Money Management | Vol. 35 No 5 | April 8, 2021

MAGAZINE OF CHOICE FOR AUSTRALIA’S WEALTH INDUSTRY

www.moneymanagement.com.au

Vol. 35 No 5 | April 8, 2021

INSURANCE

Firms behaving badly

22

SUPERANNUATION

26

Rise of mega funds

TECHNOLOGY

Portfolio optimisation

Count lures 11 IOOF/MLC firms and 30 advisers

BY MIKE TAYLOR

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Confusion and frustration in modern times THE COVID-19 pandemic has been a catalyst for change via technology – and that has included how advisers have interacted and continued to connect with clients.

But despite accessibility issues created by the pandemic quickly being solved, there were still lingering issues in the industry that had not been addressed with the same urgency, despite the solutions technology could provide.

With the expectation more advisers would continue to leave industry by the end of the year, after the deadline of the Financial Adviser Standards and Ethics Authority (FASEA) exam had passed, the remainder of the advisers in the industry would be expected to serve a broader base of clients.

Jeff Hall, Midwinter chief operating officer, said: “It should be not how many advisers you actually have, but how many customers can you actually reach and serve”.

Mike Giles, Ignition Advice chief executive, said the main problem with advice that needed to be addressed was the cost and scale in its delivery.

“More consumers than ever need help making financial decisions, advice professionals are expensive, and they can really only help a limited number of people each year,” Giles said.

Onboarding a larger set of clients while committing the required time for fact-finding and compliance might not seem currently possible to advisers, but technology could be the solution as technological services look to automate many of those processes.

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Full feature on page 16

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TOOLBOX

COUNT Financial has continued to grow its advice network at the expense of IOOF’s acquisition of MLC Wealth with the company adding three more firms to its license, bringing the total number of firms recruited this year to 11 made up of 30 advisers.

The three further firms joining the Count Financial network have been drawn from under the Godfrey Pembroke, Meritum, and Garvan licenses.

What is more, Count signalled that it is currently in due diligence with respect to other IOOF/MLC Wealth advice firms which could see it add close to 100 more advisers.

The firms are Sapphire Coast Financial Services, Next Generation Financial Planning, and Aspire Financial Planning group.

The three recruits won over to Count are consistent with the company’s growth strategy and

follow on from Count’s 17 March announcement that it had recruited four former IOOF firms.

The company noted that Sapphire Coast Financial Services is the fourth firm to join from Godfrey Pembroke, following the prior appointments of Ascent Private Wealth, Venture Financial Advisers and Plan Protect.

Commenting on the latest firms to join the Count license, the company’s chief advice officer, Andrew Kennedy, said the appointment of all three firms was a boost for the licensee which continued to target quality advice firms to join its network.

“Sapphire Coast, Next Generation and Aspire are three exceptional advice firms that we are delighted to have joining our national network,” he said.

“They bring experience and expertise which the rest of our member network will be able to benefit from.”

Will new Govt super rules promote inappropriate hawking?

THE Federal Government has been warned that its proposed new regime involving stapling people to a single superannuation product for life is likely to give rise to “hawking” by the representatives of unscrupulous providers, even targeting those who have not even left school.

What is more, Australia’s largest superannuation fund, AustralianSuper has warned against creating a situation where the funds most accessible to young, entry-level workers become their default superannuation funds for the duration.

“It is clear that a regulatory shift to ‘first-timer default’ will incentivise superannuation funds to target new job entrants and younger Australians. It may encourage providers to sell members into products early, regardless of the suitability of the product for Continued on page 3

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News

ANZ’s Alexis George replaces De Ferrari at AMP

BY MIKE TAYLOR

AMP has a new chief executive with Alexis George replacing Francesco De Ferrari.

The company has announced to the Australian Securities Exchange (ASX) that George is replacing De Ferrari who is retiring from the role as the company completes its portfolio review.

George joins AMP from ANZ where she has been deputy chief executive as well as group executive Wealth Australia.

De Ferrari will continue to lead AMP for an interim period to ensure a smooth handover.

AMP chair, Debra Hazelton said that De Ferrari would continue to work with the board

and lead AMP’s key strategic initiatives including discussions on the proposed transaction for AMP Capital’s private markets business with Ares Management Corporation.

She said De Ferrari had led AMP through an extraordinary period responding to unprecedent external challenges.

George will be joining AMP on a salary of $1.715 million a year and a short-term incentive opportunity equivalent to 100% of salary for on-target performance and 200% at maximum.

She will also have access to a sign-on award with a face-value of $4.091 million to be delivered in AMP equity, to replace existing incentive arrangements foregone with her previous employer.

Will new Government superannuation rules promote inapprorpriate hawking?

Continued from page 1

Deloitte takes Rice Warner

DELOITTE has acquired leading independent actuarial consultancy, Rice Warner.

The transaction was confirmed by Deloitte and will see Rice Warner’s staff in both Sydney and Melbourne retained and moving under the Deloitte umbrella as part of the company’s broader superannuation consultancy structure.

Rice Warner has been in existence for 27 years and has carved out a significant presence in the superannuation space.

One of its founders, Michael Rice, stepped down as chief executive in 2019, but has remained active in the firm as an executive and board member. It is understood he will continue to have a role.

The acquisition of Rice Warner will significantly strengthen Deloitte’s presence in the superannuation space at a busy time for the sector amid fund mergers and increased regulatory attention.

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that member’s life stage, the performance of the fund, suitability of insurance offer or the member’s financial risk profile,” AustralianSuper has told the Senate Economics Legislation Committee.

“Providers may also be incentivised to use a ‘Dollarmites’ type approach aimed at securing members prior to them starting their first job,” it said.

“We note this activity was explicitly rejected by the Royal Commission into the Financial Services Industry. The provisions as drafted do not appear to contemplate protections for younger Australians from these practices, in addition to the risks outlined above of them being placed into an underperforming fund,” the AustralianSuper submission said.

Elsewhere in its submission, AustralianSuper raises serious questions about those elements of the legislation that hand a regulation-making power that would allow the Parliament to prohibit expenditure that would otherwise be in members’ best financial interests.

“It also provides for specific recordkeeping obligations supporting payments a strict liability offence,” it said.

“We understand that this seemingly bizarre provision is actually intended to ensure that when superannuation funds spend money, that the products or services they are paying for are in fact provided. If this is the sole purpose

of the provision it should be more clearly stated as such,” the submission said.

“Of particular concern to us is that regulations may prohibit or restrict Trustees from making certain investments on behalf of members, even if they are in the best financial interests of members.

“The exercise of such a power directly contradicts existing law and prudential standards. Section 52 of the Superannuation Industry (Supervision) Act 1993 (SIS) and prudential standards made under that act (e.g.

APRA Prudential Standard SPS 530) dictate that the formulation of investment strategy and selection of specific investments is the sole responsibility of the trustee of the fund.

“Further, APRA-regulated superannuation fund trustees already have a fiduciary duty to act in members’ best (financial) interests. This includes that trustees are responsible for determining an appropriate level of diversification for each investment strategy.

“The notion that excluding assets from a trustee’s investment universe will improve outcomes is flawed. Further, that such a decision would be made by Parliament via regulation, to apply to all trustees regardless of their investment strategy or members’ investment choices, is not in members’ interests. The legislation also does not provide for any transitional provisions to ensure members’ existing investments aren’t adversely impacted as a result of the implementation of the provisions.”

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4 | Money Management April 8, 2021

Editorial

mike.taylor@moneymanagement.com.au

GOVT MUST STOP OUTSOURCING POLICY DETAIL TO THE REGULATORS

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

Recent legislative efforts in both the financial planning and superannuation spheres point to a Government too ready to leave too much policy detail to the regulators.

Managing Editor/Editorial Director: Mike Taylor Tel: 0438 789 214 mike.taylor@moneymanagement.com.au Associate Editor - Research: Oksana Patron

BOTH financial advisers and superannuation fund trustees should be rightly concerned at the manner in which the Government is adopting an arguably lazy and loose-ended approach to the implementation of key legislation.

Where both the Your Future, Your Super legislation and the Hayne Royal Commission bills are concerned, the Government has taken the approach of laying down a broad legislative framework while allowing the regulators – the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) – to fill in the regulatory gaps.

In circumstances where recent events have raised questions about the appropriateness of regulators becoming policymakers this approach is simply not good enough and, in large measure, disrespects the financial services industry while leaving those operating on the frontline both confused and distrustful.

In the financial planning arena, a classic case of the Government producing a legislative outline and letting the regulator fill in the detail is the so-called Haynes No 2 Bill – the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 dealing with the key question of ongoing advice fees.

Any comparison of the bill’s explanatory memorandum and the approach being outlined to advisers

by ASIC suggests that the regulator’s interpretation of the legislation’s intentions certainly errs on the tough side to a degree where some advisers are suggesting that it pushes them towards one-off fees and away from ongoing advice fees.

Similarly, the manner in which the Government has approach the Your Future, Your Super legislation leaves far too much discretion to the regulators around the so-called best financial interest duty and the reversal of the burden of proof.

As University of NSW Business School professor of commercial law and regulation, Dr Pamela Hanrahan, last week told an industry forum there is a modicum of political cynicism in the Government’s approach of leaving the details of legislation to the creation of regulations.

“This gives the government of the day the power to make the law, subject only to regulations being ‘disallowed’ later by Parliament,” she said. “As we saw in 2014 with the financial advice best interest laws, this can be a very messy process. The timelines make it very difficult for people affected by the legislation to provide meaningful input and for government to quantify in advance the likely financial and

other impacts of the changes.”

Hanrahan said it was to be hoped that the Law Reform Commission would be paying close attention to how governments used regulations as part of its broader work on simplifying the corporations legislation.

With legislation the devil is almost always in the detail and the bottom line, of course, is that it is hard to conclude other than that the Government’s approach of legislating and leaving the detail to the regulators is entirely politically expedient.

Of course, the approach also carries political dangers in a Parliament in which the Government’s majority is sitting on a knife-edge. Financial advisers will well remember how the regulatory approach to Future of Financial Advice changes hit the rocks because of those sitting on the cross-benches in the Senate.

The bottom line, however, is that the financial services industry and its health is too important to the broader Australian economy to be mucked around by political expediency translating into sloppy and insufficiently detailed legislation.

Tel: 0439 137 814 oksana.patron@moneymanagement.com.au News Editor: Jassmyn Goh Tel: 0438 957 266 jassmyn.goh@moneymanagement.com.au Senior Journalist: Laura Dew Tel: 0438 836 560 laura.dew@moneymanagement.com.au Journalist: Chris Dastoor Tel: 0439 076 518 chris.dastoor@moneymanagement.com.au Events Executive: Candace Qi Tel: 0439 355 561 candace.qi@fefundinfo.com ADVERTISING Sales Director: Craig Pecar Tel: 0438 905 121 craig.pecar@moneymanagement.com.au Account Manager: Amy Barnett Tel: 0438 879 685 amy.barnett@moneymanagement.com.au Account Manager: Damien Quinn Tel: 0416 428 190 damien.quinn@moneymanagement.com.au PRODUCTION Graphic Design: Henry Blazhevskyi

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April 8, 2021 Money Management | 5

News

Has AFCA grown beyond its mandate?

BY MIKE TAYLOR

THE Australian Financial Complaints Authority (AFCA) would be precluded from hearing complaints from wholesale clients under revised arrangements being canvassed by the Stockbrokers and Financial Advisers Association (SFAA).

