Money Management | Vol. 34 No 3 | March 12, 2020

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Vol. 34 No 3 | March 12, 2020

17

FUND RATINGS

Latest Crowns rebalance

30

INVESTING

Emerging market currencies

RATE THE RATERS

TOOLBOX

Changes to Newstart Allowance

Crown ratings – value funds suffer while 50 see top upgrade

BY LAURA DEW

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How did you feel about the FASEA exam?

DESPITE the high pass rate for the Financial Adviser Standards and Ethics Authority (FASEA) exams, many advisers are still bitter about the process.

To get a greater sense of the sentiment from advisers, Money Management released an open survey, covering the conditions of the exam, the questions asked and the methods of preparation used.

Many of the unhappy advisers surveyed passed the exam in one sitting, but despite fulfilling this commitment they were still unhappy about the process.

There seemed to be a strong sense of justification for that feeling: the process was expensive, time consuming, stressful… and that was just the lead-up to the exam.

There were numerous complaints about the conditions of the exam and FASEA said they worked to fix many of these issues.

Ambiguous was the key word as many advisers felt the questions were confusing and poorly worded, leading to them being easily misinterpreted.

Advisers who specialised in a certain area felt overwhelmed by having to answer questions outside of their speciality and question whether it was relevant.

Less than a third of respondents said the ethics component was relevant to their field of work.

Money Management contacted FASEA chief executive, Stephen Glenfield, who acknowledged some changes had been made, but many of the issues were bound by law.

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Full feature on page 24

37

THERE have been 50 funds upgraded to the top rating of five Crowns in the latest quantitative FE fundinfo Crown Ratings covering the past six months while funds with a value bias saw downgrades.

In total, there were 134 funds which received a five Crown rating which was comprised of 76 which retained a five Crown rating from the last rebalance in September, 2019, 50 which were upgraded and eight which received their first rating.

FE fundinfo Crown Ratings are a quantitative rating determined using FE fundinfo’s performance scorecard process which analyses a fund’s performance over the last three years. The score is made up of three components – alpha, relative volatility and consistently good performance.

The eight funds which received a five Crown rating for the first time, BT Index Balanced, BT Index

Growth, Chiodo Diversified Property Development, IOOF MultiSeries 50, IOOF MultiSeries 90, Lakehouse Small Companies, Morningstar Global Shares and Schroder Global Corporate Bond, was an increase from five last September.

However, the results were broader across companies than last year with no single company reporting double-digit five Crowns.

IOOF had the most amount of five Crown funds at nine funds, including two which received their first rating and two which were upgraded. This was followed by Zurich which retained all five of its five Crowns funds from last September.

Some 54 funds which received a five Crown rating in the last rebalance were downgraded this year, including five to a one Crown rating.

Many of those downgraded had a value bias in their investment process which had underperformed its growth counterparts in the period covered by the rebalance.

FSC backs once-off MySuper advice

BY MIKE TAYLOR

THE FINANCIAL SERVICES Council (FSC) has told the Government it should allow members of MySuper products to obtain financial advice in the form of one-off advice with no ongoing fees.

In a submission filed with the Treasury, the FSC has stopped short of the position adopted by the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) which have argued for advice within MySuper and instead suggested the oneoff advice arrangement.

In doing so, the FSC said that banning all advice fees from MySuper was only justifiable under two incorrect assumptions: • Advice about superannuation only includes advice about specific Continued on page 3

5/03/2020 12:03:45 PM

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March 12, 2020 Money Management | 3

News

Frydenberg signals changes to deeming rates

BY MIKE TAYLOR

THE Treasurer, Josh Frydenberg, has signalled the Government’s intention to revisit deeming rates on the basis of changed economic circumstances having made last year’s decision to reduce them now questionable.

Speaking in the context of December quarter national accounts and the changed circumstances with respect to the coronavirus and other factors, Frydenberg acknowledged the problems confronting self-funded retirees and others in a low-interest environment.

While pointing to the benefits to mortgage

holders of this week’s interest rate cut, the Treasurer said this had nonetheless made things difficult for depositors.

“That is something that the Government is also considering, because you’ll remember last year we announced some changes to the deeming rate, the lower level deeming rate was brought down to 1%, the upper level deeming rate is at 3%,” he said.

“We are now having another look at the deeming rate. That change that we introduced and announced last year was around $600 million in terms of its cost, but we do recognise that both depositors and borrowers, are affected by the changing interest rates.”

Coronavirus, rate cuts and ATO guide highlight need for SMSF advice

BY CHRIS DASTOOR

THE economic and market fallout from coronavirus, the Reserve Bank of Australia (RBA) rate cut and recent Australian Tax Office (ATO) investment strategy guidance sends a ‘stark’ message to self-managed superannuation funds (SMSF) about their need for specialist advice.

John Maroney, SMSF Association chief executive, said trustees who had a strong relationship with their specialist SMSF adviser were positioned to make the correct decisions about their portfolios when markets were turbulent.

“The advice and reassurance that these advisers can offer can prove crucial to trustees when it is so easy to be panicked into making the wrong decisions when markets are falling sharply,” Maroney said.

“This can be particularly so for trustees who are nearing retirement and are having to watch their superannuation nest eggs, which represent years of hard work and savings, suddenly diminish in value.”

There was a lesson to be learned from the global financial crisis (GFC), as Maroney said the SMSFs that navigated it successfully did so because of the advice they had received post-2008.

“In this environment having a specialist adviser to offer wise counsel on the best course of action can be invaluable,” Maroney said.

The recently-released ATO guidance reminded trustees an SMSF’s investment strategy should be “your plan for making holding and realising assets consistent with your investment objectives and retirement goals”.

“It should set out why and how you’ve chosen to invest your retirement benefits in order to meet these goals. It is not a valid approach to merely specify investment ranges of zero to 100% for each class of investment,” Maroney said.

“It’s an assessment the [SMSF] Association broadly concurs with; specialist advisers can help trustees review their investment strategy and achieve a more balanced portfolio where this is needed.”

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FSC backs once-off MySuper advice Continued from page 1 investments and is therefore not required by MySuper members; and • All MySuper members are disengaged, and they do not seek advice.

• Many people have actively chosen a MySuper product, potentially via recommendation from their adviser; • Many default members later become engaged in their superannuation (for example as they approach retirement) and seek advice about their savings; and • Significant protections are already in place to ensure advice is provided appropriately.

The FSC submission said that for members undergoing (or planning for) significant life changes such as a family separation or retirement, there was a significant need for members who may previously have been disengaged to seek financial advice.

In explaining the organisation’s position, the FSC submission said that there was a danger that totally banning advice within MySuper would significantly worsen outcomes for many superannuation fund members.

“This is because the change will create a two-tiered system that charges out-of-pocket advice fees to some members, but not others. The members most affected by this change would be those who are least able to afford these costs,” it said.

“It is inevitable that fewer people will receive financial advice as a result of this change, as some people would simply walk away when they were unable to meet the full cost. This could materially impact the decisions they make in relation to their retirement savings, and in some cases substantially reduce their savings at retirement.”

5/03/2020 11:42:05 AM

4 | Money Management March 12, 2020

Editorial

mike.taylor@moneymanagement.com.au

HAYNE ERRED ON INTRAFUND AND MYSUPER

FE Money Management Pty Ltd Level 10 4 Martin Place, Sydney, 2000

The Government needs to accept that the Royal Commission did not get everything right and that it needs to put aside its politically expedient rubber-stamp where advice within MySuper products is concerned.

THE PROBLEM WITH the Government’s approach to implementing the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is that, on the available evidence, it has failed to pay enough heed to either practicality or industry history.

As an example, if those advising the Treasurer, Josh Frydenberg, had taken the time to consider the history and workings of Australia’s MySuper and intrafund advice regimes then they may have stopped short of virtually rubberstamping the recommendation of the Royal Commissioner, Kenneth Hayne, that “deduction of any advice fee (other than for intrafund advice) from a MySuper account should be prohibited”.

If those advising Frydenberg had then looked to examine the proceedings of the Parliamentary Joint Committee on Corporations and Financial Services and evidence given by Australian Securities and Investments Commission (ASIC) commissioner, Danielle Press, they would have discovered that the regulator regards intra-fund advice as entailing the delivery of personal advice.

In other words, Hayne misunderstood intrafund advice

and, in doing so, it is arguable that his recommendation pertaining to banning advice fees in MySuper warrants a revisit on the part of the Treasury rather than the rubberstamping that currently seems likely to occur.

That is why both the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) have been right to so publicly urge that the Government reconsider the whole issue of MySuper and advice fees.

It is also clear that Hayne failed to familiarise himself with the history of MySuper, the manner in which it grew out of the so-called Cooper Review and the rather cowardly policy acknowledgement that a low-cost product should be developed because some superannuation fund members were simply unlikely to ever engage in their superannuation.

The result was that under the portfolio direction of former Labor financial services minister, Bill Shorten, a whole raft of existing default funds were converted to MySuper products.

Yes, MySuper does represent a low-cost default option for those who are largely disengaged with their superannuation, but that does not mean that all members of MySuper options are disengaged or that they do not want to access

financial advice.

The reality that Hayne failed to recognise was that his recommendation stood to place members of MySuper options at a disadvantage to their counterparts who are members of the same fund but are in choice options and he did so with the somewhat blithe observation that “it is difficult to imagine circumstances in which a member would require financial advice about their MySuper account. If a member wants financial advice, the cost of that advice should be charged to and paid by the member directly”.

It is a statement which might sound reasonable to a lawyer with a significant six figure income but paying for advice outside of superannuation is a far more daunting prospect for a MySuper member of far more modest financial means.

The Government would do well to consider the responses of the financial planning industry to its legislative approach to implementing the Royal Commission recommendations and accept that Hayne was not without flaw and some of those flaws have become more than obvious.

Managing Director: Mika-John Southworth Tel: 0455 553 775 mika-john.southworth@moneymanagement.com.au 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: Amelia King Tel: 0407 702 765 amelia.king@moneymanagement.com.au PRODUCTION Graphic Design: Henry Blazhevskyi

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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. © 2020. Supplied

Mike Taylor Managing Editor

images © 2020 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 Wollongong Chapter March CPD Day

AFA Mentoring Program Facilitator

Business Ethics Workshop: Building an Open Culture and its Assurance

QLD General Discussion Group

Wollongong, NSW 19 March fpa.com.au/events

Perth, WA 19 March afa.asn.au/events

Sydney, NSW 20 March finsia.com/events

Brisbane, QLD 26 March superannuation.asn.au

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6 | Money Management March 12, 2020

News

AFA: Why are financial advisers and brokers being singled out?

BY MIKE TAYLOR

THE Association of Financial Advisers (AFA) has directly challenged the Federal Government to explain why financial advisers and mortgage brokers have been targeted in the wake of the Royal Commission rather than the major institutions.

In a submission filed with the Federal Treasury, the AFA has supported strengthening the breach reporting regime, but questioned why advisers and brokers have been targeted while others appear to have been let off the hook.

In doing so, the AFA has recommended that mandatory reference checking should be extended to other roles in the financial services sector, including within product providers, super fund trustees and also the management roles in financial advice licensees.

The AFA also expressed strong concern over proposals to impose an obligation to breach report advisers working for other licensees and suggested that rather than making such an approach mandatory, it should be made voluntary via a direct contact line with the Australian Securities and Investments Commission.

The submission said the AFA was concerned that the Government’s legislation was unreasonably focused on financial

advisers and mortgage brokers when mandatory reference checking could and should apply more broadly.

“Why is it only being implemented for financial advisers and mortgage brokers? If the reporting of people from another licensee is a good idea, then why has it not been extended to reporting other entities that are suspected of breaching ‘core obligations’? This reflects a common view that the Royal Commission identified issues at the institutional level,” the submission said. “However, the regulatory response is focussed at the individual level.”

“There are many expressing the view that this was not the outcome that was expected

nor the outcome that should have eventuated from the Royal Commission. We also question some of the penalties that have been proposed for a failure to comply with these new obligations. In our view it seems remarkable that you could go to jail for failing to report a suspected breach by a financial adviser from another licensee.”

It was in these circumstances that the AFA said it believed that it was appropriate to extend mandatory reference checking to other roles in the financial services sector, including within product providers, super fund trustees and also management roles in financial advice licensees.

Planner group accuses ASIC of outdated view on conflicts of interest THE Australian Securities and Investments Commission (ASIC) has an outdated view of what represent conflicts of interest which must be corrected if the new post-Royal Commission advice regime is to work, according to the Profession of Independent Financial Advisers (PIFA).

The organisation’s president, Canberra-based planner, Daniel Brammall, said there was a risk of consumers being misled if the situation was not corrected and proposed legislation went ahead as drafted.

The PIFA submission responding to Treasury’s Adviser Independence Disclosure legislation, argues that the draft legislation is not what the Royal Commission recommended or intended around adviser independence and conflicts of interest.

The submission argues that key disclosures around

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independence and conflicts of interest are being hidden in the fine print of the legislation has warned of the risk that consumers will be misled if proposed legislation goes ahead as drafted.

“But an even bigger problem is ASIC’s outdated view on conflicts of interest [which] means consumers will be misled by the disclosure,” the PIFA submission said. “Independence disclosure must not be hidden in the fine print.”

Brammall pointed out that the Royal Commissioner, Ken Hayne had stated that an adviser who does not meet the test of independence “should be required to bring that fact to the client’s attention, and to explain, prominently, clearly and concisely, why that is so.”

“However the drafted legislation proposes to insert the disclosure into an existing, already

lengthy document, the Financial Services Guide,” he said.

“We already know from the research published by the Royal Commission that disclosure may not be a very effective tool in overcoming conflicts of interest.

So, burying this important fact about an adviser in an already ineffective disclosure document is not only pointless, it’s the complete opposite of what the Royal Commission recommended.

“The test of independence requires, among other things, that an adviser not be conflicted, particularly where remuneration is concerned. A common form of adviser remuneration is to charge a fee which is a proportion of the volume of funds invested, known as an ‘asset fee’. Whereas the conflicted nature of asset fees is recognised variously throughout the

legislation, ASIC’s stated interpretation of the independence law doesn’t reflect that.”

The PIFA submission said financial services legislation recognised the conflicted nature of asset fees by calling them “conflicted remuneration” and banning them – “except to the extent that an industry-negotiated exclusion softened the ban.

The result was asset fees were permissible where they were not derived from borrowed capital.

Although removing the borrowings removes the ban, it does not remove the conflict”.

“PIFA is concerned that advisers who charge in this conflicted way will, under ASIC’s outdated interpretation, be able to call themselves independent,” Brammall said. “For those advisers declaring themselves independent is very misleading to consumers.”

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8 | Money Management March 12, 2020

News

No recourse to members’ money for super funds that err

BY MIKE TAYLOR

SUPERANNUATION funds and their executives who are found to have failed in their duties under the Government’s proposed new Financial Accountability Regime (FAR) will not be able to rely on members’ funds to bail them out.

That will be one of the key bottom lines of the Government’s proposed new FAR with exposure draft reveal that superannuation fund licensees will be prohibited from using trust assets to pay a civil penalty arising from breaching an obligation under the FAR. What is more, it is unclear the degree to which superannuation funds or other financial services businesses will be able to insure against such eventualities.

The maximum penalties under the FAR are significant with the Financial Services Council (FSC) noting that the penalties are to be the greater of: 1) $10.5 million (50,000 penalties units);

2) The benefit derived/detriment avoided by the entity because of the contravention multiplied by three (where this can be determined by the court); or 3) 10% of the annual turnover of the body corporate (capped at $525 million or 2.5 million penalty units).

Responding to a discussion paper on the new FAR, the FSC said that, “interestingly, in the

Which sectors got to a jump start in 2020?

BY CHRIS DASTOOR

THE Australian equity geared sector, which was the best for 2019, returned 6.73% in January, according to data from FE Analytics.

The North American equity sector, which was the second-best sector for 2019, dropped to fifth best and returned 3.82%.

Infrastructure returned 4.25%, followed by specialist equity (3.99%) and Australia equities (3.83%).

In the Australian equity geared sector, the CFS Colonial First State Wholesale Geared Share was the top performer, returning 13.77% for the first month of the year.

This was followed by OnePath Wholesale Geared Australian Shares Index Trust B (9.6%), Ausbil Australian Geared Equity (9.16%), AMP Capital Specialist Geared Australian Share (8.89%), and Perpetual Wholesale Geared Australian (8.37%).

According to Perpetual’s market commentary, the Australian equity market gained 4.9% over the month of January, as measured by the S&P/ASX 300 Accumulation Index.

“Uncertainty swept the market early in the month as widespread bushfires across the country dampened investor sentiment on many agricultural and retail-exposed stocks,” it said.

“Momentum continued to strengthen throughout the month with the Australian market breaking multiple record highs on improved prospects of a rebound in global growth after the formal signing of a ‘phase-one’ trade deal between the US and China, as well as President Trump announcing the removal of proposed tariffs once a phase-two agreement is complete.”

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case of RSE [superannuation] licensees, it is noted that RSE licensees will be prohibited from using trust assets to pay a civil penalty arising from breaching an obligation under the FAR”.

It said that provision would be made for the court to have regard to the impact of the penalty on the trustee’s superannuation fund membership.

ClearView aims for flat fee financial advice approach MAJOR insurer ClearView has begun the process of changing the commercial dynamics of its financial advice businesses with the aim of having them become profitable standalone structures utilising flat fee structures.

ClearView managing director, Simon Swanson outlined the company’s objective to Money Management at the same time as announcing a “disappointing” half to the Australian Securities Exchange (ASX) entailing 23% decline in underlying net profit after tax to $13.1 million largely owed difficulties around income protection products.

The company reported a 27% decline in net profit after tax for its life insurance business to $7.5 million, a 19% decline in its net profit after tax (NPAT) to $1.7 million for its wealth management business and a more modest decline to underlying NPAT for its financial advice business to $600,000.

However, in doing so the company pointed to “turning financial advice into a profitable standalone segment over time by repositioning and repricing the dealer group core offering of Matrix Financial Planning and ClearView Financial Advice and rolling out LaVista Licensee Solutions to help create a sustainable model.

Speaking to Money Management, Swanson said ClearView believed it was clear that advisers needed to move to flat fee arrangements and that the days of asset-based fees or percentage-based fees were over.

He said that was the underlying premise of turning the company’s dealer groups into profit centres – a process that could take up to two years.

At the same time, Swanson also pointed to ClearView undertaking a major project to seek a modern replacement solution for its wrap technology noting that there were lessons to be learned from the industry superannuation funds in terms on simplicity and clarity of offering.

