With the corporate super sector that he helped pioneer under threat, CSSA president Douglas Latto says he is up for the fight.
Douglas Latto is an unlikely political lobbyist. His sing-song Northern Irish accent, softly spoken manners and modest, self-deprecating humour seem a world away from the brash and brutal world of Canberra negotiations. And yet, a lobbyist is effectively what he has become.
As president of the Corporate Super Specialists Alliance (CSSA) since 2010, Mr Latto has seen his members through a succession of regulatory rollercoasters, from the Cooper Review to the Future of Financial Advice and Stronger Super reforms – all of which have had significant implications for the 1,500 or so Australian financial advisers specialising in corporate super services.
Growing up in Belfast in the tumultuous 1970s, Mr Latto’s inclination was not towards the radical and divisive politics of the time but to the safer discipline of actuarial finance. Leaving home for university studies in Edinburgh, Mr Latto never imagined he would one day find himself appearing before parliamentary committees and Senate inquiries on the other side of the world.
Indeed, even five years ago, he would never have imagined such a thing, he says.
While Mr Latto jokes that he “had too much personality” to become an actuary in the end – opting for the more personable life of the certified financial planner – he admits his first forays into the political arena were nerve-wracking.
“At first it’s all very daunting – being live on Channel 648 [Australian Public Affairs Channel] and answering questions from politicians,” he says. “In the beginning, we hired an external consultant to help us but after a while you get used to it and now we write all our own submissions etc.”
Unlike the pollies-in-a-former-life and ‘party men’ who often head up industry associations, Mr Latto’s work for the CSSA is entirely voluntary. When not penning submissions to Treasury and liaising with members, he is managing director of his own practice, Legan Financial Services, based on Sydney’s upper north shore.
Balancing running the business and his CSSA responsibilities – while also finding time to play competitive cricket with a local over-50s side on the weekends – is one of the biggest challenges Mr Latto faces.
“When I took on the job [of CSSA president], I was working four-day weeks and had done enough succession planning to free myself up to focus mainly on managerial and strategy stuff and leave the client-facing work to my capable team of advisers.
“But the actual task of being president turned out to be much more than one day a week, especially with all the regulatory changes, so the reality is I just work longer hours now,” he says.
As any practice principal knows, running a financial advice business in the current climate is no easy task. Taking on additional responsibilities as Mr Latto has done requires passion, and it is that passion which, in part, lies behind the important role he has played in the development of the sector.
Ahead of the game
Having spent his early working life as a pension consultant in the booming financial world that was Thatcher-era London, Mr Latto emigrated to Australia in the late 1980s, where he encountered a very different retirement income scene.
Before the introduction of compulsory superannuation in 1993, it was an area of finance left largely to the big end of town, he says. As a migrant fresh off the boat, he took a number of back-office consultant roles, honing his technical skills, before landing a job as a corporate adviser at AIB Financial Planning – a company owned by Western Australian multi-millionaire Brian Coppin, which Mr Latto says “wasn’t a financial planning company at all”.
Mr Coppin was an old mate and business partner of Alan Bond’s, and Mr Latto was hired to provide corporate superannuation services to Mr Bond’s various companies, giving advice about which ‘master trusts’ (as retail funds were then known) were appropriate for their employees.
Following the collapse of the Bond empire, AIB was sold off and Mr Latto spent a few years with several consultancies and brokerages, building up their corporate super advisory services.
“There were very few people doing what I was doing back then – even fewer than there are now,” he recalls.
With experience of the burgeoning UK pensions market under his belt, Mr Latto saw an opportunity in the Australian superannuation space. When Paul Keating announced compulsory super, he was in an enviable position, having provided superannuation advice for several years.
In 1995, he founded Legan, hoping to establish himself in a strong position – and his hunch turned out to be a good one, his only regret being he didn’t open his doors two years earlier, following the introduction of the new regime.
Mr Latto also saw an opportunity early on to combine corporate super services – which had traditionally been more in a corporate advisory/consulting format – with personal financial advice.
He became a CFP and began to leverage his existing corporate relationships, generating leads from his consulting and financial literacy seminar work.
“If you have a trusted relationship providing corporate super services at a company, when some of the employees you have worked with reach a trigger point, say retirement, they often come to you for personal advice services,” Mr Latto explains.
“It wasn’t really an accident,” he says. “I always saw an opportunity to combine the two and provide more personal investment and estate planning advice services.”
While corporate super remains at the heart of Legan’s value proposition, four out of Mr Latto’s six advisers offer personal financial planning services to individuals.
While as an industry pioneer, Mr Latto has led the CSSA and lobbied tirelessly on behalf of the sector, the success of his own practice – as a specialist in corporate super services – is also dependent on the results of his efforts.
“We have skin in the game,” he says.
The CSSA formed in response to the Cooper Review. Corporate super specialists rallied together and the beginnings of what would become a close-knit community emerged.
While Mr Latto is “not sure how much influence [the CSSA] had” on the consultation process, it was the first time this part of the superannuation industry had been formally recognised.
By the time the Future of Financial Advice (FOFA) reform process came around, the CSSA was organised and gaining additional leverage through its close relationship with the Association of Financial Advisers (AFA) which, Mr Latto says, has been very supportive of the alliance’s aims. However, there was a threat looming.
FOFA’s ban on conflicted remuneration and the new rules governing MySuper registration have produced more than a few headaches for CSSA members.
Under the new rules, fees or commissions paid to corporate super advisers who have undertaken a super fund selection tender on behalf of a corporate client are deemed conflicted and are banned, posing a very real threat to the traditional remuneration of corporate super specialists.
According to Mr Latto, the rise of MySuper and intra-fund advice at the industry super funds will only make life harder for his members, as registered funds are prohibited from paying fees to external consultants.
Ultimately, it is the consumer who will suffer, says Mr Latto: “The most important place for financial literacy to be raised for Australians is the workplace and MySuper is just a reactive response, rather than a policy to raise standards,” he says.
Evidently, Mr Latto has come a long way from being a political novice.
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