What is more, the SFAA wants the Government to trim back the amount of discretion allowed to AFCA on what complaints it can hear and to impose some obligations on those making the complaints.

In a submission filed with the Treasury’s review of AFCA, the SFAA has made clear that while it supports an external dispute resolution (EDR) scheme such as AFCA, it has serious concerns about the manner in which the AFCA regime has been allowed to evolve.

“We consider that the AFCA scheme has developed in a way that is no longer just a protection measure for small consumer complaints,” the submission said before claiming that: “AFCA is now a scheme where: • Complainants can claim for amounts up to $1,085,000; • Member firms can have a binding award of

over $500,000 made against them; • Decisions are based on discretion and members have no practical recourse to appeal; • Complainants can bring claims even though they are wholesale investors; • If complainants are unhappy with the decision they can bring proceedings in a court of law after having had a ‘dry run’ in the AFCA system; and • Member firms settle claims rather than proceed to a determination due to the scheme’s cost structure.”

The SFAA submission argued that to address these issues changes be made to the AFCA Complaint Resolution Scheme Rules to: • Require complainants to ‘submit’ to the AFCA jurisdiction when they lodge a complaint and agree to be bound by the final decision. Alternatively, the rules could be changed to require complainants pay at least a nominal fee should they not accept AFCA’s preliminary view and progress the matter to a final decision; • Reduce the amount of discretion that AFCA can exercise when dealing with complaints; • Clarify that AFCA does not have jurisdiction to hear complaints from wholesale clients

and include wholesale client complaints as a mandatory exclusion; and • Require complainants who have not made a complaint first with a member firm to be referred back to the member firm to lodge a complaint directly with it before being able to lodge a complaint with AFCA.

Get AFCA out of ongoing investigations says FPA THE Financial Planning Association (FPA) wants to see the Australian Financial Complaints Authority (AFCA) lose its ability to investigate what it sees as systemic issues involving financial planning licensees.

Instead, the FPA wants AFCA to be confined to reporting what it sees as systemic issues to the Australian Securities and Investments Commission (ASIC) and therefore precluded from charging licensees fees for any ongoing AFCA investigation.

In a submission filed as part of the Federal Treasury’s review of AFCA, the FPA had expressed concern that circumstances might arise where matters impacting licensees are not only being investigated by ASIC and the single disciplinary body but also by AFCA. The FPA submission referred to the creation of a situation “where ASIC, the single disciplinary body,

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and AFCA are potentially investigating the same matter, and providing oversight of the licensee’s investigation of the same matter”.

“As discussed in FPA’s response to Terms of Reference 1.3 AFCA’s funding and fee structures, AFCA charges licensees additional and expensive fees for the EDR [external dispute resolution] scheme’s ongoing investigations of systemic issues.

ASIC also charges licensees for its investigations of ‘reportable situations’ and oversight of the Corporations Act through its

industry levy,” it said.

“It is unclear as to the new single disciplinary body’s involvement in such investigations and therefore any resulting costrecovery for potentially investigating and providing oversight of advisers on the same ‘reportable situation’.”

“The FPA supports AFCA’s role in identifying systemic issues and notifying the firm and ASIC of suspected systemic issues. This is a vital consumer protection function. However, AFCA’s role in relation to investigating systemic

issues further and requiring licensee action should be restricted to avoid unnecessary regulatory duplication and costs,” the FPA submission said.

“The new breach reporting, investigation and compensation obligations in the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 create a solid and consistent framework in the primary legislation under the extensive definition of ‘reportable situation’.

“Continuing AFCA’s current rules in relation to systemic issues will result in the duplication of obligations and potential directions from both AFCA and ASIC in relation to the same matter which will only cause inefficiencies and confusion for industry and consumers. ASIC as the regulator should determine any further action required and direct firms on such matters.”

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6 | Money Management April 8, 2021

News

Presenting advice fees eight ways looks ridiculous to clients

BY JASSMYN GOH

THE corporate regulator’s advice fee disclosure requirements is the biggest issue for advisers at the moment, as having to present fees to clients eight different ways from a client’s perspective looks ridiculous, according to an adviser.

HH Wealth director and financial adviser, Chris Holme, said the industry was lifting standards in a roundabout way.

“The Australian Securities and Investments Commission’s (ASIC’s) guidance on product fee disclosure is fine, but if I see a new client I’ve got to provide the financial service guide which has my fees on it, then I’ve got to get them to sign a terms of engagement letter which has my fee on it, we then present them with a statement of advice which has my fee on it,” he said.

“If they want ongoing advice we have to

provide them with an ongoing advice agreement which has my fee on it, then we present them with a fee disclosure statement which has a fee on it, and an opt-in renewal which has my fee on it.

“We are presenting the fee to clients in six different ways plus you’ve got to get direct debit request signed and a product fee as well.

“I’m obviously doing that but from a client’s perspective I feel it looks ridiculous.”

Holme said presenting fees in so many different ways could confuse clients.

“I’ve had a couple of clients ask me ‘Why are you telling me this so many times? Are you trying to tell us not to go ahead?’,” he said.

“They are just as frustrated as I am as it’s a lot of work for the one outcome.”

Holme noted the amount of paperwork was taking time away from actually servicing client needs and this led to higher advice costs.

“We have to turn away clients because if we can’t charge them our standard fee, we are not making a profit. There are clients that need advice but can’t receive it because they can’t afford it.

This is in direct correlation to the cost that it is to provide advice now,” he said.

Holme said his business turned away one to two clients a month due to this reason.

However, advisers could turn this burden into a positive by looking at it as progression towards being a professional industry, he said.

“There’s going to be cowboys in the industry that are going to leave meaning we’re going to have better compliance, leads, and more sustainable businesses,” he said.

“Advisers who are frustrated should talk to other advisers to see how they are kicking goals and look on the positive side because being an adviser is a pretty good job.”

Who can help you to navigate an evolving investment landscape?

Ares ups ante on AMP Capital private markets bid

BY MIKE TAYLOR

ARES Capital Management has upped the ante in its negotiations with AMP Limited signalling its interest in acquiring 100% of the AMP Capital private markets business.

AMP Limited has announced that while the exclusivity period around its negotiations with Ares Capital Management over the AMP Capital private markets business has concluded, work is continuing between the two companies.

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In an announcement to the Australian Securities Exchange (ASX), it said the 30-day exclusivity period in its Heads of Agreement with Ares had concluded.

“AMP and Ares continue to work towards a potential transaction and Ares has expressed interest in acquiring 100% of the private markets businesses,” it said.

“There is no certainty that a transaction will proceed, or the terms, size or structure on which it would proceed. Any transaction would remain subject to approval of AMP shareholders.”

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News

Ending vertical integration will lower financial advice cost

BY CHRIS DASTOOR

THE demise of vertically integrated institutional models will mean independent financial advisers can have better access to increased margins at a lower cost, according to WealthO2.

Shannon Bernasconi, WealthO2 managing director, said with platform fees under continuous pressure, achieving economies of scale was critical, especially if most of the platform costs were fixed.

“Following the exit of the banks from wealth management, many financial advisers are now free to choose their own administration platform, resulting in the practice and their clients benefitting from

the more modern digital engagement and non-conflicted fee models available from non-bank aligned specialist platform providers,” Bernasconi said.

Bernasconi said the platform and portfolio administration sector had become one of the most critical sectors in Australian wealth management.

“Platforms are generally viewed as the key productivity application within a financial planner’s office,” Bernasconi said.

“However, the past decade has been dominated by vertical institutional models creating an environment with high barriers to entry where innovation has been stifled.”

Findings from the Royal Commission and a continuously changing regulatory environment had seen a push of resources into compliance rather than innovation.

“Some institutions have exhibited no real appetite to adopt or realise the benefits of modern technology – and advisers and their clients forced to use these laggard platforms have suffered,” Bernasconi said.

“Others have engaged global software solutions to support new platform offerings, however these offerings have not been focussed on advisers’ needs.

“Instead, other revenue bias features have diverted the attention of these institutions. As a result advisers’ needs – and ultimately

their clients’ needs – have been sidelined.”

Darren Pettiona, WealthO2 executive director, said the size of the platform market had been underestimated.

“If you look now, you have Netwealth having the dominant market share… they have a 4.3% market share,” Pettiona said.

“I’ve never seen anywhere in the world where someone complimented the dominant market force as a 4.3% market share.”

Pettiona said it was a big market where the traditional gatekeepers, like the banks, were gone, and that technology would help advisers efficiently look after a broader set of clients.

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ASIC clarifies the reverse evidential burden on superannuation

BY MIKE TAYLOR

CIVIL proceedings brought by either the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA) will represent the greatest risk to superannuation funds under the Government’s controversial new Your Future, Your Super legislation.

ASIC has spelled out precisely how it believes the controversial reversal of the evidential burden of proof will work and what it will mean for superannuation trustees charged with breaches of the proposed new best

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financial interests duty (BFID).

In a submission filed with the Senate Economics Legislation Committee, ASIC said that in “civil proceedings brought by a regulator for a breach of the BFID, a reverse evidential burden of proof will apply (new s220A)”.

“This means that the onus is on the trustee to point to evidence that suggests a reasonable possibility that there was a proper discharge of its duties. If the trustee is able to do so, a regulator seeking to take enforcement action must then prove, on the balance of probabilities, that the trustee did not perform the trustee’s

duties and exercise the trustee’s powers in the best financial interests of beneficiaries,” it said.

“In practical terms, a reverse onus, of itself, will not materially change the scope of an ASIC investigation because ASIC must still investigate the circumstances of a suspected breach.

“We note that the reverse onus does not apply to additional BFID requirements that will be set out in regulations. Nor does the reverse onus apply where a criminal penalty is pursued by a regulator, or to class actions against trustees brought by beneficiaries or brought by the regulator on behalf of beneficiaries,” ASIC said.

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8 | Money Management April 8, 2021

News

APRA backs reversing legal burden of proof in super

BY MIKE TAYLOR

THE Australian Prudential Regulation Authority (APRA) has specifically backed reversing the legal onus of proof with respect to superannuation funds and the best financial interests duty.

In a submission to the Senate Economics Legislation Committee review of the Government’s controversial Your Future, Your Super legislation, APRA has clearly stated that the reversal of the evidentiary burden of proof will focus the minds of superannuation trustees.

“The reversal of the evidentiary burden of proof (which is part of the BFID measure) will also further focus trustees’ minds on the evidence they must have and the records they must keep to show they have acted in the best financial interests of members at all times,” the APRA submission said.

The regulator’s position stands in stark contrast to that of plaintiff law firm, Maurice Blackburn which described the reversal of the

HGL buys fund manager with its own AFSL

BY OKSANA PATRON

ASX-LISTED, HGL Limited has completed the acquisition of Supervised Investments Australia (SIAL), a fund manager with an investment management agreement for The Supervised Fund (TSF) and its own Australian Financial Services (AFS) licence.

HGL said the acquisition represented its re-entry into funds management and it hoped that its investment/funds management division, which currently is in excess of $10 million in funds under management (FUM), would grow to become a core contributor to future profitability of HGL. According to the announcement, SIAL had been brought into the HGL group as a wholly owned and managed fund manager, however it would be rebranded in due course.

The acquisition, which was first announced in January, had been funded by the issue of three million HGL shares, which were approved by shareholders at the annual general meeting (AGM) in February.

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burden of proof as “regulatory overreach”.

