Climbing the heights
‘Our exceptional growth was proof that clients are looking for more’
WHILE ESTABLISHING its operations and testing the retirement fund administration market, Verso made some interesting observations concerning the state of the industry, says group CEO Christi Franken. “We found that our exceptional growth was proof that clients are looking for more.”
An industry long characterised by apathy and disinterest found a new and growing consumerist voice around two years ago as practices, long regarded as standard, were exposed as grossly unfair to the people they were meant to serve – retirement fund members.
“In South Africa we find ourselves in a new era, where boards of trustees and fund members are far more informed than in the past,” says Brenda Penny, senior director of legal and technical services at Verso Financial Services. “Acknowledgement of that public awareness is to be given to the media and even the Pension Funds’ Adjudicator, who is constantly highlighting issues that have a financial effect on members and which, though they may have become industry practice, aren’t acceptable and can’t be allowed to continue.”
But Verso is well positioned in that environment. Its emphasis is on unique and exceptional service that extends beyond traditional clients of administrators – the boards of trustees – to the individual fund members. “It’s a service that can’t be bought anywhere else,” says Franken.
Verso Financial Services overseas retirement fund administration and group benefits offers impartial financial planning services to fund members prior to and after they retire. And there’s Verso Health, intermediaries providing professional advice and planning of medical aid cover (see more detailed interviews with the MDs of these core businesses in this survey).
Verso also runs umbrella funds for smaller clients seeking retirement savings provisions. Franken says those funds are among the most modern products available, not only in terms of modern technology but also in the choice the funds offer clients to select investment managers and where to place risk benefits.
“These aren’t like the old traditional umbrella funds offered by the insurance companies, where all services were often done in-house. With ours the administration is with Verso – but the client can decide (with advice from Verso on appropriate funds and products) who is going to manage the investment, while the risk benefits can be placed with somebody else.”
Franken says other features of the umbrella funds are total transparency of costs and no early termination or exit penalties, as some other funds charge.
Penny says it’s part of a global trend but perhaps hastened in SA due to recent corporate scandals and retirement industry exposés. So ethical standards for companies are becoming increasingly important. “Senior management is always under pressure to provide good financial results for their shareholders, but that shouldn’t be at the expense of the company’s values, ethics and morals.”
She says that’s particularly true concerning pension funds, which are in fact members’ “trust monies”. “Service providers need to be honest, transparent and show integrity at all times. We live in a world where errors do happen. My experience has been that if you’re honest with a client the situation will be uncomfortable. However, you’ll gain that client’s trust for the future.”
For that reason, Penny says, Verso staff established a list known as “Our Values” that are applied in dealings with colleagues and clients.
Verso did distinguish itself when the bulking debacle was at its peak. While a number of administrators that hadn’t been directly fingered by the Financial Services Board were keeping their heads down, Fran- ken went on record to clearly state that Verso didn’t bulk clients’ bank accounts and didn’t agree with the practice.
He also pointed out that Verso was able to secure more favourable interest rates with banks due to the number of individual fund accounts placed with the bank and because there was often related company business with the same bank. In that way additional interest from the bank accrued directly into the retirement fund account.
“We proposed guidelines to the Financial Services Board on other practices that might prejudice clients. I think something positive came out of bulking – the realisation among some clients that you can’t get all services through a one-stop shop but need specialist administrators.”
That’s where Verso has positioned itself, and Franken feels it’s summed up by saying: “We’ve looked at the top and instead of finding it overcrowded we were surprised at the few who had reached It. The top fairly begged for more to climb its heights.”
The top fairly begged for more to climb its heights. Christi Franken