Michael Lee reflects on the superannuation industry over the decades and where it might be leading to.

The Superannuation Industry is forecast to hit $6.5 trillion by 2030 according to data collated by ASFA. Having recently seen the above headlines my initial reaction was ‘wow!’ and it got me thinking about the ever-evolving superannuation and funds management industry. It also had me reflecting upon my early career as a trainee rates dealer in 1982 - yes, pre currency float - and the parallels of the growth in volumes, where we started and have evolved to. We were wheelers and dealers in those halcyon days where we communicated by phone or telex to ask for a price on a whole $1 million of 90-day bank accepted bills! One of the first calls that I made was to a guy nicknamed “Clunk” and I made my offer to buy at a particular rate, only to hear an engaged signal at the end of the phone. I quickly worked out how he got his nickname. The evolvement of the global financial markets was rapid post the AUD$ float in 1983 where trillions are now traded on a daily basis globally.

History

This was no doubt a significant moment in time as was the decision in 1992, under Paul Keating, when the government enacted the Superannuation Guarantee Contribution Scheme (SGC) of 3% which has now grown to today’s current rate of 11% (12% by July 2025). According to government at the time, the accumulated pool of superannuation was circa $146 billion in 1991 which had grown to $1 trillion by 2010 and is now circa $3.3 trillion. This is expected to double by 2030, leading to my ‘wow’ moment. Amongst all this we have had a 1987 stock market crash, Y2K and a tech boom crash, a GFC, a global lockdown throughout COVID and rates in Australia falling from a high of 17.5% to a low of 0.1% and 13 rates hikes since then.

Reflection

Having had the first 20 years in financial markets and now 20+ years in recruitment, I have had the fortune to witness both events and the changing landscape firsthand. Whilst currency and rates are just one piece of the puzzle, the asset management industry covers all the pieces of the jigsaw puzzle in the investment world. In Australia, the capital pool pie is only getting larger driven by SGC, positive migration estimated to be 190,000 a year and strong reinvestment returns across most asset classes.

Opportunities

Whilst we have seen significant consolidation within the industry fund world, these aggregators of capital - including the behemoths of the industry like AustralianSuper and Australian Retirement Trust - are forecast to be the first to reach $1 trillion by 2040 according to KPMG. There is no doubt that there will be a continuation of direct team buildouts across most asset classes with the larger funds hiring appetite being focused offshore and others in the field playing catch-up to develop their direct internal teams. To assist this growth of FUM there will also be an appetite to hire across the asset allocation, portfolio construction, performance and risk functions, as well as data analytics and performance oversight of direct investment teams continuing to be a focus.

In the current environment, we have seen capital flowing to the private/unlisted markets and a focus on impact investing translating to demand and hiring in these areas. Given the focus on offshore markets, we believe that some intellectual capital will transfer to international offices requiring potential backfilling hires locally.

The Future

So what does the crystal ball see? I believe there will be a need for more human arms and legs - hopefully not AI or robots.

There is no doubt that there are much smarter people out there than me! At JMES we would love to chat to clients and candidates alike to share your wealth of knowledge and help navigate the future for your business and careers.

To discuss further contact Michael Lee at JMES mlee@jmes.com.au

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