“This measure bolsters the requirements already introduced through SPS 515, building on penalty provisions recently introduced, which require trustees to ensure that their significant expenditure decisions are for the purposes of the sound and prudent

management of its business operations and consistent with the best interests of beneficiaries,” the submission said.

APRA said in the submission that it was currently undertaking a broad review of trustee expenditure, looking at a range of different types of expenditure arrangements across all sectors of the superannuation industry.

“This review is considering the framework and decision-making process of boards pertaining to certain areas of expenditure, including a review of the metrics and approach to assessment of benefits to members,” it said.

“If we conclude that fund expenditure by a particular trustee may not be consistent with the best interests of members or the sole purpose test, appropriate supervisory and/or enforcement action will follow. We are also seeking to identify both areas of good practice and areas where there is room for improvement, and expect to inform industry about our findings on an aggregate basis within the next year.”

12-month deferral urged on superannuation performance tests to give industry time THE Federal Government should defer the implementation of performance testing of superannuation funds for at least a year to give the industry and the regulator time to get the details right.

Leading superannuation asset consultant, JANA Consulting has called for the implementation deferral in a submission to the Senate Economics Legislation Committee arguing that there is simply not enough detail available to move any sooner.

The effective 12-month deferral being recommended by JANA would push implementation of a key element of the Government’s Your Future, Your Super package out to beyond the next Federal Election.

“The implementation of the ‘Addressing Underperformance in Superannuation’ package should be deferred until 1 July, 2022, to provide the industry adequate time to consider and consult on the significant detail to follow in yet to be drafted regulations,” the JANA submission said.

“This would also allow time for policymakers to consider and consult on an appropriate performance test for lifecycle products, which make up a growing and large part of the MySuper universe. The October Budget announced performance test is most easily applied to single strategy products and consideration needs to be given to how the performance test might apply to

lifecycle products,” it said.

“The implementation of the ‘Addressing Underperformance in Superannuation’ package for Choice multi-asset products (trustee-directed products) is inherently more complex given the range of products and design specifications including SRI/ESG products and risk-managed products such as post-retirement, absolute return and lifecycle products.

“For reasons set out further in this note, JANA does not believe it is necessary for a performance test to apply to trustee-directed products where members have made an active choice to select a product,” it said.

“JANA is also cautious about the application of a single performance test for trustee-directed products where there is no detail provided as to how performance tests would apply to this category of products (if at all).

“If there is the desire to apply a performance test to trustee-directed products, we believe that implementation of any (as yet to be determined) performance test for Choice trustee-directed products should be deferred to post 1 July, 2023.

This should include a reasonable lead time for consultation with the industry for both applicability of a performance test to trustee-directed products and the specific details of how such a test would be applied.”

30/03/2021 4:07:23 PM

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10 | Money Management April 8, 2021

News

ASIC says advisers can appeal for hardship relief on levy

BY MIKE TAYLOR

HARD-PRESSED financial advisers hit by large Australian Securities and Investments Commission (ASIC) levy bills have the ability to seek hardship relief, according to the regulator.

What is more the most senior executives within ASIC are claiming that in about two years’ time financial advisers may actually experience lower levy bills as the costs associated with the increased regulatory costs associated with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry wash through the system.

But the ASIC executives sidestepped a suggestion by Queensland Liberal backbencher and former financial adviser, Bert van Manen, that it is the banks rather than small

financial planning practices which should be meeting the cost of the much-increased levy.

While ASIC deputy chair, Karen Chester, and commissioner, Danielle Press acknowledged that the underlying reason for the significant increase in the levy was the unusual coincidence of a “denominator” and a “numerator” in the same year, outgoing ASIC chair, James

Shipton acknowledged financial planning industry concerns about the overall cost and the availability of hardship relief.

“We are open to receipt for applications of hardship and allowance for that,” he told a hearing of the Parliamentary Joint Committee on Corporations and Financial Services. van Manen had earlier referred to answers given by Chester and other members of

the ASIC executives which he said had referenced the big end of town – the banks and AMP. “[Your] answers are consistently referring to the big end of town but it is small business owners who end up paying the price for actions of big end of town,” he said.

“Do you have capacity to ensure that those who incur the large costs bear the commensurate responsibility to pay the levy while those who do not not, pay the levy at a reasonable rate. Do you have the ability to differentiate?” van Manen asked.

Chester said that there was already a gradation formula in the levy but acknowledged that it had been significantly impacted by actions brought about by the Royal Commission a large part of which related to enforcement.

Mayfair advertising found as deceptive and misleading

BY JASSMYN GOH

COMPANIES in the Mayfair 101 Group have been found to have made false, misleading, or deceptive statements in its debenture products advertisements by the Federal Court.

According to an announcement by the corporate regulator, the court found that in relation to Mayfair Wealth Partners trading as Mayfair Platinum, Online Investments trading as Mayfair 101, M101 Nominees and M101 Holdings represented that: • Mayfair’s debenture products were comparable to, and of similar risk profile to, bank term deposits, when Mayfair’s debenture products exposed investors to significantly higher risk than bank term deposits (Bank Term Deposit Representation); • The principal investment would be repaid in full on maturity, when investors might not receive capital repayments on maturity, or at all, as Mayfair could elect to extend the time for repayment for an indefinite period of time; and • Mayfair’s debenture products were specifically designed for investors seeking certainty and confidence in their investments and therefore carried no risk of

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default, when there was a risk that investors could lose some, or all, of their principal investment.

The court also found Mayfair Platinum, Mayfair 101, and M101 Nominees engaged in misleading or deceptive conduct by representing that the M Core Fixed Income Notes were fully secured financial products when the funds were: • Lent to a related party and not secured by first-ranking, unencumbered asset security or on a dollar-for-dollar basis or at all; • Used to pay deposits on properties prior to any security interest being registered; and • Used to purchase assets that were not secured by first-ranking, unencumbered asset security.

Justice Anderson found the bank term deposit representation were “not comparable to, or a proper alternative to, bank term deposits”.

He also said the use of sponsored link internet advertising was “tolerably clear that the defendants’ marketing strategy was addressed to persons searching for a term deposit in order to divert them to the defendants’ websites”.

“I am satisfied that the Mayfair products have been, in fact, designed by the defendants to produce a result which is

uncertain for investors and could not on any reasonable view be described as an investment with no risk of default,” he said.

“Mr Mawhinney was the directing mind and will, and the ultimate beneficiary, of each of the defendants.”

Commenting, the Australian Securities and Investments Commission deputy chair, Karen Chester, said firms needed to make sure they accurately described their products when advertising.

“Our ‘True to Label’ project that we commenced in late 2018 identified 30 funds with over $10 billion across these funds, that are misleading investors through online advertising, especially when investors are seeking yield in a low interest rate economy.

The online advertising is misleading by claiming to offer products that involve less risk, when in reality, investors could lose some or all of their investments,” she said.

“Advertisements also claimed investors could get their invested money out when they wanted but that was not the case. This case is a warning that ASIC will not only take action where investments are marketed as safer, lower risk, or more liquid when they are not, but when search engines are used in a misleading or deceptive way to entice investors to products they are not searching for.”

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26/02/2021 10:12:23 AM

12 | Money Management April 8, 2021

News

Hume backs growth in SMSFs

BY MIKE TAYLOR

SELF-MANAGED superannuation funds (SMSFs) have received a boost from the Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume, who has pointed to Australian Taxation Office (ATO) data as suggesting more Australians want to become ‘masters of their own destiny’.

More than 5,000 new SMSFs were established in the December 2020 quarter.

Hume’s support for the SMSF sector sits in contrast to its approach to the Australian Prudential Regulation Authority (APRA)regulated sector which has been subject to controversial elements of its Your Future, You Super legislation.

Hume said the December 2020 SMSF quarterly statistical report showed there had been significant growth across the sector, despite the economic impacts and financial uncertainty caused by COVID-19.

The report showed that there were approximately 594,000 SMSFs and an estimated 1.1 million members with the figures pointing to overall growth in total fund numbers which had increased on average by 2% each year over the last five years.

Total estimated SMSF assets also increased 5.1% over the quarter from $727.1 billion in the September 2020 quarter to $764.2 billion in the December 2020 quarter.

“The quarterly report shows increased consumer engagement and the growing desire for Australians to become ‘masters of their own destiny’ by taking their retirement savings into their own hands,” Hume said in a specifically-released statement.

“The SMSF sector always plays a significant role in the superannuation landscape, with steady growth trends signaling its increasing prominence. Already, SMSF’s make up 99% of all superannuation funds and hold approximately 26% of all superannuation assets,” Hume said.

Government accused of distorting the law on superannuation THE Federal Government is undertaking an extraordinary intervention in the free market via its Your Future, Your Super legislation by seeking to dictate what is and is not appropriate expenditure by a superannuation fund, according to leading plaintiff law firm, Maurice Blackburn.

What is more, the law firm has described the legislation as moving into the area of “undemocratic over-reach” and of reversing the evidential burden of proof.

In a submission filed with the Senate Economics Legislation Committee’s review of Your Future, Your Super legislation, the law firm said it saw the measure “as an unprecedented example of government over-reach”.

“With the ‘certain payments’ being documented in regulations, the government of the day has free rein to decide (or to change their previous decisions about) what is and what is not acceptable expenditure for these Australian businesses,” Maurice Blackburn said.

“Importantly, these decisions can be made without parliamentary scrutiny,” it said while pointing to the importance of Parliamentary oversight of the decisions taken by ministers.

“Parliamentary scrutiny has led to the removal of some significant unintended

05MM080421_1-15.indd 12

consequences from superannuation related legislation in the past, such as attempts to remove insurances from young people in high risk occupations,” it said.

“The proposed provisions, as they are currently written, invest significant power in the executive and the relevant Minister, and exclude the Parliament. If the Committee recommends that the Bill be passed, it is accepting this undemocratic over-reach as appropriate,” the Maurice Blackburn submission said.

“As legal practitioners, we find this reversal of the burden of proof to be extraordinary. Surely if a regulating body wishes to deem certain expenditure as outside the members’ best financial interest, it is up to that body to demonstrate how and why.”

The Maurice Blackburn submission said the legislation meant the “government can unilaterally decide what is and what is not an appropriate investment strategy for a superannuation fund”.

“Given that once again this is written into regulations, the government may decide at a whim what they decide to be appropriate and inappropriate investment decisions,” it said. “We are unable to identify any other example of a law which gives the government the power to override corporate investment decisions.”

ASIC delivers another relatively clean sheet on intra-fund advice THE Australian Securities and Investments Commission (ASIC) has again delivered superannuation funds a generally clean bill of health with respect to how they have been using intra-fund advice, even with respect to early release superannuation (ERS).

The regulator’s comparatively clean bill of health was delivered as part of its report on how superannuation funds supported members during COVID-19 in circumstances where it had reviewed intra-fund advice on early release and on insurance.

It said the ERS surveillance covered 27 trustees, and included 11 trustees that indicated they intended to rely on ASIC’s temporary no-action position on intra-fund advice related to the ERS, which was issued on 14 April, 2020.

“The surveillance found that actual instances of advice provided under the no-action position were very limited.

We did not identify any evidence of trustees inappropriately using intra-fund advice to discourage members from applying for the ERS,” ASIC said.

It said that as part of checking the support trustees provided to members in relation to insurance issues, ASIC requested samples of insurance related intra-fund advice.

“Of the 18 files collected, eight were assessed as complying with the best interests’ duty and related obligations,” it said.

