The Australian, Mr Shrimski said he expected sales of its superannuation products to accelerate, with plans to expand its sales channels to financial advisers late this year and offer more super products including a pension product.

“We are a little over half a billion dollars today and we anticipate that we will grow at an accelerated rate off the back of launching more products and opening up different channels,” he said.

Vanguard’s success to date, with some 10,000 super clients since its launch in November, has come from direct sales, including people who already have investments in Vanguard products.

The group, which looks after $11 trillion in funds globally, will begin selling its super products through its extensive network of links to financial advisers by the end of the year, offering them a no fee access to its platform.

Vanguard’s entry into the Australian superannuation market is being closely watched by both the industry and retail sides of the superannuation sector given its global size and its reputation for using its scale to offer low cost products.

The group, which has been best known for its low cost index funds, is well known in the institutional market and among middle and high net worth investors in Australia, but is now making an aggressive pitch for the broader retail market.

The company announced on Thursday that it was combining its two retail direct businesses – superannuation and non superannuation – and making several senior management changes, including the appointment of two new executives.

Renae Smith will join the business and the Vanguard executive team from AIA, where she has been chief customer experience and operations officer, heading up a new division responsible for delivering on the firm‘s plans to grow in the retail market.

The current head of risk, Curt Jacques, will move to head up a new product offer division which will oversee the development of its new product suite.

Mr Shrimski said the executive appointments were part of reorientating the business to have a greater focus on the retail market in Australia.

“They are really important changes as we drive to become more of a retail business,“ he said.

“Vanguard came from managing money for large institutions, but the structure we need to have going forward (with more of a focus on the retail market in Australia) is very different to the structure we have had.”

Mr Shrimski said 30 per cent of Vanguard’s new super clients were already clients of its non-superannuation business.

“We are in a very powerful position in the market where we can manage the whole of wealth (super and non super) and wrap it up in a great client experience,” he said.

He said the proposed introduction of the Federal Government’s plans to double the tax the earnings on super funds with more than $3 million will also expand the attractiveness for clients dealing with Vanguard given its offerings in the super and non super areas.

The proposed new superannuation tax structure, which has yet to be legislated for, could see billions of dollars flowing out of the superannuation sectors, with high net worth fund members looking for new investments outside of superannuation.

While the Federal Government has argued that the move will only affect an initial 80,000 people with superannuation, the total funds invested by those affected and potentially affected represents a significant proportion of the total market.

Rainmaker has estimated that there could be as much as $410bn in assets owned by super funds with more than $2.5m.

With the new tax regime set to operate from July 1, 2025, the change could see people with a large amount of money in super funds start moving it out of super as early as next year.

“The superannuation tax changes will mean the non-superannuation side (of investments) will become increasingly important,” Mr Shrimski said.

“By being able to serve both, we are in a really valuable position.”

He said industry super funds, which now dominate the superannuation market with more than $1 trillion in assets, did not have the capacity to offer non superannuation investment options.

Mr Shrimski said 60 per cent of the $500m in super fund investments had gone into Vanguard’s MySuper default option product, with the rest going into its Choice product.

He said Vanguard would be going to the adviser market with a broader suite of super products.

The global giant estimates that some 70 per cent of investment advisers in Australia have clients with at least one dollar invested in Vanguard products.

“We have the number one brand in the adviser community where we have some of our most loyal clients,” Mr Shrimski said.

“It will continue to be a very important part of our business moving forward, and now there is an ability for us to leverage that.”

“They will be able to invest in Vanguard super with no platform fee which is, again, somewhat differentiated when you look at the other options out there.”

Mr Shrimski said Vanguard planned to continue its marketing plans to become better known to the broader Australian public.

“The Australian public is becoming aware of Vanguard in the superannuation space,” he said.

“We have a strong brand out there in the adviser community and, overtime, people are becoming aware that we are now in the superannuation space.

“We have made a strong start (in super) but there is certainly a long way to go.”

He said Vanguard, which has come into the superannuation market with low fee products, was also continually looking at its fee structure, with a view to reducing it.

“In typical Vanguard fashion, as we scale, we will regularly assess our situation with a view to lowering fees,” he said.