20 minute read
SMSF Awards 2021: part 2
In a year punctuated by lockdowns, video meetings and remote working, the SMSF sector barely skipped a beat adapting to market and regulatory changes as they arrived, with service providers leading from the front supporting advisers and their clients. The ninth annual selfmanagedsuper CoreData SMSF Service Provider Awards recognised those organisations that did it best and Tia Thomas, Zoe Paterson and Jason Spits take a look at which firms found favour with advisers in the past year.
Insurance winner: TAL
Technogy-driven ease of use
By Jason Spits
Seamless integration into more than 15 platforms and the ability to pay insurance premiums through them are a key reason why advisers and their SMSF clients named TAL as the leading service provider in the insurance category of this year’s selfmanagedsuper CoreData SMSF Service Provider Awards.
TAL states these platforms include some of the largest providers, such as Macquarie, AMP, Hub24 and Netwealth, and this integration allows advisers and their SMSF clients the flexibility of funding their insurance through an investor-directed portfolio service arrangement, while also receiving consolidated reporting.
Yet, during a year in which COVID-19 continued to impact the SMSF sector, providing clients with ways to continue to manage their affairs also became important and TAL’s efforts in this space were recognised as well.
“We have continued to invest into our digital capabilities and integration with major platform providers in the market,” a TAL spokesperson explains.
“In the past year, we have continuously improved our digital signature offering and this has been applied to more than 95 per cent of our administrative forms. This is a significant efficiency improvement for advisers.”
The insurer also leveraged new technology to process client claims faster using Green ID, an online identity verification facility.
“This enables TAL to verify their client’s identity against reliable and trustworthy data sources in real time. This results in a quicker, easier experience as it eliminates the need for certified identification documents,” the spokesperson says.
“We continue to meet the genuine needs of all customers, including those who need to make a claim, as well as those customers who may not claim, while ensuring all of them have access to affordable cover over the long term.”
Alongside its usual suite of products, the firm also released three new income protection solutions in the past year to meet changes to this category of insurance, introduced by the Australian Prudential Regulation Authority, that took effect from 1 October.
The company points out a key area identified by advisers when choosing TAL as a leading service provider in this year’s awards was its long track record in supporting advisers via services that help them build their businesses.
“Our investment into TAL Risk Academy demonstrates our commitment to adviser education and training. Through this successful platform we’re contributing to the growth of advisers’ insurance capabilities and improving the quality of advice for all Australians,” the spokesperson says.
“As a result of the pandemic we quickly pivoted the academy from its face-to-face masterclasses to virtual classrooms. This rapid transition ensured that advisers could access a comprehensive learning program, which provided the same educational opportunities and quality of presentation as those previously delivered face-to-face.”
Audit winner: ASF Audits
Efficiency and education
By Zoe Paterson
Quality and speed are essential factors in any SMSF fund audit, which is why ASF Audits continues to invest in advanced technologies that reduce time and improve the quality of its service.
The business is actively focusing on applying artificial intelligence, which will complement existing automation and help to further streamline its processes, ASF Audits head of education Shelley Banton reveals.
“It will help us reduce our audit time and we are working hard in that area and are rolling out changes in our documentation management system that will help us identify areas that are complicated and complex. That’s what we need to continue to work with Continued from previous page to retain our competitive edge within the sector,” Banton says.
The firm gathers information for its audits directly from other financial institutions and software packages that its clients use. These data feeds flow automatically into its own custom-built audit software, decreasing data entry and audit time, and dramatically reducing work for clients in submitting paperwork.
Most auditors rely on data feeds, but Banton points out this organisation goes further than its competitors when it comes to verifying data accuracy.
The business uses a statistical approach to sampling and testing of audit data it receives. These independent tests efficiently identify areas where there may be discrepancies in the data that need further investigation and allow the business to have confidence it can rely on the data feeds it receives as a source of truth for the funds it is auditing.
