Money Management | Vol. 35 No 1 | February 11, 2021

MAGAZINE OF CHOICE FOR AUSTRALIA’S WEALTH INDUSTRY

www.moneymanagement.com.au

Vol. 35 No 1 | February 11, 2021

17

CLIMATE CHANGE

Meeting clients’ ESG demands

Strategies to fund retirement

2021 Offering financial advice during COVID-19

PRINT POST APPROVED PP100008686

24

PROPERTY

REITs in a pandemic

Will the Westpac High Court decision change intra-fund advice?

ADVICE

IT may have been a turbulent year, but clients have valued the advice from their financial adviser more than ever.

Despite having to receive advice from home or via Zoom, clients said the peace of mind that their adviser provided was worth the cost of the service. Advisers provided reassurance to their clients and stopped them from making panicked decisions by implementing long-term strategies in portfolios which reduced volatility.

Research by the Australian Securities Exchange (ASX) found 84% of advised clients said their adviser had been ‘helpful’ in managing the impact of COVID-19 on their portfolios.

Some advisers even said they picked up new clients as people sought advice for situations such as the loss of a business.

Scott Haslem, chief investment officer at Crestone Wealth Management, said: “The premium time to add value as an adviser is during a volatile time when they can see that you are able to sort through the noise for them and create a diversified portfolio.

“When the market goes up, people question if advice is worth it but it’s about the long-term relationship we have with our clients and the trust that is built.”

01MM110221_01-12.indd 1

22

RETIREMENT

Full feature on page 14

BY MIKE TAYLOR

QUESTIONS are being asked about the extent to which superannuation funds will need to more closely tailor their intra-fund advice offerings following the High Court’s decision which clearly defined the difference between “general” and “personal” advice.

The High Court provided that clarity by dismissing an appeal by Westpac against a Full Federal Court decision that the bank breached the Corporations Act by actively conducting a sales campaign aimed at rolling customers into Westpac products.

Westpac claimed the conversations between its personnel and the superannuation fund members fell within the framework of general advice. The High Court disagreed and upheld the view that it falls under the heading of personal advice.

In the words of ASIC Commissioner, Danielle Press: “By clarifying the distinction between tailored, quality, personal advice in the customer’s interest, and general advice given via a sales campaign, today’s judgment will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients”.

However, on ASIC’s current interpretation of intra-fund advice, the High Court’s decision may not be relevant, with the regulator having said that it regards intra-fund advice as limited personal advice. What is more, it has stipulated that Section 99F of the Superannuation Industry (Supervision) Act 1993 specifies that “intra-fund advice cannot cover advice on whether a member should consolidate their superannuation holdings into one account”.

Continued on page 3

High Court delivers key decision on personal advice IN a key decision on the distinction between personal and general advice, the High Court of Australia has dismissed an appeal lodged

by Westpac around a 2016 Australian Securities and Investments Commission (ASIC) claim that the bank had provided financial product advice.

The ASIC action concerned Westpac Securities Administration Limited and BT Funds Management and related to calls to 14 customers concerning the rollover of their external superannuation accounts.

The High Court found that Westpac had provided “personal advice” in calls it made to customers concerning the rollover of their external superannuation accounts.

The High Court found that, in doing so, Westpac had breached the Corporations Act. Continued on page 3

4/02/2021 11:34:04 AM

_FP ad Test.indd 2

20/01/2021 10:09:00 AM

February 11, 2021 Money Management | 3

News

Stalling the SG at 10% would hit youngest hardest

BY MIKE TAYLOR

YOUNG Australian superannuation fund members stand to be 15% worse off at the time of their retirement at age 67 if the Government moves, as being speculated, to cap the superannuation guarantee (SG) at 10%.

Analysis undertaken by investment portfolio firm, mProjections has carried out analysis on what happens if the

Government, in the May Budget, moves to delay or cancel the scheduled increases which would take the SG to 12% by 2025.

And the bottom line is that it is younger workers – those aged 25 or younger – who will be most affected with those aged 55 and over experiencing much less impact because they will have had less time in receipt of the scheduled increase.

The mPortfolio analysis

assumes a retirement age of 67, that people own their own home at retirement, that their fund is invested 65% in growth assets and 35% in defensive assets, and takes into account

the age pension when appropriate.

It finds that those aged 25 stand to lose around 15%, while those aged 40 stand to lose 9.1% and those aged 55 stand to lose 2.6%.

Table 1: Top 10 holdings of the fund Size of Fund at retirement , today ’s dollars Age

SGC with 2.5%

SGC with only 5%

Change

Change

$

%

25

$1,052,029

$893,951

-$158,078

-15.0%

40

$636,317

$578,459

-$57,858

-9.1%

55

$568,400

$553,434

-$14,966

-2.6%

Source: mProjections

Will the Westpac High Court decision change intra-fund advice?

Continued from page 1 A key finding in the High Court judgement was that there was a pre-existing relationship between each member and Westpac and that the bank already held some of the members’ superannuation.

“Westpac gave financial product advice to each member which was intended to influence them in making a decision in relation to a particular financial product, namely, membership in one of the funds, in circumstances where a reasonable person might expect Westpac to have considered one or more of the member’s objectives, financial situation and needs,” the High Court decision said.

“The subject matter of the advice, the nature of the relationship between Westpac and its members, the purpose and tenor of the calls, and the members’ objectives, together with the form, content and context of the financial product advice seen in light of a number of other considerations, compel the conclusion that the financial product advice was personal advice within the meaning of s 766B(3)(b).”

01MM110221_01-12.indd 3

“…where a provider of advice urges the recipient to follow a particular course of action, there is a greater likelihood that a reasonable person might expect the adviser to have considered the recipient’s personal circumstances. This observation applies with particular force in the present case, where: the course of action concerns a subject matter of significance to most members (being the consolidation of multiple superannuation accounts); there is a pre-existing relationship of dependence between the adviser and the member (that of trustee and beneficiary),” it said.

“The adviser elicited the member’s objectives; and once having been told them, the adviser confirmed those personal objectives through the use of social proofing as being common and relevant objectives.

“As has been said, those circumstances would have conveyed to a reasonable person not only that those personal objectives were considered, but that no other matters needed to be taken into account and no other advice was required before the member made a decision to accept the recommendation and roll over their external superannuation accounts.”

High Court delivers key decision on personal advice Continued from page 1 Westpac has acknowledged the High Court’s decision and noted that it provides important guidance on the distinction between general and personal advice.

The High Court held that despite the arguments of Westpac that the bank gave financial product advice to each member that was intended to influence them in making a decision in relation to a particular financial product in circumstances where a reasonable person might expect Westpac to have considered one or more of the member’s objectives, financial situation and needs.

“The subject matter of the advice, the nature of the relationship between Westpac and its members, the purpose and tenor of the calls, and the members’ objectives, together with the form, content and context of the financial product advice seen in light of a number of other considerations, compel the conclusion that the financial product advice was personal advice within the meaning of s 766B(3)(b),” the High Court decision said.

“The subject matter of the financial product advice concerned the consolidation of multiple superannuation accounts, a significant financial decision.”

4/02/2021 11:49:44 AM

4 | Money Management February 11, 2021

Editorial

mike.taylor@moneymanagement.com.au

YOU WANT TO REDUCE ADVICE COSTS? THEN REDUCE REGULATION

FE Money Management Pty Ltd Level 10

If the Government seriously wants to make financial advice more affordable then it needs to conduct a thorough review to strip out the layers of regulation which have driven up the cost of advice delivery.

There exists a contradiction on the part of the Government in supposedly pursuing the delivery of affordable advice – on the one hand it has commissioned the Australian Securities and Investments Commission (ASIC) to review the matter while, on the other hand, it appears to be intending to increase the levy imposed on financial advisers to fund ASIC. At the same time as ASIC receives submissions as part of its affordable advice review, the Federal Treasury is in the throes of developing a May Budget which seems very likely to include an increase in the levies required to run ASIC, the Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office (ATO).

Also revealed in the Budget will be precisely how much more will be directed towards ASIC to deliver a Single Disciplinary Authority covering the financial planning industry.

It is now history that the Government opted to move ASIC out from under the Public Service Act and to move it substantially off-Budget by introducing a userpays model. It is also now clear that in undertaking that move the Government and its departmental advisers failed to adequately examine the consequences.

What the Government and the Treasury failed to adequately

recognise was that even before they started on implementing the userpays model for ASIC, regulatory compliance represented the single biggest cost inflicted on financial advice firms and financial advisers and something which was flowing almost straight through the fees imposed on clients.

So, whilst ASIC focuses on the undoubted cost-effectiveness of intra-fund advice and the potential of artificial intelligence and digital advice, it should also be focusing on how much cost could be removed by thoughtfully and consultatively removing the layers of regulation imposed on the financial services industry and the delivery of advice in particular.

And what the Government should be focusing on is whether, in all the circumstances, a user-pays regime is appropriate for funding a Commonwealth regulator which, in recent months, has been seen to have been less than rigorous in terms of risk management around its own expenditures – something which has contributed to the forthcoming departure of its chair, James Shipton and has already seen the exit of his deputy chair, Daniel Crennan.

Thus, the Financial Planning Association (FPA) is right to have used its pre-Budget submission to argue for a review of the annual levy arrangements aimed at making

them more predictable and more reflective of the capacity of financial advisers to pay.

As the FPA pointed out: “The levy per financial planner has increased from $934 in 2017-18 to approximately $2,000 in 2019-20. In three years of operation, the levy for financial planners will likely have more than doubled and there is no indication that increases of this scale will cease for 2020-21 or future years”.

But many in the financial advice industry would argue that the FPA has been wrong to have indicated its support for an industry-funded regulatory model when there are good reasons for the regulator itself to be the subject of closer Budget scrutiny and governance oversight.

Over the past 15 years, Governments of both stripes have tended to treat ASIC not so much as a regulator and arm of Government but as a “stakeholder”/policymaker. Former opposition leader, Bill Shorten, was particularly guilty of this approach during his time running the financial services portfolio.

ASIC is not a stakeholder in the industry. It is an arm of Government.

It is the regulator and it should be appropriately funded to meet its obligations to protect the interests of Australian taxpayers.

Mike Taylor Managing Editor

4 Martin Place, Sydney, 2000 Managing Editor/Editorial Director: Mike Taylor Tel: 0438 789 214 mike.taylor@moneymanagement.com.au Associate Editor - Research: Oksana Patron Tel: 0439 137 814 oksana.patron@moneymanagement.com.au News Editor: Jassmyn Goh Tel: 0438 957 266 jassmyn.goh@moneymanagement.com.au Senior Journalist: Laura Dew Tel: 0438 836 560 laura.dew@moneymanagement.com.au Journalist: Chris Dastoor Tel: 0439 076 518 chris.dastoor@moneymanagement.com.au Events Executive: Candace Qi Tel: 0439 355 561 candace.qi@fefundinfo.com ADVERTISING Sales Director: Craig Pecar Tel: 0438 905 121 craig.pecar@moneymanagement.com.au Account Manager: Amy Barnett Tel: 0438 879 685 amy.barnett@moneymanagement.com.au Account Manager: Damien Quinn Tel: 0416 428 190 damien.quinn@moneymanagement.com.au PRODUCTION Graphic Design: Henry Blazhevskyi

Subscription enquiries: www.moneymanagement.com.au/subscriptions customerservice@moneymanagement.com.au

Money Management is printed by Bluestar Print, Silverwater NSW. Published fortnightly.

Subscription rates: 1 year A$244 plus GST. Overseas prices apply. All Money Management material is copyright. Reproduction in whole or in part is not allowed without written permission from the editor. © 2021. Supplied images © 2021 iStock by Getty Images. Opinions expressed in Money Management are not necessarily those of Money Management or FE Money Management Pty Ltd.

WHAT’S ON ASFA Conference

FPA ACT Chapter Event

25th Annual AFIA Risk Summit

2021 AFA Mentoring Program

Virtual conference 10-12 February superannuation.asn. au/events

Canberra, ACT 11 February fpa.com.au/events

Webinar 16-18 February Afia.asn.au/AFIA-events

Webinar 17 February afa.asn.au/event

01MM110221_01-12.indd 4

ACN 618 558 295 www.fe-fundinfo.com © Copyright FE Money Management Pty Ltd, 2021

4/02/2021 10:10:39 AM

February 11, 2021 Money Management | 5

News

FPA calls for review into the escalating ASIC levy

BY MIKE TAYLOR

AMID industry speculation that the Government might raise the so-called “ASIC levy” by as much as 20% to cover off the cost of increased activity by the Australian Securities and Investments Commission (ASIC), the Financial Planning Association (FPA) has made clear further increases will only add to the cost of financial advice.

