Since 1888, Equity Trustees has seen droughts, wars and global financial crises. 130 years ago, the State of Victoria was booming with the largest known gold reserve in Victoria. Trustee companies were set up to help people run their affairs at any phase of life or death.
But 20 years ago saw the rise of the importance of a ‘corporate’ trustee – or fiduciary. It wasn’t just people who needed or wanted an independent guide and decision maker to preserve and manage wealth – corporates responsible for managing money on behalf of others (members, investors, unit holders) needed independent oversight too.
Even though the idea seems abstract – it really boils down to people working with other people – albeit within organisations.
We asked Harvey Kalman to give us a brief history about the Corporate and Trustee Services (CTS) part of our business and what makes us so successful in this arena.
In Australia, prior to 2000, there was a structure where managed investment schemes were made up of a trustee and a separate fund manager – both were involved in the process. This created a degree of confusion and a lack of clear accountability for investors.
In 1998, the Managed Investments Act (MIA) came into law. It removed the need for the two roles and created a single Responsible Entity (RE), coming into effect for existing schemes in June 2000. The introduction of the MIA was designed to provide clear accountability on the part of the RE to look after the best interests of investors.
At this time many fund managers decided to apply for their own RE licences to jointly perform the fund management and trustee roles. Similarly, some trustees also combined the two roles using their internal funds.
In 2000 Harvey was appointed to run the business under the new regime and also do third-party distribution for existing internal funds.
Unlike many other trustee companies, Equity Trustees didn’t have a legacy of a large number of internal funds which led to the development of its independent RE services.
We asked Harvey how the CTS side of the business was built. “It is all about referral, referral, referral and having a great relationship with your partners. If you don’t have good relationships with your partners then the whole thing breaks down.”
Equity Trustees’ recent global expansion into the UK, Europe and the USA means we are becoming more global. Harvey says “There is a desire to use one platform for service providers internationally and this leads to people wanting to use the same seamless service approach for other services as well.”
Asked about the challenges in the business, Harvey says “Sometimes it’s all about mindset – all about obligations in the best interest of the investor, the member, the unit holder, the beneficiary. You may find yourself in a situation where a party wants something that they are not be entitled to. There can be difficult relationships because someone is disappointed they are not getting what they want. It’s all part of the job.”
Good judgment is paramount because rules and regulations can’t cover all eventualities: “You can’t legislate for the best interest versus self-interest,” explains Harvey: For Equity Trustees, the best interests of the client are paramount.
Harvey believes Equity Trustees owes its success to its people: “It‘s because of the people we work with, from the senior levels right through to the more junior positions – we have the right people steering the ship.”
Still strong, 130 years on.