“Cash, listed shares, term deposits, rent, things like that can come through a bank account, broker feeds and wrap feeds. But complex assets that do not have data feed capabilities have to be audited manually,” Banton explains.
In the first year, the auditor may require a bank statement to confirm cash or term deposit holdings, for example, but in future years, the practitioner can rely on data feeds for the audit.
“For unlisted shares where there is no data feed available we will need all the information around that asset in each year,” Banton says.
A large focus for ASF Audits is on ensuring SMSF clients are well educated on what they need to provide for these manual steps and how they should manage and document their fund operations to avoid running into any issues.
Through a smart dashboard on its client portal, ASF Audits can identify the types of queries SMSFs most commonly have and areas that can slow audits down, such as documentary evidence of leases to a related party or market valuations for property, unlisted assets and crypto. This allows the business to address any issues before they arise with additional education and assistance at the point of need.
“It’s about providing as much information as we can through different channels to educate our clients and helping clients improve on their procedures and processes so that it doesn’t take so long to audit,” Banton says.
The business is in regular communication with clients, providing education on a wide range of topics from market valuations to arm’s-length income. Part of the service is to provide strategic and technical advice where needed. This expertise is offered at no additional cost to the client.
“Technology is important because we could not provide the level of support we do without it, but in the age of technology, we have not lost our focus on building relationships,” Banton notes.
Ultimately, strong client service is what really gives ASF Audits its edge.
Administrator winner: Heffron
Adapting to the digital world
By Tia Thomas
After more than 20 years as educators in the financial advice industry, Heffron understands the challenges individuals face when balancing study and work responsibilities, which has led the institution to leading standards in the industry.
Its holistic approach towards education has attracted numerous financial advisers with poor time management skills, however, managing director Meg Heffron says it’s the company’s approach to the digital space that has really made a difference.
“What we’re trying to do is use technology to make a lot of the things that were previously only available one on one available more broadly. But at the end of the day, sometimes you just need to be able to talk to someone on the phone and I think we’re in the fortunate position of having a deep enough team that we can do both,” Heffron explains.
“What we have been quite successful at doing so far is taking the best of both worlds and I think that’s easier when you’re independent, privately owned and run your own race.”
Heffron has become a voice and source of confidence for numerous SMSF advisers who need answers to technical questions or an advocate with the ATO.
This was particularly the case during the instability caused by the coronavirus pandemic, which ultimately forced Heffron to rapidly adapt and provide an abundance of online seminars to ensure practitioners maintained their education levels.
“We have tools and support kits that advisers can use to either complete documents for their clients, or if they wanted to reference a tool where they can answer their own technical questions rather than ask Heffron, advisers can look those up,” Heffron points out.
“We also have just launched micro courses, which I think will help advisers with their continuing professional development and help them with their ongoing SMSF learning in a way that recognises the fact they’re very time poor.”
While the national and international communities begin to slowly recover from the effects of the coronavirus pandemic, she affirms her organisation will continue to evolve from the lessons learned during lockdown and undertake measures to both extend and create new support tools.
“We’ve been independent for over 20 years now and throughout that entire time our focus has been on supporting advisers and accountants with any SMSF issues that they face. Over the past two or three years we have leveraged technology to do that more,” she says.
“I think we are well positioned as people who are used to educating and communicating with practitioners and that enables us to develop some really nifty tools and collateral or small courses that advisers can use with their own clients.
“One of the challenges advisers face is that when they recommend something to their clients, they need to be confident that the clients have actually understood it.”
Cash and term deposits winner: Macquarie
History and technology combined
By Jason Spits
A deep history in cash management and a long engagement with the SMSF sector, as well as the adoption of digitally driven solutions, have been key drivers behind Macquarie’s success in the selfmanagedsuper CoreData SMSF Service Provider Awards 2021 cash and term deposits category.
Macquarie Banking and Financial Services head of payments and deposits Olivia McArdle identifies these qualities as the institution’s strengths as seen by the SMSF advisory community.
