A beneficiary fund provider should have a genuine interest in the wellbeing of the beneficiaries, in addition to the functional capabilities required to administer the fund and deliver the requisite investment returns.
According to Netcare Retirement Fund Principal Officer, Craig Taylor, managing beneficiary funds is a tough, complex job that requires specialist skills and experience to ensure that the best combination of beneficiary care and fund administration is achieved.
The Netcare Retirement Fund recently re-evaluated its choice of beneficiary fund provider, and the associated processes, procedures and best practices. Through this process Taylor determined four key elements required to deliver the ideal level of beneficiary fund administration to materially impact the lives of beneficiaries and meet fund requirements.
“A beneficiary fund provider must be able to deliver service that balances the hard and soft issues at play,” explains Taylor. “There needs to be a genuine interest in the wellbeing of the beneficiaries, in addition to the functional capabilities required to administer the fund and deliver the requisite investment returns.”
As such, the four key components identified by Taylor include experience and reputation, approach and passion, investment strategy and returns, and costs.
- Experience and reputation
According to Taylor, beneficiary fund provider selection should be based on a combination of factors that include a proven investment track record, an established approach to dealing with beneficiaries, and the company’s market reputation in relation to previous client experience and their engagement with guardians and beneficiaries.
- Approach and passion
The primary aim of a beneficiary fund provider should be to act in the best interests of the beneficiary. This requires a passion for the continued wellbeing of beneficiaries, in addition to the performance of the fund.
These traits should extend to the manner in which both guardians and beneficiaries, and the client are engaged with – the communication medium and languages used, the depth of training and education provided, reporting, and the manner in which fund requests are dealt with and managed.
A provider’s willingness and ability to deliver individualised solutions is another key consideration for the Netcare Retirement fund.
- Investment approach and returns
The key elements to consider in terms of investment approach include the proposed investment strategy; is there a strong capital preservation approach or is it more performance based? In addition, it is important to determine if the returns expected from the proposed investment strategy meet the fund’s expectations.
- Costs
The associated costs and fees are also critical elements as the wrong fee structure can equate to huge costs over time. Funds should ideally benefit the bottom 10% of a company’s workforce, where annual salaries are low, as this is where the impact of beneficiary funds is proportionately greater. Accordingly, if there are huge fees and large percentages on investment returns then the value of the fund is eroded for those who need it most.
To effectively deliberate on these criteria the Netcare Retirement Fund uses a combination of a rating matrix and a price filter. “The rating matrix measures a potential provider’s passion and functional capabilities with regard to beneficiary care and fund administration, as well as their ability to offer individualised solutions,” explains Taylor.
Using this approach the Netcare Retirement Fund recently appointed FedGroup.
“We’re very happy with the outcome of our review and the subsequent appointment, as FedGroup has already been able to meet and surpass our fund administration guidelines,” he says.
