Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 23

Super funds must balance leadership and consensus

When should leaders show leadership, and when should they try to gain consensus? At what point is it imperative to act in the face of opposition? When should time be taken to ensure that hearts and minds have been won before proceeding? Many leaders wrestle with these dilemmas.

In business, such predicaments usually arise where the organisation recognises the need to undergo change. If a leadership group gets too far ahead of the rest of the organisation, the change programme won’t be successful. However, if the leaders wait for consensus then it may become too late to act. So where does one draw the line?

We see this in politics as well. How much of what government does should be leading the way, and how much should be done from looking at focus group results and trying to work out how to keep the voters happy? Let’s pick a contentious example. Many economists and policymakers over the years have pointed out the downside of having a capital gains tax exemption on the family home (perverse incentives to own a massive house for two people, skewed property prices in certain market segments, difficulty in accessing capital to fund retirement, etc). It would be a brave government which would remove this tax exemption. They would have to be way out on the ‘leadership’ side of the equation and be willing to forego consensus – that is, take the consequence of being voted out at the next election.

Personality types affect decisions

The personality types of the leaders involved can play a big part in where the balance between leadership and consensus is struck. If you have ever been exposed to the DISC personality programming system, you will remember that some personality types prefer to gain consensus before acting (the S type). Others like to quantify things and prefer to have concrete proof before proceeding (the C type). Some (the I type) are likely to influence and persuade people to follow them. And some (the D type) are likely to just do it and ask forgiveness not permission.

There is also the question of training and past experience. Leadership teams at businesses who have lived through a ‘near death’ experience for the organisation may be much more conservative than their competitors. In my experience, some people who are trained to manage risk focus overly on downside risk and miss upside opportunities. The bottom line for any business or organisation is that you can’t succeed without taking risks. Those practicing traditional risk management, as opposed to Enterprise Risk Management (which looks holistically at risks that impact the whole organisation and is a key input into business strategy) may be focused on risks from a bottom-up and miss the big ‘black swan’ risks.

The type of organisation also has an influence on how the dilemma of leadership versus consensus is handled. In a military situation, the leadership has ultimate control. In a corporate environment, a leadership team (board and senior management) also has a high level of control over the direction the business takes. By contrast, in a political party where the leaders are representing their constituents, there needs to be recognition that there may need to be more consensus, or at least the message needs to be carefully sold.

Responsibilities of super funds

What about a super fund? It’s a membership organisation and the management and trustee board are there to act in the best interest of members. Does this change the balance of how far leaders can go out on a limb? I believe it does, and should make leaders place more emphasis on getting hearts and minds aligned with what they are doing.

Industry and corporate superannuation funds have always dealt with the unions that represent their members and the employers of their members. They have been used to gaining consensus amongst these powerful groups before proceeding with a course of action. In fact, due to equal representation rules, these groups have been directly represented on the super fund boards, and many such super fund board members see themselves as being there to lobby for the views of the union or of the employer sponsor. This view of being there to represent a constituency could in many situations be in conflict with the trustee’s core duty to act in the best interest of all members of the fund. In future the regulator APRA will take a much closer interest in how trustees demonstrate that they are making decisions in the members’ best interests.

However, it’s clear that individual members have remained largely disengaged. As a result, superannuation fund leadership has not had to worry about gaining consensus amongst the members themselves. Having gained consensus with the representative groups, they have then leant towards the ‘leadership’ end of the scale and made the call on what’s in the members’ best interests without any real input from those members (as the members are disengaged).

It will be interesting to see how this dynamic changes if fund members become more engaged in future as superannuation balances grow and consumers become more aware and want more of a voice. There have been predictions for many years now of this happening, but there is little evidence so far that Jane or Joe Average Employee is at all engaged with their superannuation. A surprising proportion don’t even know what fund it’s in and how it’s invested!

There are two possibilities. If members become more engaged, super funds will find themselves dealing with a more vocal group of members who are exerting their own rights. There may be many and disparate views as to the right course of action for the fund.  How will the style of leadership and decision-making in superannuation need to change? How will management and trustees engage with these members in their decision making? How far will they swing towards a management style that seeks to gain consensus with individual members? It will certainly become harder for the trustees to demonstrate that they are acting in members’ best interests where there is a wide range of member views being forcefully expressed.

Fund members remain disengaged

The other (more likely) possibility is that the majority of fund members will continue to be disengaged. As corporate funds decline, and many industry funds are now public offer and increasingly have memberships made up of a large range of industry and employer groups, there will be a dilution of the influence the previous groups who were ‘looking after’ the members – unions and employers. Will super funds move to a more ‘leadership’ style of decision-making and away from the current consensus basis? Will this be a good or bad thing for the super industry? Will the quality of decision-making improve or worsen? It’s hard to know. And it may be equally difficult for trustees in this situation to demonstrate that they are acting in the members’ best interests.

 

Melinda Howes is CEO of the Actuaries Institute. The opinions expressed in this article are her own.

 

RELATED ARTICLES

APRA still resisting ‘retail’ deposits in public super funds

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Latest Updates

Retirement

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

Shares

Boom, bubble or alarm?

After a stellar 2025 to date for equities, warning signs - from speculative froth to stretched valuations - suggest the market’s calm may be masking deeper fragilities. Strategic rebalancing feels increasingly timely.

Property

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Economy

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

Shares

Is the iPhone nearing its Blackberry moment?

Blackberry clung on to the superiority of keyboards at the beginning of the touchscreen era and paid the ultimate price. Could the rise of agentic AI and a new generation of hardware do something similar to Apple?

Fixed interest

Things may finally be turning for the bond market

The bond market is quietly regaining strength. As rate cuts loom and economic growth moderates, high-quality credit and global fixed income present renewed opportunities for investors seeking income and stability. 

Shares

The wisdom of buying absurdly expensive stocks (or not!)

Companies trading at over 10x revenue now account for over 20% of the MSCI World index, levels not seen since the dotcom bubble. Can these shares create lasting value, or are they destined to unravel?

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.