The Macquarie Cash Management Account (CMA), launched in late 1980, continues to attract strong demand from SMSF advisers and their clients, McArdle says, with interest in the product stretching back to the earliest days of the SMSF sector’s growth and development.
“Over that time, we’ve developed a really strong understanding of the needs of advisers and their clients, and how best to use technology and data-driven insights to deliver efficiencies and connectivity when it comes to managing SMSFs,” she notes.
The use of technology has continued, particularly over the past 12 months, according to McArdle, who says there was an ongoing focus on giving advisers and clients the tools required to manage SMSFs in a secure and transparent way.
“The Macquarie CMA integrates with over 70 software programs, with data available in real time. This means that advisers and their clients can make informed decisions and take up opportunities as they arise,” she says.
“We’re a digitally led bank, so we’re consistently investing in our platforms to ensure that we’re delivering intuitive features and experiences for clients.
“An example from this year includes the security feature we introduced to our digital banking offering, which allows clients to tailor the level of security and transaction authentication on their accounts.
“This builds on our Macquarie Authenticator app, which we launched in 2019 to give clients greater control when it comes to security.”
She recognises the cash management sector remains a dynamic marketplace for service providers and so Macquarie will continue speaking with advisers to understand what is important for their SMSF clients when managing their fund, and how that feedback can be incorporated into future updates to its cash offering.
Given the rapid shift to online solutions driven by COVID-19 and its resulting lockdowns, technology will continue to play a role.
“Because of our long history in the cash management industry, we have a deep understanding of what is most important to advisers in servicing the needs of SMSF clients,” McArdle says.
“We’ll continue to invest in our technology and solutions, taking on adviser feedback in order to deliver the best possible service to clients.
“By leveraging our leading digital banking and investments we’ve made across the Macquarie Banking and Financial Services Group, we’re able to give advisers and clients the tools they need to manage their SMSF in a seamless and intuitive way.”
Innovator winner: La Trobe Financial
Acknowledging industry evolution
By Zoe Paterson
The importance of innovation can never be overstated, according to La Trobe Financial deputy chief executive and chief investment officer Chris Andrews.
“Markets are rarely static and businesses evolve through forward thinking and delivery of relevant products to the market,” Andrews says.
Financial services businesses need drive, enthusiasm and commitment to continuously improve and adapt to evolving circumstances. To illustrate this observation, Andrews points to changes the finance and wealth industry has seen over the past 10, 20 and even 70 years since La Trobe Financial was founded.
“Over the past seven decades, we have been recognised as pioneers across a range of finance and wealth products. More importantly, our underlining foundational principle of serving the ‘under-served market’ has also played a key role in our commitment to innovation,” he explains.
“While the importance of a customercentric service never goes out of fashion, products, customers and delivery do change. To remain a meaningful, value-adding partner for our 81,000 customers requires a commitment to innovation.”
During 2021, La Trobe Financial introduced several products and initiatives in response to changing customer preferences and expectations.
Responding to strong demand for income producing investments, the business launched two new investment products within its Credit Fund. The 6 Month Notice Account and the 2 Year Account were designed to complement its existing range of income generating, lowvolatility products and provide greater choice and opportunity for investors in the current low-yield environment.
With investor interest in environmental, social and governance (ESG) issues on the rise, La Trobe Financial has also been working on further developing its ESG framework. The business achieved a carbon-neutral milestone in September and plans to implement multiple projects to ensure it reaches its target of being 100 per cent carbon zero by 2030.
“Through our ESG framework we are committed to deliver a further range of products to the market and look forward to some exciting news in this space soon,” Andrews says.
To support the new developments, the business has recently made several strategic senior appointments, including the appointment of a director of ESG, a head of strategic change projects and a chief transformation officer. Andrews says each role holds a clear mandate to embrace innovation and excellence, while keeping the customer at the heart of every decision and activity.
“Of course, fostering a culture of innovation goes beyond a top-down approach. Employees right across the business are encouraged to suggest process improvements, efficiencies and ideas that deliver innovation to the workplace. Innovation can start small and many of our innovations have come through feedback from our front-line staff,” he says.