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27/02/2020 9:17:58 AMpm 26/2/20 5:36

10 | Money Management March 12, 2020

News

Is pursuit of a CSLR just a cover-up for Govt’s PI failure?

BY MIKE TAYLOR

PROBLEMS with professional indemnity (PI) insurance continue to be a major cause of unpaid determinations and the Government has not taken action to address the issue for nearly a decade, according to the Financial Planning Association (FPA).

In a submission responding to the Treasury’s discussion paper on a Compensation Scheme of Last Resort (CSLR), the FPA repeated its concerns about pursuing such a regime arguing that the Government must, at the same time, address the role of PI insurance in the regulation of financial services in circumstances where failure to hold adequate PI has been a major cause of licensees not paying compensation when it is due.

“The FPA continues to believe that the first step in ensuring consumers are able to access compensation is to address the underlying causes of unpaid determinations. The Government must address the role of professional indemnity

(PI) insurance in the regulation of financial services,” it said.

“Financial services firms and practitioners are required to hold PI insurance as a condition of their license. In part, PI insurance is intended to cover liabilities from financial services complaints and ensure that licensees are able to pay compensation when a complaint is made against them. In practice, failure to hold adequate and appropriate PI insurance is a major cause of licensees not paying compensation when it is due.”

The submission said the St John review considered the issues in 2012 and made recommendations to improve the effectiveness of PI insurance including addressing the quantum and coverage of PI insurance and recommending ASIC take a proactive role in

monitoring whether licensees are complying with their PI insurance obligations.

“To date, the Government has not taken any action on these recommendations and problems with PI insurance continue to be a major cause of unpaid determinations,” it said.

“It said a CSLR would transfer responsibility for paying compensation from the party subject to the complaint to the financial services sector as a whole.

“This is a significant departure from the principle of individual responsibility and should only be taken as a genuine last resort for providing compensation to consumers. A CSLR should not replace proper action by the regulator to hold parties responsible for their own misconduct or poor performance.”

While Canberra debates, APRA acts on climate risk WHILE the major parties continue to battle over climate policy in Canberra, the Australian Prudential Regulation Authority (APRA) has written to all the entities it regulates encouraging the adoption of voluntary frameworks to assist with dealing with climate change and has foreshadowed developing a climate risk practice guide.

The regulator said many industry participants had indicated they would like APRA to provide more information on better industry practice in relation to climate-related financial risks, as well as greater clarity on regulatory expectations.

“In response, APRA intends to develop and consult on a climate change financial risk prudential practice guide (PPG),” it said. “This

01MM120320_01-14.indd 10

industry guidance is not intended to establish new obligations, but rather will be designed to assist entities in complying with their existing prudential requirements, including those found in Prudential Standard CPS 220 Risk Management.”

APRA said the cross-industry PPG, relevant to all entities, would set out APRA’s views on better practice and outline prudent practices in the area.

“The PPG will cover areas relevant to the prudent management of climate change financial risks, aligned with the recommendations of the TCFD, including aspects of governance, strategy, risk management, metrics and disclosure,” it said.

Intra-fund advice has created advice unfairness A ‘cone of silence’ exists around intra-fund advice that has created an unfair legislative environment that favours one group of financial advisers over others.

That is a central premise of a submission to Treasury by West Australian-based financial adviser, Steve Blizard who said he believed there had been excessive media focus on Future of Financial Advice (FoFA) legislation since 2013, but virtually nothing about intra-fund advice payments “whereby default super fund marketing representatives and their advisers are remunerated”.

Within his submission, Blizard has cited examples (contained within the Financial Services Guides (FSG) of industry superannuation funds of those funds paying ‘bonuses’ of up to $40,000 to financial advisers.

“While bank staff have been totally banned from earning sales bonuses, many industry super fund staff and advisers are permitted under the intra-fund system to earn ‘performance bonsues’, in additional to receiving complimentary gym memberships,” his submission said.

“While intra-fund advisers deliver a certain level of compliance information for clients (i.e.Statements of Advice for rollovers), they do not have to comply with any other form of FOFA redtape, such as annual fee disclosure statements, nor do they have to chase up bi-annual opt ins, simply to get paid.

“Instead, most intra-fund staff and advisers are remunerated primarily from collective administration fees automatically deducted from all super fund members.”

His submission argued that collective administration should only be charged by superannuation fund trustees for simple administration and provision of general factual information to fund members.

“Collective fees should not be charged to members unless the fund trustee obtains annual consent from members for these fees to be charged as administration fees from their fund,” Blizard’s submission said.

He said that, alternatively, all advice fees provided by default funds should be charged on a ‘user pays’ basis with informed consent provided by the fund member in advance for those fees.

“Any other form of personal advice should be charged directly to the member seeking advice, and not paid for by other members who are not receiving that advice. All advisers employed by that trustee, who are providing financial product advice should not be remunerated by other members in lieu.”

3/03/2020 2:43:08 PM

March 12, 2020 Money Management | 11

News

TPB consultation paper could lead to 40hrs+ adviser CPE

BY LAURA DEW

THE Tax Practitioners Board (TPB) latest consultation paper could result in greater training requirements for advisers than is currently the case.

The TPB released a paper on Continuing Professional Education (CPE) requirements last week and proposed to increase the number of hours from 20 to 40 hours per year to align with requirements under the Financial Adviser Standard and Ethics Authority (FASEA).

Rob Lavery, technical and policy manager at online advice portal knowIT, said: “The TPB’s proposed position that a financial adviser is ‘likely’ to meet the TPB’s CPE requirements if they meet FASEA’s CPD [continuing professional development] requirements, contains a caveat: any FASEA CPD activities must be able to be demonstrably linked to the adviser’s tax (financial) advice services to qualify as CPE under the TPB’s requirements.

01MM120320_01-14.indd 11

“This only becomes really concerning when looked at in conjunction with another of the TPB’s proposed positions. The TPB has proposed to increase CPE requirements from an effective 20 hours per year, to 40 hours per year to align with the requirements of FASEA. “If the TPB insists that all FASEA CPD needs to be related to providing tax (financial) adviser services in order to meet CPE requirements, advisers are going to be left well short of their 40 hour obligation when relying on FASEA CPD alone.”

He said the ‘only outcome’ he could see that would streamline advisers’ ongoing education requirements was complete alignment with FASEA requirements, without the caveat that all training relating to providing tax (financial) advice.

If the caveat was included then it would lead to advisers’ needing to do far more than 40 hours of annual training to meet both the TPB and FASEA requirements.

3/03/2020 2:32:49 PM

12 | Money Management March 12, 2020

Financial planning

THE NATIONAL OPPORTUNITY THAT IS FINANCIAL PLANNING The financial planning profession is on the cusp of a major growth trajectory as planners and professional associations unite to secure its future, writes Dante De Gori.

THE DEMAND FOR financial advice is strong. With 41% of Australians intending to get advice in the future, it is now up to the industry, regulators and government to build a profession that can meet their needs.

The financial planning profession is currently at the crossroads of what could be the most defining moment in its history.

Increased compliance requirements, higher education standards, rapid change in market dynamics as the major banks leave the sector and the increased cost of doing business are all challenges facing the sector.

But there are also significant opportunities; a chance for the profession to grow and unite towards a stronger foundation that the next generation of planners can build on. Financial planning attracts a diverse group of people.

Most are highly experienced, educated and ethical professionals. Others are still on a path to meeting their career goals and professional development milestones. The Financial Planning Association (FPA) is

committed to supporting all financial planners throughout their career to provide the best quality advice to their clients.

Each individual financial planner may offer different skills and services or target a certain niche market. But as a profession we all share a common purpose: the financial wellbeing of our clients and the availability of advice for more Australians.

From a long-term perspective, more stringent educational and ethical standards can only be a good thing for clients, who rely on quality financial planning to make some of the most important decisions of their lives.

MAKING ADVICE MORE ACCESSIBLE Those who argue that the rising cost of financial advice will cripple the industry, though not disputing this possibility also fail to recognise the work currently underway to ensure financial planning is a viable option for all Australians.

New innovations and technologies are rapidly being

adopted at a practice level by financial planners across Australia to streamline efficiencies within their businesses and reduce compliance costs.

Meanwhile, many superannuation funds now offer advice to their members and are integrating digital-advice offerings along with intra-fund to help Australians who may not be able to afford full-scale financial planning.

It is important to recognise the depth and breadth of the advice profession, one where industry participants offer different levels of service depending on the needs of their clients. A full-scale financial plan may not be affordable for some, but there are other options available and lower cost is not synonymous with poorer quality – this has been widely misunderstood by many commentators, to the detriment of the unadvised majority of Australians.

Many FPA members are taking innovative approaches to tacking the affordability of advice including introducing subscription-based fees for service and helping younger generations with their savings and household budgets.

These efforts and the collective willingness to work towards a solution should be commended, not criticised, as it is having a positive impact on the lives of Australians as they navigate the complexities of managing work, life and their personal finances.

ENGAGEMENT WITH GOVERNMENT AND REGULATORS While we recognise that financial planners are doing their best to cope with rising regulatory and compliance costs, the FPA is also doing its part through ongoing and extensive engagement with government and regulators.

The bottom line is that the goal of making financial planning more

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affordable and accessible, which was a promised objective of the Future of Financial Advice (FOFA), for those in need has not been met.

In a 2019 survey by Australian Securities and Investment Commission (ASIC): Financial advice: what consumers really think, found while 41% of Australians intend to get financial advice in the near future, many will not proceed because of perceived barriers including cost (35%) and the need for a relatively simple financial plan (29%).

Our members are telling us that the cost of providing advice has never been as high as it is today.

Costs could increase further as financial planners adjust to increased surveillance and enforcement activities ASIC is undertaking following the Financial Services Royal Commission.

Our most recent member survey shows the major challenge for planners over the next three years will be the cost of regulation, with almost half (48.3%) of FPA members agreeing on this, up from 33.5% in 2018.

In 2019, 41.4% of our members said reducing the cost of providing advice would be a major challenge, up significantly from 25.3% in 2018.

On average, FPA members charge $2,671 to prepare a Statement of Advice (SOA) for new clients, up almost 10% from $2,435 in 2018.

We believe the current framework needs to be re-examined to ensure financial planners can continue to meet compliance requirements while also meeting the growing demand for financial advice from consumers. It would be a sad day if Australians were regulated out of their chance to receive quality advice.

Ongoing engagement with government and regulators is therefore critical and a key priority for the FPA in 2020.

3/03/2020 12:44:19 PM

Financial planning STREAMLINING COMPLIANCE PROCESSES Given the increased compliance requirements financial planners are now facing, the FPA has also been examining how we can facilitate a more sustainable compliance regime for our members.

This won’t involve removing or reducing consumer protection, but it does mean looking for ways to make the system more efficient, effective and streamlined for the consumer and for the businesses that provide advice. We believe technology will play a central role here.

A key project we are currently focusing on is the Future of the Statement of Advice, which involves digitising statements of advice (SOAs) and the financial advice process. This will not only make the provision of financial advice more affordable but will also bring the profession into the 21st century.

Today’s clients do not want to be

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handed a 100-page SOA to read and sign and put in their bottom drawer to never read again - they want financial advice to be integrated into their life.

We have already launched an interactive guide to the new digitised SOA and have been working with several fintech providers who are helping financial planners to transition from the old processes they were using and integrate the new SOAs into their businesses.

Financial planners are at different stages in terms of their willingness to switch to the new model, but we are encouraging all our members to do this sooner rather than later.

REVIEWING BUSINESS MODELS Looking forward, I think it is fair to say that all financial planners have or will be reviewing their business models and adjust accordingly with respect to what it costs to run a business. Many

financial planners are small business operators and need to ensure they have the clientele that is right for their business.

While some financial planners serve the high net worth end of the market, there are still many who cater for the average Australian citizen. In addition, we are already seeing more financial planners specialise in certain areas, from financial coaching (budgeting and cashflow management) to superannuation and aged care. We are encouraging all financial planners to consider their point of difference in the market, so as a profession we can provide solutions to meet a broader range of client needs.

ENCOURAGING NEW ENTRANTS TO THE PROFESSION

increasing and, with financial planner numbers currently declining, we arguably do not have enough financial planners to meet that demand.

We will start to see more financial planners enter the profession via the university system and the opportunities for new entrants is huge. For anyone looking for a great career opportunity, I would highly recommend our profession as the job prospects are outstanding going forward. With the reforms that are still taking place and changes in technology, the profession is being set up for a very bright future.

Overall, I am optimistic about the future of the financial planning profession. We know demand is

Dante De Gori is chief executive of the Financial Planning Association.

3/03/2020 12:44:27 PM

14 | Money Management March 12, 2020

InFocus

IF YOU THOUGHT THAT BREACH REPORTING WAS TOUGH ENOUGH NOW… Australia’s dob-yourself-in breach reporting is hard now, but things are about to get a lot harder, writes Holley Nethercote’s Paul Derham and Michael Mavromatis.

A NEW BILL (an exposure draft at this stage) seeks to amend the Corporations Act 2001, to expand the number of circumstances in which breaches must be reported. These changes are likely to result in a lot more breach reporting.

The bill also proposes changes to the Credit Act, which will require Australian credit licensees to report breaches and other reportable circumstances.

will have to lodge a report with the Australian Securities and Investments Commission (ASIC), within 30 calendar days after you reasonably know, that there are reasonable grounds to believe a reportable situation has arisen (i.e. no longer 10 business days after becoming aware of the breach or likely breach).

However, you will need to report the outcomes of investigations within 10 calendar days.

What are the new breach reporting requirements and other reportable circumstances?

The bill includes new and additional reportable circumstances. The new requirements as currently drafted, include reporting on the following: • Investigations into whether a specified breach or likely breach has occurred or will occur and the outcomes of those investigations; • The obligation to report breaches of certain “core” obligations. Core obligations include s912A (general licensee obligations) and s912B (compensation arrangements) obligations; and • Conduct constituting “gross negligence” or “serious fraud” (bearing in mind that gross negligence does not have a precise meaning under Australian law at present).

The changes also include broadening what is considered to be a significant and reportable breach, to include contraventions of civil penalty provisions. This means that the significance test is no longer an entirely subjective test.

If you are an Australian Financial Services Licence (AFSL) holder or credit licensee, the bill also proposes that you

When reporting your own breaches just isn’t enough…

We’ve often described the AFSL breach reporting obligation as “un-Australian” because it requires you as a licensee to dob yourself in. Now AFSL holders will also need to report financial advisers operating under another licensee, when they have reasonable grounds to suspect that a reportable situation has arisen.

This new requirement doesn’t just apply to advice licensees. If you are a responsible entity, superannuation trustee, platform operator (or any other AFSL licensee) and you have serious compliance concerns in relation to a financial adviser, you will need to report them to ASIC. You will also have to report those advisers to their own advice licensee (the adviser’s licensee at the time of the relevant incident).

These reports will be due within 30 calendar days.

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The method of breach reporting is changing Other changes will include that reports will need to be lodged in a form prescribed by ASIC. This is consistent with the process that APRA-regulated entities undertake at present when they report breaches to APRA.

ASIC will name licensees who report breaches Under the new changes, ASIC will also be required to publish data on reportable situation reports lodged

by AFSL holders. This includes the name of the licensees.

Reference checking and information sharing The bill also seeks to introduce reference checking and information sharing requirements. The changes seek to address Royal Commission recommendations 1.6 and 2.7, which called for AFSL holders and Australian credit licensees, to comply with a reference checking and an information sharing protocol in relation to financial advisers and mortgage brokers.

The most common reason that licensees are reluctant to report advisers for poor behaviour to their new licensees at present, is the fear of saying something that may be defamatory.

This is particularly the case where a licensee may form the view that it has enough evidence to cease its relationship with an adviser, but not enough to make statements judging the adviser’s conduct to other parties.

Defamation and the defence of qualified privilege Based on the current exposure draft, if you are an AFSL holder or credit licensee, you will have a defence of qualified privilege against a defamation action or a breach of confidence action, resulting from information you share as part of the new obligations.

In addition to an AFSL holder’s qualified privilege when acting in compliance with the obligation to provide a reference about a current, former or prospective representative, those AFSL holders will also not be liable for any action

based on breach of confidence in relation to that conduct.

This provides a protection to the AFSL holder where confidential information is divulged in the course of satisfying the obligation to share information.

From a privacy perspective, prospective advisers will be required to consent to the sharing of their personal information with their new employers. The purpose of this inclusion is to ensure that the new requirements are not inconsistent with existing privacy laws.

Other changes The Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2020 Measures)) Bill 2020 exposure draft seeks to address a number of other recommendations that were made by the Banking Royal Commission.

The bill also proposes changes to advice fees in superannuation, superannuation regulator roles, ongoing fee arrangements, enforceability of financial services industry codes and limiting avoidance of life insurance contracts.

When will the changes apply?

The proposed changes concerning breach reporting, reference checking and information sharing are new and far reaching. At this stage it is proposed that these changes will be implemented by 1 July, 2020, but will be effective from 1 April, 2021. Some other changes will be effective as early as 1 July, 2020.

When the bill becomes law, you’ll need to update a long list of compliance policies.

Paul Derham is a partner and Michael Mavromatis is a special counsel at Holley Nethercote.

2/03/2020 3:44:57 PM

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4/03/2020 9:45:52 AM

16 | Money Management March 12, 2020

DDO

DESIGN AND DISTRIBUTION OBLIGATIONS – PUTTING THE CONSUMER FIRST The implementation of design and distribution obligations to the Australian financial services industry will bring with it a range of new challenges but, as Mikkel Bates reports, there is much which can be learned from experience in other jurisdictions.

THE DESIGN AND distribution obligations (DDO) are due to take effect for product issuers and distributors on 5 April, 2021, and there is much to be done in a little over a year if it is to be trouble-free.

The Australian Securities and Investment Commission’s (ASIC’s) consultation paper CP 325 says the introduction of DDO “recognises that…disclosure to consumers… often does not correlate with good consumer outcomes”, so product issuers will be explicitly required to design and issue products that deliver good outcomes for an identified target market of retail consumers. Simply relying on disclosure is no longer enough; clients must be put at the heart of product design and ongoing product governance.

Distributors will not be permitted to make financial products available to retail consumers unless there is a valid target market determination (TMD) in force. That TMD must describe the nature and complexity of the product and what it aims to deliver, as well as the characteristics, objectives and needs of the retail consumers for whom it has been designed. It must list any restrictions on distribution, the latest date by which the issuer must review the TMD and list any events or circumstances that could indicate the TMD is no longer valid, triggering an earlier review.