The FPA has made the point that the cost of regulation of financial planning is going up but there are fewer planners available to meet that cost.

The FPA has used its pre-Budget submission to call for a review of the levy arrangements to make them more predictable in circumstances where it had risen every year since the Government adopted the Australian Securities and Investments Committee industry funding model.

“While the FPA supports an industry-funded regulatory model, two major issues have become apparent since the levy was first applied in the 2017-2018 fiscal year,” FPA chief executive, Dante De Gori said.

“The levy amount each year has proved to be unpredictable, which makes it practically

impossible for a financial planner to effectively budget for this business cost,” he said, pointing out that for the 2018-19 financial year ASIC predicted in March of 2019 that the per financial planner amount for the levy would be $907.

“By the time invoices for this year were issued in January 2020, the per financial planner amount had risen to $1,142. This is a 26% increase in just ten months,” De Gori said.

“Similarly, for the 2019-20 financial year ASIC predicted in March of 2020 that the per financial planner amount for the levy would be $1,571. The FPA expects the amount will have risen further to around $2,000 – an increase of nearly a third.

“The levy has been increasing at a dramatic

Centrepoint resumes dividends, looks for growth PUBLICLY-LISTED financial planning group Centrepoint Alliance will resume paying dividends after announcing a return to profit in the first half of the current financial year.

The company announced to the Australian Securities Exchange (ASX) earnings of $2.1 million compared to a loss of $400,000 in its prior first half.

The company said it was proposing a fully-franked dividend of four cents per share comprised of a three cent special dividend and a one cent interim dividend.

Commenting on the outcome, Centrepoint Alliance chair, Alan Fisher, said the company had continued to improve its operating performance and was now well positioned to participate in industry consolidation and to seek new strategic opportunities.

“We have continued to focus on organic growth and refining our cost base, as is evident in the first half operating results,” he said.

“We are now actively pursuing opportunities to unlock the value of the business that can be achieved through scale.

“Centrepoint Alliance has significantly improved its financial position over the three years since the company paid out $15 million in cash dividends in the 2018 financial year. The company has a history of returning excess capital to shareholders, having declared a special dividend of $0.07 per share when it sold its insurance premium funding business in the 2017 financial year.”

“In light of Centrepoint Alliance’s strong operating results, the board has resolved that is now in shareholders’ best interests that the company should not only resume the period payment of ordinary dividends, but also return excess capital to its owners,” Fisher said.

01MM110221_01-12.indd 5

rate that far outstrips the rate of revenue growth for most financial planning businesses and is being exacerbated by a reduction in the number of financial planners from whom the levy must be recovered,” De Gori added.

“The levy per financial planner has increased from $934 in 2017-18 to approximately $2,000 in 2019-20. In three years of operation, the levy for financial planners will likely have more than doubled and there is no indication that increases of this scale will cease for 202021 or future years.”

He noted that over the 2019-20 financial year, the number of financial planners from which this budget must be recovered has fallen from around 25,600 to around 22,500 – a loss of 3,100.

“As a first step in addressing these twin challenges of predictability and dramatic levy increases the Government should undertake to review the ASIC industry levy,” De Gori said.

The FPA submission urges a review that considers whether the current method of recovering the entirety of ASIC costs relating to financial advice through the levy is appropriate, particularly given that much of the additional cost being recovered relates to specific enforcement action against a small number of financial services businesses.

Court orders discovery of key AMP BOLR documents THE law firms conducting the class action on behalf of financial advisers against AMP Limited over buyer of last resort (BOLR) contracts have been ordered to pay a costs security of $1.5 million to enable them to obtain key documents covering the company’s changes to the BOLR arrangements and how they occurred.

The documentation filed by the law firms references AMP Financial Planning as having referenced the possibility of a “BOLR run” in its own pleadings.

Federal Court orders made just before Christmas reveal that the firms representing the advisers have sought discovery of key information from AMP Limited including all documents created or received in the period from 1 July, 2018, and 8 August, 2019, relating to any proposed or possible change to the BOLR multiple in the 2017 BOLR Policy.

As well, the firms are seeking all documents recording communications or consultation between AMP Financial Planning and AMP Financial Planners Association in relation to the BOLR Multiple between 1 July, 2018, and 8 August, 2019.

Included in the documents being sought are those relating to “a decrease in the market value of register rights linked to ongoing revenue including in respect of grandfathered commissions and/or a ‘BOLR run’”.

The lawyers have also sought documents relating to the board meeting of AMP Financial Planning held on 7 August, 2019, and a copy of the minutes of that meeting, all board papers provided to board members for the meeting and all documents recording communications between AMP Financial Planning board members in the period 1 August, 2019, and 7 August, 2019.

3/02/2021 4:12:57 PM

6 | Money Management February 11, 2021

News

IOOF dismisses $1.3 billion in outflows as financial advisers exit

BY MIKE TAYLOR

IOOF has confirmed that the termination of its platform relationship with BT cost $8.1 billion.

In a quarterly update delivered to the Australian Securities Exchange (ASX) IOOF pointed to a decline in funds under management and advice of $0.4 billion, noting that an uplift of $12.7 billion had been offset by the $8.1 billion from the termination of the BT relationship together with $1.5 billion from the liquidation of IOOF’s Cash Management Fund and a $0.4 billion one-off transfer from the Cash Management Trust.

IOOF’s funds under management, advice and administration (FUMA) was down $0.4 billion to $202.4 billion for the quarter to 31 December, 2020.

IOOF chief executive, Renato Mota, also pointed to progress with respect to the company’s

Advice 2.0 strategy.

“We have seen practices with $363 million in funds under advice choose to become selflicensed and continue to utilise services under the IOOF Group. We have also seen 22 advisers with $869 million in funds under advice transition from IOOF licences due to various reasons including some practices that we don’t view as economically sustainable under our future advice model.

“The financial impact of the total $1.3 billion advice outflows is not material,” he said.

“Building an advice model that is sustainable in its own right, without economic subsidisation and allowing for ongoing investment in technology and processes is critical in ensuring that financial advice is more affordable and available to more Australians.”

Mota noted that the financial advice segment was also impacted by the termination of IOOF’s

relationship agreement with BT which was announced to the market on 18 December, 2020.

“IOOF received a one-off settlement of $80 million pre-tax in January, 2021, which takes into consideration amounts owed in recognition of IOOF’s rights under the agreement. This agreement represented funds under advice of $18.8 billion as at 30 November, 2020, more than half of which has been retained in IOOF’s FUMA total: • $8.1 billion transferred to BT and removed from IOOF’s FUMA total. This outflow relates to the value of the funds under advice with non-IOOF licensed advisers who utilised the open architecture arrangement between IOOF and BT; and • $10.7 billion retained in IOOF’s FUMA total from advisers licensed by IOOF that utilised IOOF’s open architecture arrangement with BT and remain as funds under advice.”

Who’s makes the complex simple?

Don’t unnecessarily entangle advisers says FPA THE Financial Planning Association (FPA) is seeking more certainty from Treasury that financial advisers are not going to be adversely caught up in the Government’s proposed new insurance claims handling machinery.

In particular, the FPA wants it made clear that financial advisers will be able to handle the insurance claims of new clients without having to take on extra licensing obligations.

In a submission filed with the Treasury in response to the Financial Sector Reform (Claimant Intermediaries) Regulations 2020 the FPA said financial planners were already

01MM110221_01-12.indd 6

appropriately licensed and regulated by ASIC and so should not be exposed to any additional requirements to continue assisting their clients with insurance claims.

However, the FPA said it was seeking clarification from the Treasury about the application of the exemption in circumstances where a client has changed financial planner and an insurance claim is the first substantive interaction between the client and their new financial planner.

“This situation can occur frequently for a variety of reasons, including that there is often a

significant amount of time between a client receiving advice on an insurance policy and the point at which they might make a claim against that policy,” it said.

The submission claimed that, in this time, the client’s original financial planner may have retired or the client may have relocated and engaged a financial planner in their new location.

“It is in the client’s interest to be able to receive assistance with their insurance claim from their new planner immediately and the exemption should apply in these circumstances,” the FPA submission said.

3/02/2021 11:15:40 AM

February 11, 2021 Money Management | 7

News

AFCA forced by ASIC to change its approach to ARs

BY MIKE TAYLOR

THE Australian Financial Complaints Authority (AFCA) has been forced by the Australian Securities and Investments Commission (ASIC) to change the way it treats authorised representatives.

AFCA announced to it had amended its rules to provide clarity for consumers and financial firms regarding AFCA’s jurisdiction to receive complaints about the conduct of an authorised representative of an AFCA member, noting that this was a result of a legislative instrument issued by ASIC on 5 January, 2021, requiring AFCA to update its rules.

It said the rules change followed the judgment of the NSW Supreme Court in DH Flinders Pty Limited v Australian Financial Complaints Authority in November 2020 relating to AFCA’s jurisdiction to consider a complaint against a licensee in relation to the conduct of its corporate authorised representative, specifically where the conduct of the representative was without or outside authority.

The AFCA announcement said the judgement had highlighted that AFCA’s rules needed to be clearer to ensure that they reflected the same obligations and liabilities for licensees as set out in the Corporations Act.

“At ASIC’s direction, the rules now clearly reflect the same statutory liability for licensees regarding their authorised representatives as set out in the Corporations Act and the National Consumer Credit Protection Act,” it said. “The updated AFCA rules apply to complaints received by AFCA from 13 January, 2021, onwards.”

It said complaints received before 13 January, 2021, will be handled by AFCA under the previous rules.

“As the vast majority of complaints AFCA considers are between parties with a direct relationship (e.g. a bank to a bank customer) these complaints are not

impacted by the rules change,” it said.

“AFCA is currently reviewing a very small number of complaints received before 13 January, 2021, which are potentially impacted by the judgment and is in contact with those complainants and financial firms to discuss the specifics of their complaint.

“For the small number of complaints which may be outside AFCA’s rules, AFCA will be encouraging the financial firms involved to consent to AFCA considering the complaint to achieve an early resolution and avoid the prospect of potential court or other action by the complainant.”

Who else, but Elston.

Elston Group ACN: 130 771 523 EP Financial Services Pty Ltd ABN 52 130 772 495 AFSL: 325 252 © 2019

Financial advisers feel they are under ‘constant threat’: Allan Gray

BY JASSMYN GOH

FINANCIAL advisers today are having to work harder and faster to futureproof their businesses, according to Allan Gray.

The fund manager found there were three common themes across its Australian, UK, and South African markets which were ongoing regulatory developments, technology advancements, fee scrutiny and questions around the benefit of advice.

01MM110221_01-12.indd 7

Allan Gray Australia’s chief operating officer, JD de Lange, said it was “frightening” that one-third of advisers in a survey said that they would leave the industry within the next year or two.

He said the increasing compliance burden, a loss of revenue in the form of commissions or rebates, a drop in practice valuations, and the stress of meeting new educational requirements contributed to the situation in Australia.

“We last saw adviser sentiment this low in 2010 following the global financial crash and it makes it very hard to grow the industry and encourage new entrants to join because advisers feel under constant threat,” he said.

“There are about 10% fewer advice clients than five years ago, which has created fee pressure for advisers. As a result, advice has become extremely expensive even

by Australian terms.

“In an asset-based-fee world,

the discussions were more investment focused and price was a function of assets under management. Today an advice plan needs a structuring fee and an ongoing management fee both based on the value proposition offered by the adviser.

“A new proposal costs $3,600 or more to deliver, while the annual fee could easily be more than double that. This all means the adviser needs to have a very clear and quantifiable value proposition.”

3/02/2021 11:15:50 AM

8 | Money Management February 11, 2021

News

Time to let advisers use their professional judgement

BY MIKE TAYLOR

THE Australian Securities and Investments Commission (ASIC) has been told that financial advisers want to be empowered to use their professional judgement but for too long have not been trusted to do so.

The Association of Financial Advisers (AFA) has noted that the ASIC affordable advice discussion paper has pointed to the ability of advisers to use their judgement to decide the scope and subject matter of the advice that a client is seeking, but said this needed to be more formally recognised.

“We appreciate the point made in paragraph 29 that ‘financial advisers can use their judgement to decide on the scope of the advice in a way that is consistent with a client’s relevant circumstances and the subject matter of the advice the client is seeking’,” the AFA said.

“Financial advisers want to be empowered to use their professional judgement, and we believe that they should be. Many of them are highly educated and well qualified. Many have years of experience.

“It seems to us that for too long they have not been trusted to

Another 30 financial advisers head for the exit: HFS data

BY OKSANA PATRON

DESPITE a relatively uneventful week, the industry has seen a net loss of 29 adviser roles during the third week of January even though 30 licensees managed to grow their adviser head count, according to the data from HFS Consulting.