“The remaining files were assessed as non-compliant because of issues with procedures and record keeping.

We did not identify any serious consumer detriment and the compliance rate was similar to the compliance rate identified in ASIC’s December 2019 Report 639 'Financial advice by superannuation funds'.”

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26/03/2021 1:40:31 PM

14 | Money Management April 8, 2021

InFocus

IS ACTIVE INVESTMENT MANAGEMENT REALLY A QUIET ACHIEVER? Ausbil’s Mark Knight writes that amid all the recent talk on the rise of passive investment strategies, their active counterparts have been steadily compounding outperformance.

THE CASE FOR active management is stronger than ever, especially following one of the toughest investment years in living memory.

Investors may direct their surplus income or capital into financial markets for a variety of reasons, but for the vast majority of us, the key driver is the desire to maintain quality of living well beyond our working lives. Indeed, the prospect of toiling for 40 to 45 years only to retire with an inadequate level of purchasing power and economic choice is a truly frightening one. It is no longer flippant to contemplate a retirement phase that lasts almost as long as our working lives. The ultimate aim of our savings behaviour should be to minimise financial stress right across the long twilight of one’s ‘innings’.

MAKING SENSE OF THE BARRAGE OF INFORMATION We are surrounded by a cacophony of research, data and commentary that seldom looks beyond an investment horizon of between one to three years. Witness the common financial press. When it does refer to particular or aggregate outcomes produced by investment managers and superannuation funds utilising active investing, it inevitably refers to the shorter term and compares to a relevant benchmark. The benchmark or index, of course, does not take active decisions, it is simply a ‘weighing device’, typically based on market-cap criteria and the net sum of investor behaviour at any given point in time.

By contrast, with an eye to producing superior, risk adjusted long-term returns, the thoughtful active manager will use judgment to avoid such short-term traps and invest in the inevitability of economic

05MM080421_1-15.indd 14

and market growth, and mean reversion over time. It makes sense that there will be periods of underperformance because, after all, this risk recycles as a source of future long-term excess return.

In this way, whether referencing an index or an active return, any given short-term result offers a poor guide for the future prospects for investment performance. In fact, it isn’t telling us much at all. We can only assess the efficiency of a market index, or the effective judgment of an active manager, over the very long-term.

Given this and the complementary point that the common person’s investment span is genuinely multi-decade, it remains a mystery as to why so many pundits develop a prognosis based on data and records that extend for only a few years. Surely it makes sense to draw inference from market and manager results that have endured the rigour of varying cycles, peaks and troughs over an extended timeframe?

Let’s take a look at an asset class: The Mercer Australian Large Cap Share Performance Survey for the 20 years to end December 2020

shows that the S&P/ASX 300 (All Ords before 1 April, 2000) returned 8.1% per annum on a compound basis. Of the 27 active strategies in the survey, 26 beat the market with a median result of 9.4% p.a., compounding at a very respectable 1.3% p.a. above the market. The upper quartile compounded at 10.5% p.a., beating the market by 2.4% p.a. Even the lower-quartile mark of 8.8% p.a. outperformed the broader market. These results do not include the effect of franking and are shown on a before fees basis.

Over a 20-year timeframe, investing $10,000 at a median return of 9.4% p.a. produces a balance of $60,304. If, rather, one invested in an index fund or market exchange traded fund (ETF) and received a before fees return of 8.1% p.a., the final balance would amount to a far lower $47,480.

For comparison, Ausbil Australian Active Equity fund has delivered a 20-year compound return of 10.3% p.a. (gross of fees) turning $10,000 into $115,231. Since inception in 1997, the same fund has delivered a compound return of 11.0% p.a., an excess return of 2.9% p.a. (gross of fees).

Compared to the large-cap

segment of the market, the smallcap sector of the market is arguably less efficient (lower levels of information), with less broker coverage and therefore affords relatively greater opportunity for alpha generation over the long run. The data bears this out in a stark fashion.

The Mercer Australian Small Cap (ex 100) Share Performance Survey for the 20 years to end December 2020 shows that the S&P/ASX Small Ords returned 6.5% p.a. on a compound basis. Of the 11 strategies in the survey, all of them beat the market with a median result of 13.2% p.a., compounding at a very respectable 6.7% p.a. above the market. The upper quartile compounded at 13.8% p.a., beating the market by 7.3% p.a. Even the lower-quartile mark of 12.4% p.a. outperformed the broader market by 5.9% p.a.

During the last 10 years in particular, there has been a proliferation of micro-cap strategies that utilise the S&P/ASX Emerging Companies index as their benchmark. For the 10 years ending December 2020, the Mercer Survey indicated a peer group median compound return of 14.5% p.a. versus 1.7% p.a. for the benchmark.

Given the evidence, the role for patient, active investing in Australian equity portfolios is proven and compelling.

COPING WITH SEQUENCING RISK Reducing share exposure either after the commencement of a correction or during the period of recovery, will interfere with compound growth and be detrimental to capital accumulation.

However, after the worst corrections, history shows that share values may take several years

31/03/2021 3:08:57 PM

April 8, 2021 Money Management | 15

InFocus to return to their starting value.

During the famous stockmarket crash of 1987, the S&P 500 collapsed by 28.5% and took 398 trading days to recover. The Global Financial Crisis (GFC) that extended across the second half of 2007 and 2008 caused the S&P 500 to depreciate by 56.8% and recovery took 1,022 trading days.

So, while an 80% to 100% exposure to equities will make sense for many investors, the retiree is in different circumstances given the absence of working income, the reliance on investment income and the consequent vulnerability to so called sequencing risk. It will therefore make sense to retain at least three to five years of income in defensive assets so as to allow growth assets to recover after substantial downside movements. Further, low volatility and absolute return equity strategies may be utilised alongside traditional, long only shares to moderate this downside risk.

ESG: AN ADDITIONAL SOURCE OF ACTIVE INVESTMENT RETURNS Fundamental, proprietary research provides the insights that allow active managers to create a capital return beyond the return of the market sector in which they invest.

The effort is 24/7 and is conducted by qualified, dedicated professionals. This research is both qualitative and quantitative and, traditionally, has focused on the financial aspects of corporate performance. It is now increasingly common for the same managers to also investigate the target companies approach to the environment, social and corporate governance (ESG), alongside its financial

THE COVID-19 RECOVERY – MAJOR INDICES SINCE THE CRASH

Chart 1: Ausbil Australian Active Equity fund: Value of $10,000 invested at inception in 1997 (net of fees)

Source: Ausbil

aspects, for a fuller view of the earnings risks and opportunities.

The fuller the view, the greater the likelihood of excess returns on a risk-adjusted basis over time.

Proper ESG integration will also insist on extensive engagement and advocacy with the interaction between fund manager and company manager encouraging corporate behaviour that is both responsible and sustainable.

Issues such as climate change and modern slavery are topical.

An index or index tracker is unable to do this work. As is the case with valuations, the index is ‘blind’, without any ability to use thoughtfulness and intellect to produce superior outcomes over time, or to actively reduce risks obvious or not.

THE EFFECT OF FEES Given the vast array of available investment strategies and vehicles it is difficult to generalise about the average level of investment management fees and what level is and isn’t reasonable. Investors though should remain considered in this area because the compounding

effect of fees can genuinely interfere with long-term growth objectives. It is also important to distinguish between investment, administration and advice fees. Only investment management fees should be attributed to investment portfolios and included in net fee calculations.

To enjoy the benefits of an active approach, investors should ensure that excess returns are expected to well exceed fees on a rolling longterm basis.

“Patience is bitter, but its fruit is sweet.”

Recent developments are troubling. In response to the economic malaise presented by the pandemic, the Federal Government expanded the superannuation hardship provisions allowing savers including young adults to withdraw up to $20,000 from their retirement accounts. The Government is expected to implement the Your Super, Your Future reforms from 1 July, 2021, and MySuper products will be subject to an annual performance test based on a comparison with conventional market indices. Underperforming funds will be listed as

underperforming on the YourSuper comparison tool until their performance improves. The reforms present the real risk that super fund trustees will minimise their exposure to active investing rather than suffer the potential for public ignominy during those inevitable periods when the fund return profile and relevant indices depart from one another.

Einstein is reputed to have claimed that “compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it”. Whether Government legislation, regulation, advice or investor behaviour, any cause for impatience around access to capital or the lengthy incubation period necessary to produce valuable active returns, will only serve to interfere with our industry’s capacity to deliver that which our customers desire most – the ability to develop an independent financial confidence that will go the distance. After 45 years across a typical working career, who would deny them?

Mark Knight is director at Ausbil.

53.7%

40.3%

33%

S&P ASX 300

NASDAQ 100

MSCI World

Source: FE Analytics; over 12 months to 23 March, 2021.

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31/03/2021 3:55:45 PM

16 | Money Management April 8, 2021

Technology

CONFUSION AND FRUSTRATION IN MODERN TIMES COVID-19 has been a catalyst for technological change in the industry but, Chris Dastoor writes, a major issue remains in how technology can address the accessibility of advice.

THE COVID-19 PANDEMIC has been a catalyst that has brought forward technological advances years earlier than otherwise might have happened.

The world entered the Zoomera where meetings could happen remotely and for advisers, this was essential in keeping some form of face-to-face meetings with clients.

However, although there were solutions brought on to fix issues created by the pandemic, many

05MM080421_16-29.indd 16

other existential issues faced by the industry were not addressed with the same sense of urgency, particularly when it came to the accessibility of advice.

As more advisers leave the industry, the remaining advisers will be expected to cover a broader base of clients. How technology could help in this aspect was by improving workflow, as well as automation, which would be crucial when it came to dealing with a larger

scale of clients.

Mike Giles, Ignition Advice chief executive, said the main problem with the accessibility of advice that needed to be addressed was the cost and scale of its delivery.

“More consumers than ever need help making financial decisions, advice professionals are expensive, and they can really only help a limited number of people each year,” Giles said.

“Which is why advisers tend to

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April 8, 2021 Money Management | 17

Technology

only engage with the sort of top end and only the top 10% of the market gets advised with regular retail customers not getting advice.”

Giles said the problem was customers needed help making decisions, and the cost of its delivery and its ability to scale were challenges, which was why technology was needed to help.

“Technology enables the customer to become the central part of the workflow, at the moment when an adviser does the work it’s all very adviser-centric, they’re doing all the heavy lifting,” Giles said.

“When you pour technology in, suddenly customers can actually get into the process and do some or even all of the process.”

Shannon Bernasconi, WealthO2 managing director, said the climate for technology had changed as banks departed advice and the end of vertically integrated institutional models meant more flexibility in how technology could be adapted. “[The banks] dominated, and therefore they didn’t invest and they stifled innovation, so that’s the one point of inflection we’re seeing,” Bernasconi said.

“Other parts of the world have really shone in fintech usage, compared to Australia – and that isn’t just because we aren’t great at fintech – it’s because we had that dominant vertical integration and [the banks] didn’t need to do anything.”

Emily Chen, Iress global head of product, said technology presented an opportunity for firms to assess and access the next generation of customers so they could service more clients in the future.

05MM080421_16-29.indd 17

“To make advice more accessible, we probably need to shift left and to achieve this, advisers need to be able to service more customers without adding cost and administration to the process,” Chen said.

“Even before talking about engaging new customers, the focus around automation, how technology can help create infrastructure as well as engagement tools to actually help them meet the needs.