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One bizarre aspect of the DDO is that, while it is about putting the consumer first in product design and the TMD must be made available to the public free of charge to “[enable] consumers to access a target market determination should they wish to do so”, ASIC does “not consider the target market determination to be a consumerfacing disclosure document”.

Consider this in terms of an investment platform that makes products available for retail consumers to select for their portfolios. On the one hand, the product issuer and the platform each need to issue a TMD – for the fund and the platform, respectively – but, on the other hand, neither needs to consider the TMD to be a consumer-facing document. This sits a bit uncomfortably with “the consumer-centric approach issuers and distributors should take to deliver good consumer outcomes.”

THE VIEW FROM EUROPE We don’t pretend to know better in Europe, but we have been grappling for years with MiFID II, a European directive that includes the need to determine the appropriate target market for a product and which came into force two years ago.

There are some key differences – under MiFID II, the obligation to ensure products are only sold to the correct target market falls on

the distributor, there is no need to produce a document outlining the target market and product issuers don’t need to state the next product review date in advance – but there are enough similarities with DDO to use the MiFID II experience to streamline some of the work required.

One section of the European MiFID Template (or ‘EMT’, used by issuers to send standardised data to distributors) that has taken some getting used to is whether the starting point for the target market assessment is the product or the investor. In other words, is an equity income fund intended to be bought only by investors seeking an income or, from the client’s standpoint, could it be deemed a suitable investment for growth investors who don’t need income?

A more pertinent example may be to ask whether it would always be wrong to include an emerging markets equity fund as a small weighting in a diversified portfolio for a low-medium risk investor.

With the objectives and needs of the client at the heart of the product governance process, whether the product could be suitable for such an investor must be the starting point. The difficulty, of course, is how the product issuer can determine suitability for the client without knowing who they are or what other investments they hold.

The EMT has overcome this is by defining the target market through a number of client characteristics, including their needs (growth, income, capital preservation, etc) and issuers answer ‘Y’ (product is designed for them), ‘Neutral’ (not the primary target market, but may be suitable) or ‘N’ (unlikely to be suitable in any circumstance, i.e. the “negative target market”). Any sales into the negative target market must be reported by the distributor to the issuer, who should incorporate that, as appropriate, into their product governance process.

The investment product industry in Europe has tried, as far as practical, to make the client the starting point for the target market assessment and spent a long time agreeing a standardised format for the data to describe it. If there is one thing anyone coming to terms with DDO can take away from MiFID II, that should be it.

If you want to go one step further and show you are really putting the consumer first, go beyond ASIC’s requirement and make the TMD a consumer-friendly document, so the end investor can refer to it and easily understand it when a distributor recommends a product for them.

Mikkel Bates is the regulatory manager for FE fundinfo, the company which owns Money Management.

2/03/2020 3:19:25 PM

March 12, 2020 Money Management | 17

FE fundinfo Crown Ratings

WHO LAYS CLAIM TO THE THRONE? The last FE fundinfo Crowns rebalance saw two double-digit five Crown fund groups. Chris Dastoor finds out whether they were able to retain that position.

IOOF NOW LEADS the way with the most five Crown rated funds with nine, as the two fund managers with 10 or more five Crown funds from the last rebalance – IPAC Asset Management and Macquarie dropped to four and six respectively.

IOOF’s new additions to the five Crown pantheon were MultiMix Moderate, MultiSeries 50, MultiSeries 70 and MultiSeries 90.

This was in addition to their previous five Crown rated funds which it had managed to retain – Strategic Cash Plus, Specialist Property, Balanced Investor Trust, MultiMix Balanced Growth and MultiMix Growth.

Dan Farmer, chief investment officer for IOOF, said the firm’s diversified fixed interest portfolios had been comprehensively reshaped over the last couple of years.

“We’ve moved away from benchmark-focused managers and looked to more absolute return strategies focused on relative value and more opportunistic investment strategies.”

“We’ve had a strong allocation to direct property, we manage direct property internally and that portfolio has had strong returns over the years which has helped all those funds,” Farmer said.

“We’re active with how we position our asset allocations and timeframe is important, we tend to look at a 12-18 month horizon.”

Zurich retained all five of its five Crown rated funds – Unhedged Global Growth Share Scheme, Global Growth Share, Concentrated Global Growth, Unhedged Global Growth Share and Global Growth Share Scheme.

Matthew Drennan, head of

investments Zurich Australia, said it was a “fantastic compliment”, not only on the strength of the performance, but on the strength of the investment process.

“It’s a very unique process where they’re looking for inflection points in earnings and the sustainability of those,” Drennan said.

“I think we’ve had a very good number of years with the funds and the five funds are just variations on the main theme which is global growth.”

He said it was the dedication they had to sticking to their unique process that focused on an observation of an inflection point in earnings.

“The focus is not on what the level of earnings growth is, but the direction of it, and the process has shown over time it’s the major identifier of company performance,” Drennan said.

“The market tends to be very inefficient in terms of identifying those inflection points and the sustainability of that growth.”

FUNDS REPORTING DRASTIC MOVES THERE HAVE BEEN nine funds in the latest FE fundinfo Crown Ratings rebalance which have seen a significant five-ranking move from their previous position last September.

The latest rebalance found there were four funds where their ratings increased from one Crown to five Crowns.

These were CI Brunswick from Cooper Investors, Legg Mason Martin Currie Real Income, Prime Value Emerging Opportunities and Yarra Australian Real Asset Securities.

A spokesperson for Yarra Capital Management said the fund’s performance had been driven by superior stock selection and bottomup research particularly the fund’s overweight position to transport infrastructure companies and an underweight position to retail REITS. Cooper Investors said the firm had a consistent investment process and the fund had been performing well.

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A spokesperson for Legg Mason said: “The key reason for outperformance of the fund during 2019 comes down to our unique portfolio design.

“The lower-risk nature of listed Real Asset holdings and broad portfolio diversification across assets that are driven by Australia’s very strong population and urbanisation growth rather than trade or cyclical business cycle driven growth, means that our key positions haven’t participated in the broader market sell-offs over the past year.”

There were eight funds which received five Crowns for the first time this year, having not had the required history previously. These were were BT Index Balanced, BT Index Growth, Chiodo Diversified Property Development, IOOF MultiSeries 90, IOOF MultiSeries 50, Lakehouse Small Companies, Morningstar Global Shares and

Schroder Global Corporate Bond.

At the other end of the ranking spectrum, there were five funds which fell from a top ranking of five Crowns last year to just one Crown this rebalance.

The funds which suffered this drastic downgrade were Realindex Emerging Markets, Dimensional Australian Value Trust, IPAC SIS International Share Strategy No.2, Legg Mason Martin Currie Tactical Allocation and PIMCO Dynamic Bond.

Both First Sentier Investors, which owns Realindex, and Dimensional – which had five funds downgraded to one Crown – said the reason for the downgrade was due to the funds’ preference for value assets.

“We are overweight the cheaper companies, sectors and countries and underweight the more expensive ones. As the cheaper has underperformed and the expensive has outperformed,

our portfolio has become cheaper relative to the broader market, trading at historically wide valuation discounts versus the market,” a First Sentier spokesperson said.

“The process continues to be based on identifying accounting fundamentals which aim to build a universe of accounting weights rather than market capitalisation weights.”

A spokesperson for Dimensional said: “Nothing has changed in how Dimensional manages these strategies, which have performed as we would expect given the factors they target in a systematic way.

“Each of the equity trusts that FE Crowns have downgraded are seeking diversified exposure to value companies. The value premium has been negative over this period, so as you would expect, the trusts have lagged the broader market.”

By Laura Dew

5/03/2020 10:25:06 AM

18 | Money Management March 12, 2020

FE fundinfo Crown Ratings

WHAT HAPPENED TO THE PREVIOUS DOUBLE-DIGIT CROWN FUND MANAGERS? IPAC ASSET MANAGEMENT had 12 five Crown funds last rebalance, while Macquarie Investment Management had 10, but how did they do this time around?

Last September there were two double-digit Crown fund managers – IPAC Asset Management led the way with 12 five Crown funds and Macquarie Investment Management had 10 – but both saw significant drops for this rebalance.

The 12 five Crowns IPAC previously had was now four. Most funds only dropped to four Crowns, but one dropped all the way to one Crown.

Macquarie now had five funds with five Crowns, as the other five dropped to four Crowns.

The IPAC funds that retained their five Crown rating were Select Index Growth, Select Index High Growth, Summit Select Index

Growth and Life Choices Index 85.

Seven IPAC funds dropped from five Crowns to four Crowns, those were: Diversified Investment Strategy 4, MMP High Growth, North Multi Manager Active Growth, North Professional High Growth, Select Index Balanced, Life Choices Active 100 and North Guardian Volatility Growth.

Stephen Flegg, portfolio manager at AMP Capital, said overall last year was still a good year for performance across the full IPAC range.

“If we look at the different ways we measure success, the first is in absolute performance and that was a good year, one of the best in the last decade, all of our flagship balanced funds were in the top half of their peer groups,” Flegg said.

“It was a challenging year for a

lot of active managers… if you weren’t in the few big names that performed well, active managers typically underperformed.

“Our funds marginally underperformed the index, but we when look across the different metrics of how our diversified funds performed, so absolute performance relative to peers, we would characterise last year as successful.”

IPAC SIS - International Share Strategy No 2 dropped from five Crowns to one Crown, which Flegg said was closed to the public and had no direct investors.

“This fund is used as a building block trust within a number of the diversified IPAC portfolios. As such its performance is relevant within the context of a broader multiasset portfolio,” Flegg said.

“Primarily, investors gain

STRONG SCORE FOR EQUITY FUNDS IT WAS GOOD news for the mixed asset growth, global and small and mid cap funds in this edition of the FE fundinfo Crown Ratings, all reporting double-digit funds which received five Crowns.

There was a clear split between equity funds and fixed income with 60 equity funds receiving five Crowns versus just 18 fixed income funds.

In the global equity sector, within the Australian Core Strategies (ACS) universe, there were 25 funds which received a five Crown rating, the largest of all the sectors, seven of which were upgrades from last September.

Upgraded from four Crowns were Carnegie Worldwide Equity Trust, Evans And Partners International, Fidelity Global Demographics and Ironbark Royal London Concentrated Global Share. There were a

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further three which were upgraded from three Crowns; AtlasTrend Big Data, AXA IM Sustainable Equity and Insync Global Capital Aware.

Looking at the ACS mixed assetgrowth sector, there were 18 funds which received a five Crown rating and five of these were upgrades.

The five funds in this sector to be upgraded to five Crowns were Ausbil Balanced and Mercer Growth which were both moved up from four Crowns and CFS Colonial First State Wholesale Diversified, CFS Colonial First State Wholesale Balanced and IOOF MultiSeries 70 which were all upgraded from three Crowns.

Finally, there were 18 small and mid-cap equity funds featured with five Crowns, divided between 15 in the ACS Australian small/ mid cap equity sector and three in the smaller ACS global small/mid

exposure to this fund through investing in our diversified ranges such North Professional, Life Choices Active, Diversified Investment Strategies or Summit Select Active.”

Macquarie’s five Crown funds were Balanced Growth, Australian Small Companies, Small Companies, Australian Shares and True Index Global Infrastructure Securities.

The funds that lost their five Crown ratings were Property Securities, Active Plus Equities, Wholesale Australian Equities, Australian Equities and Walter Scott Global Equity – all now four Crowns.

When asked about the performance of the now four Crown rated funds, Macquarie declined to comment.

By Chris Dastoor

METHODOLOGY

cap equity sector.

In the global small/mid cap equity sector, the Prime Value Emerging Opportunities fund saw a significant upgrade from one to five, the Ellerston Global Mid Small Unhedged was upgraded from two to five and the Bell Global Emerging Companies fund retained its five Crown rating. There were no funds in this sector which lost their five Crown rating.

Looking in the Australian small/ mid cap equity sector, the Alpha Australian Small Companies was upgraded from three to five Crowns while the AMP Experts’ Choice Small Companies, Ausbil MicroCap and Fairview Equity Partners Emerging Companies were upgraded from four Crowns to five.

The remaining funds all retained their five Crown rating from 2019.

By Laura Dew

FE fundinfo Crown Fund Ratings are a quantitative rating determined using FE fundinfo’s performance scorecard process which analyses a fund’s performance over the last three years.

The score is made up of three components – alpha, relative volatility, and a consistently good performance.

The funds examined were within the Australian Core Strategies universe and had at least a three-year track record.

The funds are assigned ratings based on their total scores, according to the following distribution: • The top 10% – five FE fundinfo Crowns; • The next 15% – four FE fundinfo Crowns; • The next 25% – three FE fundinfo Crowns; • The next 25% – two FE fundinfo Crowns; and • The bottom 25% – one FE fundinfo Crown.

5/03/2020 10:43:29 AM

March 12, 2020 Money Management | 19

FE fundinfo Crown Ratings

FUND NAME

CROWN RATING

4D Global Infrastructure AllianceBernstein Managed Volatility Equities Alpha Australian Small Companies Alphinity Global Equity AMP Capital Global Growth Opportunities AMP Capital Specialist Property and Infrastructure AMP Experts' Choice Growth AMP Experts' Choice Small Companies APN Asian REIT Ardea Real Outcome AtlasTrend Big Data Big AU Pro D High Growth Ausbil Balanced Ausbil MicroCap Australian Ethical Emerging Companies AXA IM Sustainable Equity Bell Global Emerging Companies Bentham High Yield BlackRock Global Listed Infrastructure BlackRock Scientific Diversified Growth BlackRock Scientific Diversified Stable Wholesale BlackRock Scientific Wholesale Diversified Growth BMO LGM Global Emerging Markets BT 1960s Lifestage BT 1970s Lifestage BT 1980s Lifestage BT 1990s Lifestage BT 2000s Lifestage BT Index Balanced BT Index Growth BT Wholesale Multi-manager High Growth Carnegie Worldwide Equity Trust CC Marsico Global CFS Colonial First State Wholesale Balanced CFS Colonial First State Wholesale Diversified CFS Generation WS Global Share CFS Wholesale Global Credit Challenger Guaranteed Income 400 cents pa 30/09/22 Charter Hall Maxim Property Securities Chiodo Diversified Property Development CI Brunswick Crescent Wealth Property Cromwell Phoenix Opportunities Custom Portfolio Solutions - Global Growth

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

DDH Selector Australian Equities DirectMoney Personal Loan Ellerston Global Mid Small Unhedged Elstree Enhanced Income Evans And Partners International Fairview Equity Partners Emerging Companies Fidelity Asia Fidelity Future Leaders Fidelity Global Demographics Fidelity Global Emerging Markets Fiducian Growth Global Corporate Bond Trust Wholesale Growth Index High Growth Index Hyperion Global Growth Companies Insync Global Capital Aware Intermede Global Equities IOOF Balanced Investor Trust IOOF MultiMix Balanced Growth IOOF MultiMix Growth IOOF MultiMix Moderate IOOF MultiSeries 50 IOOF MultiSeries 70 IOOF MultiSeries 90 IPAC Life Choices Index 85 IPAC Select Index Growth IPAC Select Index High Growth IPAC Summit Select Index Growth Ironbark Royal London Concentrated Global Share Lakehouse Small Companies Legg Mason Martin Currie Global Long-Term Unconstrained Legg Mason Martin Currie Real Income Legg Mason Western Asset Cash Plus Macquarie Australian Shares Macquarie Australian Small Companies Macquarie Balanced Growth Macquarie Core Plus Australian Fixed Interest Macquarie Small Companies Macquarie True Index Global Infrastructure Securities Magellan Global Magellan High Conviction Magellan Infrastructure Unhedged Manning Private Debt Mercer Global Sovereign Bond Mercer Global Unlisted Infrastructure

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Mercer Growth Mercer High Growth MLC Wholesale Horizon 6 Share Portfolio Montgomery Global Morningstar Global Shares Mutual MIF MyNorth Index Growth Northcape Capital Global Emerging Markets OC Micro-Cap Ophir Opportunities Optimix Wholesale Australian Fixed Interest Trust Partners Group Global Multi Asset Pendal Enhanced Cash Pendal MicroCap Opportunities Perennial Value Smaller Companies Trust Pimco Capital Securities Wholesale PIMCO Global Bond Platypus Australian Equities Trust Premium Asia Income Prime Value Emerging Opportunities Principal Global Credit Opportunities Principal Global Property Securities Quay Global Real Estate Resolution Capital Global Property Securities Hedged II Russell Australian Cash Enhanced Russell International Bond Schroder Global Corporate Bond SGH Emerging Companies Specialist Property Spheria Opportunities State Street Passive Balanced Trust Strategic Cash Plus T. Rowe Price Global Equity U Ethical Enhanced Cash Portfolio U Ethical Enhanced Cash Trust U Ethical Growth Portfolio UBS Global Credit Fund UBS Property Securities Fund Vanguard Wholesale High Growth Index Yarra Australian Real Assets Securities Zurich Investments Concentrated Global Growth Zurich Investments Global Growth Share Zurich Investments Global Growth Share Scheme Zurich Investments Unhedged Global Growth Share Zurich Investments Unhedged Global Growth Share Scheme

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

8IP Australian Small Companies Aberdeen Standard Australian Equities Advance High Growth Multi Blend Advance Property Securities Multi Blend Allan Gray Australia Equity AllianceBernstein Global Equities Alphinity Sustainable Share AMP Capital Ethical Leaders Balanced AMP Capital Future Cash Flow 6 Series 1 AMP Capital High Growth AMP Capital Listed Property Trusts AMP Capital Managed Treasury AMP Capital Property Securities AMP Capital Small Australian Companies AMP Capital Specialist Australian Small Companies AMP Capital Wholesale Australian Bond AMP Capital Wholesale Global Equity Growth AMP Experts' Choice Balanced Apostle Dundas Global Equity Ardea Australian Inflation Linked Bond AU Pro D Growth Balanced Index Bell Global Equities Bennelong Australian Equities Bennelong Concentrated Australian Equities Bennelong ex-20 Australian Equities Bennelong Twenty20 Australian Equities BlackRock Concentrated Total Return Share BlackRock Enhanced Australian Bond BlackRock International Alpha Tilts BlackRock iShares Edge MSCI Australia Minimum Volatility ETF BlackRock Tactical Growth BT Enhanced Cash BT Index High Growth BT Index Moderate BT Multi-manager High Growth BT Wholesale Multi-manager Balanced BT Wholesale Multi-manager Growth