This week’s figures showed that there were 23 licensees which acquired one new adviser role and another seven financial planning groups increased its adviser numbers with two new roles each.

The groups which welcomed the addition of at least two new adviser roles included Lifespan Financial Planning, Fiducian Financial Services, Alliance Wealth and Advice Evolution, among others.

At the same time, 48 groups posted declining numbers of advisers and, in total, saw a loss of 66 adviser roles during the week.

AMP Financial Planning traditionally accounted for the biggest loss and saw a departure of five roles and was followed by three groups – Aware Financial Services, Skylight Financial Solutions and Synchron – which each saw a departure of three advisers. On top of that, a further eight groups lost two adviser roles while 36 licensees reported a loss of one adviser role.

According to data from HFS Consulting, there were also two small licensees for which the reported losses in advisers drove the overall number of roles to zero and they had effectively closed.

The firm’s director, Colin Williams, said it was a busy week of reporting given that all in all 78 licensees saw a movement in adviser role numbers.

“This week’s data showed a net loss of 29 adviser roles. Some of the data is still being backdated into 2020 as licensees have 30 days to report adviser movement. Net movement for January 2021 to date is at (-6),” he said.

“The vast majority of the movement are existing advisers moving between licensees. The number of provisional advisers (Professional Year) is increasing, now up to 58 after adding eight in 2021 which is a good start.

“We are also seeing a small number of provisional advisers now becoming advisers in their own right, with three current advisers having a 2021 start date as an actual adviser.”

The HFS Consulting data looks at the weekly adviser movements based on the corporate regulator’s Financial Adviser Register (FAR).

01MM110221_01-12.indd 8

demonstrate professional judgement,” the AFA said.

“We strongly favour moving in a sensible transition towards increase reliance on professional judgement, as is permitted by other professions,” the AFA submission said but at the same time noted that “reliance on professional judgement does require greater certainty and consistency”.

“Principally, what is most important is for licensees and advisers to have confidence in their ability to use limited advice, and not to feel at risk that in doing so, they will be breaching their obligations.”

Providing simple financial advice simply will reduce cost

BY JASSMYN GOH

FINANCIAL advisers need to be able to provide simple advice simply to reduce the cost of personal advice, according to The Advisers Association (TAA).

In its submission to the corporate regulator’s consultation on ‘Promoting access to affordable advice for customers’, TAA said the fact that the Australian Securities and Investments Commission (ASIC) had already provided temporary relief for financial advice related to COVID-19 demonstrated that simplification was possible.

However, it said, the changes put advisers on an uneven playing field compared to other providers such as intrafund advice and accountants as advisers needed to meet all advice requirements including best interest and safe harbour obligations for new clients.

“It is important for there to be a level playing field for advice, so if a client wants to see a financial adviser for the same advice about their super, the adviser should be subject to the same rules and disclosure requirements as if the advice was provided by a super fund through intrafund advice,” TAA said.

“Our preference is to remove the term ‘general advice’ and rename intrafund advice and roboadvice as intrafund information and robo information. This would remove any client confusion that they are receiving advice, when what they are typically receiving is information about a product. When FSR was being introduced ‘Financial Product Information’ was proposed, which is a more accurate description than advice.

“We believe that within the current regulatory environment there are opportunities for ASIC to make changes, which will make it easier for everyday Australians to access limited advice, similar to intrafund in a compliant, costeffective and quality manner.”

TAA also said the limited advice framework could be improved by matching advice risk and complexity to the level of advice documentation and process requirements for simple, rather than complex limited advice scenarios. Examples included cashflow, superannuation contributions, super investment options and switching, insurance in super, consolidation of super accounts, and investment in managed funds and exchange traded funds (ETFs).

3/02/2021 11:15:42 AM

FUTURE

OF

WEALTH MANAGEMENT

WEBINARS

LIVE WEBINAR | ASK THE EXPERTS

MANAGED ACCOUNTS WEBINAR 11AM, 11TH MARCH 2021

Join us for an opportunity to ask the experts and earn CPD points!

Managed accounts continue to be attractive to financial advisers but the space is becoming increasingly crowded so what is giving providers the edge? The adaptable use of technology is part of the answer but what other factors are in play and what should advisers be looking for?

REGISTER NOW!

https://www.moneymanagement.com.au/events/upcoming-events

SPONSORED BY

5220_FOWM21 FP MA.indd 9

1/02/2021 1:02:21 PM

10 | Money Management February 11, 2021

News

How Easton intends to leverage its Paragem acquisition

Financial planner salaries expected to rise 23%

BY CHRIS DASTOOR

BY MIKE TAYLOR

THE board of Easton Investments has formally recommended to shareholders that they accept HUB24’s proportional offer for the company arguing that it will deliver significant strategic benefits including the acquisition of Paragem meaning that Easton can become a leader in licensee and adviser services.

In target statement documentation released to the Australian Securities Exchange (ASX), Easton described Paragem as a strong strategic fit with Easton’s Wealth Solutions division which provide additional scale to support the development of technology to improve efficiencies and add new revenue generating services.

It said this was consistent with Easton’s strategic direction to become a leading non-institutional provider of adviser and licensee services.

“The strategic relationship with HUB24 is aimed at accelerating growth opportunities,” it said.

“Notably Easton’s plans to compete in the wealth training and continuing professional development market, as

well as the potential to grow Easton’s adviser network.”

It said that there was an opportunity for Easton to become a leader in licensee and adviser services as it partnered with HUB24 to deliver efficient, cost-effective solutions and services to financial advisers, accountants and their clients.

Call to let financial advisers and clients agree scope of advice up-front FINANCIAL advisers and their clients should be able to agree the scope of advice upfront, thus providing greater certainty around what is provided including intra-fund advice, according to one of Australia’s largest superannuation lobby groups, the Association of Superannuation Funds of Australia (ASFA).

In a submission to the Australian Securities and Investments Commission (ASIC) affordable advice review, ASIC has canvassed updates to ASIC’s regulatory guide 244 to provide clearer explanations on how the best interests duty can be met if an adviser agrees with the consumer to provide limited scope advice upfront.

“Currently, when giving personal advice, there is a requirement to provide advice in areas that a consumer hasn’t necessarily requested, but which may be relevant to their circumstances. The reason why this additional advice might be required even without the explicit request from the consumer is due to uncertainty around scoping advice,” the ASFA submission said.

It said this “adds to the complexity of advice and increases the cost of delivering it”.

The ASFA submission said it might be beneficial to explore the concept of providing strategic recommendations to consumers only rather than product recommendations.

“Consumers can then refer to their current providers or seek new providers through their own research,” it said. “There are concerns that, in this situation, consumers may not implement the advice they’ve been given. To overcome this, advisers could assist with implementation once a consumer has made a product choice or provide follow up advice if a consumer has a list of products but is uncertain about which product would suit their personal circumstances the most.”

01MM110221_01-12.indd 10

DATA shows that despite salaries expected to be flat across the board in 2021, financial planners are expected to buck that trend with those who have one to five years of experience predicted to see a 23% rise.

The annual Robert Walters Salary Survey, which tracked trends and sentiments in the Australian job market, showed confidence in the opportunities on offer in the industry were also high with 65% of those surveyed indicating they felt confident about their job prospects this year.

There was also 25% of businesses in the wealth management space that indicated they would give pay rises this year, with 33% of professionals in the industry expecting a pay rise in 2021.

Across the banking and financial services industry in general – the most sought after individuals in 2021 were risk and compliance professionals, credit and lending professionals, and investment analysts and specialists.

Remuneration was also identified as not being the key driver of worker satisfaction, as the ongoing impact of the COVID-19 pandemic and stay-at-home directives had seen professionals instead turn to job security, workplace culture and their colleagues as the main source of their job satisfaction.

Overall, 85% of professionals surveyed indicated they want their current flexible working arrangements to continue, which included 43% who want to continue working remotely full-time.

However, business leaders said they were focused on getting employees back to the office, which they viewed as having a critical role to play in restarting the economy and 60% said productivity was the driver for them not wanting to continue with flexible working arrangements.

Almost half (49%) of those surveyed who were unemployed said it was due to a COVID-19 related redundancy, while 32% of businesses said they would continue their hiring and head count freezes into 2021, and 25% would likely make redundancies.

James Nicholson, Robert Walters ANZ managing director, said 2021 was going to see a resetting of the employment landscape.

“Job seekers are confident of their job prospects for the year ahead and are emboldened by the flexibility gains made in 2021,” Nicholson said.

“However, employers are working to get their teams back to the office and remain cautious on the long-term recovery of the economy.

“How this re-balancing of the working environment and bridging of the expectation gap is managed now, has the potential to dictate the future of the workplace for decades to come.

“We expect salaries will remain relatively flat in the year ahead – even in those industries experiencing the most demand; and a third of businesses have indicated they will be continuing with head count freezes in the short-term.”

3/02/2021 11:16:05 AM

February 11, 2021 Money Management | 11

News

How BT Super lost 38,000 superannuation members

BY MIKE TAYLOR

BT Funds Management has admitted it lost around 38,000 members from its BT Super product in February, last year, after a less than perfect migration process.

The company admitted it migrated 277,779 members to BT Super in February 2020, but that as part of the process “members experienced disruption during the migration process whereby they could not access their accounts”.

The company said the problem had arisen as it sought to migrate the members to BT Super which it described as “a new product that offers an improved customer experience”.

Answering questions on notice from the House of Representatives

Standing Committee on Economics, the company said: “approximately 38,000 members out of the above mentioned cohort have left BT post February 2020”.

However, it said the figure included all member exits and they might not have all been attributable to the migration process and disruption.

“The aggregate figure includes all member exits, which may be due to natural membership attrition and the early release of superannuation initiative,” it said.

“BT does not collect information regarding the reason(s) for member exit. As such, we are unable to provide the number of members that have left BT as a direct result of the disruption during the migration process.”

MEETS

AUSBIL ACTIVE SUSTAINABLE EQUITY FUND provides exposure to companies with a sustainable approach, satisfying a range of environmental, social and corporate governance considerations.

Invest today with tomorrow in mind.

Ausbil Active Sustainable Equity Fund as at 31/12/2020

1 month

3 months

6 months

1 year

2 year (pa1)

Since inception (pa1) 12.15%

Portfolio

1.85%

16.62%

21.40%

16.11%

21.77%

Benchmark2

1.21%

13.70%

13.20%

1.40%

11.86%

7.09%

XS Ret

0.64%

2.92%

8.20%

14.70%

9.91%

5.06%

1. Inception Date: 31 January 2018

2. Benchmark: S&P/ASX 200 Accumulation Index

2020 WINNER

This information has been prepared by Ausbil Investment Management Limited (ABN 26 076 316 473 AFSL 229722) (Ausbil) the issuer and responsible entity of the Ausbil Active Sustainable (ARSN 623 141 784) (Fund). This is general information only and does not take account of investment objectives, financial situation or needs of any person. It should not be relied upon in determining whether to invest in the Fund. In deciding whether to acquire or continue to hold an investment in the Fund, an investor should consider the Fund’s product disclosure statement, available at www.ausbil.com.au. Past performance is not a reliable indicator of future performance. Performance figures are calculated to 31 December 2020 and are net of fees and assume distributions are reinvested. The Zenith Fund Awards were issued 30 October 2020 by Zenith Investment Partners (ABN 27 130 132 672, AFSL 226872) and are determined using proprietary methodologies. The Fund Awards are solely statements of opinion and do not represent recommendations to purchase, hold or sell any securities or make any other investment decisions. To the extent that the Fund Awards constitutes advice, it is General Advice for Wholesale clients only without taking into consideration the objectives, financial situation or needs of any specific person. Investors should seek their own independent financial advice before making any investment decision and should consider the appropriateness of any advice. Investors should obtain a copy of and consider any relevant PDS or offer document before making any investment decisions. Past performance is not an indication of future performance. Fund Awards are current for 12 months from the date awarded and are subject to change at any time. Fund Awards for previous years are referenced for historical purposes only.

01MM110221_01-12.indd 11

3/02/2021 11:16:20 AM

12 | Money Management February 11, 2021

InFocus

IS IT TIME TO IMPOSE EXTERNAL OVERSIGHT ON ASIC? Mike Taylor writes that in the aftermath of the Thom Review into the Australian Securities and Investments Commission the Government has the opportunity to impose external board oversight on the regulator.