“There’s a range of personal advice options, like scaled advice, which has been a concept that’s been around for a long time.”

Chen said one of the ways technology could be a benefit was by making advice automated and cheaper for people to access.

“When we think about cheaper in a technology sense, it’s about how to be more efficient, how to let the systems and technology do more, rather than having humans in front of computer screens,” Chen said.

Chen said an example was the legislation around advice fee consents and how this process could be automated by technology.

“As an example, without technology, advisers would have to manually access fee consent – getting signatures from their clients, saving that and filing it for compliance purposes, before passing each of the fee consent account details to each of the product platforms to wrap up the review process,” Chen said.

“They have to do this every year for every client that’s paying ongoing fees – how technology could help in this example includes both engagement and those compliance components.”

Chen said the infrastructure Iress had created around this allowed advisers to automatically send fee consent forms which would only require a digital signature.

“That’s completely automated, and saved back into the CRM [customer relationship management system] and through the utility that was built using blockchain, it goes through the product platforms without human touch,” Chen said.

“So rather than the adviser sitting in front of the computer and having to send multiple emails to and from the client to and from each of the platforms, we let technology drive that automation through workflow.

“Connecting the industry is also quite key, advisers use [on average] 2.5 product platforms, so that’s lots of paperwork if technology wasn’t there to help facilitate on fee consent.”

Jeff Hall, Midwinter chief operating officer, said they wanted to change the vernacular on the topic.

“It should be not how many advisers you actually have, but how many customers can you actually reach and serve,” Hall said.

“That’s where tech comes in for the different groups, whether that’s a super fund or an independent financial adviser.

“We need to start making it more efficient for them to actually start being able to offer lower cost options, being able to educate and simplify the process.”

Demographically, Hall said it was important for advisers to be connected with everybody.

“It doesn’t matter what

SHANNON BERNASCONI

Continued on page 18

30/03/2021 4:04:56 PM

18 | Money Management April 8, 2021

Technology

Continued from page 17 demographic people are from, they all like to interact differently,” Hall said.

“There’s the myth the older generations don’t like to do anything with tech, but the stats are proving that wrong these days – a lot of the tech savvy are the older generation.

“They are happy to take the time to look into things when they want to research and understand.”

Hall said the key to accessibility was having clients being able to start inputting their information, and being able to then investigate and look at all their documents in one place.

“It’s making it easier for people to monitor and collect information, which saves the adviser time,” Hall said.

“It’s having that single point of entry that everything should flow through, so omnichannel – which is a buzzword people are using – but they should be able to jump in at any point whether they want to use a telephone or a portal.

“But if they get halfway through the journey and they do feel they want to speak with somebody, then they should be able to.”

Ben Marshan, Financial Planning Association of Australia (FPA) head of policy, strategy and innovation, said the benefits of using more technology in the advice process were that it could make advice more affordable, engaging and cost-effective to provide.

05MM080421_16-29.indd 18

However, he said there were two things holding back accessibility of advice.

“Number one, there’s an integration issue and so a lot of the technology at the moment doesn’t integrate easily with each other,” Marshan said.

“There are different pieces of technology that will solve parts of the advice process really well, but if you can’t move the data from one spot to another then it defeats the purpose of using it.

“Secondly, there’s been so much change in financial services over the last seven or eight years that unless you have a reasonably-sized business or licensee to sit back and have a look at your processes, it’s a time-consuming process.”

REGULATION AND SCALED ADVICE Scaled advice could also help with accessibility of advice, but advisers had trepidation over whether they could fulfil regulatory requirements.

However, Marshan said

regulation was not a factor holding back the use of technology in scaled advice.

“Tech itself doesn’t improve the ability to provide scaled advice, per se,” Marshan said.

“The things that are holding people back from providing scaled advice don’t change just because you have technology in the mix.

“But technology allows you to collect information more quickly and allows you to use that information more efficiently, it allows you to deliver the advice more efficiently and all of that makes it more affordable and quicker.”

Marshan said all the regulators told him they were comfortable with scaled advice being provided.

“It’s this myth we’ve created in our minds – this fear the regulator isn’t saying what they actually mean – that’s stopping us from taking advantage of the opportunities that are there,” Marshan said.

“I regularly meet with the regulators, I have regular conversations with them, I

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April 8, 2021 Money Management | 19

Technology

regularly test their thinking and meaning – they’re genuine in saying ‘we’re happy for scaled advice to be provided’.”

However, from an adviser perspective, Hall said compliance was still an issue because of the cost to comfortably be able to implement it.

“Technology is able to help with the compliance side of the world; if we can reduce the burden on the planner, ensuring they are keeping within their licenses, we can do the heavy lifting on monitoring the clients and generating the documents, collecting the data,” Hall said.

“Technology is there to help with simplification, to make it easy for the adviser to spend more time with a client and less time meeting their compliance and regulatory obligations.”

POST-COVID FUTURE Before the COVID-19 pandemic, Chen said they talked to customers about how they would transition from the traditional business to digital models. However, COVID-19 accelerated the need to support a hybrid working system with digital at the centre.

When it came to post-COVID changes that were still needed in the industry, Chen said a goal was to eliminate paperwork entirely.

“This will extend into things like digital statements of advice (SoAs), so bringing to life the advice and

05MM080421_16-29.indd 19

provide it in a more interactive and visual way,” Chen said.

“There’s a lot of conversations around infrastructure and how to engage customers through automation.

“We will see a lot more engagement tools created as part of this process, how advisers may want to communicate with customers will change.”

Marshan said there was a massive opportunity coming through with the consumer data right (CDR) and the availability of tools the client could give when it came to the authority to collect their data directly from banks and other financial institutions.

“We have forever been asking clients to bring in their financial statements and information about their financial position, and then manually going through that, copying it into whatever systems we are using,” Marshan said.

“There’s a lot of opportunity to instead collect that digitally from the client, which would save time and effort doing it on [the adviser] end.”

Hall said during COVID-19, they looked at ‘robo-servicing’ for advisers to help them manage their day-to-day work.

“Compliance is another big one that we’re going to continue to build out; we’ve doubled-down on that during COVID-19,” Hall said.

“But the biggest pain point for advisers is still all the regulation

“There’s the myth the older generations don’t like to do anything with tech but the stats are proving that wrong – a lot of the tech savvy are the older generation.”

– Jeff Hall, Midwinter and compliance they need to do, so the simplification of that and helping in that space is quite key.

“That’s lowering the cost for advice and making it simpler for both the adviser and the client.”

Giles said advice was still a ‘siloed world’ where systems were still often too compartmentalised and isolated from each other.

“One of the reasons it’s so painful is that it’s rarely integrated into financial transaction systems,” Giles said.

“When people come online, they expect they don’t have to re-key all the same information and they get frustrated with that. That requires more openness in terms of technology transfers, open banking is probably an area that’s going to start making changes.”

Giles said COVID-19 began the push towards adapting technology quickly and showed it was a reasonable goal for businesses.

“Data privacy is the other area that really needs to catch up, because we deliver into Europe we fall under the GDPR [General Data Privacy Protection] rules, which are very strong,” Giles said.

“That’s built a digital confidence in Europe and we have to be equally as strong here.”

JEFF HALL

31/03/2021 9:20:18 AM

20 | Money Management April 8, 2021

Alternatives

CONSIDERING THE ALTERNATIVE While alternative strategies can provide protection during down markets, advisers are still hesitant as they feel the perception of risk and illiquidity overshadow the benefits, Jassmyn Goh finds.

THE ALTERNATIVE ASSET management space has ballooned over the past decade and, while Australia still stands as a laggard globally, the COVID-19 pandemic and low interest rate environment has created increasing demand from investors.

Within FE Analytics’ Australian Core Strategies universe, the alternatives sector had 117 funds and 16 (13%) had been launched since 2019. This signals there is appetite in the Australian market for alternative investments.

Tribeca portfolio manager, Jun Bei Liu, said the sector had been growing in the country quite meaningfully over the last five to 10 years but was still behind the global pace. Liu said COVID-19 had increased demand from both retail and institutional investors as both were looking for market agility and higher returns.

Long-short alternative managers, she said, had the opportunity to buy long and short stocks whereas long-only

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managers were unable to take advantage of their insights of an underperforming company.

“This is a very efficient way to utilise both sides of the argument and benefit from rising and falling prices,” she said.

“In the falling market it provides strong protection when the market is falling because we are shorting the companies that have a weaker business model and the like. This is really good protection when those businesses fall more than higherquality businesses when normally there is a lot of investor support.”

Active long-short managers, she said, were able to outperform in both up and down markets and provided more consistent returns.

Since the COVID-19 pandemic was declared last year, the market has crashed and risen and long-short managers were able to enhance their returns by shorting during market volatility.

“If you look across the alternative fund manager space as a group, we have always had higher

returns than the rest of the funds management market,” Liu said.

Regal Funds Management chief executive, Brendan O’Connor, said many investors were a bit despondent given the current low interest rate environment and were looking to diversify and achieve growth by moving into alternative investments.

The pandemic had exacerbated and prolonged the low interest rate environment and investors were seeking to benefit from returns that were uncorrelated to the market. Long-short managers, he said, were able to harvest alpha from idiosyncratic movements from shares as opposed to the market movement.

Away from long-short managers, investors could also use alternative strategies to access niche beta. These were typically from a specialist investment team that were trying to access different parts of the market such as agriculture, forestry or water assets.

“They are largely owning the assets (being long) but through their expertise they seek to generate alpha in a manner that is uncorrelated to traditional financial assets,” O’Connor said.

ADVISER RELUCTANCY Despite the benefits of producing alpha when rates are low, financial advisers have historically been reluctant to dip their toes into the alternatives world.

O’Connor pointed to the higher volatility that alternative investments experienced as a barrier for investors.

“The volatility associated in investing in this market is unfortunately the price you pay for getting exposure to some of these companies you wouldn’t usually have exposure to. We focus on strong risk-adjusted returns over the medium to long term,” he said.

“You will get periods where your portfolio experiences volatility, but when it comes to the overall asset allocation and positions provided,

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April 8, 2021 Money Management | 21

Alternatives you can size your positions and allocations to a manner where you can tolerate that volatility and that volatility that can turn into opportunities that help tie in your investments.”

Liu attributed the hesitation to the fact that the sector still felt very new to investors and a myth persisted that alternative strategies were highly leveraged and risky.

However, she believed that the longshort space helped lower risk in portfolios.

“If you look at the consistency of performance, most long-short managers outperform in a downmarket, but generally a lot of them struggle in a rising market. We have been able to outperform in both up and down markets” Liu said.

“This is because we can short stocks which gives us the ability to buy risky stocks as well. We can buy a very volatile company that have shares that move a lot because we can short similar companies, and that takes out so much risk and makes long-short managers more defensive than long-only managers.”

Liu said if she invested in a high-quality tech company that was exposed to stockmarket risk but also invested in a similar exposure where earnings were not doing so well, when the stockmarket fell her portfolio would be protected as she would have a short position pair traded with the higher-quality stock.

Apostle Funds Management managing director, Karyn West, said alternative funds were often designed around the institutional market as they had longer lock-up periods and that it was a struggle to create products that suited the retail market.

“The retail market often needs daily pricing and high liquidity needs and that does not fit well with alternative investments.”

Apostle invested in more niche alternative areas including venture capital, private equity, alternative debt, and property.

WHAT TO LOOK FOR IN AN ALTERNATIVE MANAGER West said advisers looking at the alternatives space should look for quality managers who aligned

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themselves with clients and were cognisant of the market and regulatory environment.