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Capital Group Global Equity (AU) CC JCB Active Bond CFS Colonial First State Wholesale Australian Small Companies CFS Colonial First State Wholesale Concentrated Australian Share CFS Colonial First State Wholesale Global Property Securities CFS FC AZ Sestante Wholesale Diversified CFS FirstChoice Wholesale Geared Growth Plus CFS FirstChoice Wholesale Global Property Securities CFS Wholesale Australian Share CFS Wholesale Premium Cash Enhanced CI Cooper Investors Asian Equities ClearView CFML Colonial Infrastructure Commonwealth Lifelink Plus (Series 2 & 3) & Lifelink (LL) Managed Growth Commonwealth Lifelink Plus (Series 2 & 3) & Lifelink (LL2) Managed Growth Cooper Investors Global Equities Unhedged Cromwell Phoenix Property Securities DDH Selector High Conviction Equity Dimensional Short Term Fixed Interest Trust Fidelity Australian Opportunities Fidelity Global Equities Fiducian Balanced FirstChoice Wholesale High Growth Flinders Emerging Companies Future Directions Australian Bond Future Directions Growth Future Directions High Growth Ganes Focused Value GCI Diversified Income Greencape Broadcap Greencape High Conviction Growth Wholesale High Growth Wholesale Hyperion Small Growth Companies (apps closed) IOOF Cash Management Trust D IOOF MultiMix Australian Shares

4 4 4

IOOF MultiMix Cash Enhanced IOOF MultiSeries 30 IPAC Diversified Investment Strategy 2 IPAC Diversified Investment Strategy 3 IPAC Diversified Investment Strategy 4 IPAC Life Choices Active 100 IPAC Life Choices Active 70 IPAC Life Choices Active 85 IPAC Life Choices Index 50 IPAC MMP Balance IPAC MMP Growth IPAC MMP High Growth IPAC North Guardian Volatility Balanced IPAC North Guardian Volatility Growth IPAC North Multi Manager Active Balanced IPAC North Multi Manager Active Growth IPAC North Professional Balanced IPAC North Professional Growth IPAC North Professional High Growth IPAC Pathways 85 IPAC Pathways 95 IPAC Select Index Balanced IPAC SIS - International Fixed Interest Strategy No 2 IPAC Summit Select Active Growth IPAC Summit Select Index Balance Ironbark Global Ex Australia Property Ironbark Global Property Securities Jaipur AM Master Jamieson Coote Bonds Active Janus Henderson Australian Fixed Interest Institutional Janus Henderson Cash Enhanced Institutional Janus Henderson Global Research Growth Katana Australian Equity Lazard Global Listed Infrastructure Legg Mason Martin Currie Emerging Markets Legg Mason Western Asset Australian Bond Lifeplan NextGen Vanguard Growth Index Lincoln Australian Growth

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4/03/2020 4:10:41 PM

20 | Money Management March 12, 2020

FE fundinfo Crown Ratings Macquarie Active Plus Equities Macquarie Australian Diversified Income Macquarie Australian Enhanced Plus Equities Macquarie Australian Equities Macquarie Australian Fixed Interest Macquarie Core Australian Fixed Interest Macquarie Enhanced Australian Fixed Interest Macquarie Global Infrastructure Trust II B Macquarie Inflation Linked Bond Macquarie Property Securities Macquarie True Index Sovereign Bond Macquarie Wholesale Australian Equities Macquarie Wholesale Property Securities Magellan Infrastructure Magellan Infrastructure (Currency Hedged) (Managed) Mercer Australian Shares for Tax Exempt Investors Mercer Australian Small Companies Mercer Australian Sovereign Bond Mercer Moderate Growth MFS Concentrated Global Equity Trust Wholesale MFS Emerging Markets Equity Trust Mirae Asset Asia Great Consumer Equity MLC Wholesale Horizon 5 Growth Portfolio Morningstar Australian Bonds MyNorth Index Balanced Netwealth Active 90/10 High Growth OC Dynamic Equity OC Premium Small Companies

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

OnePath ANZ Fixed Income Onepath Wholesale EmergCompanies Trust OnePath Wholesale Global Emerging Markets Share Onepath Wholesale High Growth Trust Pendal American Share Pendal Enhanced Credit Pendal Focus Australian Share Pendal Government Bond Pendal MidCap Pendal Sustainable Australian Fixed Interest Pengana Emerging Companies Pengana High Conviction Equities Pengana International Perpetual Select Investments Growth Platinum European PM Capital Global Companies PM Capital Long Term Investment QIC Australian Fixed Interest RARE Infrastructure Value Unhedged Resolution Capital Core Plus Property Securities Resolution Capital Global Property Securities Resolution Capital Global Property Securities Unhedged II Robeco Emerging Conservative Equity Russell Australian Bond Income Sandhurst Bendigo Socially Responsible Growth Schroder Asia Pacific Schroder Global Emerging Markets SGH 20

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

SGH Australia Plus SGH ICE SGH Tiger Smallco Investment Specialist Australian Shares Spheria Australian Smaller Companies SSgA SPDR MSCI World Quality Mix Suncorp Horizon Managed Investment Policy Growth T. Rowe Price Asia Ex Japan U Ethical Australian Equities Trust Wholesale UBS Australian Bond Fund UBS Australian Small Companies Fund UBS Cash-Plus Fund UBS International Bond Fund UBS Microcap Fund VanEck MSCI World ex Australia Quality ETF Vanguard Cash Plus Index Vanguard Global Minimum Volatility Vanguard Managed Payout Vanguard Wholesale Balanced Index Vanguard Wholesale Growth Index Walter Scott Global Equity WaveStone Australian Share Zurich Investments Global Thematic Share Zurich Investments Managed Growth Zurich Investments Unhedged International Share Zurich Investments Unhedged International Share Pool

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Aberdeen Standard Asian Opportunities Aberdeen Standard Australian Fixed Income Aberdeen Standard Australian Small Companies Aberdeen Standard Diversified Fixed Income Aberdeen Standard Ex-20 Australian Equities Aberdeen Standard Inflation Linked Bond Advance Australian Fixed Interest Multi Blend Advance Balanced Multi Blend Advance Cash Management Trust Advance Growth Multi Blend Advance International Shares Index Alphinity Australian Equity Alphinity Australian Share Alphinity Concentrated Australian Share AMP Capital Enhanced Index International Share AMP Capital Enhanced Index Share AMP Capital Equity AMP Capital Ethical Leaders Australian Share AMP Capital Global Infrastructure Securities Hedged AMP Capital Global Infrastructure Securities Unhedged AMP Capital Global Property Securities AMP Capital International Bond AMP Capital Specialist Australian Share AMP Capital Specialist Core International Share AMP Capital Sustainable Share AMP FLI AMP Balanced Enhanced Index AMP FLI Responsible Investment Leaders Growth AMP Generations Australian Equities AMP Generations Index Balanced AMP Generations Index Growth AMS Balanced Antares High Growth Shares ANZ Cash Plus ANZ Fixed Interest Trust Arrowstreet Global Equity AU Balanced Growth Portfolio AU Pro D Balanced AU Property Securities Ausbil Australian Active Equity Australian Ethical Australian Shares Australian Ethical Balanced Australian Ethical Fixed Interest AXA Generations Balanced AXA Generations Growth Balanced Balanced Wholesale Barwon Global Listed Private Equity Bendigo Diversified Fixed Interest BetaShares AMP Capital Global Property Securities BlackRock Advantage Australian Equity BlackRock Australian Share Plus BlackRock Balanced BlackRock Cash BlackRock Diversified ESG Stable BlackRock Equity BlackRock Fission Indexed International Equity BlackRock iShares Edge MSCI Australia Multifactor ETF BlackRock Wholesale International Bond BT 1940s Lifestage BT 1950s Lifestage BT Investor Choice Westpac All Australian Growth Share BT Investor Choice Westpac Australian Bond

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

BT Investor Choice Westpac Australian Tax Effective Share BT Multi-manager Balanced BT Multi-manager Growth BT Personal Portfolio Service Investment Westpac Diversified Growth BT Personal Portfolio Service Investment Westpac Tax Effective BT RREEF Global Property Securities BT Wholesale Multi-manager Australian Share BT Wholesale Multi-manager Fixed Interest BT Wholesale Multi-manager International Share BT Wholesale Partner Australian Shares Growth 1 BT Wholesale Partner International Shares Core 1 CFS Acadian Global Managed Volatility Equity-Class A CFS Asian Growth CFS Colonial First State Wholesale Australian Bond CFS Colonial First State Wholesale Conservative CFS Colonial First State Wholesale Equity Income CFS Colonial First State Wholesale Geared Global Property Securities CFS Colonial First State Wholesale High Growth CFS Colonial First State Wholesale Imputation CFS Colonial First State Wholesale Strategic Cash CFS FC AZ Sestante Wholesale Growth CFS FC Baillie Gifford W LT Global Growth CFS FirstChoice Acadian Wholesale Australian Equity CFS FirstChoice Wholesale Asian Share CFS FirstChoice Wholesale Australian Small Companies CFS FirstChoice Wholesale Defensive CFS FirstChoice Wholesale Emerging Markets CFS FirstChoice Wholesale Fixed Interest CFS FirstChoice Wholesale Growth CFS FirstChoice Wholesale Multi-Index Balanced CFS MIF Future Leaders CFS Wholesale Global Corporate Bond CFS Wholesale Global Emerging Markets Sustainability Clime Australian Equities Colchester Global Government Bond A Colchester Global Government Bond I Commonwealth Lifelink Plus (Series 2 & 3) & Lifelink (LL3) Managed Growth Commonwealth Lifewise Series 4 & 5 Managed Growth Conservative Index Cromwell Australian Property DDH Cash IDPS DDH Fixed Interest Defensive Index Dimensional Australian Core Equity Trust Dimensional Australian Large Company Trust Dimensional Australian Small Company Trust Dimensional Global Bond Trust Dimensional Global Large Company Trust Dimensional Global Real Estate Trust Dimensional Global Small Company Trust Dimensional Global Sustainability Trust Dimensional World Allocation 70/30 Trust DNR Australian Equities High Conviction Eley Griffiths Small Companies Fidelity Australian Equities Fidelity India Fiducian Australian Shares Fiducian Australian Smaller Company Shares

3 3 3

Fiducian Global Smaller Companies and Emerging Markets Fiducian International Shares Fiducian Property Securities Fiducian Ultra Growth FirstChoice Wholesale Balanced Franklin Global Aggregate Bond Franklin Global Growth Franklin Templeton Australian Equity Freehold Australian Property Future Directions Asia ex Japan Future Directions Balanced Future Directions International Bond GMO Emerging Markets Trust Grant Samuel Tribeca Australian Smaller Companies Growth Hyperion Australian Growth Companies IFP Global Franchise Invesco Wholesale Australian Share Invesco Wholesale Global Property Securities Hedged IOOF Cash Management Trust IOOF MultiMix Conservative IOOF MultiMix Diversified Fixed Interest IOOF Profile 85 IOOF Profile Australian Shares IPAC Classic Portfolio 2 IPAC Classic Portfolio 3 IPAC Life Choices Active 50 IPAC Life Choices Index 70 IPAC MMP Australian Share Sector IPAC MMP International Share Sector IPAC MMP Secure IPAC MMP Secure Growth IPAC North Guardian Volatility Moderately Defensive IPAC North Multi Manager Active Defensive IPAC North Multi Manager Active Moderately Defensive IPAC North Professional Conservative IPAC North Professional Moderately Conservative IPAC Pathways 70 IPAC Pathways Australian Shares IPAC Pathways International Shares Unhedged IPAC Select Index Moderately Defensive IPAC SIS - Australian Cash Strategy No 1 IPAC SIS - Australian Share Strategy No 1 IPAC SIS - Australian Share Strategy No 3 IPAC SIS - International Share Strategy No 1 IPAC SIS Inflation Plus 4 IPAC SIS Inflation Plus 6 IPAC SIS Inflation Plus 7 IPAC Summit Select Active Balanced IPAC Summit Select Active Defensive IPAC Summit Select Active Moderately Defensive IPAC Summit Select Index Defensive IPAC Summit Select Index Moderately Defensive Ironbark Karara Australian Small Companies Ironbark Paladin Property Securities iShares Australian Listed Property Index Janus Henderson Cash Janus Henderson Global Fixed Interest Total Return JPMorgan Global Research Enhanced Index Equity LDI Connect 7 Portfolio Legg Mason Brandywine Global Fixed Income Trust Legg Mason Brandywine Global Opportunistic Fixed Income

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4/03/2020 4:10:57 PM

March 12, 2020 Money Management | 21

FE fundinfo Crown Ratings Lifeplan NextGen PIMCO Global Bond Lifeplan NextGen Vanguard Balanced Index Loftus Peak Global Disruption Macquarie Australian Pure Indexed Equities Macquarie Diversified Treasury AA Macquarie Dynamic Bond Macquarie Global Infrastructure Trust II A Macquarie Global Multi-Sector Fixed Income Macquarie Hedged Index Global Infrastructure Securities Macquarie International Equities Macquarie International Infrastructure Securities Unhedged Macquarie Term Cash Macquarie Treasury Macquarie True Index Emerging Markets Macquarie Yield Enhanced Australian Shares Mason Stevens Credit Mercer Australian Shares Mercer Australian Shares Plus Mercer Cash Term Deposit Units Mercer Conservative Growth Mercer Defensive Mercer Emerging Markets Debt Mercer Emerging Markets Shares Mercer Global Credit Mercer Global Listed Infrastructure Mercer Global Listed Property Mercer Global Small Companies Shares Mercer Income Plus Mercer International Shares MFS Blended Research Global Equity Trust MFS Global Equity Trust Milliman Managed Risk Global Shr Milliman Mgd Risk Australian Shr MLC Navigator Access Pre Select High Growth (Access Class) MLC Pre Select Growth MLC Pre Select High Growth MLC Wholesale Australian Share MLC Wholesale Australian Share Index MLC Wholesale Diversified Debt MLC Wholesale Global Share MLC Wholesale Horizon 4 Balanced Portfolio Morningstar Global Property Securities (Hedged) Morningstar High Growth Morningstar International Shares Unhedged Mutual Cash Term Deposits and Bank Bills MyNorth Index Moderately Defensive Nanuk New World Netwealth Active 50/50 Balanced

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Nikko AM Growth OnePath ANZ Private International Fixed Interest Onepath Wholesale Balanced Trust Onepath Wholesale Diversified Fixed Interest Trust Onepath Wholesale Managed Growth Trust Optimix Wholesale Balanced Trust Optimix Wholesale Enhanced Cash Trust B Optimix Wholesale Global Share Trust Optimix Wholesale Global Smaller Companies Share Trust Optimix Wholesale Growth Trust Pan-Tribal Global Equity Pendal Active Balanced Pendal Active Growth Pendal Active High Growth Pendal Australian Equity Pendal Australian Share Pendal Ethical Share Pendal Fixed Interest Pendal Global Emerging Markets Opportunities-WS Pendal Global Fixed Interest Pendal Global Property Securities Pendal Imputation Pendal Japanese Share Pendal Property Investment Pendal Property Securities Pendal Stable Cash Plus Pendal Sustainable Australian Share Pendal Sustainable International Fixed Interest Pengana Global Small Companies Perpetual Charitable Endowment Perpetual Global Share Perpetual Private International Share Perpetual Pure Microcap Perpetual Select Investments Balanced Perpetual Wholesale International Share Perpetual Wholesale Split Growth PIMCO Australian Bond PIMCO Diversified Fixed Interest Platinum Asia Platinum Japan Plato Australian Shares Core Platypus Systematic Growth Premium Asia RARE Emerging Markets RARE Infrastructure Income Realindex Aus Small Co Realindex Australian Share Redpoint Global Infrastructure

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Resolution Capital Core Plus Property Securities II Russell Australian Bond Russell Australian Opportunities Russell Australian Shares Russell Balanced Russell Global Opportunities Russell Growth Russell High Growth Russell International Property Securities Russell International Shares Russell Investments Portfolio Series - Growth Schroder Fixed Income Schroder Real Return CPI Plus 5% SGH LaSalle Concentrated Global Property Smallco Broadcap Smarter Money Smarter Money Higher Income Solaris Australian Equity (Total Return) Solaris Core Australian Equity Solaris High Alpha Australian Equity Standish Global Bond State Street Australian Equities Index Trust State Street Global Index Plus Trust State Street International Equities Index Trust Strategic Global Property Suncorp Horizon Managed Investment Policy Managed Suncorp RSA Money Accumulator SAMA Manage Accumulation Shares Suncorp Vested Investment Plan VIP Fixed Interest Suncorp Vested Investment Plan VIP Growth T. Rowe Price Australian Equity TAAM New Asia The Trust Company Diversified Property Third Link Growth U Ethical Australian Equities Trust UBS Clarion Global Infrastructure Securities Fund UBS Clarion Global Property Securities Fund UBS Diversified Fixed Income Fund UBS IQ Morningstar Australia Dividend Yield ETF UBS Tactical Beta Fund - Growth Vanguard Wholesale Conservative Index Westpac Simple Super Managed Investment Westpac Variable Income Plan Growth Plus Westpac Variable Income Plan Managed Growth Yarra Emerging Leaders Yarra Global Small Companies Zurich Investments Emerging Markets Equity Scheme Zurich Money Maker Series Managed

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Aberdeen Standard Actively Hedged International Equities Aberdeen Standard International Equity Aberdeen Standard Multi-Asset Real Return Aberdeen Standard Select Investment Actively Hedged International Equities Advance Australian Shares Multi Blend Advance International Fixed Interest Multi Blend Advance International Shares Multi Blend Advance Moderate Multi Blend Affluence Investment Affluence LIC AllianceBernstein Dynamic Global Fixed Income Alpha Australian Blue Chip Alpha Diversified Income Alpha Infrastructure Alpha Property Securities Altrinsic Global Equities Trust AMP Capital Conservative AMP Capital Core Retirement AMP Capital Future Cash Flow 12 Series 1 AMP Capital Future Cash Flow 9 Series 1 AMP Capital Premium Growth AMP Capital Specialist Diversified Fixed Income AMP Capital Wholesale Cash Management Trust AMP Dynamic Balanced AMP EFM Fixed Interest AMP Experts' Choice Conservative AMP Experts' Choice Diversified Interest Income AMP Experts' Choice International Shares AMP Experts' Choice Short Term Money Market AMP Flex Lifetime Investments S2 Resolution Capital Core Plus Property Securities AMP FLI AMP Property Securities AMP Generations Cash Management AMP Generations Index Moderately Defensive AMP Generations International Equities AMP MyNorth Retirement AMS Moderately Conservative Antares Australian Equities Professional Antares Elite Opportunities Professional APN Property For Income