THE QUESTION HAS to be asked: Would the expenses issues which surrounded Australian Securities and Investments Commission (ASIC) chair, James Shipton and his deputy chair, Daniel Crennan, have arisen if the regulator had still been fully subject to the Public Service Act? It has not even been three years since ASIC was removed from Public Service Act and the situation which gave rise to the resignation of Crennan and the impending departure of Shipton arose from seeking to translate a public service regulatory entity into a Commonwealth statutory entity sitting outside of the strictures of the public service.

Notwithstanding the fact that the Treasurer, Josh Frydenberg, saw fit to accept Treasury legal advice that Shipton was not guilty of any instances of misconduct, it is evident from the review conducted by Dr Vivienne Thom that the structures and management of Australia’s core financial services regulator have fallen short of what ASIC expects of the entities it regulates.

And it appears that not least amongst those shortcomings has been the existence of a viable risk management and oversight regime within ASIC – something which would arguably have prevented the circumstances which gave rise to the embarrassments around the

KEY ECONOMIC INDICATORS

Shipton and Crennan expenses.

And it is therefore telling to read Dr Thom’s report in its entirely and to note that it points to questions raised about “the overall governance arrangements in ASIC, particularly in respect of the responsibilities of the Accountable Authority”.

In looking at those questions, Thom pointed to the manner in which the ASIC Act actually required the establishment of “an appropriate system of risk oversight and management for the entity” and “an appropriate system of internal control of the entity; including by implementing measures direct at ensuring officials of the entity comply with finance law”.

Thom then went on to suggest

that her review had raised issues of concern regarding: • The proper use and management of public resources; • Systems of risk oversight and management for the entity; • System of internal control for the entity; and • Co-operation between ASIC officials.

Frydenberg has noted Thom’s recommendations and said that the Government expects ASIC to implement them as a priority and report regularly to him on their progress.

What Frydenberg did not mention, however, was the manner in which a key Parliamentary Committee had actually canvassed closer

oversight of the way in which ASIC is run, including the imposition of an external board.

In fact, the chair of the Senate Joint Committee on Corporations and Financial Services, Victorian backbencher, James Paterson, actively canvassed the benefit of such external board oversight when taking evidence from former Australian Competition and Consumer Commission chairman, Professor Graeme Samuel, and economist and academic, Professor Ian Harper.

Importantly, it is open to Paterson’s committee to recommend the imposition of an external board when it makes it report to the Parliament later this year and this, in turn, could feed into Treasury’s consideration of the matter.

If the Government were to adopt the recommendation of an external board it would mean that Shipton would effectively become the last chair of ASIC to hold the sweeping “accountable authority” powers the use of which gave rise to many of the questions raised by the Australian National Audit Office (ANAO).

But the Government would need to be careful in selecting who it approached to be a part of that board given its recent experience with the board appointed to oversee the Financial Adviser Standards and Ethics Authority (FASEA).

0.10%

-3.8%

0.7%

Cash rate

Economic growth

Inflation

Source: Reserve Bank of Australia, 7 January 2021

01MM110221_01-12.indd 12

3/02/2021 11:16:35 AM

MLC Core Investment List.

Now with more on the menu.

Invest in six new SMAs and the Antares Income Fund.

We recently launched the MLC Core Investment List on our Series 2 Wrap to give your clients cost-effective access to our high-quality multi-asset funds. We’ve now added six new Separately Managed Account (SMA) model portfolios and the Antares Income Fund.

Today, with over $1 billion in funds under management, advisers are using the choice and value MLC Core is offering to help them achieve their clients’ goals.

To find out more, speak to your BDM or visit mlc.com.au/adviser/core

Important information: MLC Wrap Investments Series 2 and MLC Navigator Investment Plan Series 2 are Investor Directed Portfolio Services operated by Navigator Australia Limited ABN 45 006 302 987 AFSL 236466 (NAL). MLC Wrap Super Series 2 and MLC Navigator Retirement Plan Series 2 are superannuation products issued by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) through the MLC Superannuation Fund ABN 40 022 701 955. The information is a summary only and should not be relied on for decision making and is provided solely for the use of authorised financial advisers and is not intended for distribution to investors and potential clients. You should obtain and consider the relevant Product Disclosure Statement and the Financial Services Guide before deciding whether to acquire or continue to hold the product. Relevant disclosure documents for each product are available by calling 133 652 or from www.mlc.com.au. The information is correct as at 1 January 2021 but may change in the future. A160448-0121

_FP ad Test.indd 13

1/02/2021 9:35:26 AM

14 | Money Management February 11, 2021

Advice

ADVICE DURING COVID-19 Financial advisers have found the greatest benefit of the pandemic has been clients realising the value of their advice, writes Laura Dew, even if it meant them receiving it digitally.

2021

01MM110221_14-25.indd 14

REASSURING CLIENTS PLAYS a greater part in the work of financial advisers than offering actual financial advice, according to financial advisers, with many valuing the advice more in turbulent times.

During the pandemic, market downturns led to heightened volatility and share price crashes which left portfolios in a state of disarray and investors panicking about where to turn. But advisers have said that they were far more involved in helping their clients mentally rather than with their finances.

They also said the pandemic meant their clients recognised the value of advice more than normal as they could see how their adviser was working to protect their interests even if that meant stopping them from making emotionally-driven decisions.

There was the risk that clients could make a panicked decision to liquidate their portfolios into cash and then struggle to time when to enter the market but advisers said their clients understood they had long-term strategies in place.

All advisers said they felt the pandemic had increased their clients’ awareness of the advice process and made them value it more as a form of reassurance and stability. Some said they had picked up new clients who were in situations which warranted receiving advice for the first time, perhaps after the closure of a business or loss of a job.

Clients also valued the engagement they were able to have with their adviser, which was often carried out digitally rather than face-to-face.

Eugene Ardino, chief executive of Lifespan Financial Planning,

said: “We helped investors realise the value of advice and make good decisions, even if that meant not changing anything in their portfolios. The majority of our investors are for the long-term and were less affected by shortterm market gyrations.

“We saw a lot of people start getting advice as a market drop always highlights the need for diversification and having strategies that can reduce volatility. In a bull market, investing looks easy.”

Scott Haslem, chief investment officer at Crestone Wealth Management, said: “The premium time to add value as an adviser is during a volatile time when they can see that you are able to sort through the noise for them and create a diversified portfolio.

When the market goes up, people question if advice is worth it but it’s about the long-term relationship we have with our clients and the trust that is built”.

“There were a few people who were dipping their toe in the water for the first time when they realised they needed advice, I didn’t hear of any business that was losing clients,” Bryan Ashenden, technical manager at BT said.

Research by the Australian Securities Exchange (ASX) last September found 84% of advised clients said their adviser had been ‘helpful’ in managing the impact of COVID-19 on their portfolios and 41% said their adviser was ‘extremely’ or ‘very’ helpful.

Clients who had been advised during the pandemic were also more likely to invest spare cash and increase allocations to Australian direct shares than non-advised investors.

This was echoed by Fidelity’s

3/02/2021 3:56:08 PM

February 11, 2021 Money Management | 15

Strap Advice

68%

Advised investors who made changes to their portfolios

26%

Advised investors who invested all their spare cash

23%

Advised investors who increased allocation to Australian direct shares

63% Non-advised investors who would be ‘open’ to advice

Source: ASX, September 2020

‘Value of Advice’ report last July which found while over half of non-advised investors worried about money on a daily or weekly basis, this fell to 36% for those who received advice.

Denis O’Callaghan, adviser at Fitzpatricks Wealth, said: “We told clients to focus on things they could control, their mindset and their self-worth and spoke to each one every seven to 10 days to keep in contact. Everyone wondered when it was going to end but we encouraged them to take a positive mindset.

“They all already had longterm plans in place, cash reserves so they were confident they could survive three months if they were out of work and their portfolios were set up to manage volatility.”

In light of this, the ASX report said there was interest from those who were not currently receiving advice with 17% of non-advised investors saying they would be more likely to consult an adviser in the future and 63% were ‘open’ to receiving advice.

“There is still scope for professional advisers and investment educators to help investors further improve their skills. While a growing number have come to appreciate the benefits of diversification, many still have portfolios concentrated in a few asset types,” the report said.

“A significant number of investors have also become more

01MM110221_14-25.indd 15

likely to seek advice after COVID19. And while many still believe advice is only for those with large amount to invest, 63% of Australians remain open to receiving advice in the future.”

Haslem added a focus for advisers in 2021 should be working out how they could continue to demonstrate the value they added for clients during the pandemic and how they could promote that to bring in new clients.

REMOTE WORKING One of the biggest challenges for advice firms themselves was the move to remote working and having to shift all their systems and documentation to be available from home. Staff were moved to work from home and client meetings were held over Zoom and this was harder for some firms than others depending on their pre-existing situations and geographic locations, particularly those who were caught up in the four-month Melbourne lockdown.

“Remote working wasn’t easy but we made it work. It was easier for mature businesses who had lots of clients but harder for newer ones who were trying to pick up new business. You can’t onboard a new client if you haven’t met them,” said Ardino.

Ashenden said: “Lot of people moved to Teams and Zoom but it was important to consider IT security and accessing information

from home. People moved to digital very quickly and we will be likely to embrace that going forward. It was easier for the client than for the adviser though as they needed to ensure they were doing everything correctly”.

“We have been hosting lunch and learn sessions for our advisers online with guest speakers as a way to keep in touch with our advisers and they have worked brilliantly,” O’Callaghan said.

“For clients, we moved to video conferencing and FaceTiming them to give the visual connection.

We spent time and money on human skills training for our staff in the past so clients are keen to come and see us in person again.”

Advisers said clients were keen to see their adviser face-toface again once the restrictions were lifted but they would likely continue to offer the option of digital meetings.

EDUCATION There was also the ongoing task of meeting educational requirements for the Financial Advisory Standard and Ethics Authority (FASEA). Exams were moved to digital in certain places rather than physical locations and advisers were encouraged to study online. Meanwhile, study providers such as Kaplan and TAL Risk Academy began offering online study aids and classes.

Exam sittings in April and June

Continued on page 16

3/02/2021 3:56:24 PM

16 | Money Management February 11, 2021

Advice

THREE TIPS FOR CLIENTS IN 2021

THREE TIPS FOR ADVISERS IN 2021

Denis O’Callaghan, Fitzpatricks Wealth • Have cash reserves saved for three months which you leave untouched so you know you will be OK if you lose income temporarily; • Have a team of professionals around you who understand your goal; and • Focus on yourself and what you can control.

Bryan Ashenden, BT • Think about how you can capitalise on what you learnt in 2020; • Give clients the choice of how they want to have meetings, even when things reopen, they may still be happy with online communication or want a hybrid; and • Demonstrate the benefits of being advised and the value you add to clients, find a way to demonstrate those positive outcomes to help you bring in new clients.

Continued from page 15 2020 were online only, while September and November exams were online in Melbourne only.

Some 11,241 of entrants had passed the adviser exams held to date.

Ashenden said: “A lot of people moved onto completing their requirements in H1 2020 but less so for the exam as they wanted to do that in person given the importance of passing it.

“We are slowly seeing that turnaround though and people start doing them again as they have realised the pandemic isn’t going to be a temporary thing and more online options are being offered”.

For 2021, there were six physical exams were scheduled between January and November but advisers could take a digital exam if necessary.

OPPORTUNITIES IN 2021 After the shock market crash of 2020, advisers said they were trying to use the lessons learnt from last year. This included

01MM110221_14-25.indd 16

offering the options of digital engagement to clients and emphasising the importance of having diversified portfolios.

“Not everyone believes that having a diversified portfolio, in terms of assets and geographies, is important but last year has shown that they are critical to preserving capital,” Haslem said.

Ardino said he expected an increase in managed accounts and managed discretionary accounts as they were easier to manage volatility.

“Around 30% to 40% of our advisers use them and we expect this will increase as we educate advisers about them. It is a no-brainer as it reduces costs and allows us to make changes in a crisis very quickly, it makes sense on a lot of fronts,” he said.

They also questioned what would happen once stimulus measures were withdrawn and whether people would go back to working in CBD offices or continue to work remotely.

“The recession was offset by massive amounts of stimulus, growth assets have done well but that is because of the market stimulus and liquidity. When that unwinds, what will happen?

Navigating the next 12 months will be a challenge for portfolio managers,” Ardino continued.

In an unexpected move, O’Callaghan said he had been building relationships with liquidators for the past few months in expectation of business foreclosures.

“We have built relationships with liquidators, they actually had their quietest year in 2020, but they will be looking to capture businesses and shut them down and we have clients with cash ready who are looking to buy at firesale rates,” O’Callaghan said.

“There is a quiet optimism about the future and there are opportunities coming up. We have stayed optimistic that the world would not end and are looking to flourish in 2021.”