“Placing the customer at the heart of everything we do requires backing our frontline staff to continually listen to the market for any kind of information or suggestion that may help us do what we do better, or provide transformative feedback that leads to new product lines.”
These integrated efforts in putting customers first have placed La Trobe Financial at the front of the pack when it comes to innovation.
Investment platform winner: Macquarie Wrap
Scale with scope and simplicity
By Jason Spits
At its core, an investment platform is about creating the simplest and easiest means for investors to access a range of products and invest in them, driven by the best technology available, and Macquarie Wrap has been engaged in those activities for more than two decades.
Macquarie Group head of wealth product and technology Michelle Weber says this focus on innovation, connectivity and efficiency, directed by conversations with advisers, is a key reason they have chosen it as the leading service provider in the investment platform category for the selfmanagedsuper CoreData SMSF Service Provider Awards 2021.
“Technology and the accelerated digitisation of processes across industries has become crucial and the platform market is no different,” Weber notes.
“We’re in a unique position where we’re able to combine the experience and scale of an established platform provider and the ability to innovate quickly using the leading digital tools available.”
Looking back over the past year, she adds Macquarie has concentrated on simplifying the platform and the products on it to ensure both are transparent, contemporary and provide competitive solutions for clients and advisers.
“We have simplified our cash hub offering to create greater transparency for clients and to help facilitate easier movement between products as a client’s needs change,” she reveals.
“We have a compelling cash offering and one of the features we see resonating really well with advisers and their clients is the integrated nature of the Macquarie Cash Management Account within the Macquarie Wrap platform, as well as with more than 70 external software programs.”
At the same time, Macquarie has also responded to the demand for investments that consider environmental, social and governance (ESG) issues, adding managed and listed investment options to the platform.
“We’re seeing that ESG factors have become a really important consideration for many advisers and their clients, and this trend will continue to accelerate,” Weber says.
“This year we made a series of updates to the Macquarie Wrap, including the addition of a menu of ESG managed funds and exchange-traded funds designed to make it easier for advisers to find appropriate ESG investments on the platform.
“We’ve also added carbon and sustainability ratings to give greater visibility to advisers and clients on whether a fund has been accredited for responsible investing through the Responsible Investment Association Australasia’s rating program.”
She sees the future being similar to the recent past, with current trends becoming more central to the advisers, their clients and the Macquarie Wrap platform.
“Over the past 12 months we’ve seen an uplift in the adoption of technology when it comes to the ways in which advisers and their clients manage their investments – and while this has undoubtedly been accelerated by the COVID-19 pandemic, this shift was already underway,” she notes.
“We’re listening to feedback from advisers and their clients and are consistently investing in the platform for the future to ensure it gets to the heart of what advisers and clients need.
“As ESG factors become an increasingly common consideration in the investment process, we’ll continue to add products and features on the Macquarie Wrap platform that give advisers and their clients clarity and choice to invest in a way that is aligned to their ESG values.”
Listed investment company winner: Global Value Fund
Identifying discounted assets
By Zoe Paterson
All around the world, interest rates are at rock bottom, asset class valuations are near record highs and investment markets are extremely sensitive to the slightest movements in interest rate settings. It’s an environment in which traditional asset classes have become far riskier for investors than they normally would be, according to Global Value Fund portfolio manager and director Miles Staude.
“Investing into vanilla asset classes at a time when valuations are at or near their all-time highs and when markets are hypersensitive to the smallest of changes in what may, or may not, lie ahead of us is not a particularly appealing proposition,” Staude says in his September update to investors.
Global Value Fund aims to offer investors an alternative to standard global equities investments. Rather than seeking to outperform general market indices through active stock selection, the portfolio managers concentrate on finding assets that are trading at a discount to their intrinsic worth and actively identifying or creating catalysts to unlock that value.
Managed by London-based Staude Capital, led by Miles Staude, the listed investment company was launched in Australia in 2014. Veteran Australian investors Jonathan Trollip, Chris Cuffe and Geoff Wilson sit on its board of directors.
