Super business drives net inflows for Australian Ethical

Australian Ethical's superannuation offering brought in $527 million of organic inflows in the last financial year despite being hit with additional licence conditions from APRA that it is currently working through.

The influx of increasing superannuation guarantee contributions, rollover activity and strong end-of-financial-year contributions boosted Australian Ethical's superannuation net flows, which overall stood at of $664 million, up 13% year-on-year, and helped drive record funds under management of $14.5 billion.

"We also saw improving member acquisition momentum in the latter half of FY26 following the successful completion of the transition to the GROW administration platform, enhancements to digital marketing capability, improved member onboarding processes and the reactivation of the Employment Hero acquisition channel," the company said.

APRA slapped Australian Ethical Retail Superannuation Fund with extra licence conditions last year, concerned over the fund's investment management arrangements with its parent company and whether the fees involved are in members' best financial interests.

Shortly thereafter, Natalie Kooyman was named chief risk officer to replace Karen Hughes, who had served in the role since 2017.

In the second half of FY26, Australian Ethical said its superannuation trustee, Australian Ethical Superannuation, made good progress to address the additional licence conditions imposed by APRA.

"As part of this work, EY was engaged to undertake an independent review of the Trustee's framework for assessing, overseeing and substantiating related-party outsourcing arrangements in relation to the licence conditions. The review highlights further governance enhancements the Trustee will undertake in FY27," Australian Ethical said.

"Ensuring the business is resilient as well as efficient is critical and as such we continue to focus on the governance uplift required to further strengthen the governance, risk management and oversight of related-party arrangements to support the continued maturity of the superannuation business and the best financial interests of its members."

Undertaking an independent review and carrying out activities to improve the governance, risk management and oversight of related-party arrangements in relation to APRA's licence conditions cost $833,000.

Since transitioning its super administration to GROW Inc from Mercer in 2024, Australian Ethical said it has seen the benefits of the transition with admin and custody fees decreasing 16% over the year.

The group posted underlying profit after tax of $27.3 million, up 15% annually.

Australian Ethical managing director John McMurdo said FY26 was a year of disciplined execution for the company, delivering record earnings, key strategic milestones and continued business momentum.

"Australian Ethical continues to receive peer recognition through industry awards and accolades that reflect the strength of the business we have built, our investment capability, the quality of our customer experience, people, products and operating platform. Together these acknowledgements reinforce our position as one of Australia's leading purpose-driven financial services organisations," he said.