BRYAN ASHENDEN

3/02/2021 3:56:34 PM

February 11, 2021 Money Management | 17

Ethical advice

MEETING CLIENTS’ ESG DEMANDS Financial advisers looking to include ethical investing into their offering should “just do it”, Jassmyn Goh writes, or they may find clients, especially younger ones, will start demanding it.

THERE IS NO doubt that in recent decades Australia, and the world, has been experiencing extreme weather events from months-long bushfires, to flooding, to unprecedented temperature levels.

These events are not only leading to investors deciding to screen their portfolios away from climate-harming investments, but young financial advisers are taking a strong interest in tackling climate change in their client’s portfolios.

Ethical Investment Advisers director and senior authorised representative, Louise Edkins, who has been advising clients solely on

01MM110221_14-25.indd 17

ethical investments since 1994, told Money Management that generally it was the planners who were the last to be convinced about ethical investments.

“Fund managers are out there doing it to different degrees and clients are wanting it,” she said.

“The person in the middle, being the planner, needs to be on board as well and generally they have been the laggards in this whole concept.

“It’s a great way to engage with clients to get a deeper understanding and connection because you’re talking about values, and not just about the money. The values are sometimes

more important than performance, irrespective of what that performance is.

“All clients from retirees right to the younger generation are all very interested in ethical investment because retirees want their grandchildren to inherit a sustainable planet and the younger generation are signing up online to ethical superannuation platforms with advice, and some of the biggest growth in super is into ethical super funds.”

Edkins, who is part of the Ethical Advisers’ Co-operative, noted that while most advisers were generally looking into

environmental, social, and governance (ESG) investing, it was the younger advisers that were taking a stronger interest and interested in joining the co-op.

The co-op was established in 2011 by advisers who wanted to represent and advocate on behalf of ethical and sustainable investment advice within Australia.

HH Wealth director and financial adviser, Chris Holme, has recently started investing ethically and said reasons included compliance and his children’s futures.

Continued on page 18

4/02/2021 10:09:59 AM

18 | Money Management February 11, 2021

Ethical advice

Continued from page 17 On the compliance side, Holme said the Financial Advisers Standards and Ethics Authority (FASEA) standards included looking at client’s ethical concerns and to help them invest as per their values. He said he went further than just asking clients the usual questions of if they cared where their money was invested.

Holme said he also queried clients on what their values were on sustainability, if there were areas they wanted to avoid, and used that information to select investments that performed well and were low cost.

At the same time, Holme said he wanted to make a difference through his advice and the amount of media attention on sustainability and climate change had caught his attention.

“I’ve been watching documentaries on climate change and have become more aware and concerned about it. I have two young children and that is a big driving factor as well,” he said.

“In the latest David Attenborough documentary he said in the next 10 years there wouldn’t be a Great Barrier Reef and that completely floored me and I don’t want that to be a reality for my kids. That led me to thinking what can I do about it?

And that led me to make it a focus of our business.”

Future Focus Financial Planning principal and adviser, Kevin McDonald, started his business based in the Illawarra 18 months ago and ESG investing they felt was a key offering that was missing in the region.

McDonald said he believed that private capital could create change more effectively than the Government, and that 50% of new

01MM110221_14-25.indd 18

business coming into the firm were looking to have their investments responsibly managed.

Both Edkins and McDonald said their clients’ biggest concerns was on climate change, followed by fossil fuels, sustainability, human rights, and armaments. The bushfire season that ravaged the east coast of Australia in late 2019 and the onset of the COVID-19 pandemic, they said, had pushed home these concerns.

HOW TO GET INTO ETHICAL INVESTING For advisers looking to get into the space, Holme said to start off with getting a more comprehensive fact find.

“A lot of the fact find material these days just says ‘are you concerned with where you money is going?’. It’s just one question and most people just say ‘no’ or have no idea how to answer it or why they have to answer it,” he said.

“It’s not enough to just have that one. A more comprehensive fact find will ask the areas you want to support and avoid which is a good place to start.”

Holme noted that he was

undertaking a course called ‘Foundations in Responsible Investment’ through the Principles of Responsible Investment (PRI) Academy to become a certified Responsible Investments Association Australasia (RIAA) investor. He said the course was “enlightening” and that it completely changed his mindset on ethical investing.

Both Holme and McDonald said seeking out other advisers who had more experience in ethical investing was another tip to learn and gain ideas for this kind of investing.

“The best resource out there is the Ethical Adviser Co-operative fund ratings page, the next best resource is getting onto the RIAA website where there is an adviser guide to help people understand this space. Those two resources really help you to go from zero to 100,” McDonald said.

BARRIERS TO ENTRY Edkins said the main barrier for advisers was not knowing what to do or not knowing which products were good while having a number of clients wanting to invest

ethically.

“That’s an educational aspect that the standard financial planner really needs to get up to speed with. You don’t want to provide a recommendation that you think is ethical and when the client looks at it and they see they are invested in Rio Tinto, Santos, and BHP and they are against coal and oil. They won’t be happy with you as an adviser so you need to make sure you know what the product is about,” she said.

Research, Edkins said, was key to providing quality ethical investing advice and to avoid box ticking.

“There are a lot of products out there that have an ethical badge that I wouldn’t invest in and my clients wouldn’t invest in because they don’t reflect their values. It’s important to know what the fund manager invests in and whether that reflects the client’s values,” she said.

“We get research from a number of different places – research that maps to the UN Sustainable Development Goals, from the Ethical Advisers Co-operative website, and RIAA certifies products and advisers.”

3/02/2021 4:09:36 PM

February 11, 2021 Money Management | 19

Ethical advice

Another large barrier for advisers were those who were under a licensee would be limited to choosing ethical products in the approved product list (APL).

“Licensees really put a barrier up for their APLs and there might still be this perception that something that is ethically screened might be a bit fringe or alternative even though over 60% of fund managers do ESG in Australia,” Edkins said.

“It’s nothing new, it’s about accessing climate risk and environmental and social risk of investments. There’s a real risk of investing in companies that are not accessing their climate and environmental risk in the longer term as well as the fact that investing in positive solutions is actually making more money right now and are outperforming standard investments.”

She noted that there needed to be a concerted effort from advisers under licensees to push investments they wanted and for APL committees to include products that were ethical and reflected the needs of clients.

“A lot of ethical investing is client led – clients are demanding it rather than advisers offering it.

Advisers have to come up with a solution to reflect what the client wants,” Edkins said.

Both McDonald and Holme had their businesses under a licensee and needed to obtain one-off approvals for any ethical fund they wanted for their clients. This had to be done for each fund not on the APL even if the fund had been previously approved.

While it was not difficult to get approval, Holme said it was an unnecessary inefficient step and that advisers who wanted to avoid this should think about getting

01MM110221_14-25.indd 19

self-licensed.

“Another issue is that a lot of licensees base their APLs on research houses like Lonsec and Zenith. Our research house is Zenith and it seems like they don’t have the best view on ethical funds and I’m unsure whether it’s because the ethical funds are not paying them to be rated. A lot of the ethical funds are not rated on Zenith which means they’re not on our APL. It’s not an issue for everyone but those things have been barriers,” he said.

McDonald said while this barrier was minor, due to the myriad of changes in the advice industry in general, this issue would often be put in the “too hard basket”.

“A good thing for us is our conviction in funds we’re recommending and we’re happy to go outside the APL to recommend the ones we think fit the best. For us it’s more platform restrictions because we’re only using a handful at the moment that we are confident we can use and clients can use. As platforms improve what’s accessible then it will enhance what ESG options we can recommend,” he said.

“The area that’s really lacking is diversified portfolio manager of manager type portfolios in the ESG space. There’s some great Australian equity funds, global equity funds, and infrastructure funds but not one that offers an off the shelf diversified option that hits the mark.

“Our solution for now is choosing sector-based funds for clients to allocate across the different asset class and risk profiles.”

FUTURE OF ESG All three advisers believed there would be a large amount of money

“A lot of ethical investing is client led – clients are demanding it rather than advisers offering it.”

– Louise Edkins, Ethical Investments Advisers pumped into the sector in the coming years as there were international legislation drivers and current climate change inducing companies pivoting to become more sustainable.

In the EU and UK there was strong environmental legislation included in the COVID-19 recovery plan, and the new US administration included infrastructure as part of their pandemic recovery.

“There’s a lot of drivers internationally, in international investments that are going to be using legislation to invest in environmental infrastructure.

That’s where I see there’s going to be strong demand in drivers and performance in those sectors,” Edkins said.

“Every year fund managers are getting stronger on their reporting, transparency, and with the Paris Agreement and reporting on climate impact in operations of big companies is part of that requirement so there are a lot of companies in Australia that have overseas operations too that are being influenced with under reporting. There’s a lot of carbon reporting in big companies and that will be stronger and more disclosed over time.”

Holme said: “Ideally I’d love to see big companies like BHP and Rio change how they produce energy products, from coal and mining to sustainable products.

LOUISE EDKINS

They’ll be forced to eventually but whether it’s soon enough I don’t know.

“I think it’s the future and many people now concerned with it and you can see it when the amount of money being pumped into the sector. We’re also now getting really good returns and better returns than unethical funds. Even if people didn’t care about the environment and wanted a good return it’s better now to invest in an ethical fund.”

“Just do it, just get started,” Holme said if advisers were thinking about including ethical investing into their offering.

“I was worried about what to do at the beginning but there’s not many areas where you can go wrong. You’re doing the ethical thing by actually making more of a commitment to your client to help them where they invest their money.”

3/02/2021 4:09:48 PM

20 | Money Management February 11, 2021

Wealth management

A TURNING POINT FOR THE ADVICE RELATIONSHIPS AND VALUE EXCHANGE Money Management is continuing its wealth management series, in which we are speaking to financial planning groups to hear their views on the industry. This month, Money Management interviewed Arthur Kallos, founder and chief executive of Spark Financial.

MM: WHAT ARE the new challenges that advisers will need to face in the coming months and what was the key lesson from COVID-19 pandemic?

Arthur Kallos: I see many positives that have come out of this pandemic and lessons on how advisers want to serve clients and how we are going to deliver to their clients’ needs and preferences to form stronger relationships, deliver peace of mind through increased accessibility and engagement, leading to long-term customer relationships.

Depending on how clients were served by advisers, some advisers had to see their clients face to face as part of their value proposition and that was tested during the pandemic, particularly in Victoria.

But overall, I think for the industry and for the consumers it was a turning point for the advice relationships and value exchange that had to be embraced by all stakeholders.

It actually forced advisers to better understand “how my clients determine value” versus “how I would like to serve my clients”.

Face-to-face appointments were challenged so advisers had to look to other means to continue their services and assist their clients through the pandemic and that forced them to look at how they did things, and to explore video meetings, electronic/digital signatures, online engagement tools, etc.

With no other options available, apprehensiveness on applying such methods was overcome and I think we proved that through the

01MM110221_14-25.indd 20

pandemic advisers and consumers have probably realised that there are other ways to be serviced, and potentially prefer these new ways.

In the medium-term, I think all businesses need to ensure they have a robust disaster recovery or COVID-like response plans or a business continuity plan. It will also be about ensuring that advancement in compliance technology, such as regtech, and to ensure that the cost of compliance can be driven down to ensure that advisers’ business models will remain sustainable for a broader range of clients. In addition to that will be the professional indemnity costs and the relationships between rising potential costs and the appreciation of compliance regtech by insurers to help to keep these rising costs at bay.

MM: What are the strengths of your business and how well are you positioned for the future?

AK: Spark Financial Group is the controlling entity of both Australian financial services licenses (AFSLs), [Axies and Aura Wealth]. We acquired Aura in March 2020 and through 2020 focused on harmonising our services for all the advisers within each AFSL. We are most suited to practices that are seeking access to greater scale, access to innovative technology solutions, a dynamic adviser culture, and a hands-on practice development approach.

We are not a multi-hundred AR [authorised representatives] group and do not intend to be because we are focused on the growth of our practices, rather than growing AR

4/02/2021 9:41:26 AM

February 11, 2021 Money Management | 21

Wealth management Strap

numbers for the group. If we focus on growing our practices, then the AR numbers will take care of themselves. We are looking to stay at this mid-size AFSL space, where sufficient scale is accessible to pass onto our practices whilst remaining accessible and high touch instead of becoming a larger-size AR group with hundreds of representatives where you can start to lose your ability to remain personal.

Through 2020, Spark invested heavily in the harmonisation of methodologies, tools and processes for both AFSLs – we had to bring our advisers on the journey, and through COVID-19, this was quite the task. I am delighted that these initiatives are now implemented along with the integration of our regtech solutions.

Our focus on technology partnerships and integrations remains key, where 2021 is about implementation and deployment at practice level to ensure our advisers are equipped to enable growth through increased scale, efficiency and capacity.