“It’s all about quality and the best investments that diversify.

Advisers should look for products that are suitable for a particular period or suit a certain environment.

At the end of the day it’s about quality teams and quality investments,” she said.

Agreeing, Regal’s O’Connor said the hallmarks of a good alternative investment manager were that they demonstrated they had added alpha over a long period of time over different market cycles. He said advisers needed to look at a period of over 10 years and find out whether the fund had some sort of independent recognition.

“Advisers should look for funds that can demonstrate they have achieved alpha over a number of market cycles and corrections, and they should look at how they have responded, and how their risk management has performed,” he said.

“The funds need to truly be able to demonstrate they’ve added alpha, and they haven’t just ridden the beta of the market. This will be demonstrated through the manager’s individual stockpicking skills which have generated the return as opposed to the rise of the overall market.”

O’Connor noted the Rubicon people needed to cross when considering alternatives was to realise that there were fewer alternative managers than long-only managers, their fees were typically higher as investors were paying for the specific skillset of the manager and that, sometimes, the strategies required a degree of illiquidity to generate alpha.

Liu said before jumping into an alternative sector, advisers needed to understand the strategy itself and what the strategy deliver for their portfolio as there were so many variations of alternative investments in the sector.

Similar to O’Connor, Liu said the track record of alternatives was extremely important and that there were a number of managers who had not been through many market cycles.

“You want to know how the funds

“You want to know how the funds have responded to market events and see the funds stress tested during crisis events like the pandemic and the Global Financial Crisis.”

– Jun Bei Liu, Tribeca have responded to market events and see the funds stress tested during crisis events like the pandemic and the Global Financial Crisis,” she said. “You want to see how they behave and how they deliver returns.”

ALTERNATIVE CHALLENGES However, Liu noted longevity was a challenge for new managers coming into the space as there were only around seven or eight alternative managers in Australia that were consistently rated.

“Every now and again a new manager pops up but they don’t have longevity. The challenge for funds is having a strong team and building on it, which is another example of why you want to see how managers have responded through different cycles,” she said.

For West, she said the top two issues for the sector were liquidity and fees. Given the Government gave the greenlight for superannuation funds to release members’ funds on grounds of hardship during the COVID-19 pandemic, super funds were now more cognisant of liquidity.

“They are all looking through their portfolios and they’ve been through a difficult year and now they are turning attention to the new heatmaps and benchmarking arrangements coming into play.

They are having to look through a range of issues and liquidity is one and fees another,” she said.

West said there was a disproportionate focus on fees in Australia that was not present overseas. Other markets looked at net returns and assessed the merit of the investment and, while fees came into consideration, it did not have the same focus as Australia.

“I fear that going forward we will need to forego really good investments if fees are higher because the budgets here are going

JUN BEI LIU

to be stricter. Unfortunately, that’s the landscape we’re going into but we have to deal with it,” she said.

“Typically alternative investments are more expensive as they are more specialised, and often require very specific skillsets, large teams, specialist systems and the operational aspects that run the products are going to be higher for investments such as private equity, venture capital, and hedge funds.”

She said any areas where there was a large supply of managers were more vulnerable such as private equity.

“If a group wants to enter the Australian market and is prepared to discount their fees to get a foothold it impacts the other private equity managers. This has been happening for about five to 10 years, but it has intensified over the last 12 months. It’s a permanent feature of our system,” West said.

“Funds need to be more creative with things like co-investment, opportunities, and find different ways to reduce fees. They need to work actively with the underlying manager for them to be more creative with finding better value for the clients.

“If they’re not prepared to do those sorts of things, it’s going to be a huge challenge for them.”

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22 | Money Management April 8, 2021

Insurance

INSURERS CONTINUE TO BEHAVE BADLY Col Fullager examines examples of poor insurer conduct and how the firms could have behaved better towards the client.

IN AN ARTICLE headed 'Insurers Behaving Badly‘ (Money Management, 9 August, 2019), a number of examples were provided of inappropriate insurer conduct, including: • Requesting additional claim proofs without providing reasons for the relevance of the proofs to the policy and the claim – a requirement under Section 8.5 of the Life Insurance Code of Practice; • Failing to alter an insured’s mailing address resulting in policies lapsing and claims being denied; and • Underpaying a claimant for several years and then compounding the error by making a lump sum catch-up payment resulting in an excessive tax bill.

All gave rise to issues where the assistance of the experienced adviser was invaluable in having the client prejudice corrected.

Unfortunately, equivalent situations continue to arise, arguably with greater frequency and detrimental impact than before.

If you have ever doubted the potential for a financial adviser value add, please read on.

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(i) Making the simple, difficult, and dangerous John held various policies with his insurer. Illness struck and it reached the point where an income protection insurance claim needed to be lodged.

The new Financial Services Council (FSC) standard authority was completed and sent to the insurer designating a third party as the claim point of contact and requesting a claim pack be sent to that person.

Several days later an email was received: “An income protection insurance claim has now been registered for this member”. So far, so good… but the email went on: “In order to send you the claim pack, we need a certified copy of the members driver’s license or passport to be certified at a police station as the current copy we have is not clear”.

For reasons explained below, the third party responded with what appeared to be an eminently reasonable counter-suggestion “Can you please send the claim pack now and we will undertake to get certified ID when the documentation is returned. Also, please confirm certification can

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April 8, 2021 Money Management | 23

Insurance Strap

be by other than the police, for example, a Justice of the Peace”.

Another several days later, “Please be advised, as per previous email, we need identification for the subject claimant… etc.” and, of course, the response repeated the request for police certification.

What are the reasonable concerns, apart from dealing with what seems to be an inflexible and dogmatic mindset: • Even if the ID requirement was reasonable, the police arguably have better things to do; • In this COVID-friendly environment, why would the insurer deliberately — and arguably unnecessarily — send someone to a police station particularly as the insurer is unaware what the claim condition is until the forms are lodged, for example the claimant may be bedridden or would be placed at a heightened risk of contagion if they stray outside the home environment; • There are clearly many other, and safer, ways in which ID can be certified, for example the insured could get the treating doctor to do it when the medical claim forms are completed; and • Why is ID needed by an insurer to enable blank claim forms to be sent to a third party representative?

What was an essentially simple request, turned into an escalation matter, further delaying the sending of the claim pack and wasting the time for all involved. (ii) Generated earnings V Government subsidies As part of its economic stimulation initiatives, the Federal Government has made available

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various subsidy payments, including JobKeeper, JobSeeker and the cashflow boost payments.

A number of claimants have recently had their partial disability benefits reduced or stopped as the insurer has deemed these payments to fall within the definition of post-disability, personal exertion, generated earnings. To add insult to injury, one claimant was even instructed to repay many thousands of dollars of allegedly overpaid benefits as a result.

In so far that the “at least three” insurers involved appeared to be drawing a longer bow than Robin Hood, an informal legal opinion was obtained in regard to the cash flow boost payments.

The response: “The Cash Flow Boost Benefit (CFBB) is not money generated by the business due to the insured’s own exertion. This interpretation is supported by the following: • The money is not ‘generated’ by the business — it is granted or gifted to the business by the Government in an effort to stimulate the economy; • The eligibility criteria make it clear that the CFBB is only payable upon satisfaction of four stated criteria, and none of these criteria relate to the activity of the insured; • The CFBB is only payable if the business has employees.

Therefore, the activity or inactivity of the insured is not a relevant consideration for the assessment of eligibility to receive the benefit; • The business does not need to pay tax on the amount of the CFBB and it is not subject to GST because there is no supply for the payment.”

(iii) Application of exclusion clauses Full insurance cover, even with a loaded premium, has long been held as the preferred alternative to insurance cover subject to an additional exclusion clause.

Some respite was provided years back when the true purpose of an exclusion clause was translated into a written commitment by most, if not all, retail insurers.

Exclusion clauses are intended to normalise the additional risk that comes with the presence of a material, pre-existing condition or activity. Normalisation is achieved by excluding: • Insured events that arise out of the presence of the pre-existing condition/activity; and • Situations where recovery from an insured event is impacted by the presence of the pre-existing condition/activity.

However, the written commitment made it clear that if, notwithstanding the pre-existing condition/activity, the insured event would nonetheless have resulted, the claim would be considered on its merit despite the presence of an exclusion clause.

Of course, one of the risks associated with not being reminded of the past is that it can be forgotten which recently appeared to be the case in the following situation.

Jill lodged an income protection insurance claim which was declined because the insurer asserted that the presence of the excluded, pre-existing condition had given rise to the insured event.

With the assistance of her adviser, Jill commissioned a report from the treating specialist who did not beat around the bush

COL FULLAGAR

in stating that it was “abundantly clear” for reasons given that, in this instance, Jill’s pre-existing condition was unrelated to the insured event and that the insured event would have given rise to an equivalent claim even if there was no pre-existing condition.

The report was submitted to the insurer and a review of the claim decision was requested.

Unwilling to accept the specialist’s opinion on face value, the insurer sought an opinion from its own consultant medical officer (CMO) who, whilst medically qualified, was not a specialist in the relevant field.

As the insurer’s CMO had not treated or examined the insured, the opinion provided was necessarily generic with that opinion being that the pre-existing condition “is a predisposing factor” to the insured event.

Armed with this, the insurer accepted the generic opinion of its CMO over the specific opinion of the treating specialist and maintained its decline decision; however, the insurer then relevantly added that this was, however, not the main determinant in its decision.

Continued on page 24

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24 | Money Management April 8, 2021

Insurance

Continued from page 23

The insurer went on to cite the wording of the exclusion clause and noted that by its mere presence “… we consider that we are entitled to rely on [it]…”

This matter is ongoing and concerning.

While on the subject of exclusion clauses, an insurer was contacted recently and advised that the wording of its standard exclusion clause was, shall we say, less-than-optimal in so far that it contained ambiguous terms and terms that were inconsistent with the policy.

By way of example, the following wording appeared “I hereby understand and agree that the definition of ‘pre-claim earnings’ for the policy I have applied for means: for claims within 12 months of the policy start date...”

Setting aside the unnecessarily archaic language, the question is reasonably asked “What does the reference to ‘claim’ mean? Is this referring to the start of the Waiting Period or the start of benefit payments?”

A subsequent question, also reasonably asked, is why is there a reference to ‘pre-claim earnings’ when the policy refers to ‘pre-disability income’?

The best way to find the right room for an argument is to look for a door titled Imprecision. (iv) Speaking of arguments A claim was recently declined on the basis that the relevant policy definition had not been met based on a medical technicality. The insured disagreed with the insurer position and sought to

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identify what additional information might be obtained such that an insurer review of its decision would be enabled. The insurer was contacted by email with the email ending: “For the record, [the client] does not want this to be treated as a complaint such that it is referred to the complaints team; he is simply looking to work with [the insurer] in order to resolve the matter of his claim in a mutually acceptable way.”

Pretty clear, eh? Evidently not as the very next day brought the response: “I’ll refer this to our internal dispute resolution (IDR) team for an independent review.”

Why would an insurer do that, you might ask?

The anticipated answer came with the insurer’s letter maintaining its decision: “Please note this is our final response in relation to your complaint.”

By referring the matter to IDR, the insurer was able to label the file ‘Finalised’ thus closing off the insured’s ability to obtain additional material and seek a claim review, unless the insured was willing to navigate an Australian Financial Complaints Authority (AFCA) complaint.