2 2 2

APN Property For Income 2 Armytage Australian Equity Income Armytage Strategic Opportunities Atrium Evolution Series - Diversified AEF 9 AU Wingate Spectrum Ausbil Australian Emerging Leaders Australian Ethical Advocacy Australian Ethical Diversified Shares Australian Ethical Income Australian Ethical International Shares AXA Generations Defensive AXA Generations Moderately Defensive AXA Managed Investment Plan Australian Shares Portfolio AXA Managed Investment Plan Fixed Interest Portfolio AXA Managed Investment Plan Guaranteed Portfolio AXA Managed Investment Plan International Portfolio AXA Wholesale Australian Equity Value Barrow Hanley Global Equity Trust Bendigo Global Share Bentham Asset backed Securities Bentham Global Income Bentham Global Income NZD Bentham Syndicated Loan Bentham Syndicated Loan NZD BetaShares Managed Risk Australian Share BetaShares Managed Risk Global Share BlackRock Australian Share BlackRock iShares Edge MSCI World Minimum Volatility ETF BlackRock iShares Edge MSCI World Multifactor ETF BT Classic Investment BT Diversified Share BT Index Defensive BT International BT Investor Choice Westpac All Australian Tax Effective Share BT Investor Choice Westpac Balanced Growth BT Investor Choice Westpac Dynamic Growth BT Multi-manager Fixed Interest BT Personal Portfolio Service Investment Westpac Australian Property BT Smaller Companies BT Technology

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

BT Wholesale Multi-manager Conservative Candriam Sustainable Global Equity Capital Global Small Cap Capital Group World Dividend Growers (AU) Celeste Australian Small Companies CFS Acadian Australian Equity High Yield-Class A CFS Colonial First State Wholesale Diversified Fixed Interest CFS Colonial First State Wholesale Global Listed Infrastructure Securities CFS Colonial First State Wholesale Property Securities CFS FC WS Inv FirstChoice Wholesale Diversified CFS FirstChoice Acadian Wholesale Geared Global Equity CFS FirstChoice Wholesale Australian Share CFS FirstChoice Wholesale Geared Global Share CFS FirstChoice Wholesale Global Infrastructure Securities CFS FirstChoice Wholesale Lower Volatility Australian Share CFS FirstChoice Wholesale Moderate CFS FirstChoice Wholesale Multi-Index Growth CFS FirstChoice Wholesale Property Securities CFS FirstChoice WS Investments FirstRate Wholesale Saver CFS Mezzanine FirstChoice Multi-Index Moderate CFS Realindex Enhanced Equal Weighted Global Share CFS Stewart Investors Global Emerging Markets CFS Stewart Investors Wholesale Global Emerging Markets Leaders CFS Stewart Investors Wholesale Worldwide Leaders CFS Stewart Investors Wholesale Worldwide Sustainability CFS T. Rowe Price Wholesale Australian Equity CFS Wholesale Global Health & Biotechnology CFS Wholesale Institutional Cash CFS Wholesale Premium Cash ChinaAMC China Opportunities CI Australian Equities ClearView CFML Fixed Interest ClearView Managed Investments Diversified Growth ClearView Rollover Bond Managed Clime Australian Value Colchester Global Government Bond N Commonwealth Lifewise Series 4 & 5 Capital Secure Conservative Wholesale Crescent Wealth Cash

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4/03/2020 4:11:09 PM

22 | Money Management March 12, 2020

FE fundinfo Crown Ratings DDH Aggressive Growth DDH Australian Shares DDH Balanced Growth DDH Preferred Income Defensive Wholesale Dimensional Australian Core Imputation Trust Dimensional Five Year Diversified Fixed Interest Trust Dimensional Global Core Equity Trust Dimensional World Allocation 50/50 Trust DMG Diversified Portfolio EQT Core International Equity EQT Flagship EQT Growth EQT Wholesale Flagship Fidelity China Fiducian Capital Safe Fiducian Capital Stable FirstChoice Wholesale Global Share Firstmac High Livez Foundation Assertive Freehold A-REITs & Listed Infrastructure Future Directions Emerging Markets IML Australian Share IML Equity Income Infrastructure Partners Investment Core Invesco Senior Secured Loans Invesco Wholesale Australian Smaller Companies Invesco Wholesale Senior Secured Income IOOF Balanced (Fee Option 1) IOOF Capital Secure Trust IOOF MultiMix Capital Stable IOOF MultiMix International Shares IOOF Profile 65 IOOF Profile 75 IOOF Profile International Shares IPAC Diversified Investment Strategy 1 IPAC Diversified Investment Strategy 5 IPAC Life Choices Alternative Balanced IPAC Life Choices Premium Growth IPAC North Multi Manager Active High Growth IPAC North Professional Alternative Balanced IPAC Pathways 30 IPAC Pathways Australian Property Securities IPAC Select Index Defensive IPAC Summit Select Active High Growth IPAC Summit Select Alternative Balanced IPAC Summit Select Index High Growth Ironbark Copper Rock Global All Cap Share Ironbark Karara Australian Share Janus Henderson Diversified Credit Janus Henderson INTECH Global All Country Managed Volatility ex-Australia L1 Capital Australian Equities Lazard Global Equity Franchise Lazard Global Small Caps LDI Connect 3 Portfolio Legg Mason Martin Currie Core Equity Legg Mason Martin Currie Diversified Growth Legg Mason Martin Currie Diversified Income Legg Mason Martin Currie Select Opportunities Legg Mason QS Investors Global Equity Lifeplan Wealth Builder Australian Share Strategy Macquarie Enhanced Property Securities Macquarie Global Income Opportunities Macquarie Hedged Index Global Real Estate Securities Macquarie International Infrastructure Securities Macquarie Life Capital Stable Macquarie Multi-Asset Opportunities Macquarie Polaris Global Equity Macquarie True Index Cash

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Aberdeen Standard Emerging Opportunities Aberdeen Standard Multi Asset Income Acadian Sus Wholesale Glb Equity Adelaide Cash Management Trust Advance Australian Shares ARS Advance Defensive Multi Blend Advance Defensive Yield Multi-Blend Affluence Small Company Allan Gray Australia Stable Alluvium Global Alpha Enhanced Yield Alpha Global Opportunities Altius Bond Altius Sustainable Bond AMP AMP FLI Monthly Income Trust No 2 AMP Capital Corporate Bond AMP Capital Dynamic Markets AMP Capital Equity Income Generator AMP Capital Income Generator AMP Capital Multi-Asset

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Macquarie True Index Global Real Estate Securities Macquarie Walter Scott Emerging Markets Maple-Brown Abbott Asia Pacific Trust Maple-Brown Abbott Asian Investment Trust MCG K2 Advisors Endowment Strategy Mercer Australian Inflation Plus Mercer Cash-Cash Units Mercer Passive Australian Listed Property Mercer Passive Global Listed Property Mercer Socially Responsible Australian Shares Mercer Socially Responsible Global Shares Microequities Global Value Microcap Milliman Mgd Risk M-Index High Gro MLC National Australia Investment Trust Monthly Income MLC National Australia Investment Trust Monthly Income NEF MLC Navigator Access Pre Select Growth (Access Class) MLC Pre Select Balanced MLC Wholesale Global Property MLC Wholesale Horizon 3 Conservative Growth Portfolio MLC Wholesale Horizon 7 Accelerated Growth Portfolio MLC Wholesale Inflation Plus Assertive Portfolio MLC Wholesale Inflation Plus Moderate Portfolio MLC Wholesale Property Securities Morningstar Australian Shares Morningstar Balanced Morningstar Cash Morningstar Conservative Morningstar Global Inflation Linked Securities Hedged Morningstar Growth Morningstar Growth Real Return Morningstar High Growth Real Return Morningstar International Bonds (Hedged) Mutual 50 Leaders Australian Shares MyNorth Index Defensive MyNorth Index High Growth Nikko AM Balanced Nikko AM Conservative Omega Global Corporate Bond OnePath ANZ Enhanced Yield OnePath ANZ Private Global Equities Trust OnePath OA Inv Pfolio OptiMix Global Emerging Markets Share Trust EF Onepath Wholesale Capital Stable Trust Onepath Wholesale Sustainable Investments Australian Share Trust Optimix Wholesale Australian Share Trust Optimix Wholesale Conservative Trust Optimix Wholesale Moderate Trust Packer & Co Investigator Trust PanAgora Dynamic Global Equity (Ex Tobacco) Paradice Global Small Cap Pendal Balanced Returns Pendal Concentrated Global Share Pendal Core Global Share Pendal International Share Trust Pendal Managed Cash Pendal Monthly Income Plus Pendal Smaller Companies Pendal Sustainable International Share Pengana International Ethical Opportunity Perpetual Balanced Growth No 2 Perpetual Charitable and Community Investor Perpetual Credit Income Perpetual Exact Market Cash Perpetual Growth Opportunities Perpetual Private Australian Share Perpetual Private Fixed Income Perpetual Private Real Estate Perpetual Select Investments Diversified

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

AMP Capital Wholesale Global Equity Value AMP Experts' Choice Australian Shares AMP FLI AMP Conservative Enhanced Index AMP FLI AMP Monthly Income Trust No 1 AMP FLI Responsible Investment Leaders Conservative AMP Generations Diversified Credit AMP Generations Platinum International Equity Antares Dividend Builder Professional Antares Income Antares Listed Property Antipodes Global Long Only ANZ Equity Imputation Trust ANZ Equity Trust No 1 ANZ Investment Bond Capital Guaranteed ANZ OA Inv Pfolio Onepath Conservative ANZ OA Inv Pfolio OnePath Global Property Securities ANZ Wholesale Select Leaders Trust APN AREIT APSEC Atlantic Pacific Australian Equity AtlasTrend Online Shopping Spree

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

2

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Perpetual Select Investments Geared High Growth Perpetual Wholesale Balanced Growth Perpetual Wholesale Conservative Growth Perpetual Wholesale Diversified Growth Perpetual Wholesale Smaller Companies Perpetual Wholesale Smaller Companies 2 PIMCO Australian Short-Term Bond PIMCO Global Credit Pimco Income Platinum International Brands Platinum International Health Care Platinum Unhedged Plato Australian Shares Income Plato Australian Shares Low Volatility Income Plato Global Shares Income Prime Value Opportunities Profile Accumulation Portfolio Profile Preservation Portfolio RARE Infrastructure Value Hedged Realindex Global Share Realindex Global Share (Screened) Russell Australian Cash Russell Conservative Russell Diversified 50 Russell Emerging Markets Russell Global Bond Russell Global Listed Infrastructure Russell Investments Portfolio Series - Balanced Schroder Australian Equity Schroder Global Core Schroder Global Quality Schroder Global Sustainable Equity Schroder Real Return CPI Plus 3.5% Schroder Strategic Growth Schroder Wholesale Australian Equity SGH LaSalle Global Listed Property Securities Specialist Global Shares Spectrum Strategic Income Spheria Australian Microcap Spire Copper Rock Capital Global Smaller Companies SPW Global Income State Street Australian Equity State Street Global Equity State Street Multi-Asset Builder Stonehouse Core Value Portfolio Strategic Australian Equity Strategic Fixed Interest The Montgomery The Trust Company Bond Touchstone Index Unaware UBS Balanced Investment Fund UBS Income Solution Fund UBS International Share Fund UBS IQ Morningstar Australia Quality ETF UBS Tactical Beta Fund - Balanced Vanguard Cash Reserve Westpac Australian Property Securities Yarra Australian Equities Yarra Enhanced Income Yarra Investment Yarra Leaders Zurich Investment Plan Balanced Zurich Investment Plan Fixed Interest Zurich Investment Plan Government Securities Zurich Investments Australian Property Securities Zurich Investments Emerging Markets Equity Zurich Investments Small Companies Zurich Investments Small Companies Scheme Zurich Money Maker Series Property

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Atrium Evolution Series - Diversified AEF 5 Atrium Evolution Series - Diversified AEF 7 AU A-REIT Australian Equity Income (CNA) Australian Share AXA Generations Alternative Balanced AXA Generations High Growth AXA Guaranteed Investment Bond AXA Managed Investment Plan Managed Portfolio AXA Managed Investment Plan MultiManager Secure Bateau Global Opportunities BetaShares Australian Dividend Harvester BetaShares S&P 500 Yield Maximiser BlackRock Concentrated Industrial Share BlackRock Enhanced Cash BlackRock Fixed Income Global Opportunities Aust BlackRock Global Allocation BlackRock Global Multi Asset Income BT Cash Management Trust BT Classic Investment BT Balanced Returns

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

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FE fundinfo Crown Ratings BT Classic Investment BT Split Growth BT Classic Investment BT Tax Effective Income BT Income Plus BT Investor Choice Westpac Australian Property Securities BT Investor Choice Westpac Conservative Growth BT Investor Choice Westpac Moderate Growth BT Personal Portfolio Service Investment Westpac Moderate Growth BT Westpac Cash Management Trust CFS Colonial First State Australian Share Growth CFS Colonial First State Multi-Asset Real Return Class A CFS Colonial First State Wholesale Global Credit Income CFS Colonial First State Wholesale Target Return Income CFS FC AZ Sestante Wholesale Conservative CFS FirstChoice Wholesale Investments FirstRate Wholesale Term Deposit - 10 year CFS FirstChoice Wholesale Investments FirstRate Wholesale Term Deposit - 15 year CFS FirstChoice Wholesale Investments FirstRate Wholesale Term Deposit - 2 year CFS FirstChoice Wholesale Investments FirstRate Wholesale Term Deposit - 3 year CFS FirstChoice Wholesale Investments FirstRate Wholesale Term Deposit - 5 year CFS FirstChoice Wholesale Investments FirstRate Wholesale Term Deposit - 7 year CFS FirstChoice Wholesale Multi-Index Conservative CFS MIF Developing Companies CFS Wholesale Global Technology & Communications ClearView CFML Cash ClearView CFML Listed Property ClearView CFML RARE Emerging Markets ClearView Managed Investments Australian Shares Growth ClearView Managed Investments Diversified Balanced ClearView Managed Investments Diversified Stable Commonwealth Easy Saver Plus - Balanced Commonwealth Easy Saver Plus - Capital Guaranteed Commonwealth Easy Saver Plus - Capital Secure Commonwealth Easy Saver Plus - Guaranteed Cash Commonwealth Easy Saver Plus - Managed Growth (LM units) Commonwealth Easy Saver Plus - Managed Growth (PM units) Commonwealth Lifewise Series 4 & 5 Capital Guaranteed Conservative Crescent Wealth Australian Equity Crescent Wealth International Equities Custom Portfolio Solutions - Global Managers Trust DDH Conservative Growth Dimensional Australian Value Trust Dimensional Emerging Markets Trust Dimensional Global Value Trust Dimensional Two Year Diversified Fixed Interest Trust Dimensional World Equity Trust DMP Australian Small Caps Trust Ellerston Australian Share Ellerston Overlay Australian share Epoch Global Equity Shareholder Yield (Unhedged) ETFS S&P 500 High Yield Low Volatility ETF Fidante Credit Suisse Global Private Equity Fiducian Diversified Social Aspirations Fiducian India Fiducian Technology FirstChoice Wholesale Conservative Forager Australian Shares Forager International Shares Foundation Balanced Foundation Conservative Franklin Templeton Multisector Bond Future Directions Conservative Future Directions International Share GAM FCM ILS Yield Gleneagle Income Plus IML Australian Small Companies IML Concentrated Australian Share IML Future Leaders IML Industrial Share IML Small Caps Invesco Wholesale Diversified Growth Invesco Wholesale Global Opportunities IOOF Balanced (Fee Option 2) IOOF Growth Shares IOOF Income IOOF MultiMix Wholesale Australian Property Trust Ordinary IOOF Profile 45 IOOF Profile 55 IOOF Profile 95 IOOF Profile Diversified Fixed Interest IOOF Property Income Plus IOOF Value Shares IPAC AMP Capital Income Generator

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

IPAC Classic Enhanced Growth Portfolio IPAC Classic Portfolio 1 IPAC Classic Value Portfolio IPAC Life Choices Income Generator IPAC MMP International Share Hedged Sector IPAC Pathways Value IPAC Select Income Generator IPAC SIS - International Share Strategy No 2 IPAC SIS Inflation Plus 2 IPAC Summit Select Income Generator Ironbark Copper Rock Emerging Markets Opportunities Janus Henderson Global Equity Income Janus Henderson Tactical Income JPMorgan Global Strategic Bond Kinetic Emerging Companies Lazard Australian Equity Lazard Defensive Australian Equity Lazard Emerging Markets Equity Lazard Emerging Markets Total Return Debt Lazard Select Australian Equity LDI Connect 20 Portfolio Legg Mason Martin Currie Equity Income Legg Mason Martin Currie Ethical Values with Income Legg Mason Martin Currie Property Securities Legg Mason Martin Currie Tactical Allocation Life Settlements Wholesale Lincoln Australian Income Loomis Sayles Credit Opportunities Loomis Sayles Senior Floating Rate Loan MacKay Shields Unconstrained Bond Macquarie Arrowstreet Emerging Markets Macquarie Asia New Stars No 1 Macquarie Capital Stable Macquarie Income Opportunities Maple-Brown Abbott Australian Equity Trust Maple-Brown Abbott Australian Share Maple-Brown Abbott Diversified Investment Trust Maple-Brown Abbott Global Listed Infrastructure Maple-Brown Abbott Responsible Investment Maple-Brown Abbott Sharemarket MCP Australian Share Income Mercer Diversified Shares Merlon Australian Share Income Microequities Deep Value Microequities High Income Value Microcap MLC Navigator Access Pre Select Balanced (Access Class) MLC Navigator Access Pre Select Conservative (Access Class) MLC Pre Select Conservative MLC Wholesale Horizon 1 Bond Portfolio MLC Wholesale Horizon 2 Income Portfolio MLC Wholesale IncomeBuilderTM MLC Wholesale Inflation Plus Conservative Portfolio Morningstar Balanced Real Return Morningstar Moderate Morningstar Moderate Real Return Morningstar Multi Asset Real Return Morningstar Multi-Asset All Growth Morphic Global opportunities MyNorth Dynamic Balanced Nikko AM Australian Share Concentrated Nikko AM Australian Share Concentrated - LT Nikko AM Australian Share Income Nikko AM Australian Share Wholesale Novaport Microcap Novaport Smaller Companies OA Inv Pfolio Onepath Cash Shares OA Inv Pfolio Onepath Heine Property Securities OA Inv Pfolio Onepath Tax Effective Income Omega Global Listed Infrastructure Onepath Diversified High Yield Trust Wholesale Units OnePath OA Inv Pfolio Diversified High Yield Trust OnePath OA Inv Pfolio Flexible Term Deposit Plus EF OnePath OA Inv Pfolio OnePath Global Property Securities OnePath OA Inv Pfolio Optimix Enhanced Cash Trust OnePath OA IP-Altrinsic Global Equities NEF Onepath Wholesale Australian Share Trust Onepath Wholesale Blue Chip Imputation Trust Onepath Wholesale Property Securities Trust Optimal Japan and Asia Trust Optimix Enhanced Cash Trust Optimix Wholesale High Growth Trust Optimix Wholesale Property Securities Trust Orbis Global Equity Australia Registered PanAgora Dynamic Global Equity Pendal Active Conservative Pendal Active Moderate Pendal Asian Share Pendal Dynamic Global Equity Pendal European Share