With the reduction in adviser numbers and future movement of clients looking for new homes via sales of financial planning practices, we are focussed on helping our advisers be ready for this coming opportunity.

MM: What are Spark’s plans with regards to its two AFSLs? Will they be ever be merged?

AK: Spark Financial Group is a shared services business, with the resources and capability to 100% manage our AFSLs, Axies and Aura Wealth. We see no advantage to move our advisers from one to the other in the short-term.

All advisers receive the same level of support from Spark and since the merger, both AFSLs have received increased services due to our greater scale and benefitted from our thought

01MM110221_14-25.indd 21

leadership on the role of technology across our group.

Perhaps in future, we could use the AFSLs to segment the adviser capability and authority, meaning if we received clarity from the regulator on scaled/ specific advice, we could appoint advisers to one of these AFSLs and separate holistic, full advice to the other. Time will tell.

MM: How do you think the business model across the industry will evolve and which ones will struggle?

AK: The way the advice offerings have evolved over time, with advisers having been urged to deliver more holistic financial advice, has forced advisers to develop value propositions that would attract higher net worth clients, so you have got many advisers who are trying to be in that segment. This has created a great divide in the market for advice where consumers need arguably more but cannot access advice because a) they cannot afford it or b) advisers are not willing to service that market because they cannot deliver their value proposition at this price point.

So, of course, it is going to affect business models and that is why we have this whole scoping exercise that we need to understand entirely, and this would then allow us to form a business model that can fill this gap in the market.

Advisers are moving away from the institutionally-owned AFSLs subsidised by products, which employed vertical models.

These have now been largely disassembled due to those businesses divesting and as a result of that, advisers had to look for a new home. To the defence of these models, that was how advice was affordably delivered to the mass market, however, it was these models that were also seen to be taking advantage of consumers.

ARTHUR KALLOS

For the advisers within, although operating within these parameters, it was these models that often caused poor consumer outcomes.

Unfortunately, the poor consumer outcomes were not isolated to vertically integrated models, and we had advisers in our industry operating outside these parameters and conducting themselves in a manner that was not in their client’s best interests which brought our industry into disrepute.

MM: Do you think the industry is currently overregulated?

AK: Yes and no. As I do not think it is overregulated in the efforts to protect consumers, however, it needs further development to address the gaps raised earlier around affordable advice.

I think that the reality is that if you choose to be a part of an aggregated offer or a business model such as a dealer group, where advising within the parameters set today, the reality is that one poor advice document by any adviser can create a lot of damage or disturbance to every stakeholder on that AFSL and the clients within.

In our AFSL’s we strive to ensure that we have correct monitoring and supervision processes in place to reduce that risk. We must protect all our advisers and their clients.

“2021 is about implementation and deployment at a practice level to ensure our advisers are equipped to enable growth through increased scale, efficiency and capacity.”

– Arthur Kallos Traditional compliance methods were delivered through a human review and so the more people you had doing it, the more costs would amount and those costs would be passed onto advisers (and ultimately their clients) putting pressure on their business model.

What has changed though are the various technology compliance (regtech) solutions that have come onto the market. As AFSLs start to investigate and test the solutions, that would be a catalyst towards decreasing the amount of human effort required to oversee advice processes and quality, which in turn will drive down compliance costs.

This allows AFSLs to gain a higher level of compliance oversight without unnecessarily increasing these costs to the advisers. Therefore, we are aiming to protect advisers and their business models to enable them to serve their clients in a compliant and cost-effective manner. My message here is that if your AFSL is not looking at these solutions, then it will need to do so. At Spark we have studied this carefully and created a technology ecosystem that incorporates these solutions seamlessly and as a result we can deliver more value through our broader licensee offering.

4/02/2021 9:41:15 AM

22 | Money Management February 11, 2021

Retirement

2021: A RETIREMENT STRATEGY JOURNEY Richard Dinham outlines the five different types of strategies available to advisers to help their clients transition to retirement.

FINANCIAL PLANNERS IN 2021 will likely find themselves spending more and more time developing strategies specifically tailored for clients who are in retirement.

The shift from “accumulationfocussed” clients to “decumulation-focussed” clients is already well underway, but will become even more pronounced over the next few years.

A key issue for planners is that the strategies required for retiree clients can be quite different to those prepared for clients still in accumulation mode. In order to best meet their retiree clients’ distinct requirements, financial planners will need to be adaptable and flexible in the solutions they offer.

The best approach for any individual client will depend on a mix of factors - the task of financial planners is to find the best strategy to meet the client’s needs, goals, financial resources, and understanding of advice and other financial issues including

01MM110221_14-25.indd 22

tax considerations, Centrelink benefits, Age Pension entitlements and the like.

Planners also need to consider a spectrum of retirement investment strategies, from a relatively simple ‘business as usual’ approach at one end to a significantly more complex ‘income layering’ approach at the other end.

Chart 1 shows the spectrum of approaches for investment advice used by planners, comparing the different features of each.

Helping clients work out which strategy will best suit them will be an important part of financial planner’s work.

STRATEGY 1: SAME AS ACCUMULATION PHASE The simplest approach is for retirees to continue with the same investment strategy from the accumulation phase into the retirement phase.

This approach may suit wealthy clients who have a sizable asset base which can generate sufficient income to fund their desired

retirement lifestyle. But it may leave other retirees vulnerable.

What’s more, a ‘simple’ strategy doesn’t mean that it is without risks.

Using the same investment strategy in retirement assumes that, at the time of retirement, the investment goal remains unchanged – and that the client is still a long-term investor and can continue to tolerate market risk.

For those who focus on the absolute level of real returns over the whole investment horizon, this may be a sound strategy. However, its effectiveness for many retirees is highly debatable and comes at the cost of flexibility. Using a potentially volatile investment portfolio to fund a steady income overlooks the sequence of return risk as well as retirees’ reducing risk capacity as they age.

Furthermore, the strategy focuses on overall lifestyle spending goals but fails to take into account the fact that retirees’ spending behaviour is often adjusted according to portfolio performance and time horizon.

STRATEGY 2: TRANSITION TO A MORE CONSERVATIVE ASSET ALLOCATION Moving to a more conservative asset allocation strategy in retirement generally means having a portfolio with a large percentage allocated to low-risk and low-volatility assets such as conservative equities, fixed income and money market securities.

The low volatility of this strategy hedges the sequence of return risk and makes it suitable for retirees who value downside protection more than the upside growth.

However, if the downside is overly protected, the relatively constrained upside potential of the strategy may expose retirees to greater longevity risk and inflation risk.

Overall, this strategy is easy to understand for investors and may be most appropriate for those with a lower level of financial literacy.

STRATEGY 3: SIMPLE BUCKETING Most planners are familiar with the bucketing approach – dividing the

3/02/2021 11:11:36 AM

February 11, 2021 Money Management | 23

Retirement Chart 1: Spectrum of investment advice strategies

investment portfolio into separate components, or buckets, with each bucket serving different objectives.

A simple bucketing approach has only two buckets: a cash bucket and a diversified investment bucket.

The cash bucket holds adequate cash (and cash equivalents) to cover retirees’ immediate financial needs – typically a year or two’s worth – while the diversified bucket has an allocation to relatively risky assets with the objective of achieving capital growth.

As the value of the diversified bucket increases over time (assuming good investment experience), retirees can transfer assets to the cash bucket so that their immediate cashflow needs continue to be met.

This approach has the important benefit of providing a short-term buffer against falls. It also allows planners to better manage the implications of rebalancing and selling growth assets on their clients, which is useful for managing sequencing risk and market risk.

This simple bucketing approach may also help reduce the effect of the potentially constrained upside of the conservative asset allocation approach.

STRATEGY 4: COMPLEX BUCKETING An upgraded version of the bucketing strategy is to take a more sophisticated approach which is specifically tailored to retirees’ more detailed spending needs.

It also follows the principle of dividing retirees’ accumulated savings into discrete pools, each with different objectives. However, in addition to a cash bucket (in this case covering two to three years’ expected expenses) and a diversified investment bucket, it also has a capital-certainty bucket to provide an additional layer of income support.

This bucket blends in some risky asset classes and covers the few more years’ expected expenses (usually three to five years).

Specifically, this bucket could be a bond ladder – a selection of fixedincome securities with each security maturing at a different date to replenish the cash bucket or a term annuity.

01MM110221_14-25.indd 23

Source: Fidelity, CoreData

The complex bucketing strategy manages risk by segmenting retirement investments into different time horizons. Compared to a conservative allocation strategy, which allocates assets based on the largest loss a retiree can stomach in a market downturn and optimises asset allocation to avoid capital depletion, the complex bucketing strategy seeks to broadly match asset duration to the liability (or expenses) duration, ensuring that funds are available as and when expenses arise.

This ‘asset-liability matching’ approach is the cornerstone of the strategy. Matching short-term spending requirements with cash and short-term bonds provides investors with confidence that money will be available when it’s needed, even if investment markets are at that point in decline. Matching long-term expenses with relatively long-term assets, such as equities, provides investors with a greater expected return with that part of their portfolio, with the aim of ensuring capital is available to meet the expected future spending need.

A strength, and a challenge, of the complex bucketing approach lies in replenishing or rebalancing the cash and capital-certainty buckets over time. It is a relatively complex strategy to establish and to manage

– it requires regular review and potential manual rebalancing by the financial planner to ensure the buckets continue to serve their intended purposes.

STRATEGY 5: INCOME LAYERING (GOAL SEGMENTATION) An income layering strategy, like the complex bucketing strategy, divides a retirement portfolio into separate components, but bases those components on retirees’ spending needs for life.

Generally speaking, retiree spending needs can be grouped into four distinct categories: basic living expenses; contingency expenditures; discretionary expenses; and legacy (or ‘leaving something for the kids‘).

The income priority is matched to the spending priority, with income for essential spending being the top priority. Retirees have their own trade-offs between spending more on discretionary items in early years of retirement and being more certain of meeting goals in later years, and the layers of this strategy can be tailored to suit.

The income layering approach separates retirees’ needs from their wants, or ‘nice-to-haves’, and prioritises income accordingly.

High-priority needs are protected

from market volatility for life, with the portfolio anchored by the age pension (if eligible). Income to pay for essentials can also be secured, and sourced from annuities.

Budgeting and creating income streams for clients’ expected lifetime can be a complex task. An income layering strategy requires close collaboration between planner and client, and regular reviews to ensure the strategy remains effective in light of any changes in the client’s personal circumstances or in market conditions.

Determining the best strategy, or combination of strategies, is a significant part of the value a planner brings to the table.

In addition, planners have legal obligations to clients under the Future of Financial Advice (FoFA) laws – primarily, but not only, the best interests duty and related obligations, as well as ethics requirements. Planners are obliged to make sure the advice they give leaves a client better off than if the client had not sought the advice, and a planner must be sure that the advice provided is clearly understood and agreed to by the client.

Richard Dinham is head of client solutions and retirement at Fidelity International.

3/02/2021 11:11:46 AM

24 | Money Management February 11, 2021

Property

VACCINES, RECOVERY AND VALUE Marco Colantonio explains how trends such as data and logistics are proving positive for the performance of global REITS. WHILE GLOBAL REAL ESTATE investment trusts (REITs) have participated in the ‘vaccine rally’, on a real estate sector basis the rebound has been uneven and overall performance of the sector globally has lagged the broader equities markets.

The REIT ‘dawdle’ is likely a consequence of investors questioning the relevance of some types of real estate and its ability to recover when COVID-19 has forced changes to the way occupiers use land and buildings.

An analysis of over 4,700 corporate earnings transcripts between July and December 2020

by Bloomberg found that about one-in-eight firms globally were re-assessing their real estate needs in an effort to cut costs.

Headlines like these can cast a shadow over the entire sector, however amongst the clouds lie value opportunities.

AN EARNINGS DISTORTION In Chart 1 we have charted the performance of global REITs, global equities and fixed income during the 12 months to 31 December, 2020.

The chart provides a clear illustration of the aforementioned relatively lacklustre market sentiment towards the REIT sector.

However, when considering earnings stability through the course of the pandemic, one must ask if this sentiment and corresponding underperformance is justified?

The fact is global REIT earnings have proven to be less volatile than the broader market through the pandemic and over time.

01MM110221_14-25.indd 24

Whilst the COVID-19 economic fall-out has been materially detrimental to certain areas of the REIT market which have stolen the headlines, many property types have been hugely resilient.

THE REIT SECTORS TO WATCH The strongest indication of overall REIT resilience is the fact that 94% of our own portfolio as at the end of the fourth quarter of 2020 has maintained or increased dividends through the pandemic.

