Q&A with Frontier's new Director of Sector Research June 2019
Paul Newfield has joined Frontier Advisors in the newly-created role of director of sector research. We ask Paul what he's looking forward to most, what's on his to do list, and if ESG considerations will be a big part of his role? He also reflects on how the industry has changed over the past two decades, names his pick for 'the next big thing' in investment management, and admits to being a 'cautious adventurer by heart'.
- What are you looking forward to about your new role?
I love learning new things and taking on new challenges. I am looking forward to meeting new people, to working with new people, including new clients, and to learning new things and growing both personally and professionally. I think having a “growth mindset” for myself, and everyone I work with, is key and I am constantly seeking ways to improve. One thing is certain in investments – you are always learning, always discovering new things and the landscape is always changing.
- ...and what is on your to-do list?
Firstly to more deeply understand all the things Frontier have got right, because they have been very successful to date, and understanding more deeply the journey they have been on is a good starting point. Finding out as much as I can from their people, their clients and their existing leaders and then secondly, bring my experience to see how I can positively contribute to their future journey and deliver value adding services for clients based on their future needs – I am extremely motivated to get going.
"One thing is certain in investments – you are always learning, always discovering new things and the landscape is always changing.'
- What are the biggest challenges facing the superannuation industry at the moment?
I think the lack of genuine member engagement, the distrust of many aspects of financial services and the ambiguity in relation to the purpose behind superannuation (despite the sole purpose test) are all aspects which remain perhaps more relevant today than at any time in the past 25 years. An over focus of many industry participants on peer relative performance without sufficient consideration of the impact this could have on member outcomes is another challenge in my view (although I note in a commercially competitive environment, funds do need to stand out). On the funds management side – finding the right managers to partner with an ever expanding manager universe will also be important.
- …and how has it changed in the two decades you have been working in the industry?
Institutional investors today are far larger on average than before, examining a far wider breadth of opportunities, more susceptible to risks (both internal and external) both of which can emerge very quickly. The world is far more challenging, changing at a quicker pace and with more information coming down the line, in an instant than ever before. When I arrived in Australia over 20 years ago there were over 5,000 super funds, today there are a few hundred. If there is one thing I have learnt is that change is inevitable but institutional clients need to prepare themselves for ongoing and more rapid change. They need to tap into partners, leverage off technology and be as efficient as possible in their delivery of services. There is also a wide spectrum of other funds, some smaller funds who may want a different set of services.
"If there is one thing I have learnt is that change is inevitable but institutional clients need to prepare themselves for ongoing and more rapid change."
- What do you think will be the next big thing in investment management?
I think it has to be improvements in technology and cutting through an institutions total portfolio via specific lenses. This will enable CIOs, Investment Committees and Boards to gain a deeper understanding of their portfolios and to then deliberately position their whole portfolios linked to their beliefs and preferences and to also take advantage of near term events which are likely to impact on markets or mitigate against specific risks. Finding specific managers, who have a partnership mentality, who can deliver specific outcomes for funds and fill their gaps or desired exposures will be important.
"Companies and organisations need a social “license” to operate – in the long term if they do not have a positive net impact on the community in which they operate, then they will be dis-intermediated, or that social license to operate will be withdrawn."
- Will ESG considerations be a big part of your role?
For some strange reason, many people think of ESG as some greenie, lefty, new age movement. The truth is good investors have always valued, perhaps more implicitly than today, these traits. Good governance means being good stewards of members’ capital and the companies or assets in which the capital is invested. In a rapidly changing world and one where we realise many things are not perpetual – finding investments which are sustainable, which have sustainable competitive advantages is hard, but can only be a good thing for end savers. Lastly, people today (including the UN in fact) remain concerned about the environment. Companies and organisations need a social “license” to operate – in the long term if they do not have a positive net impact on the community in which they operate, then they will be dis-intermediated, or that social license to operate will be withdrawn.
- Where did you grow up and what was it like?
Johannesburg, South Africa – I loved it, the weather, the game parks, the beaches at the coast. As a kid, unaware of the artificial construct, it was a good lifestyle. But South Africa was not all that safe and remains that way and in my early twenties, alone, I moved out of home for the first time and came to a job in Australia, sight unseen. I think I am somewhat of a cautious adventurer by heart.