The arguable skulduggery did not end there.

The insurer IDR response proudly announced: “You have the right to copies of ALL the documents and information we relied on in assessing your complaint” (emphasis mine).

The insured decided to request said documents and information so that the medical basis of the

insurer’s position could be considered, and an informed assessment undertaken.

Sometime later an attachment laden email was received and duly reviewed only to find there was nothing even close to a medical referral by the insurer. A further query was raised giving rise to the response: “The documentation provided to you does not include internal correspondence, which is sensitive in nature. This is confirmed in Section 14.5 of the ‘Access to Information’ section of the Life Insurance Code of Practice.”

One might be forgiven for

thinking the representation of: “ALL the documents and information” was misleading especially when it was realised that the insurer representative failed to act upon or advise the content of the next Section of the Code i.e 14.6(b).

“If we decline to provide access to or disclose information to you… we will give you a schedule of the documents we have declined to provide and give you reasons for doing so.”

To quote Julia Roberts from the movie Pretty Woman: “Slippery little suckers”.

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April 8, 2021 Money Management | 25

Insurance

(v) COVID-19 claim An insurer recently declined an income protection insurance claim.

Whilst acknowledging that the insured suffered from an illness, the insurer maintained that the decision to cease work was not ‘solely’ due to the illness alone but was, in part due to the medically advised concern that the insured might contract COVID-19.

For a claim in this, or an equivalent situation, to succeed, it would seem reasonable that at least five criteria would need to be met: • Has medical advice been received that the insured is suffering from a medical condition that increases to an unacceptably high level, the risks associated with contracting an illness present in the community or at the workplace?

• Is there an illness present in the community or at the workplace at such a level that it would pose an unacceptably high risk to the insured’s medical well-being?

• Has the insured been given medical advice confirming (i) and (ii)?

• Is the nature of the insured’s work such that it would be impractical to undertake it at an alternate site where the above risks were reduced to a level that was considered medically safe?

• Is the nature of the insured’s work such that it would be impractical for the insured to undertake it whilst wearing the necessary personal protective clothing (PPE)?

The sad irony in regard to the

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above is that the insurer had to be advised of the relevant criteria rather than it having considered the matter and advised the insured accordingly. (vi) Learned, but loopy, logic Sometimes that which appears to be learned logic can, on closer inspection, be seen to be more akin to loopy. A recent example: A total and permanent disability (TPD) claim was assessed and accepted, with the Date of Disablement being June 2015.

Notwithstanding the backdating of the claim, the insurer insisted that premiums paid subsequent to June 2015, up to the date of claim acceptance, were to be retained.

“The continued deduction of premiums while your client’s claim was ongoing occurred as the trustee has a standard practice to continue insurance cover in place until a member specifically chooses to cancel or reduce their cover. This practice means a member remains covered in the event of death while a TPD claim is ongoing as the TPD claim may not necessarily be accepted.

“The fact that the insurer remains ‘on risk’ from the date of disablement means premiums remain legally payable to the insurer under the terms of the insurance policy...”

The above logic is, however, flawed in so far that, if an insured died while the TPD benefit was being assessed, to the extent the TPD date of disablement was earlier than the date of death, assessment of the TPD claim would

take precedence. If the TPD benefit was not accepted, the death benefit would be assessed, in which case premiums from the proposed TPD date of disablement to the date of death, would be payable.

If, however, the TPD benefit was accepted, cover would end at the TPD date of disablement, and no more premiums would be payable such that, premiums paid subsequently should be refunded.

The additional worry is, however, that the trustee’s position was stated to be ‘standard’ which begs the question, how many other insured’s have had premiums unreasonably retained? (vii) Summary Insured lives are drawn from all parts of the rich tapestry of life; the highly intelligent, the highly skilled, the well intentioned and the wellhealed; however, the vast majority will share one thing, they will be relative minnows when it comes to matters risk insurance related.

As such, left to their own devices, they can be misled and miss out.

The examples cited above are real and likely concerning. True, they may only represent a small proportion of the otherwise great things that can be found going on in the risk insurance industry, but infrequency does not condone.

The introduction to this article invited the reader that doubted the potential for value add by an informed adviser, to read on. It is hoped that the point is well made.

Col Fullagar is principal of Integrity Resolutions.

30/03/2021 4:03:10 PM

26 | Money Management April 8, 2021

Super funds

HOW SUPER FUNDS CAN MAKE SCALE PAY Their assets may be increasing but the number of Australia’s superannuation funds is falling and creating ‘mega funds’. Now, they need that scale to work in their favour, Babloo Sarin writes.

THE ASSET POOL of Australia’s regulated superannuation funds hit $2 trillion at the end of 2019, having more than doubled in the past seven years. By contrast, the number of funds dropped by a third, as they seek better member outcomes and economies of scale to boost performance.

This has led to the emergence of so-called ‘mega funds’ and the phenomenon looks set to continue, with the Australian Prudential Regulation Authority (APRA) sustaining the pressure on poor-performing funds to “merge or exit the industry.”

Consolidation continued throughout 2020 despite the turbulent year. In August, IOOF

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announced its merger with MLC to create a $173 billion mega fund, surpassing the newly created Aware Super ($130 billion). The ongoing merger discussions of QSuper and Sunsuper, meanwhile, would create a $195 billion fund.

More deals are imminent and are estimated to involve $1.5 trillion of assets. To put that figure into perspective, the market capitalisation of companies listed on the Australian Securities Exchange (ASX) stands at $2.2 trillion.

Consolidation brings economies of scale — a central objective that has a number of benefits. Industry data provider

Rainmaker says that member fees dropped by an average of 21% as a result of super fund mergers over the past three years.

On the income side of the balance sheet, a larger pool of money opens doors to other investment opportunities — particularly in alternative asset classes such as private equity, real estate and infrastructure.

However, these benefits do not happen automatically. The Productivity Commission’s 2018 assessment found evidence for benefits of scale related to administration expenses and investment returns, but this was not clear in all cases, and it indicated that “significant

unrealised economies remain”.

The need for portfolio diversification means that mega funds have had to become global, multi-asset managers. As their portfolios have grown in size and complexity, a robust operating model is critical to providing effective and efficient support.

HOW TO BECOME AN EFFECTIVE MULTI-ASSET MANAGER 1) Internalisation of investment management: Look before you leap As they grow their portfolio complexity and size, super funds have to consider which investment strategies to internalise as they

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April 8, 2021 Money Management | 27

Super funds Table 1: The benefits of scale

Better member outcomes

• Members benefit from lower costs and potential for better investment returns • Ability to invest in technology and services to improve the customer experience

Lower administrative costs

• Lower per capita cost of internal functions such as legal, marketing and HR

Greater investment options

• Greater focus on product development particularly retirement solutions • Positive net cashflow

Greater investment control

• Increased access to alternative assets such as infrastructure, private equity and real estate • Ability to buy larger stakes in target companies and increase engagement/stewardship influence • Reduced use of agents and associated conflicts/fees • Bring investment management of certain asset classes in house for greater control of investment strategy and lower costs

Outsourcing advantages

• Ability to access best-in-class solutions to achieve an optimal and efficient operating model.

Source: State Street

think about cost controls and management fees.

AustralianSuper, for instance, has set a target of managing 50% of its assets in-house by 2021, and increased in-house management to 40% last year from 31%, driving $160 million in savings for members. UniSuper, which has led this insourcing trend, manages almost 70% of its investments internally.

But this trend will lead to investment teams demanding access to new markets, data and investment solutions at a faster pace than middle and back-office support staff can accommodate them. And building and managing the internal infrastructure to match the fund’s expansion might undo the economies of scale it was hoping to create.

2) Embedding flexibility: Get ready to scale up Australia’s superannuation funds can learn something from some of the world’s largest public asset owners in the US, which have already been down this road.

Many first attempted to install their own technology platforms, to build out back-office support and create their own data warehouses to maintain full control, only to realise it was sapping resources from highervalue activities and moving too slowly to properly enable investment teams.

Institutions are now focused on a model whereby more complex functions such as risk management, mark-to-market (MTM) valuations and data analysis and management are outsourced to a dedicated

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provider. This ensures continuity of access to the latest technology and frees up in-house talent to focus on core portfolio management responsibilities and more value-adding activities.

This model has been vindicated during the pandemic. The finance staff forced to work from home discovered that compliance and cybersecurity protocols have restricted access to their own proprietary information and disrupted business processes.

Functions outsourced to a global provider, on the other hand, remained accessible.

Although keeping control of investment decisions is crucial, institutions can use the service providers’ expertise for more non-core, yet critical functions — including execution, analytics and reporting.

Super funds have longer-term demands to consider, too. As they expand their investment portfolios, they will need to convert the higher, fixed costs of internal trading platforms into scalable variable costs. And they need extensive access to liquidity pools and execution capabilities across markets and asset classes.

3) The technology arms race: How to keep pace As super funds expand their investment portfolios, they need a flexible technology infrastructure to quickly and seamlessly onboard new asset classes and supporting operations.

But that is only part of the story. The investment industry is going through a technology revolution that is redefining how it consumes and applies data — and

this is not a race that super funds can run on their own.

The data available to support investment decision-making is growing exponentially. Consultancy firm Opimas has estimated that the market for environmental, social and governance (ESG) data, for instance, could reach US$1 billion ($1.3 billion) globally in 2021, and analysis by industry trade groups suggests that there are now 445 — and rising — ‘alternative data’ firms providing institutional investors with insights from non-traditional information sources.

This tells us that super funds will need more advanced data management capabilities: increased migration to cloud and access to centralised data warehouses that can process proprietary and external information sources in near-real time.

BENEFITS BEYOND ECONOMIES OF SCALE The power of size is about more than just economies of scale. In private markets, mega fund status offers a substantial competitive advantage. A mega fund with close to $200 billion has more freedom to co-invest with general partners in private assets, which helps to cut fees and improve returns, and they have more control over risk decisions. They can even bypass general partners altogether — buying a building, say, or even an airport outright — which gives them full control and a long-term income stream.

As super funds gain scale, they can also compete with private

equity funds in the public markets, with the financial muscle to buy out a company and take it private, rather than just invest in it.

Mega funds can also capture opportunities that were previously hard to access, such as long-term lending. Banks have had to retreat as more onerous regulatory and capital requirements force their hand, allowing super funds to step in and lend directly to businesses.

For a super fund, such opportunities bring the added advantage of supporting domestic businesses whose employees are the contributors of their funding.

HOW BIG IS BEST? Debate rages about the exact endgame for the super fund industry. For instance, a Right Lane Consulting report concludes that the ideal structure for Australia’s superannuation system would be no more than five generalist mega-funds and 10 specialised funds. Others argue that we need a longer-term analysis of the impact on investment returns and insurance cover before this thesis is fully supported.

What is clear is that the debate is less about whether bigger is better, and more about how big is best?

The onus is now on super fund executives, regulators and outsourcing partners to make sure that ‘mega’ is used to its full potential — and that members reap the rewards.

Babloo Sarin is head of asset owners - Asia Pacific at State Street.

30/03/2021 4:57:34 PM

28 | Money Management April 8, 2021

Fixed income

OPPORTUNITIES FOR BONDS IN A POST-COVID WORLD Positive trends are arising from COVID-19, writes Adam Grotzinger, which create mispriced opportunities in corporate bonds.

2020 WAS A year of immense change with the effects of the global pandemic and widespread lockdowns felt on a global scale: jobs were lost, incomes were affected, and company profits were slashed.