Trends toward digitisation and e-commerce have seen a material acceleration as a result of the pandemic. This has strengthened the case for logistics, data centres and cell tower REITs. We believe the trend acceleration further enhances the long-term investment case for high-quality REITs in these sectors.

Take NASDAQ-listed REIT Equinix as an example. We view Equinix as a world leader in network-dense data centres – think of these as modern-day telephone exchanges that are critical for the effective functioning of the internet. Not surprisingly, Equinix has benefitted from the acceleration in data usage caused by COVID. Demand for data centre capacity continues to grow with the current pandemic conditions only serving to reinforce entrenched structural trends.

When it comes to logistics, the e-commerce driven demand for logistics properties has continued unabated since COVID-19 began spreading across the globe. The pandemic has pulled forward an estimated five years of expected online sales growth in the US and

3/02/2021 11:11:07 AM

February 11, 2021 Money Management | 25

Property Strap

UK. In the US this is evidenced by the scale of Amazon’s roll out where they’ve increased fulfilment capacity by around 50% through 2020. To put that in perspective that equates to over half of Walmart’s (the largest US retailer by sales behind Amazon) distribution network which was developed over 50 years.

Similar trends are evident in other markets. In the UK, the third quarter had the greatest take-up of logistics space on record driven predominantly by pure-play online retailers, food retailers and thirdparty logistics.

Another sector we have long been attracted to is the lifescience office segment. Strong demand conditions existed even before COVID-19, driven by an ageing population, increased healthcare spending and enthusiastic venture capital funding. The task of tackling unsolved complex human diseases has a long runway in our view – and is increasingly being addressed using talent from both technology and medical science often found clustered in knowledge-based markets such as Boston, San Francisco, San Diego and Seattle.

The rapid development of several effective COVID-19

vaccines is no doubt in part due to the enormous funding and effort put towards the same cause.

Perhaps unsurprisingly, there has been a significant increase in capital focusing on the life science office sector.

One of our top portfolio holdings has been US-listed Alexandria – a leading owner and developer and the only pure-play listed REIT focused on this sector.

WHAT ABOUT TRADITIONAL PROPERTY SECTORS? Rising office market vacancy rates and conjecture around the structural impact of working from home (WFH) on office buildings continue to make headlines.

We believe the office will continue to play a critical role in employee collaboration, mentorship and business development activities. However, the pandemic has proven the effectiveness of technology in enabling many office workers to WFH at least part of each week.

Therefore, net office utilisation will likely be lower than the pre-pandemic baseline, reducing landlord pricing power.

In response, office landlords will be encouraged to offer tenants more lease flexibility and

amenities – as such the asset class becomes even more capital intensive and operationally complex. Larger landlords with advantages of scale and access to capital will be better placed to take market share.

Locations which offer better quality of life, more affordable living options and businessfriendly regulatory and tax environments should also benefit.

For example, in the US there has been a spate of corporates weighing plans to establish a presence or relocate to the Sunbelt including Oracle, Hewlett Packard and Tesla from San Francisco to Texas, and Goldman Sachs and Blackstone from New York to Florida.

When it comes to the retail sector, fiscal and monetary stimulus has put many consumers in a relatively strong position with government stimulus cheques boosting incomes while lower spending on many services (such as travel and entertainment) has boosted household savings rates.

Together with the positive net wealth effect of rising asset prices (stocks and houses), conditions are ripe for strong consumer spending in many markets. Investors have an opportunity to take advantage of

Chart 1: Global REITs vs Global Equity vs Fixed Income

Source: FactSet, Resolution Capital

01MM110221_14-25.indd 25

attractive valuations of select retail formats that stand to capture a disproportionate share of this spend.

We believe non-discretionary, service oriented or value retail formats in markets with moderate supply of retail space per capita are more resilient to e-commerce substitution. Retail landlords will also need more capital to manage occupancy and/or re-develop their assets, therefore we also favour better capitalised retail landlords.

GLOBAL REITs WITHIN A PORTFOLIO The above touches on just a handful of sectors within the global REIT universe. It is a hugely diverse universe which can provide investors exposure to some of the best real estate in the world – real estate that very few individuals are able to access directly.

While we hear much about the doom and gloom in office and retail it would be naïve to be hasty about investment decisions even as many economies across the world continue to grapple with COVID-19. We recall the dramatic predictions of workplace changes following September 11 and SARS which ultimately proved to be over-stated.

However, rather than attempting to speculate, investors are best served analysing existing trends that are changing course or accelerating. Whatever your view is on office or retail, exceptional long-term investment opportunities lie in property outside of these sectors – properties which have proven to be some of the most stable assets during the most significant health crisis of our time.

An allocation to a diverse portfolio of global REITs could prove to be a resilient pillar in your investment portfolio.

Resilience that would seem to be underappreciated by the market today, given the valuations afforded.

Marco Colantonio is global property portfolio manager at Resolution Capital.

3/02/2021 11:11:17 AM

26 | Money Management February 11, 2021

Toolbox

THE RECIPE FOR SUCCESSFULLY ADVISING ON SUSTAINABLE INVESTMENTS Jessie Pettigrew shares how financial advisers can best work with their clients to help them navigate the environmental, social and governance investing landscape.

IN THE PAST 12 months we’ve seen a rising tide of interest in sustainable investments – once considered niche, now many investors, and a growing cohort of financial advisers, acknowledge that funds and assets which take environmental, social, and governance (ESG) factors into account have become mainstream.

Moreover, they are noticing that sustainable investments are performing in line with, or better than, regular investments.

In fact, ESG has become a regular part of many advisers’ discussions, not only around their clients’ investments, but also about their everyday lives. At a recent virtual roundtable, 'The ABC of sustainable investing – making ESG work for your advice practice', held

01MM110221_26-32.indd 26

by BT, Dave Rae, an adviser with Federation Financial explained how an incidental discussion about a client’s recent purchase of a hybrid Toyota was a great segue into a broader conversation about his values, and how they could be expressed through his investment portfolio.

It’s worth noting investors are often leading the conversations with their advisers about ESG. The majority of Australians (86%) believe that it is important for their financial adviser to ask them about their interests and values in relation to their investments, according to recent research by the Responsible Investment Association of Australasia (RIAA), which also notes that more than three-quarters of Australians

believe there is not enough independent information about ethical or responsible banking and superannuation funds available.

This shows there’s plenty of scope for advisers to shift their discussion with clients in this direction.

Healthy fund flows into investment products with an ESG or sustainability focus also mean now is the time for advisers to build knowledge of ESG, and the different ways investors can access investments in this category. For instance, by the end of the second quarter of 2020, Morningstar estimated retail assets invested in sustainable investments reached $19.9 billion, a 21% increase compared to 30 June, 2019.

Which is why it’s essential for advisers to develop their

3/02/2021 11:54:03 AM

February 11, 2021 Money Management | 27

Toolbox

understanding and skills in this area. Here are three takeaways that can help you engage clients on this emerging and important topic.

1. Sustainable investing can be part of your growth strategy While Australians expect our super and other investments to be invested ethically, many have yet to develop a sound understanding of what ESG really is. That’s not surprising as there’s a lot of information to grasp, and investment jargon to wade through.

The recent bushfires, floods and the COVID-19 pandemic mean it’s never been more important for advisers to engage clients on ESG. You might think this is a topic you’re just starting to explore. But this is actually an opportunity to bring clients along on this journey.

Sustainable investing is developing rapidly, so it’s perfectly acceptable to let clients know you’re also on a quest to learn more about this area.

When I speak to advisers about sustainable investing, they’re often interested in how they can find investments that meet their clients’ needs, and what tools and resources they can use to inform their client conversations.

I particularly recommend as a practical resource RIAA’s financial adviser guide which clearly explains the main concepts of ESG and sustainability investing as well as guidance on how to get involved.

Taking advantage of all the free resources available to advisers is a great way to build confidence when talking to clients.

Never before have advisers had a wider range of options to build a portfolio of assets that take into account sustainability and ESG factors, with a growing range of choices across asset classes including fixed income such as green bonds and equities funds.

According to RIAA, there are now 165 investment managers that apply responsible investment

01MM110221_26-32.indd 27

criteria to some or all their investment practices. These managers oversee approximately $1,900 billion in assets, which equates to 60% of all assets in Australia that are professionally managed. Investors can really build portfolios that effect change.

Advice practices that are developing their growth strategy in accordance with a longer time horizon may be well aware of an escalating trend – the great wealth transfer from baby boomers to younger generations, with the latter typically more engaged in sustainable practices and having greater interest in sustainable investing than their parents and grandparents.

There are immense opportunities for advice practices that are well-prepared for the great wealth transfer – and conversely, risks for those that are not. Before wealth is transferred to the next generation, it is usually inherited by the surviving spouses.

Research shows that advisers have a 44% retention rate when money moves between spouses; this drops dramatically to just 2% when it moves to the children.

Understanding how these segments’ personal values inform their investment philosophy can help advisers retain them as clients.

2. Sustainable investing jargon can be confusing, so help clients by translating it into plain English A lot of the terms can seem confusing when you first get started in this area, which means the language can be even more perplexing for clients. It’s a good idea to start with the basics. Here are some accepted definitions of the main terms: • Sustainable or responsible investing: An umbrella term that largely captures strategies that include non-financial ESG factors in the investment process to ensure investors are

looking at the whole picture when making decisions; • Environmental, social and governance (ESG): The three main types of non-financial factors, such as environmental compliance, labour force relations or board skills and composition, that have, at times, been known to affect the risk and return of investments; • Impact investing: When investors use funds to create positive outcomes, for instance by investing in renewable energy or health care; • Ethical investing: The idea of investing in a way that aligns with your personal values and beliefs, for instance by avoiding allocating money to gambling companies; • Negative screening: Avoiding investing in certain companies, industries, or countries. It’s a tool investors can use to ensure they’re not investing in assets that, for example, have high ESG risk or that don’t align with their personal values; • Positive screening: Purposely investing in certain companies or industries that have a positive impact on society, or are better at addressing ESG risks and opportunities; and • Asset stewardship: Investors engaging with company management teams and have some influence when it comes to encouraging them to adopt practices to improve their approach to ESG. Investors can also have some influence when voting on board appointments and company resolutions.

Many of these terms, like sustainable investing, responsible investing and ethical investing are used together or interchangeably.

Again, RIAA has some good resources that can help cut through the jargon. The point is not to get too caught up in labels.

It’s all about being mindful about how investors’ funds are allocated and ensuring they are aligned to

Continued on page 28

3/02/2021 11:54:11 AM

28 | Money Management February 11, 2021

Toolbox

CPD QUIZ This activity has been pre-accredited by the Financial Planning Association for 0.25 CPD credit, which may be used by financial planners as supporting evidence of ongoing professional development.

Continued from page 27 your clients’ goals and interests.

For that reason, understanding why a client is interested in sustainable investment, or what they are interested in, might help you identify the right investments for them.

What we’ve heard from advisers who have deep experience with sustainable investments is that clients display both active and latent demand for ESG investments.

Active demand is when clients specifically ask for sustainable investments or for their portfolios to exclude things like tobacco or gambling stocks or include renewable energy.

You can also uncover latent demand – when clients want to pursue responsible outcomes with their funds but don’t actively ask for this – by asking the right questions.

Sustainable investing can be a way to encourage your clients to engage with their investments, especially when you can identify specific, personal issues that resonate. Topical issues can be critical; for instance, when clients ask about the effect of climate change on their investments as a result of the bushfires.

3. ESG options are performing – and clients shouldn’t miss out on these investment opportunities Some investors may be concerned about a trade-off between ESG investing and performance. But there’s ample evidence which indicates investments that take ESG factors into consideration can outperform over time, as well as during periods of market volatility. For instance, according to RIAA, sustainable companies performed better and responsible investment funds continued to outperform the general market during the worst of the market volatility in 2020. The difficult market conditions were a big test for responsible investments and we watched ESG fund performance closely.

Of course, sustainable investment strategies are not a silver bullet, but the mounting evidence on the outperformance of sustainable investments is difficult to ignore, especially when considering how to act in the clients’ best interests.

Beyond ‘nice to have’ As sustainability and ESG investing becomes more sophisticated, professional standards are also rising. There is also increasing regulatory interest in this area. The Australian Prudential Regulation Authority (APRA) has written to regulated entities encouraging them to consider the impact of climate change on their operations. Guy Debelle, deputy governor of the Reserve Bank of Australia has also spelt out how the central bank factors in climate change in monetary policy decisions.

The Financial Adviser Standards and Ethics Authority’s (FASEA) code of ethics also means it’s important to talk to clients around this – so it’s not just a ‘nice to have’ part of an adviser’s responsibilities, it’s increasingly being codified into regulations as well.

