At the end of this month, Rice Warner will cease trading and its consulting staff will transfer to Deloitte.  The move will provide strong career opportunities for our talented team as well as giving us a solid platform to grow our consulting activities.  We have built a business which will be a formidable addition to the capabilities of our new employer, a major multi-disciplinary global consulting firm.

We consider that our brand and reputation has set us aside from our peers.  The brand has been built over many years and is an outcome of our actuarial genesis, strong industry research, active participation in public policy and creative work with clients.

The firm’s opinion is sought by influencers, including the media, industry bodies and politicians.  Its insights are used for formulation of client strategic plans, business forecasts, product development and sales strategies.

The work we do in public policy is considerable.  It ranges from regular blogs through to detailed submissions to government.  It also includes major pieces of work done for several clients.

This last Insight newsletter from Rice Warner nostalgically highlights some of our achievements over the last twenty years.

Small beginnings

Rice Warner has always been small with a peak of about 50 staff in recent years.  However, we found a formula which helped us build a larger presence in the marketplace.  The catalyst for our development was our (initially tiny) superannuation consulting practice in the 1990s.  Unlike the other superannuation actuarial practices at the time, we did not have a stream of captive defined benefit clients, so we needed to develop services for the emerging accumulation funds.

In the early days, Michael Rice and Steve Freeborn focused on helping corporate clients deal with the new problems associated with the introduction of the SGC (1992) and the SIS Act (1994).  This was the catalyst for many corporate funds to wind up.  Most moved into master trusts where they could maintain some of their benefit design.  Later, industry funds built the capability to manage corporate sub-plans and they started their massive growth spurt.  In 1994, we were the first consultancy to move a corporate fund into an industry fund (ARF) under a tender.

In the early 2000’s, we began to work for several industry funds to complement work we did for financial institutions (mainly master trusts).  A breakthrough was winning a tender to provide consulting services to two small industry funds, ARF and STA.  The funds had not changed much over two decades – they still charged $1 a week for life insurance and neither had a pension product.  Our strategic advice assisted both sets of trustees to undertake a merger which formed AustralianSuper.

Since then, we have been involved in several of the largest fund mergers including both Health Super and VicSuper into First State Super (now Aware), and, more recently, the merger of Media Super into Cbus.

Research

Our research has given us access to rich material from which we have developed our strategic insights.  Broadly, it can be split into three areas:

Industry

Our flagship research product is our annual report on Superannuation Market Projections.  This has been the industry benchmark over the last 20 years.  The report provides commentary on current market trends and projects numbers of members and asset sizes for the next 15 years.  It is accompanied by a detailed book on all assumptions made together with all statistics on a Tableau platform for detailed analysis.

We also provide an annual report on the size and composition of Australians’ financial savings outside superannuation in Personal Investments Projections.

We have measured the levels of under-insurance in Australia, and we have made projections of the life insurance industry from time to time.

Some of the work prepared for clients includes:

• Superannuation Fees, prepared biennially for IFSA/FSC (2003 through to 2018)
• The Financial Advice Industry post FOFA, prepared for ISA (2012)
• Retirement Savings Gap, prepared for FSC (2013, 2014)
• Segmented SMSF Fees, prepared for ASIC (2013) and updated for the SMSF Association (2020)
• Modelling the superannuation industry, prepared for Treasury (2017, 2020)
• Modelling and reports for ISA commencing 2016
• Cameos prepared for Women in Super regularly since 2015
• The Future of Financial Advice, prepared for FSC (2020)

Product

We have benchmarked superannuation products and all the fund components as part of our analysis for funds seeking suitable outsourced sub-plan arrangements, and for funds seeking a merger partner.  This has given us a good insight into all aspects of a superannuation fund’s activities – investments, group insurance, retirement, financial advice, administration, risk management and broader operations.