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Pendal Sustainable Conservative Pengana Australian Equities Pengana Australian Equities Income Pengana International Ethical Pengana WHEB Sustainable Impact Perennial Value Australian Shares Trust Perennial Value Shares for Income Trust Perennial Value Shares Wholesale Trust Perennial Value Wealth Defender Australian Shares Trust Perpetual Australian Share Perpetual Cash Management Perpetual Diversified Income Perpetual Diversified Real Return Perpetual High Grade Treasury Perpetual Pure Value Share Perpetual Select Investments Conservative Perpetual Wholesale Australian Share Perpetual Wholesale Concentrated Equity Perpetual Wholesale Ethical SRI Perpetual Wholesale Income Share Perpetual Wholesale Industrial Share Pimco Dynamic Bond PIMCO Target Return Platinum Global Platinum International Platinum International Technology PM Capital Asian Companies PM Capital Australian Companies Premium Asia Property Premium China Presima Global Property Securities Concentrated Prime Value Growth Prime Value Imputation QIC Bond Plus QIC Liquid Alternatives Realindex Emerging Markets Realm High Income Reitway Global Property Portfolio Russell Investments Multi-Asset Growth Strategy Plus Russell Investments Multi-Asset Growth Strategy Retail Russell Investments Multi-Asset Income Strategy Russell Investments Portfolio Series - Conservative Russell Multi-Asset Growth Strategy Sandhurst Cash Common Sandhurst Strategic Income Sandon Capital Activist Schroder Emerging Markets Sustainable Schroder Equity Opportunities Schroder Global Value Unhedged Schroder Real Return SG Hiscock Premier Property Opportunities SG Hiscock Property SG Hiscock Property Opportunities SG Hiscock Property Opportunities (Closed) SGH Property Income Specialised Fixed Income Strategy 2 Specialist Diversified Fixed Interest Specialist Dynamic Allocation Strategic Global Strategic International Equity Suncorp Horizon Managed Investment Policy Cash Suncorp Personal Investment Plan Capital Stable Suncorp Vested Investment Plan VIP Australian Shares T. Rowe Price Dynamic Global Bond Talaria Global Equity Foundation Units Talaria Global Equity Wholesale Units Templeton Global Bond Plus Templeton Global Equity Templeton Global Trust THB US Micro Cap The Supervised The Trust Company Australian Share The Trust Company Imputation The Trust Company Philanthropy UBS Australian Share Fund UBS Australian Small Companies SIV Fund UBS Defensive Investment Fund UBS HALO Australian Share Fund UBS Tactical Beta Fund - Conservative Vanguard Global Value Equity Westpac Simple Super Bank Deposit Westpac Variable Income Plan Cash Guaranteed Westpac Variable Income Plan Managed Stable Wisdom Australian Equities Yarra Ex-20 Australian Equities Yarra Income Plus Zurich Investment Plan Australian Property Securities Zurich Investment Plan Capital Stable Zurich Investment Plan Managed Share

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

The tables and data contained in the Investment Centre are intended for use by professional investors and advisers only and are not to be relied upon by any other persons.

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FASEA EXAM DOESN’T GET PASSING GRADE The industry has now had four rounds of FASEA exams, but Chris Dastoor writes advisers – particularly those who have passed – are still as confused and unhappy about the process as ever.

WITH FOUR FINANCIAL Adviser Standards and Ethics Authority (FASEA) exams now completed, 5,257 advisers have sat the first three exams, with another 2,200 who sat the February exam.

Despite the anxiety in the industry over sitting the exam, the lowest pass rate was 86% – which was in the December exam.

However, despite the high pass rate, many advisers were dissatisfied with the conditions of the exam.

In an attempt to gauge the sentiment for the exam and find out why advisers were unhappy with the exam despite passing it, Money Management published an

01MM120320_16-35.indd 24

open survey to gather feedback, and received over 250 responses.

Some 89.6% of the respondents said they had taken the exam, 75.4% had passed it and the overwhelming majority (97.9%) of respondents said they had only needed to sit it once, but the feedback was universally negative regardless.

Advisers were particularly unhappy with how the exam was conducted, particularly when it came to how they were treated on the day and access to personal comforts like water, tissues, or using the bathroom.

They were also critical of the

questions – how they were worded, the ambiguity of the questions, and whether they were relevant to their field of expertise.

Money Management contacted FASEA to find out why the exam was conducted this way, how they felt about adviser concerns, and if they planned to make any changes.

Stephen Glenfield, FASEA chief executive, defended the exam’s methods and said FASEA relied on the Australia Council for Education Research (ACER) to conduct the exams.

“In conjunction with our exam provider ACER, the Standards

Authority takes candidate feedback seriously,” Glenfield said.

“Together with ACER and its venue providers, we discuss all feedback to determine improvements.”

The pass mark was one of the biggest queries advisers had as they did not know what grade they received whether they passed or failed.

Glenfield said they used a method of ‘scaled scoring’ which was the best practice for ‘high stakes’ exam scores like accountancy, law and medicine.

“The scaled score for a given exam takes into account the

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FASEA Exam

difficulty level of the questions in that exam to ensure that a consistent standard is applied across all exams,” Glenfield said.

“The scaled score is determined once all results have gone through extensive psychometric analysis.

“The ‘pass mark’ for each exam is set by an expert independent review panel using formalised and internationally accepted standard setting procedures.”

This meant the starting point was 65%-74%, which was the equivalent of a university credit grade.

“To ensure equity and fairness for all candidates, the ‘pass mark’ will be reviewed for each exam cycle and may be adjusted to account for differences in exam difficulty and to maintain standards,” Glenfield said.

CONDITIONS When it came to exam conditions being fair, 52.9% said ‘yes’, 34.4% said ‘no’ and 12.7% said it was ‘hard to say’.

Among the biggest complaints about the exam was that, despite being open-book, it had intense conditions that matched a closedbook exam.

“Aggressive, antagonistic instructors. It was not really an open-book exam either and the indexing and search capability in the software was a hindrance, not an aid,” a respondent said.

“I am 47, and have an undergrad and masters. I have sat numerous exams and I would say this has been the worst exam experience,” another respondent said.

Advisers were unhappy with the restrictions on their desk, including access to simple items like water and tissues.

“It was way, way overboard. No water bottles, tissues etc for a three-and-a-half-hour exam. This just meant that if one person

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wanted a drink of water it interrupted everyone,” a respondent said.

“To go to the toilet, you had to raise your hand and await the supervisor. It seemed as though they thought we were all going to cheat and it was their job to catch us.” “[We were] treated like school children, followed to the toilet, and water left at the front table,” another respondent said.

Glenfield said as a result of previous feedback, together with ACER and its venue providers, they had discussed changes to this issue which would take effect from the April exam.

“As a result of candidate requests to have water at their desks during the exam, FASEA has agreed with venue providers that future exams will allow candidates to have clear water bottles at their workstation,” Glenfield said.

QUESTION? Only 19.7% said the exam questions were fair, with a significant majority of advisers finding the questions unfair.

Many in the industry already had experience in tertiary education, including exams, and felt the FASEA exam did not compare in fairness.

“I have never failed an exam, but despite having 20 years’ experience, and swotting beforehand I could make no guess at how I went,” a respondent said.

“A complete waste of time, and a detrimental effect on one’s mental health, knowing failure can mean the end of your career,” another respondent said.

“This was the most convoluted and poorly-worded exam I have ever sat, in terms of making someone a better adviser, it did absolutely nothing,” another respondent said.

Chart 1: Were the exam conditions fair?

Chart 2: Were the exam questions fair?

Source: Money Management

The exam is three-and-a-halfhours (210 minutes) including 15 minutes reading time – for perspective, that’s longer than the longest theatrical release in The Lord of the Rings film series which was 201 minutes (The Return of the King, if you were wondering).

Despite the epic length of the exam, many advisers still complained of there being too many questions to complete in the allotted time.

“Three hours, 15 minutes for 78 questions does not leave enough time to think about a question let alone answer the full range, under time pressure, throughout the exam,” a respondent said.

Glenfield said the length of the exam was consistent with other ‘high stakes’ exams.

“ACER’s data analysis has not identified any issues with the

length of the exam as the majority of candidates are completing all questions in the exam within the allocated time,” Glenfield said.

Another complaint was learning disabilities and those who spoke English as a second language were not accounted for, which becomes a greater issue when combined with the ambiguous questioning line.

“If English isn’t your first language it would be very hard as the questions are ambiguous,” a respondent said.

Given the multicultural nature of our country, this could have the effect of reducing advisers who were able to provide advice to certain communities.

“Results for each exam are subject to ACER’s comprehensive marking approach which includes analysis for differences between Continued on page 26

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Continued from page 25 candidates with English as a second language, as well as other demographic characteristics,” Glenfield said.

When it came to accommodating learning disabilities, Glenfield said candidates had the option to apply for reasonable adjustments prior to sitting the exam.

“The application process for this is set out in the candidate information booklet available when a candidate registers for the exam,” Glenfield said.

“ACER will assess each candidate based on their application and consider advice from their medical practitioner.

Appropriate, reasonable adjustments would be provided.”

Another adviser said they had injured themselves two weeks before the exam – when the deadline for special provisions was a month earlier.

They had the option for deferment of the exam, which the respondent noted was fine in a capital city, but rural advisers lacked this luxury as there were not as many exam dates available.

Beau Riley, TAL head of licensees and partnerships, said a three-anda-half-hour exam was not a straightforward task and it had not been made clear on what the pass mark was or whether there will be an extension on the completion date.

TAL ran the Risk Academy, which was one of the many provider courses on the market to help advisers prepare for the exam.

“When you consider how busy advisers are with their business, family and new education requirements, finding time to prepare for the exam is not easy,” Riley said.

UMM, WHAT? The keyword throughout all the survey responses was ‘ambiguous’, as advisers felt the

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questions were subjective, unclear or poorly worded.

Joel Ronchi, principal at myIntegrity in Practice, had extensive feedback from advisers who had sat the June, September, December and February exams.

He started myIntegrity in Practice to help financial advisers and licensees understand and implement the FASEA standards.

“There are key phrases that keep coming up, one is ambiguous, a lot of advisers feel the wording in the questions can be ambiguous and that means different things to different people,” Ronchi said.

“For example, in some of the multiple-choice questions, advisers have said there’s two options so close it’s hard to pick and it revolves around wording.”

“I walked out of the exam not knowing if I would have passed or failed. I did not walk out of the exam thinking my clients will benefit from me sitting this exam,” a respondent said.

Riley said feedback from Risk Academy attendees was that they felt the questions were ambiguous, especially the multiple-choice ones.

“For advisers that specialise, there is often concern around how broad the questions may be in the exam,” Riley said.

Glenfield said candidates would be familiar with exams that asked questions based on knowledge recall, but the FASEA exam was different as it required candidates to analyse a scenario and apply their knowledge.

Chart 3: Was the exam’s ethics component relevant to your field of work?

Source: Money Management

“Why this method? Because ACER has used its extensive global experience in managing exams to develop the questions and the most effective methodology,” Glenfield said.

“ACER is also using experts in the field to write and mark the questions. The exam is testing the practical application of the relevant knowledge areas using complex questioning techniques consistent with other high stakes exams.

“In addition, detailed psychometric analysis is undertaken after every exam cycle. It should be noted that where an individual question does not perform satisfactorily, it is removed from scoring.”

ETHICS Only 29.7% of respondents found the ethics component relevant, while 40.6% said ‘no’ and 29.7% said ‘it’s hard to say’.

“The questions did not really test if an adviser is ‘ethical’, rather,

it tested random knowledge of different areas in a poorly-worded way,” a respondent said.

“Questions and answers could easily be misinterpreted. [It] feels like this exam is a revenue raising exercise – slightly unethical perhaps?”

FEEDBACK Advisers had said they lacked feedback from results, leaving them unaware if they had performed poorly in a certain area.

“Unsuccessful candidates are able to re-sit the exam and these advisers will receive guidance on which knowledge areas they need to improve to enhance their ability to pass at a future sitting,” Glenfield said after FASEA announced the September exam results on 8 November, 2019.

“Not receiving a percentage on the fail, we are given the opportunity to remark the written questions at a cost,” a respondent said.

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FASEA Exam

“We need to know the mark to gauge if we should pay the funds to re-mark otherwise it is pointless.”

The exam costs $540 plus GST to sit, but to re-mark the exam it would cost $198, including GST. Glenfield said the exam tested the application of three ‘knowledge areas’: financial advice regulatory and legal requirements, financial advice construction, and applied ethical and professional reasoning and communication (incorporating the code of ethics).

“Should a candidate fail the exam, analysis of their performance is undertaken to determine whether they underperformed in a particular knowledge area, or across all knowledge areas,” Glenfield said.

“Based on this analysis, candidates who have failed the exam are provided the following feedback: 1) If a candidate had clearly underperformed on one knowledge area versus others, they receive advice to revise that particular area. If a candidate has underperformed across all areas consistently, they will be advised to revise all knowledge areas.

2) Advice regarding the re-marking process. If a candidate’s result does not mathematically allow for a pass (if their exam is re-marked), the candidate will be advised accordingly.”

Although there was no shortage of exam preparation resources available in the market, older advisers still felt the pressure of sitting an exam for the first time in decades, if at all.

“Supervisors were rude and grumpy adding more stress to an already stressful situation, desks were too close to each other and people tapping loudly on keyboards was distracting, but

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thankfully they had earplugs we could use,” a respondent said.

Unsurprisingly, it’s older advisers who felt the hardest done by, as the investment into further education doesn’t have the same return on investment given they have less time left in their career.

“It’s embarrassing to have to sit an exam for your own profession to confirm I know what I have been doing correctly for the last 25 years,” a respondent said.

“Age discrimination for those that are not comfortable with tech – the guy next to me really struggled with the typing and the control-F concept,” another respondent said.

“There are key phrases that keep coming up, one is ambiguous, a lot of advisers feel the wording in the questions can be ambiguous and that means different things to different people.”

Joel Ronchi, principal at myIntegrity in Practice –

Glenfield said the exam wasn’t meant to test technical knowledge in those areas, only the application of the three ‘knowledge areas’.

“Although there may be references to specific advice areas in the client scenario provided, the exam is testing the application of, for example, the Corporations Act or the code of ethics, not technical specialist areas,” Glenfield said.

SPECIALISATION

GETTING THE MOST OUT OF PREPARATION

The exam covers multiple areas of specialisation, which meant advisers who specialised in one area were expected to accurately answer questions on areas they don’t specialise in to pass the exam.

Many advisers questioned if the exam was appropriate for professionals who specialised in a specific field like stockbroking, life insurance or self-managed superannuation funds (SMSFs).

“If you were a risk writer you would have no idea of the answers to some questions,” a respondent said.

“Some of the questions were around portfolio construction, some were not clear in what they were asking, some do not relate to financial planning, some were not in the reading.”

“I would have liked to see more relevant questions where it is testing my knowledge of legislation and ethics, not some obscure area of financial planning that we will never be dealing with on a day-to-day basis,” another respondent said.

“This exam proves how out of touch the question makers are with this profession.”

The most popular study provider was Kaplan, which 48.7% of respondents said they used, followed by TAL (42.3%), myIntegrity (15.5%), Cram4Exam (3.2%), TAFE (2.1%), Blue Path (1.6%), and AIA (1.1%).

Knowledge Shop, BT and OnePath were also popular responses in the ‘other’ category.

Apart from the study providers available, there was important information about the exam available online for free.

Riley said the materials FASEA provided were beneficial, which included practice questions and the candidate information video which explained how the exam worked.

“In addition, some of the recommended readings available to advisers are invaluable for their exam preparation, including but not limited to the code of ethics explanatory statement and guidance document, and the ASIC [Australian Securities and Investments Commission] guide RG 175,” Riley said.

“Knowing how to navigate the legislative instruments provided

is an essential component of exam preparation.”

Ronchi said it helps to have a strategy going into the exam and there’s no one size fits all approach when it came to preparing for the exam.

“Take the time to go to the FASEA website, have a look at the video they put out that walks through the actual platform,” Ronchi said.

“It’s an eight-minute video, not only does it walk you through and show you how it works, but it gives a visual on what to expect on the day.

“Be aware about what’s going to happen on the day, you can’t take in anything with you except your ID, you get a scratch piece of paper and a pen provided, and you get a desktop with one screen.

“Just read the questions carefully, read the wording, read what the intent of the question is and answer the question as it’s being asked.”

Ben Marshan, head of policy and standards at the Financial Planning Association (FPA), said most of its members had adapted and would just get on with preparing for the exam.

“They’re telling us they need put in a little bit of work to do the study and get themselves up to speed with the material,” Marshan said.

“They’re providing us the feedback that the exam is challenging, not something they can just walk into and think they will be able to pass without preparation.”

The FPA has created a learning portal called FPA Return to Learn which provided information from universities to help members Continued on page 28

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Continued from page 27 getting back into tertiary study and prepare for the exam.

“Rather than give them big slabs of legislation to study, we’re able to summarise and put it in a more useful format for them,” Marshan said.

“We’ve done analysis on the code and we’re able to map how it works, so they can get their head around a little more easily and understand it.”

Marshan said some of the feedback they had received was the shock from advisers on the length and breadth of financial planning regulation.

“Some members have said leaving that amount of material to the last weekend before you sit the exam has been a mistake, even though they passed,” Marshan said.

“What was a little surprising was that some advisers thought just could rely on understanding their compliance manual their licensee put in place.”

Riley said most advisers have found managing the volume of reading as one of their biggest struggles.

“While suggested readings including the Corporations Act (Chapter 7) and the Privacy Act 1988 are important, and knowing how to navigate the document is required for the exam, reading these in their entirety may not be the best way to achieve the desired outcomes for the exam,” Riley said.