Jessie Pettigrew is senior manager, sustainability at BT.

01MM110221_26-32.indd 28

1. What percentage of Australians believe that it is important that their financial adviser asks them about their interests and values in relation to their investments? a) O ver 80% b) 70% c) A round 50% d) 3 0% 2. Which statement below is correct?

Estimates from Morningstar indicate that: a) A t the end of the second quarter of 2020, retail assets invested in sustainable investments had increased by over 20% compared to 30 June, 2018 b) At the end of the second quarter of 2020, retail assets invested in sustainable investments had increased by over 20% compared to 30 June, 2019 t the end of the second quarter of 2020, retail assets invested in c) A sustainable investments had increased by 10% compared to 30 June, 2019 d) A t the end of 2020, retail assets invested in sustainable investments had increased by over 20% compared to 31 Dec, 2019 3. Choose the correct statement below. a) T here are 165 investment managers now applying responsible investment criteria to some or all of their investment practices b) There has been a 165% increase in the number of investment managers now applying responsible investment criteria to some or all of their investment practices c) W hile there is a growing number of sustainable investments available, there are currently no investment managers that apply responsible investment criteria to all of their investment practices d) N one of the above 4. Examples of non-financial factors that are often group under the banner of ESG factors include: nvironmental compliance a) E b) Labour force relations oard skills and composition c) B d) A ll of the above 5. Which statement below is correct? ustainable companies performed better and responsible a) S investment funds continued to outperform the general market during the worst of the market volatility in 2020 b) Sustainable companies performed better and responsible investment funds matched the performance of the general market during the worst of the market volatility in 2020 ustainable companies underperformed and responsible c) S investment funds nearly matched the performance of the general market during the worst of the market volatility in 2020 d) N either sustainable companies nor responsible investment funds were impacted by the market volatility in 2020

TO SUBMIT YOUR ANSWERS VISIT https://www.moneymanagement.com.au/features/ tools-guides/ recipe-successfully-advising-sustainable-investments

For more information about the CPD Quiz, please email education@moneymanagement.com.au

3/02/2021 11:54:22 AM

HELPING ISSUERS AND DISTRIBUTORS MEET THEIR DDO OBLIGATIONS Target market data collection TMD document creation Data & TMD dissemination Data & document feeds Our extensive capabilities in data, dissemination and regulatory compliance help product issuers and distributors meet regulatory obligations, optimise resources and reduce risk.

Contact a specialist to ďŹ nd out more fe-fundinfo.com @fefundinfo.com DDO@fefundinfo.com

5281_DDO FP.indd 29

1/02/2021 9:45:13 AM

30 | Money Management February 11, 2021

Send your appointments to chris.dastoor@moneymanagement.com.au

Appointments

Move of the WEEK Rick Wingfield Chief innovation and transformation officer MLC Life Insurance

MLC Life Insurance has appointed Rick Wingfield as chief innovation and transformation officer (CITO) and will oversee the company’s innovation and transformation program.

The move comes as the company had previously acknowledged challenges in its current technology systems.

Wingfield was most recently global CITO of Catapult, a listed sport performance technology company where he led a team of 130 people to deliver technology solutions to successful sports clubs including the Richmond Tigers, New England Patriots,

Wealth management software firm WealthO2 has appointed Andrew Whelan to the newly-created role of chief distribution officer, reporting to chief executive, Shannon Bernasconi.

Whelan joined from financial planning software firm Midwinter where he led the sales, marketing and distribution teams.

Before that, he held various senior roles that included director of advisor services at Milliman, and head of adviser services at Morningstar.

Bernasconi said Whelan had more than 20 years’ experience in the financial services market and his experience with Milliman, Morningstar and other financial technology providers made him a good fit for the WealthO2 team.

This followed the recent appointments of the founders of HUB24, COIN, and Macquarie Wrap to the WealthO2 board, as Neil Roderick joined the board as chair and Darren Pettiona joined as executive director.

Aberdeen Standard Investments (ASI) has appointed René Buehlmann as chief executive of its

01MM110221_26-32.indd 30

Chelsea and Real Madrid.

Before that, he was the general manager, innovation, at Australia Post, where he provided information, digital and technology leadership for the communication management services business.

He also held the positions of chief information officer at AIA Australia and was head of technology at NAB where he previously worked with MLC Life Insurance during its earlier integration with Aviva.

Rodney Cook, MLC Life Insurance chief executive, said the appointment was an important step forward in delivering the

Asia Pacific business effective from 1 March, 2021, succeeding Hugh Young who will become chair of Asia.

Buehlmann would be responsible for driving the company’s global strategy in the region as it invested into further building its franchise, accelerating growth in Asia Pacific and bringing its full breadth of global investment capabilities closer to clients.

He had over three decades experience in global wealth and asset management, corporate banking and financial markets.

He had spent 29 years with UBS and was mostly recently head of asset management Asia Pacific and global head of wholesale client coverage.

Buehlmann would be based in Singapore and would join the executive leadership team, reporting to Stephen Bird, chief executive of Standard Life Aberdeen.

Stock exchange Chi-X Australia has appointed John Williams to the newly-created role of deputy chief operating officer, effective from 1 February, 2020.

Based in Sydney, Williams would be responsible for execution

company’s technology transformation and business strategy.

“Rick joins us at a critical time in our journey as we deliver on our current business plans and beyond,” Cook said.

“In leading the Innovation and Transformation Division at MLC Life Insurance, he will be responsible for creating superior experiences for our customers, partners, and people, supported by technology. I look forward to him joining our senior leadership team.”

Wingfield would replace current acting CITO, Tahir Tanveer.

of the organisation’s day-to-day operational business strategy and commitment to excellent customer service.

Williams had over 20 years’ experience working in the capital markets industry and most recently he was head of admissions at the National Stock Exchange of Australia.

While he was there, he led the development of an admissions strategy and technology solution from the group-up while he ensured full alignment with regulatory requirements.

Prior to that, he held several key senior roles at the Australia Securities Exchange (ASX) across 10 years, including general manager listings operations, senior manager market access, and manager clearing and settlement operations.

State Super has appointed Charles Wu as chief investment officer (CIO), where he will be part of the executive leadership team and the management investment committee.

Previously the deputy CIO and general manager defined

contribution investments, he joined State Super in 2015.

He had also recently been appointed president of CFA Societies, Sydney, late last year.

Reporting to him will be Keri Pratt, newly-appointed to the role of general manager defined benefits assets and liabilities; Sarah Gallard, senior manager responsible investment; and Jonathan Chung, senior manager portfolio risk and general manager defined contribution investments.

Investment Trends has appointed Dr Irene Guiamatsia as head of research, while former research director, Recep Peker, will continue to support clients in an advisory capacity.

Guiamatsia was an experienced researcher with two decades of experience which spanned academia, market research and financial regulation.

She was previously Investment Trends’ key industry expert for the retail online broking and leveraged trading markets prior to joining the Australian Securities and Investment Commission (ASIC) in 2019.

2/02/2021 5:44:47 PM

BE BETTER INFORMED:

FE fundinfo Crown Fund Ratings are highly respected and widely recognised across the UK, European, and Asian markets.

Now, available in Australia in partnership with Money Management, FE fundinfo’s quantitative ratings are designed to help advisers identify funds which have displayed superior performance in terms of stockpicking, consistency and risk control.

A one Crown rating represents a fund that falls into the fourth/ bottom quartile

Two Crowns demonstrates funds that place in the third quartile

Three Crowns demonstrates funds that sit in the second quartile

Four Crowns are given to funds that have placed between 75-90% of their sector peers

Five Crowns are awarded to funds that place in the top 10%

WHERE CAN YOU VIEW CROWN RATINGS? a part of

Powered by

The multi-award winning research, due diligence and portfolio construction tool.

A part of the Money Management website, the investment centre gives you access to fund performance data and much more.

www.fe-fundinfo.com

www.moneymanagement.com.au/crowns

For more information on the methodology please visit: www.moneymanagement.com.au/aboutcrowns

5264_CrownsPrintUpdate MM FP.indd 31

a part of

in partnership with

1/02/2021 9:44:25 AM

OUTSIDER OUT

32 | Money Management April 2, 2015 Management February 11, 2021

A light-hearted look at the other side of making money

A fly on the wall when someone puts a fly in the ointment

A fun game – playing 20 Questions with Bert and ASIC

THERE have been times when Outsider just wanted to be a fly on the wall – you know the sorts of occasions – Queensland’s Annastasia Palaszczuk seated next to NSW’s Gladys Berejiklian or almost anyone running into Western Australia’s Mark McGowan.

So, Outsider would have liked to be a fly on the wall when Australian Securities and Investments Commission (ASIC) chair, James Shipton, took back control of the regulator from his deputy, Karen Chester, having spent the best part of three months on the sidelines while he was subject of a Treasury inquiry into his expenses and those of his former other deputy, Daniel Crennan.

You see, in Shipton’s absence Chester had to front a Parliamentary Committee or two and had some fairly caustic things to say about the manner in which the whole imbroglio around Shipton and Crennan’s expenses had arisen and been handled, including mentioning a certain “opacity” around the issue.

Outsider might be wrong, of course, but after listening to Chester’s evidence to the committees he was left with the feeling that

OUTSIDER is old but well remembers playing that game “20 questions” in which you get to ask 20 questions of someone to determine the right answer.

In fact, Outsider must be very bloody old because when he googled “20 questions” he noted that it was described as a 19th Century parlour game made popular in the US. But he digresses.

What Outsider can say, though, is that Queensland Liberal backbencher and former financial adviser, Bert Van Manen, appears to be very good at 20 questions, especially when it comes to seeking to prise information out of the Australian Securities and Investments Commission.

How does Outsider know this? Because Van Manen placed precisely 20 questions on notice to ASIC after the last hearing of the Parliamentary Joint Committee on Corporations and Financial Services of 2020 and received most of the answers he wanted just before Christmas.

And among the answers provided by ASIC were juicy tidbits such as the fact that some of the regulator’s staffers have provided advice to clients and some have been paraplanners which Outsider, personally, finds very reassuring.

But perhaps the question ASIC should be asking itself is who is asking Bert to ask the questions?

she would have felt very comfortable if the Treasurer, Josh Frydenberg, had thought to make her time as acting ASIC chair, permanent.

Now, of course, Shipton has resumed his role as chair for around three months while the Government seeks to recruit his successor which means that he and his deputy must, well, try to get along although it seems unlikely to Outsider that it will be business as usual.

Outsider feels sure that both Shipton and Chester will operate professionally in pursuing the best interests of taxpayers but he feels equally sure that there will be a good deal of interest in who makes the shortlist to be Shipton’s successor.

Persevering through a political thought-bubble IT is not often that Outsider feels a sense of surprise. But the usually unfazed Outsider was left feeling shocked when he attended what must have been one of the first industry face-to-face events since the COVID-19 pandemic halted events.

You see during the event the Minister for Superannuation, Financial Services, and the Digital Economy, Jane Hume was awarded a ‘Perseverance Award’.

What for, you ask? Outsider has no idea.

But Outsider notes that during Hume’s speech at the event she said that the early release of super scheme was a “lifeline” for many Australians who were struggling to make ends meet due to the pandemic.

After some questioning from the audience about how these people were going to make up the money they accessed, Hume optimistically stated there were a myriad of ways including catch-up contributions and the concessional cap.

Outsider has a really hard time figuring out how people

OUT OF CONTEXT

"u can't sell houses u don't own u can't sell cars u don't own but u *can* sell stock u don't own!?"

www.moneymanagement.com.au

01MM110221_26-32.indd 32

that needed a lifeline would have extra money to put into their super but imagines it might be much easier for Persevering Jane to envisage directing extra money into her super when she is comfortably sitting on a $264,000 salary.

Persevering Jane stated that it was “awkward” for the current Liberal government to deal with the legislated super guarantee increase to 10% in July, and 0.5% increases until it reaches 12% by 2025, because she claimed there was a trade off between wages and super.

It must be nice to have a job that sits under the Parliamentary Superannuation Act 2004 that provides 15.4% super and doesn’t seem to impact wages.

While Outsider would love to have 15.4% super, he also is very grateful he is a journalist on a measly wage that keeps him humble and realistic.

Outsider wonders whether perseverance awards belong to Australians who have genuinely suffered as a result of the pandemic and from the horrific effects of climate change such as bushfires.

- Elon Musk via Twitter

"She is now the victim of a policy that she put in place herself."

- NSW premier Gladys Berejiklian on QLD premier Annastacia Palaszczuk's economic cry for help

Find us here:

4/02/2021 11:34:40 AM