Member analytics

In 2013, we started collecting the data from member annual statements.  These are rich with information on the members’ chosen investment and insurance strategies, the level of contributions made and any benefits paid.  We collected both accumulation and pension statements.  The data was useful for “people like you” comparisons as well as for longitudinal analysis.

The data was anonymised, so we did not have personal details such as name, address or member number.  We did collect the postcode for regional comparisons.

At its peak (2017) we collected 12 million statements out of 30 million issued by superannuation funds.  We also held significant SMSF records so were able to form valuable insights about the population’s superannuation.  Sadly, changes in compliance and privacy requirements regarding member data and resulting differences in documentation requirements between different funds have made it impractical to continue this work.  Even so, the deep insights gained from it continue to be one of the sources of differentiation in our advice to clients.

Client Work

Our client work has changed in line with the superannuation environment.  We have provided financial calculators for members and wrote the software for the award-winning Beeline advice suite at VicSuper.

We are a leader in several fields but notably in group insurance and in retirement incomes.

Public Policy

Politicians

In 1989, Michael Rice wrote a Paper with two other actuaries about the new topic of Industry Superannuation.  He presented to an ASFA lunch attended by the then Shadow Minister for Social Security, Superannuation and Child Care, The Honourable Richard Alston AO.

Richard invited Michael to join a small group of actuaries headed by Dr David Knox to develop superannuation policy as part of the Liberal Party’s Fightback package. Labor retained power in the 1993 election and David Connolly became the new Shadow Minister for Superannuation.  He developed the Liberal’s Choice package and introduced Retirement Savings Accounts (RSAs) offered by banks for SME customers.

When the Coalition under John Howard won the 1996 election, a decision had to be made as to whether to support the legislation Labor had introduced to increase the SG gradually from 3% to 9%.  The Coalition policy was not to mandate any particular level of contributions but to let each individual choose.

David Knox and Michael were summoned to Canberra to meet the new PM, his adviser Vince Fitzgerald, the new Treasurer, Peter Costello, and David Connolly.  At a brief meeting, it was decided to leave the policy in place.  This was a catalyst for getting the SG to its base level of 9%.

Subsequently, and to this day, Rice Warner has provided support to any politician wanting research or opinion on financial services.

Government submissions

Rice Warner makes submissions to most relevant government inquiries within financial services.  Michael Rice has led the team which prepared this work, but he has been backed by many actuaries who share an interest in public policy work.

The major submissions we have made (which all remain on the Rice Warner website) are:

• Henry Tax Review (2008)
• Harmer Review of Age Pension (2009)
• Super System (Cooper) Review (2010)
• Financial System Inquiry (2014)
• Tax White Paper Task Force (2015)
• Senate Economics Reference Committee (2016) – Economic Security for Women in Retirement
• Treasury – Objective of Superannuation (2016)
• Productivity Commission inquiry into Efficiency and Competition in the Superannuation Industry (several submissions, 2016-2018)
• Treasury –Comprehensive Income Products in Retirement (2017)
• Treasury – Retirement Income Covenant (2018)
• Treasury – Protecting Your Superannuation Package (2018)
• House of Representatives Standing Committee on Economics – Inquiry into the implications of removing refundable franking credits (2018)
• Treasury – Putting Members’ Interests First (2019)
• Retirement Income Review (2020)
• Treasury – Your Future, Your Super (2020).

Canberra Summit

Our primary event is a biennial conference held in Canberra.  We have held 7 of these over the years.

Initially, we ran the Canberra Summit in Parliament House but the last two have been held in the Hyatt. We have also had industry sponsors in the last two to cover the costs.

Summit attendance is by invitation only (and at no cost to participants other than travel and accommodation costs). We have always had prominent Ministers or Shadow Ministers as the guest speakers.

The most recent one attracted 120 attendees, mainly senior executives within the superannuation and life insurance industries (including Chairs and CEOs of superannuation funds and financial institutions) as well as senior representatives from the regulators, and the departments of Treasury and Finance.  Several Members of Parliament with an interest in superannuation have attended with their advisers.