THREE DECADES AND A MASTERS DEGREE, BUT NO EXAM PASS Despite three decades of experience in the industry and a Masters degree approved by the Financial Adviser Standards and Ethics Authority (FASEA), Leigh Anoos couldn’t pass the FASEA exam.

Anoos is a licensed financial planning and managing director at Easy Monitor, a software company that specialises in compliance management for financial services.

She sat the exam in Melbourne on 5 December, 2019, and was one of the 14% that failed.

An industry veteran that had worked for 33 years, she had received her Masters in Financial Planning from the University of Sunshine Coast in May, 2007 – one of FASEA’s many approved previously provided courses.

“I don’t feel I have failed, I feel the system has failed… I’m not ashamed and many advisers have been beaten into submission, feeling ashamed and not wanting to declare it,” Anoos said.

“I’m getting messages from third parties that are too scared to tell anybody they’ve sat the exam, let alone failed it.”

For exam preparation, she had participated in training groups organised by her dealer group, as well as TAL’s Risk Academy online.

“Getting into the exam, it was like being led around like grade one children, we had to stand in lines and weren’t allowed to do anything until we were told.

“We were shuffled into a room, we weren’t allowed to choose desks, I don’t know why, it was all about power and control.”

Anoos said her biggest complaints were a lack of transparency from FASEA and that it would be better if there was a precursor course.

“I won’t re-sit, only because I have no idea what else I could have done to prepare better,” Anoos said.

“I studied hard for that, I attended everything that was available to me that I could get my hands on prior to the exam, so what would be the point?

“Why would I re-sit knowing quite well that during the exam it was not about the things I studied?”

She took issue with the ambiguity of the questions and said in real life advisers would be able to ask further questions to clients to clarify.

In correspondence from the financial adviser exam team at the Australia Council for Education Research (ACER), who had been contracted by FASEA to develop and administer the exam, they told her ‘international research-based methods for the analysis and standard-setting process have been used to determine the pass mark’ for the exam.

“This approach is quite different from how universities and/or higher education providers might determine a ‘pass mark’, for example, by providing a percentage correct, or using a bell-curve distribution,” it said.

She was told if she were to re-sit the exam, she would need to revise in three areas: financial advice regulatory and legal requirements, financial advice construction, and applied ethical and professional reasoning and communication.

If she wanted a re-mark of her written responses, it would cost $198.

“The option exists for a re-mark of your written responses from the recent financial adviser exam,” ACER said.

“Please be reminded that each written response has already been marked by two independent approved expert markers and then reviewed and adjudicated by the expert chief marker.”

“All re-marking will be double-marked and conducted independently, with previously assigned scores unseen by markers.”

Table 1: FASEA Exam Schedule

Sitting Date

Registration Period

Locations

Sitting 5

2-7 April 2020

2 January 2020 – 13 March 2020

Sydney, Canberra, Melbourne, Brisbane, Townsville, Adelaide, Perth, Darwin, Hobart, Gosford, Sunshine Coast, Geelong, Toowoomba, Bunbury, Mackay, Geraldton, Wagga Waggaand and Coffs Harbour.

Sitting 6

11-16 June 2020

2 March 2020 – 22 May 2020

Sydney, Canberra, Melbourne, Brisbane, Adelaide, Perth, Darwin, Hobart, Townsville, Gold Coast, Newcastle, Wollongong, Cairns, Bendigo, Albury/Wodonga, Rockhampton, Port Macquarie and Orange.

Source: FASEA

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BE BETTER INFORMED

2020 FE FUNDINFO CROWN RATINGS RELEASED To find out which funds received 5 Crowns in the latest rebalance go to moneymanagement.com.au

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

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3/03/2020 1:08:43 PM

30 | Money Management March 12, 2020

Emerging markets

HARNESSING CURRENCY RETURNS IN EMERGING MARKETS The close economic links between Australia and Asia can be a negative for emerging market investors with Aussie dollars, according to Adam Kibble.

EMERGING MARKETS (EM) account for nearly 80% of global economic growth, almost doubling their share from 20 years ago. As a result, emerging market equities and bonds have become an important source of attractive, diversified returns for financial advisers and their clients.

Often neglected is the fact that a significant part of emerging market asset returns can be derived from currency exposure.

However, Australian dollar (AUD) based investors typically haven’t captured these currency gains due to the economic links between Australia and Asia, and the impact of changes in commodity prices.

Simply put, when EM currencies are doing well, so is the Australian dollar.

By separating the currency exposure into its three component parts and actively managing the

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part which provides unrewarded risks, Australian investors can better capture the available returns from emerging market currency exposures, enhancing their overall return potential from emerging market investments.

Many advisers and investors view the emerging markets as an attractive source of investment returns. Regardless of whether these returns are accessed passively through index funds or through hiring skilled portfolio managers, the impact of volatility in the investor’s base currency on the overall return of emerging market bonds and equities, is often ignored.

In the case of active emerging market portfolios a portfolio manager is making active decisions on which currencies to favour or avoid. However, typically, they do not consider an investor’s base currency-specific risk.

When looking at the overall emerging market currency return relative to an investor’s base currency, it can be separated into three components: 1) The active portfolio manager’s currency selection relative to the emerging market currency market in general (emerging market currency-specific risk) 2) Overall emerging market currency moves relative to the developed market currency market (the emerging market versus developed market currency beta) 3) An investor’s base currency movement relative to the developed market currency market (the base-currencyspecific risk) An investor will typically retain the first component as this is where active portfolio managers aim to add value. We believe the

second component will also be attractive for many investors as this element has historically added value. However, investors can benefit from actively managing the third component; base-currency-specific risk – as this is unrewarded risk exposure that can dilute the performance outcome. For AUD-based investors this base-currencyspecific risk has resulted in the lowest returns from emerging market currency exposure compared to investors from other developed markets over the past 20 years.

AUSTRALIAN INVESTORS HAVE BEEN MISSING OUT Emerging market currency returns can vary significantly depending on the investor’s base currency – in other words, their base-currency-specific risk. The

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Emerging markets currency returns from investing unhedged in emerging market bonds has ranged from 1.9% for Australian dollar-based investors to 6.1% for Japanese yen-based investors. Similarly, Japanese yen-based investors in unhedged emerging market equities have gained 4.4% from the currency, whilst Australian dollar-based investors have only had a small positive contribution from emerging market currency exposure.

Why did investors around the world experience such different outcomes? The answer is inextricably tied to movements in investors’ base currencies – the third component of emerging market currency risk described above. The AUD has a high historical correlation with the MSCI Emerging Markets Index currency basket. This is due to the both the economic links between Australia and its largest trading partners in Asia, and the impact of changes in commodity prices on the Australian economy and the economies of other commodity exporting countries (many of which are emerging markets).

Australian investors are exposed to two unmanaged currency risks in emerging markets. The first component represents the performance of the basket of emerging market currencies versus developed market currencies – this is the long-term risk premium which we expect to be positive and relatively stable and can be captured passively and remain unhedged.

The second component arises from the behaviour of the investor’s base currency, in this case the AUD, against a basket of developed market currencies. As investors typically do not expect this component to generate a long-term positive return, we believe it is appropriate to diversify the base currency exposure. This logic applies to investors of any base currency, but the case for doing so may be amplified in the case of the AUD due to the currency’s high historical correlation with emerging market currencies.

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Chart 1: Cumulative effective currency returns: MSCI EM currency basket

Chart 2: Relative yearly currency returns: Hedged: Equal Weight G7 vs Unhedged

Source: Insight Investment

APPROACH TO MANAGING EMERGING MARKET CURRENCY RISK We believe AUD-based investors can benefit from emerging market currency appreciation with a more sophisticated approach to currency management, which seeks to reduce their base-currencyspecific risk.

An unhedged AUD-based investor effectively has a single, concentrated, short position in the AUD. By moving from this to a more balanced short position across a basket of the most liquid developed market currencies (which might consist of the US dollar, euro, Japanese yen, British pound, Swiss franc and Canadian dollar), AUD-based investors can diversify their base-currencyspecific risk. This currency

diversification approach maintains the desired long emerging market currency exposure, while reducing the short AUD exposure by purchasing AUD currency forward contracts against the other G7 currencies.

For MSCI Emerging Markets Index equities, applying an equally weighted short base currency position across the G7, this diversification strategy would have generated a positive return of 2.1% pa from currency exposure), compared to -0.8% annualised for the period January, 1999 to December, 2018.

Diversifying the basecurrency-specific risk has also significantly reduced the volatility of currency returns from 10.7% to 6.1%. The result of applying the strategy would have been a

substantial reduction in overall currency risk, leading to greater confidence that emerging market currency returns will be captured.

Importantly, this approach maintains exposure to emerging market currency selected by an investor’s emerging market portfolio manager, and so avoids the costs of directly trading emerging market currencies.

At Insight, we believe that through an actively-managed currency strategy, which seeks to diversify the concentrated short AUD exposure implicit in an emerging market allocation, Australian investors can access the additional investment returns that emerging market currency exposure can offer.

Adam Kibble is investment specialist at Insight Investment.

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32 | Money Management March 12, 2020

Retirement

SUCCESSFUL RETIREMENT, IS IT ABOUT MORE THAN MONEY? Much focus is given to accruing enough income for retirement but, writes Sandy McLeod, there is a need to consider clients’ mental health and wellbeing as they move away from a working environment.

AS AUSTRALIANS ENJOY greater longevity than ever before, financial security in our advanced years is becoming increasingly challenging. Planning for an undetermined period of time with unforeseeable events and expenses is difficult. No longer do people retire from their place of employment and enjoy 10 years of leisure; for the modern retiree, retirement is more likely to be 20-25 years.

TRANSITION TO RETIREMENT While it’s important that financial advisers protect the financial wellbeing of their clients as they head towards retirement, their duty of care should also extend to an awareness of their client’s mental health and wellbeing.

Like all life transitions, the transition to retirement can be a particularly challenging and confusing time, with many of the stressors connected to the unknown. There are a huge number of considerations around money, how time will be spent, the length of retirement, and possible physical health problems that are all areas of concern and stress for many older Australian workers.

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THE ROLE OF THE FINANCIAL ADVISER When assisting clients with short and long-term financial goals, advisers are often among the first to know about any issues their clients are facing. As a trusted and reliable source of information, there is real opportunity for advisers to help clients plan for wellbeing that is not just financially focused when discussing their needs. Financial advisers are uniquely positioned to align a client’s financial assessment to a more holistic view.

A financial adviser helps clients to attain achievable goals with robust planning. During this process there are opportunities to review plans, design strategies and create realistic objectives. Unfortunately, many people neglect to apply the same rigour to planning for their mental and physical health, and the impact that a major life change like retirement can have. Thoughtful planning for all elements of health is an important step towards creating sustainable wellbeing in retirement.

IS RETIREMENT ONE SIZE FITS ALL? Retirement is a key life stage that most people plan for financially, but it looks different for everyone.

Talking about what retirement

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Retirement Strap

means to individual clients is an opportunity to really understand their goals, any resource gaps they may have, and what strategies need to be implemented.

Not everyone sees retirement as a move away from paid work.

Many Australians plan to never fully retire; some transition to a different type of employment that creates greater personal fulfillment; others scale back their volume of work by taking on parttime roles; whilst many utilise skills gained throughout their career as volunteers and give back to their local community.

There are multiple benefits to continuing some form of work, including continued learning and development, physical and mental stimulation, greater opportunities for personal connections, and if paid, an ongoing income.

Many of the interactions and personal connections people have during their working life need to be replaced as they transition into retirement.

Planning for this change creates confidence for the future and avoids feelings of isolation and loneliness in retirement.

When making financial recommendations or devising a strategy, it is vital that financial advisers understand the client’s requirements and discuss both short and long-term goals. It is here that there are opportunities to understand what level of planning clients are doing to replace the positive aspects of their working life.

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WORKPLACE BENEFITS ARE NOT JUST FINANCIAL Wellbeing in retirement is predicated by several factors, and research shows that the most important of these is quality connections. This is an area that is often overlooked when making the transition to retirement because the focus is on the initial list of activities that are planned immediately ceasing paid work. There are projects on the to-do list to complete, exciting travel plans, and days scheduled for rest and recuperation.

What is less obvious is the need to be mindful of the daily interactions that provide a connection to others. Taking stock of the number of meaningful exchanges that clients have outside of their workplace while they are still at work creates an understanding of where they need to focus their plans postretirement. Work inevitably forms a big part of our identity and is quite often the main source of our social connection throughout the week. It is therefore important to have some plans in place to maintain these social connections in retirement.

This is also true of the nature of their work; if it is a particularly mindful role that requires deep thinking and focus, or a physical job that keeps them active throughout the day, in each of these cases there will be an adjustment required to maintain certain levels of mental and physical health. It is worthwhile discussing some continuous activities that may be

fitting replacements for things that currently keep them active at work.

How people feel about their job, and their impact, satisfaction and energy levels at work are also indicators of how much will need to be replaced in the transition from full-time paid employment to fulltime retirement.

The evidence is clear that the more planning people do to prepare for the transition to retirement beforehand, the better the outcomes for financial, mental and physical wellbeing will be.

This, combined with recognising where they need to build up their resources and connections, and actively deciding on when and how they retire is the key to success.

STRATEGIES TO HELP ADVISERS AND THEIR CLIENTS It is important that we recognise the impact that continued stress has on both the physical and mental wellbeing of financial advisers, too.

Advisers have stressful, demanding roles that the rapidly changing environment and media scrutiny has exacerbated in recent times. With this in mind, there are steps that can be taken to ensure financial advisers are looking after not just their clients, but also their own mental health and wellbeing at work.

Self-reflection on the impact that the recent pressure has had on personal wellbeing and employing some self-care strategies to help manage stress

levels, build resilience and keep advisers functioning at their best is a good first step.

People who experience prolonged periods of high stress and poor mental health are not considered ‘thriving’, and therefore are generally not bringing their best selves to work.

This may result in the unintended consequences of lower productivity and engagement in work, presenteeism or staff turnover, as well as further negative impacts to mental health and wellbeing.

It is important to ensure that financial advisers take time to look after themselves with some simple strategies that will help to maintain a good work/life balance.

This can include taking regular breaks at work, setting realistic priorities for each workday, making a clear distinction between work and home (and not being available at work outside designated hours), finding a time for physical activity, and trying to inject mindfulness throughout the day (mindful eating can be a good place to start). Staying connected to people who provide support is essential, such as by calling or texting friends and family, reaching out to an Employee Assistance Program (EAP), or contacting support lines like Lifeline on 13 11 14.

Sandy McLeod is general manager of insurance solutions at SuperFriend.

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34 | Money Management March 12, 2020

Portfolio construction

INVESTMENT IDEAS FOR A NEW DECADE As we commence the 2020s, investors need to adjust to a lower yield landscape and understand which investments can help to deliver them positive returns, writes Yoram Lustig.

THE PAST DECADE was a great one for investors. During the 2010s, the MSCI All Country World index rallied nearly 146% and the Bloomberg Barclays Global Aggregate Bond index climbed by more than 49%. And while it was an unusually strong decade for nominal returns, it was an even better one for real returns as inflation was exceptionally low.

Further to this positive backdrop, Morningstar research shows Australian investors have outperformed global peers, with mandatory and systematic superannuation investing attributable for overall higher investor returns relative to other markets where investors tended to be more exposed to market timing risks. While this may have helped to yield stronger outcomes for investors in Australia over the past several years, with the next decade looking different, they too need to adjust to a lower yield landscape.

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Relatively modest returns and, at some point, a recession should be expected. This is neither to suggest that the bull market will end in 2020 nor that a recession is imminent. However, it is to suggest that investors should start taking actions in preparation for potential far‑reaching changes.

I believe investors, here and around the world, face three main challenges over the next decade:

HOW TO GENERATE RETURNS IN A LOW‑RETURN ENVIRONMENT Valuations matter: History shows us that, in normal circumstances, higher prices today mean lower returns tomorrow. During the 2020s, returns from both equity and bond markets are likely to fall short of those of the 2010s, during which they delivered annualised returns of 9.4% and 4.1%, respectively.

When asset prices rise, passive investment strategies tend to perform well; during

periods of lower and negative returns, passive strategies are less successful. We believe investors therefore may have three choices: (1) to calibrate return objectives downward with likely more modest future returns; (2) to change portfolio composition to lower quality and higher risk; and/or (3) to deploy active investment strategies, making their money work as hard as possible. For many investors, accepting lower returns or taking on lower‑quality/higher‑risk assets to maintain existing returns is not a realistic option.

Such investors may need to seek alternative, creative approaches.

Three Investment Ideas 1) Active management: As monetary stimulus fades, volatility is likely to rise unless ample liquidity persists, keeping it subdued. Volatility means security prices are prone to diverge from

valuations, and the dispersion among returns of securities and asset classes is expected to widen. We believe an environment of heightened variability and wide dispersion of returns should be supportive for skilled active managers who can differentiate between winners and losers, identify mispriced investments, and add value through security selection and dynamic asset allocation.

2) Investments offering a growth premium: In a low‑growth world, assets offering above‑average growth rates warrant a premium.

Growth stocks in the US are one example. While growth has outperformed value during the 2010s—US large‑cap growth stocks returned 15.2% per annum and US large‑cap value stocks returned 11.8% per annum—this trend could continue into the 2020s.

Another example is emerging market assets, both equities

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Portfolio construction

and bonds, which offer higher potential growth, albeit with additional risks. As we enter the 2020s, current interest rates in many emerging markets are at the level where the developed market rates started in 2010.

Should emerging market bond yields follow the developed market downward path, the next decade could support emerging market asset prices, as the liquidity boost did for developed market asset prices in the 2010s.

3) Alternatives: When traditional sources of market returns— equity, duration (term), and credit risks—are modest, investors may seek alternative sources of returns. Some alternative investments could offer such sources, not only through passive exposure to alternative risk premia, but also through proven active management, generating active alpha. Alternatives with low correlation to equity and bond markets can add diversification as well as unique return streams, mitigating risks and potentially enhancing performance.

HOW TO DIVERSIFY EQUITY RISK The main risk, and driver, of returns in most portfolios is equity risk. Even in a ‘balanced’ portfolio of 60% equity and 40% bonds, over 90% of risk could come from equity market exposure—in other words, the portfolio is not really balanced after all.