The fund invests in a diversified range of underlying assets, including listed equities, credit, fixed income, infrastructure, private equity, real estate and cash. In September 2021, its portfolio was comprised of 40 per cent listed equity, 23 per cent listed debt instruments, 18 per cent listed private equity and 10 per cent listed hedge funds, plus a small exposure to other investments.
The portfolio managers use this diversification across asset classes and exposure to lower-volatility investments, such as government and corporate bonds, to manage investment risk.
The fund’s investment approach has been paying off. Its pre-tax net tangible assets increased by 29.2 per cent during the 2021 financial year, while shareholders received total returns of 32 per cent over the period, driven by a strong increase in the share price coupled with high levels of dividend payments.
“By far the biggest contributor to these returns was the company’s discounted capture strategy, which generated gross returns of 24.9 per cent,” Staude says of the fund’s result to July 2021.
That figure represents 80 per cent of the portfolio’s total returns for the financial year.
The fund lifted its dividends by 14 per cent in 2021 compared with the previous financial year, paying a final dividend of 3.3 cents per share for the half. This translates to a gross yield of 7 per cent to 8 per cent.
The board issued guidance that it expects a further 3.3 cent per share dividend to be paid in each half of the 2022 financial year. With a profits reserve of almost $35 million, the company believes it is well positioned to continue to pay dividends at that level until at least 2025, regardless of future profits.”
Fixed income winner: Macquarie Asset Management
Dynamic action combined with education
By Jason Spits
The need to counter the impact of long-term low interest rates for fixed income investors led Macquarie Asset Management to evolve its approach in that area by adopting a more active position, according to head of fixed income Brett Lewthwaite and co-head of systematic investments Scot Thompson.
The firm, which was named as the leading service provider in the fixed income category at the selfmanagedsuper CoreData SMSF Service Provider Awards 2021, recognised the current environment of low interest rates and bond yields would be a challenge for SMSF investors, particularly for those investing for the defensive part of their portfolio.
“We have long held the view that we would be in a lower interest rate environment given the structural headwinds facing global economies, similar to the Japan experience over the past 20 years,” Lewthwaite and Thompson say.
“With this in mind, we have continued to enhance and evolve our suite of fixed income solutions for advisers, ensuring that they still continue to provide the key benefits advisers seek within their fixed income portfolio – regular income, liquidity and preservation of capital.”
A key move that has been well supported by advisers, according to Lewthwaite and Thompson, is adopting a dynamic approach to global fixed income.
“This solution has been resonating strongly with advisers over the past few years in an environment where more traditional and passive fixed income strategies are unlikely to be as attractive from a risk/return perspective going forward,” they note.
“In contrast, our offering adopts a dynamic approach to investing in global markets, allowing us to be nimble in investing in the best opportunities on offer across the spectrum of the investment universe and providing for advisers a better return/risk outcome.”
They add this type of approach to fixed income investing is appealing to many SMSF investors, but some are still unaware of the value this asset class can provide to an investment portfolio.
“One of the challenges we face as a provider of fixed income products to the SMSF market is that in many cases investors are not familiar with fixed income and the role it plays in a diversified portfolio, particularly in a new COVID environment characterised by unprecedented market themes and actions,” they explain.
“So for us, a key focus is not only delivering fixed income solutions, but also providing insight into the sector. Fortunately, our strong relationships with the adviser community allows us to provide high-quality insights and not just product.”
Despite the shift to a new normal in a postlockdown market, Lewthwaite and Thompson see plenty of potential in the fixed income sector.
“Going forward we expect investors will continue to seek high-quality investment solutions that meet and exceed their investment and risk objectives from managers that have a strong track record of being able to adapt to changing market conditions,” they reveal.
“We also expect SMSF investors to seek the most efficient ways of accessing these solutions to minimise administrative burden. At Macquarie, we continue to explore how best we can support these trends.”