Insight Blogs

We have produced around 30 Insights blogs a year on industry topics.  This has given us a leading role in anticipating key trends, and then helping clients to navigate them.

These blogs are kept short to encourage high levels of readership.  We send the blogs to about 5,000 people on our database and average over 1,200 readers, which includes many senior people working in financial services.

The high volume of content has led to increased interaction with industry journalists who are always on the lookout for informed and impartial commentary.

Our staff

Small organisations drive innovation largely through building a great staff culture.  We are proud of some of our achievements. Rice Warner has provided support and encouragement for people to launch and grow careers, developing skills which they can use to good effect in Rice Warner and, where relevant, in subsequent roles where experience at Rice Warner is highly valued and respected.

Valuing Females in Retirement

Rice Warner decided to support its own female staff. In 2012, it developed a comprehensive package of subsidised employee benefits including the novel idea of paying additional superannuation contributions for female staff.

Before paying the additional contributions, it first needed to ensure it was not breaching anti-discrimination laws.  Consequently, it approached the Human Rights Commission for a ruling.  The Commission ruled the action was a Special Measure designed to achieve substantial equity between men and women.

The package began in July 2013.  The objective of this package was to create an environment and culture that encouraged female employees who choose to have children to return to the workforce.  Increased workforce participation would benefit the individual’s career and Rice Warner in terms of diversity and retention of experienced female staff. The package also partly compensates for the impact of lower retirement savings for females.

These measures were an additional staff benefit for female employees and were not considered in setting each female employee’s remuneration package.

The package has been successful in raising awareness and about one-third of female staff took out additional insurance cover or made additional contributions to superannuation.

As well as providing study leave and financial support for our actuarial staff, we also assisted staff with post-graduate education.  Pleasingly, four of the five people who obtained an MBA or other Master’s degree in recent years were female.

Professional Papers

We have always encouraged our staff to support our professional body, the Actuaries Institute, and the industry bodies.  Many staff act as volunteers on committees for these organisations.

Our consultants have prepared several influential professional papers, many of them in collaboration with actuaries at other firms.  Recent ones include:

• Investing for the different levels of retirement (Rice, 2014)
• For Richer for Poorer, an inter-generational look at retirement wealth, prepared for Actuaries Institute (Bonarius, Rice, Stevens) (2015)
• Unlocking Housing Wealth, Actuaries Institute (Andrew Boal and Alun Stevens were part of working group, 2016)
• Maximising retirement incomes (bucketing strategies) (Rice, Stevens, 2015)
• Stay or Go? The science of departures from superannuation funds (Bonarius, Dunn, 2017)
• Exploring Retiree Mortality (Dunn, Stevens, 2018)
• The Age Pension in the 21^st Century (Rice, 2018)
• What is the Right Level of SG? (Bonarius, Rice 2019)
• Options for an improved and integrated system of retirement (Rice – with Asher and Knox, 2019)
• Lifecycle investment to and through retirement (Dunn, Berg, 2019)
• Spending in Retirement and the Taper Rate, prepared for Actuaries Institute (Boal, 2020).
• Gender Inequality in Retirement Savings (Dunn, Rice with Knox, 2021)

Having fun

It would be remiss not to mention some of the fun we have had on the journey.  Wine seems to have featured heavily… from advertising in Robin Bradley’s Gold Book of wine, (and giving ourselves a good rating every vintage), through to the wine tours we tagged onto trips to South Australian clients, and to the Friday night Super Rugby events with clients.

We have many anecdotes from conferences and staff Christmas parties that are best left unpublished…

Farewell and future plans

As our team moves into new premises and joins a global brand, we aim to maintain a presence in the areas where we have been successful.  As well as providing high quality consulting work, we will keep our base of strong research, thoughtful contributions to public policy, and insight like no other.