Equity market downturns are not a major problem for investors with very long time horizons and nerves of steel—they could remain invested and ride through the storm. For everybody else, however, diversifying equity risk is likely to be beneficial—and may even be necessary for survival. To diversify equity market risk, investors used to buy long‑term government bonds— which tend to be negatively correlated with equities—and received yields of

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4% and above for doing so.

However, those days are long gone and are unlikely to return for the foreseeable future.

Government bond yields have fallen and in many cases are negative. Investors no longer get paid for diversification; often, they need to pay for it.

Three Investment Ideas 1) Government bonds: As we believe yields are unlikely to fall much below current levels, government bonds do not offer significant return potential.

However, we think they can still provide useful diversification against equity risk during drawdowns. Long‑duration bonds—whose values rise more than those of short‑duration bonds when yields decline—are one of the most effective diversifiers against equity risk.

Holding unhedged US Treasuries could be a sensible way to include high‑quality duration risk as well as the US dollar—two safe‑haven assets in a single go.

2) Currencies: Investors may seek other ways to diversify equity risk beyond government bonds.

Currencies are another venue to explore, offering in some cases low correlation with equities. In particular, the US dollar and the Japanese yen are two traditional safe‑haven currencies that tend to perform well when equity markets perform poorly.

3) Idiosyncratic alpha: Active alpha generated through bottom‑up security selection and top‑down tactical asset allocation is often lowly correlated with equity, as well as bond, markets—as long as the alpha is not just running an excess beta risk. Alpha could be a diversifier of equity market risk, achieving two goals at the same time: reducing risk and enhancing performance. In other words, viewing alpha not only as a source of return but also as a diversifier of risk.

“During the 2020s, returns from both equity and bond markets are likely to fall short of those of the 2010s” - Yoram Lustig, T. Rowe Price HOW TO REMAIN INVESTED WHILE PREPARING FOR THE END OF THE CYCLE There is no way of knowing how bad a recession will be until it happens. When the next recession occurs, it may either be a shallow one or a deep one. Investors should be humble, hoping for a shallow recession but preparing for a deep one. If it turns out to be the latter, it could destroy profits that took years of investing to generate.

Three Investment Ideas 1) Tail‑risk mitigation strategies: Remaining invested while mitigating downside risk, and not paying too much for defensive assets, is one of the main challenges for investors. A diversified basket of derivative overlay strategies could be attached to portfolios, aiming to cut tail events and offset some losses that might occur when equity markets drop. Examples include buying stocks with low volatility or defensive risk premia strategies while removing the market exposure, buying protective put options while hedging them by using futures contracts, buying 10‑year US Treasury futures, and using a systematic strategy that dynamically alters equity exposure based on predicted equity risk.

2) Multi‑asset investing: Security selection in a single asset class could add value. So could security selection across many asset classes. And there are other sources of returns— tactical asset allocation, risk factor investing, and so on. So, why not dynamically blend all

the available sources of returns—both alpha and beta— to potentially benefit from all the available returns out there? This is the gist of multi‑asset investing. When most asset classes rise—as they did in the 2010s—multi‑asset investing is not as important as during times when different investments’ performance diverge. When the future is uncertain, we believe the best approach is to maintain a dynamic, diverse exposure to independent sources of return, adapting it to current market conditions to keep it relevant.

3) ESG: One aspect of the green revolution is that investors are likely to increasingly seek companies that acknowledge shareholders are not their only stakeholders. ESG— environmental, social, and governance—factors may be compensated over the longterm as they increasingly fit the global desire for sustainability and for tackling the challenges humanity faces. Securities of ESG‑compliant companies could enjoy a premium for helping the world overcome some of its ESG‑related challenges.

WHAT WE’RE WATCHING NEXT The challenges highlighted here are long term in nature. In the near term, however, even though we do not expect the bull market to end or a recession to start in the next 12 months—or perhaps longer—we will be closely monitoring economic data. for any indications to the contrary.

Yoram Lustig is head of multi-asset solutions, EMEA at T. Rowe Price.

3/03/2020 10:56:18 AM

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Toolbox

NEW BEGINNINGS FOR NEWSTART ALLOWANCE IOOF TechConnect’s Mark Gleeson explains the changes that advisers need to be aware of for their clients ahead of the move from Newstart to JobSeeker Payment this month.

FROM 20 MARCH, 2020, the new JobSeeker Payment replaces Newstart Allowance as the main working age payment. As part of the Government’s welfare reform package, many other payments cease from 20 March, 2020.

Legislation to implement the changes was passed in 2017.

Advisers should advise affected clients of the changes in order to manage their expectations and to consider possible strategies to maximise their payment.

The following payments will cease on 20 March, 2020: • Newstart Allowance; • Sickness Allowance (closed to new recipients from 20 March, 2020 and ceases on 20 September, 2020); • Widow Allowance (closed to new recipients on 1 July, 2018 and ceases on 1 January 2022); • Partner Allowance (ceases on 1 January, 2022); • Widow B Pension; • Wife Pension; and • Bereavement Allowance.

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NEWSTART BECOMES JOBSEEKER JobSeeker is effectively the new name for the Newstart Allowance from 20 March, 2020 and it becomes the main working age Centrelink payment. Clients receiving Newstart Allowance do not need to do anything and will automatically transfer to the JobSeeker Payment.

Clients will continue to receive the same rate of payment and hold a health care card, providing their circumstances do not change.

From 20 March, 2020, eligible clients can receive the JobSeeker Payment if they satisfy at least one of the following requirements: • They are looking for work; • They cannot temporarily work or study due to sickness or injury; • They have recently lost their partner.

INFORMATION RELATING TO SOME OF THE CEASING PAYMENTS • Sickness Allowance is an income support payment for people who are temporarily incapacitated for work or study

and do not have adequate levels of income support. The person must be able resume their employment or return to their studies once they have recovered from their incapacity.

• Widow B Pension is a payment for a widow who did not get a Parenting Payment, has limited money and has lost the financial support of their partner; • Wife Pension is an income support payment for female partners of people receiving an Age Pension or Disability Support Pension as of June 1995. No new claims of the Wife Pension have been granted from 1 July, 1995.; and • Bereavement Allowance provides short-term financial assistance of up to 14 weeks for recent widows.

HOW CAN YOU HELP YOUR CLIENTS? Advisers may wish to use the table above to guide clients through their possible options from 20 March, 2020. Clients who

are affected should receive communications from the Department of Human Services about the upcoming changes. In most cases, clients will be transferred automatically to the new JobSeeker Payment.

If clients expect to continue receiving Centrelink benefits, advisers may wish to explore the possibility of certain strategies to maximise the amount of the payment, for example: • Making contributions, within allowable limits, to super for the client or their partner.

Amounts held in accumulation phase are not means tested if the client is under Age Pension age; • Investing in improvements to their main residence which is exempt from means testing; • Certain prepaid funeral expenses and cemetery plots.

These are exempt assets and there is no limit. Alternatively, funeral investments or bonds may be an option. Each Continued on page 38

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Toolbox

CPD QUIZ Continued from page 37 member of a couple can invest up to $13,250 (2019/20) for a prepaid funeral or cemetery plot and be exempt from means testing; and • Singles and couples can gift $10,000 of assets per financial year, with a limit of $30,000 in any rolling five financial year period. Gifts in excess of these limits are assessed as an asset, known as a deprived asset, and deemed under the income test for five years from the time of the gift.

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.

1. Which of the following payments will cease from 20 March, 2020? a) Carer Allowance b) Disability Support Pension c) Carer Payment d) Wife Pension

Mark Gleeson is senior technical manager at IOOF TechConnect.

Table 1: Changes from 20 March, 2020 onwards

receiving Newstart Allowance from 20 March, 2020? a) They will receive no payment

Clients currently receiving…

Outcome

Newstart Allowance

Newstart Allowance ends on 20 March, 2020 and the client transfers to the JobSeeker Payment. There are no changes if the client continues to satisfy the requirements.

Sickness Allowance

The client continues to receive Sickness Allowance until the medical certificate expires. After expiry, the client may be able to transfer to the JobSeeker payment. No new claims of Sickness Allowance will be accepted from 20 March, 2020.

b) They will receive Age Pension c) They will receive Jobseeker Payment

Widow Allowance

Widow Allowance was closed to new recipients on 1 July, 2018. The payment ceases on 1 January, 2022 when the last of the existing recipients transfer to the Age Pension.

Partner Allowance

Partner Allowance ceases on 1 January, 2022 when the last of the existing recipients transfer to the Age Pension.

Widow B Pension

Widow B Pension recipients will automatically be transferred to the Age Pension from 20 March, 2020.

Please note, no new Widow B Pensions have been granted since 20 March, 1997.

Wife Pension

Wife Pension ends on 20 March, 2020 and clients will then have three options: 1. Transfer to Carer Payment – if they live in Australia and receive both the Wife Pension and the Carer Allowance on 19 March, 2020 (and they continue to qualify for Carer Allowance).

2. Transfer to Age Pension – if on 19 March, 2020 they are Age Pension age, receive the Wife Pension and do not receive the Carer Allowance.

3. Transfer to JobSeeker Payment – if they live in Australia, receive Wife Pension on 19 March, 2020, are under Age Pension age and do not receive the Carer Allowance.

Bereavement Allowance

2. What is the likely outcome for a client currently

Bereavement Allowance recipients at 19 March, 2020 continue to receive payments until the end of their bereavement period which is generally 14 weeks.

There are no new claims of Bereavement Allowance from 20 March, 2020.

d) They will continue to receive Newstart Allowance under grandfathering rules 3. Which of the following is a possible option to increase Centrelink benefits? a) Gift up to $13,250 per year and $30,000 over five years b) Gift up to $10,000 per year and $30,000 over five years c) Gift up to $10,000 per year for five years d) Gift up to $100,000 per year and $300,000 over three years 4. Which of the following best describes the assessment of superannuation in accumulation phase for Centrelink purposes? a) It is asset tested and deemed under the income test when the client is under Age Pension age b) It is asset tested but not deemed under the income test when the client is under Age Pension age c) It is not asset tested and not assessed under the income test when the client is under Age Pension age d) It is not means tested when the client reaches Age Pension age

TO SUBMIT YOUR ANSWERS VISIT https://www.moneymanagement.com.au/ features/tools-guides/ new-beginnings-newstart-allowance For more information about the CPD Quiz, please email education@moneymanagement.com.au

Source: IOOF

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March 12, 2020 Money Management | 39

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

Appointments

Move of the WEEK Greg Thomas Chief business officer Bennelong

Bennelong Funds Management has appointed Greg Thomas as chief business officer while Doug Stewart will become chief executive in the UK, a newlycreated role replacing the chief operating officer role previously held by Thomas.

Both new appoints would report to Craig Bingham,

chief executive of Bennelong Funds Management.

Bennelong and BennBridge were both part of the BFM Group, an investment company that partnered with 12 boutiques globally.

Thomas had helped launch BennBridge in late 2016, and before that was

IOOF has announced three executive committee appointments as the firm entered a new phase of its transformation following its acquisition of ANZ’s Pension and Investments business (P&I).

Frank Lombardo was appointed as chief operating officer, Darren Whereat as chief advice officer, and Mark Oliver as chief distribution officer.

Lombardo’s role would now encompass new areas such as transformation and integration, a new commercial management capability, and supporting the firm’s ‘client first’ thinking.

Whereat’s role would focus on consistency and further cementing the central role advice was set to play in the firm’s future strategy.

Self-managed superannuation fund software company Class has appointed Alexis Rouch as chief technology officer (CTO), as it undergoes a transformative business strategy.

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managing director with Visium Asset UK, COO of Gruss Capital, and spent two years with Copenhagen Capital.

Stewart joined BennBridge from OppenheimerFunds, where he was chief executive and head of EMEA for their European business from 2016.

Rouch had worked in technology for over 20 years, and most recently had technology leadership roles at AMP, WorkSafe Victoria, ANZ, PwC, Accenture and Medical Media Australia.

She would join the business as it executed its ‘reimagination strategy’, which would see Class grow into new sectors of the professional services ecosystem as a technology solutions provider.

The reimagination strategy included an investment of $12 million this year on product and technology development, in addition to a growth strategy that included partnerships, investments and acquisitions.

lead the sales and marketing team; Christine Murr was the new client services lead, leading the customer support team; and Deborah Dalziel was the new marketing manager.

Whelan had 20 years’ experience in the financial services market and was previously director of the adviser services for Milliman.

Murr joined Midwinter last month from StatePlus where she was a financial planner was most recently.

Dalziel also joined last month and would lead the transformation of the Midwinter brand to support the future direction of the business.

Cloud-based financial advice software business, Midwinter Financial Services, has made three new appointments to lead its sales, marketing and customer services teams.

Andrew Whelan was appointed head of distribution to

Zurich Financial Services Australia has settled its Life and Investments distribution leadership team following Zurich’s acquisition of OnePath Life from ANZ in June 2019.

The team would now be made up of Nathan Taggart, head of sales; Phil Gould, head of distri-

bution analytics and governance; Mel Ware as head of marketing and brand; and Tim Atley, head of strategic account management.

They would report to Kristine Brooks, chief distribution officer, and the team would be responsible for the delivery of Zurich’s multi-proposition strategy to the Australian market, covering both Zurich and OnePath brands.

SuperConcepts has appointed Stuart Forsyth as the new independent chair of the board.

Lara Bourguignon, SuperConcepts chief executive, praised Forsyth’s self-managed superannuation fund experience.

“Stuart has served on our board as an independent member for more than four years and has extensive SMSF experience from his previous role as deputy commissioner superannuation and, more recently, the non-executive director of SuperIQ,” Bourguignon said.

4/03/2020 9:55:41 AM

OUTSIDER OUT

ManagementMarch April 2,12, 2015 40 | Money Management 2020

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

Tim Wilson keeping industry funds busy

Josh talks headwinds, Outsider talks toilet paper

OUTSIDER understands that Liberal back-bencher, Tim Wilson, has been keeping quite a few industry fund officials busy in his role as chair of the House of Representatives Standing Committee on Economics.

Wilson, of course, became somewhat controversial by utilising his committee position to question the Australian Labor Party’s approach to franking credits (odd, when it was not the party in Government), but he clearly has other fish to fry when it comes to industry superannuation funds and how they operate.

Wilson’s committee gave superannuation funds a going over in November last year as part of its ongoing Review of the Four Major Banks and other Financial Institutions, but word has it his written questioning of some industry funds is focused on how much money is being channelled to Industry Super Australia (ISA).

As frequent readers of Money Management would know, ISA is funded by a number of industry funds and has generated such major television advertising efforts as ‘compare the pair’ and ‘from little things, big things grow’ and it would seem Wilson is hoping to unearth some big things about how the arrangements work.

Of course, all of this is happening while the Government receives submissions pertaining to its Retirement Income Review and as some of Wilson’s Liberal back-bench colleagues continue to question the value of superannuation and the compulsory nature of the superannuation guarantee.

Outsider has always believed in stuff-ups over conspiracies but is there a pattern developing here?

OUTSIDER should be feeling a whole lot more relieved after receiving an e-mail from the Treasurer, Josh Frydenberg, assuring him that while Australia faces economic headwinds, the economy is nonetheless resilient.

And then your ageing and cynical correspondent realised that Josh was talking about the National Accounts and if that was the case then the Treasurer was looking in the rear-view mirror – Australia before the bushfires and before the dreaded toilet-paper eating coronavirus loomed large on the horizon.

Indeed, it took the Treasurer six paragraphs of his reassuring message before he got around to telling Outsider that he needed to be realistic about the challenges ahead which included the full economic impact of the bushfires and the coronavirus.

But he then added that the Government was working on a targeted response and asserted that Australia’s strong economy and budget would allow our leaders “the flexibility to respond in controlled and targeted way”.

Outsider wonders whether this is much the same controlled and targeted

way that supermarket shelves have been denuded of toilet paper, tissues, pasta, rice, flour and sundry other food staples?

Indeed, the toilet paper shortage around Sydney has become so grave that were it not for the fact that Money Management is printed on glossy paper, Outsider would have had his colleagues cutting it into handy squares that can then be strung on a piece of Number 8 fencing wire and then tastefully hung in the most elegant and fastidious bathrooms.

After all, Money Management wants to be there for you in your time of need.

The computer and keyboard graveyard OUTSIDER has been around long enough to remember the day he switched from noisy typewriters to sleek dumb terminals.

“What joy!” Outsider remembers thinking of that day as the clunky and loud typewriter was finally consigned to a corner of his desk only to be used on the 90% of occasions when the mainframe failed to perform.

It’s been several decades since that day and Outsider has now gone through many operating systems, computer towers, laptops, and not to mention the numerous keyboards that have become quieter and easier to use.

OUT OF CONTEXT www.moneymanagement.com.au

01MM120320_36-40.indd 40

Reminiscing, Outsider wondered where all those keyboards ended up and thought that perhaps their fates were not very eco-friendly.

However, Outsider got wind of the FASEA exam conditions that did not allow water bottles at desks, handkerchiefs or extra jumpers. But what really stood out was how many of the advisers who sat the exam complained about the old, clunky, and noisy keyboards.

“Poor conditions, and the noisy keyboards made it hard to concentrate,” one adviser said.

Another said the “computers and

"It's very strange to be in a meeting that's only women."

- Mirova fund manager Jens Peers

keyboards used were incredibly old and made it difficult to type”.

“My computer broke down,” another said.

Not only this, FASEA seemed to know about the state of the technology they were imposing on the advisers and provided ear plugs.

Outsider empathised with the advisers as Outsider is well-versed with old, inefficient, and insufferable technology but laughed as he imagined the computer and keyboard graveyard that were FASEA exam halls.

FASEA, Outsider thought, perhaps were eco-friendly after all.

"Rate cuts won't kill the virus."

- Shane Oliver, AMP Capital chief economist Find us here:

5/03/2020 12:45:05 PM

FUND MANAGER

OF THE YEAR 2020 AUSTRALIA’S FIRST INDEPENDENT AND WHOLE OF MARKET AWARDS

SHORTLISTED FUNDS ANNOUNCED!!

Congratulations to all the shortlisted funds! For the past 32 years, we have seen Fund Manager of the Year Awards improve year after year, with more categories being introduced reflecting the efforts and evolution of Asset Management in Australia. One element which has not changed is that the awards are the hallmark for excellence in our industry.

In 2020, we would like to continue breaking new ground, and rather than limit participation to subscribers of any single research house, our plan is to bring together the best and most influential voices in our industry to act as a judging panel. Our intention is that all funds on sale in Australia should be eligible to win.

View shortlisted funds www.fundmanagerawards.com.au 21ST MAY FOUR SEASONS HOTEL SYDNEY

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4/03/2020 9:53:47 AM

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