Implemented less than a year ago, the Default Investment Strategy (DIS) marks an important milestone in the MPF industry. As the bellwether in this new frontier, BCT Group took away the MPF Capability Award in Best Managed DIS, among other awards. When asked about the secret to the win, Ms. Ka Shi Lau, Managing Director & CEO, said unique positioning and excellence in communication are the keys to success. More details follow.
BENCHMARK (BM): Congratulations! In what ways are your DIS funds special? And how do you choose a fund manager to partner with?
Ka Shi Lau (KSL): BCT is highly honored to receive the awards from BENCHMARK. BCT Group’s uniqueness lies in its positioning in the market – independent of investment managers. This positioning grants us the freedom to appoint different external investment managers with a global presence and investment expertise. The same applies to the DIS.
Fund management is an integral part of our DIS solution. That’s why we exercise stringent due diligence in our manager search in developing our DIS funds. We do so to ensure the soundness and quality of the underlying products we select for the Core cumulation Fund and the Age 65 Plus Fund. To address risk considerations, we adopt a prudent risk management process to evaluate risks and measure the suitability of investment managers on an ongoing basis.
BM: How do you ensure that the managers can keep up their performance?
KSL: As a gatekeeper of members’ retirement money, we ensure that clients’ interests always come first. We have in place in our workflows an internal check and control framework that includes regular due diligence, supervision, and risk control on fund governance and performance. In addition, we have a watch list system to monitor the monthly performance of laggard funds so that we can take further action based on the progress of improvement made by the relevant managers.
Optimizing our products and fund manager selection is a continuous process. We understand that it may be difficult for an investment manager to excel in all areas of investments, such as asset class, geographical region, and sector. Therefore, one of our key initiatives in 2018 is the enhancement of the fund platform for our BCT (MPF) Pro Choice, which will expand the multi-manager approach BCT has adopted since MPF’s inception and further harness the strengths of different investment managers. Under the new structure, the performance of the underlying funds can be better monitored and investment managers can be replaced more efficiently when required. This will ultimately help to diversify risks, lower volatility of the funds, and enhance investment returns.
BM: Your transition into DIS was smooth. Can you tell us what kind of preparation work you’ve done to facilitate the launch?
KSL: Being well prepared with targeted communication. The smooth transition into DIS was enabled by our well-thought out ember communication strategy and the joint effort by BCT’s colleagues. Our preparation work started far before the launch and included conducting a thorough checking procedure to identify the members affected by the DIS and ensure that important information was communicated to the targeted group. In addition, in-depth training was conducted to equip frontline colleagues with sufficient knowledge to handle DIS inquiries.
Our award-winning call center was well prepared to cope with the drastic increase in DIS inquiries, while hundreds of briefing sessions were arranged for employers and members to understand the change. Our communication plan was designed to address the needs of various stakeholders. For example, DIS materials were prepared specifically for employers, scheme members, intermediaries, and the public to raise their awareness of DIS.
BM: With DIS as the key milestone in the MPF system, what do you see as the next major change, both in the industry and in BCT?
KSL: We anticipate ongoing efforts by the authorities and industry peers to spearhead the MPF reform. Digitalization is another emerging trend in the MPF arena. The regulator MPFA is currently mapping out the design and functionalities of the “eMPF” platform, aiming to improve the accuracy, reliability, and efficiency of the system in the long run.
Innovation is the key. As mentioned earlier, BCT will soon be enhancing our fund platform for our master trust scheme, but our innovation extends beyond the product level. In 2018, we will further strengthen customer connectivity and experience by innovating in different aspects of our business – bolstering our digital capacities, driving e-communications, streamlining administrative processes, and continue to educate people about the importance of retirement planning. BM