With hopes that a vaccine-led recovery will allow more businesses to reopen and recover and economies to repair, we look forward to a positive 2021 and 2022 outlook.

There are sectors that will continue to experience growth in the short, medium, and longer-term despite negative short-term impact because of their resilience and innovation during the pandemic.

As corporate profits rebound, and support measures from governments and central banks continue to be implemented, we anticipate the outlook for growth prospects is bullish, and in the immediate term, these could be some of the strongest growth years since before the Global Financial Crisis (GFC).

GLOBAL GROWTH OUTLOOK We believe there are a number of positive trends supporting a strong recovery in economy: 1) Improvements in employment: As the vaccination rollout continues and COVID-19 case numbers decline, we expect the

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reopening of economic activity to lead to labor sector recovery, with job growth shifting higher and unemployment rates gradually trending lower as labor force participation increases.

2) Sharp rebound in spending: One of the trends we are seeing is the rubber band snapping back in goods and services consumption. The pent-up demand in pandemic-sensitive sectors of the economy should provide a significant boost to demand.

For example, healthcare, one of the most sizable service sectors accounted for about 17% of the US gross domestic product (GDP) pre-COVID, was set back substantially due to COVID-19. A return to a normal level of healthcare spending will add jobs and boost the US economy quickly and meaningfully. In addition, we expect stronger consumption in certain sectors like travel, given that consumer savings have stayed elevated through the crisis. That said it is not only service that will experience strength from consumption – we also see good consumption retaining its strength as many of the structural shift in consumption

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April 8, 2021 Money Management | 29

Fixed income Strap

“The market tendency to ignore or misprice individual issuer prospects should allow active managers to find opportunities and enhance potential for portfolio income.”

– Adam Grotzinger as a result of COVID-19 remain in place.

A range of recent data indicate that corporations are spending as well with recent data reflecting upside surprises for example in US producer prices, Japan’s fourth-quarter GDP, machinery orders and Tankan manufacturing sentiment, and South Korea’s exports.

3) Strong fiscal stimulus: In the US, President Biden has recently signed the $1.9 trillion American Rescue Plan Act which includes relief measures ranging from stimulus checks to child tax credits, jobless benefits to vaccine-distribution funds, healthcare subsidies to restaurant aid. Similarly, governments around the world have been introducing strong stimulus to boost economies.

COVID-19 has brought about a change in fiscal attitudes and we are potentially entering a new era where governments are more willing and able to take greater responsibility for growth through fiscal programmes.

4) Accommodative monetary policies: On the monetary policy front, actions by the Federal Reserve, European Central Bank, Bank of Japan and others helped avoid worst-case scenarios by maintaining liquidity and financial stability in a time of crisis. We expect monetary policies to remain accommodative.

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OPPORTUNITIES IN CORPORATE BONDS With the early-cycle mix of low interest rates and ongoing support from both monetary and fiscal policy, combined with the release of pent-up demand from consumers and manufacturers, we believe the economic backdrop is supporting higher corporate earnings, stronger balance sheets and lower credit risks. Therefore, we see pockets of opportunity in different sectors of corporate bonds.

Firstly, we believe corporations that were beneficiaries of the trends that emerged during COVID-19 will continue to be supported by strong tailwind. Examples of these include media, technology, and financial issuers that have fortified their operations in response to COVID-19. Many of them have experienced growth through COVID-19 with very solid fundamentals.

We also believe there are opportunities in some of the sectors that faced short term headwinds from COVID-19 but continue to show signs of strong secular growth.

An example of this is the leisure sector, in particular airlines and cruise ships. The pandemic has had a temporary impact on this sector’s clientele and as the global economy opens back up, we anticipate these industries and sectors returning closer to normality. In these sectors we are focused on

market leaders operating sizeable and large scale businesses that have already survived the initial lockdowns last year, have demonstrated an ability to raise capital in periods of stress and maintain a viable business models that will have little maturity walls to refinancing in the future.

Furthermore, many of these companies maintain liquidity on balance sheet (~12-24 months).

For investors looking for yield, it’s important to separate the short-term pain from COVID19 from the bigger question of where industries and companies have been permanently or temporarily disrupted. In our view, the market tendency to ignore or misprice individual issuer prospects should allow active managers to find opportunities and enhance potential for portfolio income.

POTENTIAL RISKS One of the identifiable tail risks is the vaccination rollout which will enable a gradual return to more service sector consumption trends of the past. While there is risk, we believe it’s relatively small and don’t assign a high probability to this scenario but it bears monitoring. It will also be important to monitor consumption patterns – what is the consumption balance between goods and services in the post COVID-19 economy and what are the implication this has

for growth and inflation?

Another risk is a premature tightening of financial conditions from monetary policy authorities.

We would also ascribe this as a tail probability given the new average inflation targeting regime that the Fed is operating under and their expressed desire to facilitate a rebuilding of inflationary expectations and a stronger labour market.

Lastly, inflation bears monitoring given the backdrop of unprecedently strong stimulus and extraordinary monetary easing coupled with strong growth.

So be cautious on owning longer maturity, longer duration, in particular government bonds, but also spread sectors like high grade corporate bonds that trade tight to government bond markets where any back up in nominal yields can create a negative total return experience given starting credit margin, or credit spread over those risk-free curves.

We believe there are attractive opportunities today in selective segments of the corporate bond markets that offer durable income with minimal duration risks. Investors should be playing relative value within credit to take advantage of some of the opportunities within the markets and keep to a shorter overall duration profile in their portfolios.

Adam Grotzinger is senior portfolio manager at Neuberger Berman.

30/03/2021 4:01:15 PM

30 | Money Management April 8, 2021

Toolbox

THE BUILDING BLOCKS OF A PORTFOLIO When building a portfolio, managers may find there is an ‘optimum’ number of positions, writes Chris Bedingfield, where holding too many can have a negative effect.

MOST ADVISERS AND their clients would agree that a key aim of investing is that over time, returns will beat the rise in the cost of living (after fees and taxes).

In addition, it is important to try to minimise the risk of permanent capital loss. This isn’t mark-to-market losses driven by

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sentiment and noise, but losses that arise from a permanent diminution of business value.

Different investment managers will seek to do this in different ways, depending on their investment philosophy and style as well as their investment area or asset class.

At Quay, we seek the best real

estate investment opportunities that can meet our investment objective with the lowest possible long-term risk. This may sound simple, but it usually isn’t. There are a number of elements that go into the construction of a portfolio. Here we outline our approach to building a high conviction, index agnostic fund,

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April 8, 2021 Money Management | 31

Toolbox

Chart 1: Portfolio volatility vs portfolio size scatter plot

and seek to answer common questions such as: beyond selecting stocks, how do we allocate weights? And how many stocks are too many (or too few)?

SECURITY SELECTION The first step for an investment manager is usually to define the number, or range, of securities they are prepared to own in their fund.

Portfolio construction often begins with the best investment idea – so the portfolio comprises of one security with 100% weight.

Adding a second security offers some diversification, but also dilutes the best idea. However, the known benefit of diversification tends to outweigh the risk of only investing in one idea. The same can be argued for adding a third, fourth, fifth security.

So there is a cost benefit for every stock that is added to the portfolio. But at what point does the benefit of diversification begin to outweigh the cost of diluting the best ideas?

At Quay, we sought to define the ‘sweet spot’ of diversification versus dilution by calculating and recording the standard deviation of returns of 10 different portfolios of two randomly listed real estate securities. We then repeated the process for three securities, then four, and so on, up to a portfolio of 90 randomlyselected securities. In total, we recorded the average volatility of 890 portfolios in total, plotted in Chart 1.

By applying a ‘line of best fit’ to the data, we identified a clear pay-off diagram between measured risk on the y-axis (volatility) and dilution measured along the x-axis (number of

05MM080421_30-36.indd 31

securities). The average difference in volatility between a two and a 90-stock portfolio is greater than 2% standard deviation points per annum.

However, around half the volatility reduction occurred after just 20 stocks, and three quarters of the volatility is reduced with 40 securities.

Beyond 40 securities, the benefits of additional diversification are negligible – yet the cost (dilution) for additional securities is roughly the same. At the other end of the spectrum, fewer than 20 securities begins to add meaningful volatility and we believe that for retail investors, the risk of fewer than 20 securities is too great.

Within this context, we concluded a portfolio of between 20 to 40 securities was optimal for our strategy. For other asset classes, the numbers may differ but the logic is the same.

Chart 2: Stock expected return outlook

Chart 3: Stock expected return outlook

STOCK WEIGHTS When working out the individual stock and sector weights, a few Continued on page 32

Source: Quay Global Estate, Bloomberg

31/03/2021 11:32:00 AM

32 | Money Management April 8, 2021

Toolbox

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

1. The first step for an investment manager is usually to? a) Define the number, or range, of securities they are prepared to Continued from page 31 elements need to be factored in.

Chart 2 maps the expected return distribution between two securities, ‘A’ and ‘B’. Both securities are expected to exceed the real return objective of 5% per annum. But while B displays a higher expected return as measured by the median (8.5%), we would tend to favour and assign a greater weight to A (expected return 6.5%). This is because we are more focused on the left hand side of the chart (the risk of total returns falling below our investment objective) than the right (the risk of outsized returns).

In this example, the cumulative probability that B’s returns could fall below our benchmark is 36.7%, while for A it is just 11.2%.

Unfortunately, this type of analysis is prospective in nature. There is no statistical data that allows us to map the variance of returns as neatly as the chart above. However, through our fundamental research, detailed cashflow forecasts, sensitivity analysis and industry analysis we can form a view on the variability in our expected returns.

DOWNSIDE RISK High conviction ideas must not only meet our return objective with a margin of safety (and have an assessed low distribution of returns), but also have another characteristic – a skewed or asymmetric pay-off.

Chart 3 includes security ‘C’, where the returns are skewed to the upside and the downside is limited. Of the three opportunities, C would represent our highest conviction idea and therefore the highest portfolio weight.

An example of these asymmetric returns could be a takeover offer, where the underlying security price is supported by a cash bid but there is the prospect of a higher offer. The downside risk is usually limited to the bid price, depending on the terms of the offer. But once a bid is public these are easy games to identify, so the upside is limited.

Longer-term, these scenarios also exist but are less obvious. In listed real estate investing, buying assets at a substantial discount to replacement cost – or assets that are supply constrained and have a substantial barrier to entry or secular long run tailwinds (such as demographics) – also has very limited downside and skewed upside potential, but only if viewed through the prism of a long-term investment horizon.

Of course, each asset manager has their own approach to portfolio construction. But understanding the thinking behind the selection of securities can help advisers identify the opportunities that best suit each client’s needs.

We will always favour lower (acceptable) total returns with lower downside risk, rather than chase the ‘hot sectors’ of today that may promise higher returns but come with meaningful downside risk.

Chris Bedingfield is principal and portfolio manager at Quay Global Investors.

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own in their fund b) Decide on the MER that will apply to the fund c) Buy assets at a substantial discount to replacement cost d) Map the variance of returns 2. The average difference in volatility between a two and a 90 stock portfolio is? a) Less than 2% standard deviation points per annum b) Equal to 3% standard deviation points per annum c) Greater than 2% standard deviation points per annum d) There is no difference in volatility 3. Beyond 40 securities, the benefits of additional diversification are? a) Slightly improved b) Greatly improved c) Greatly worsened d) Negligible 4. How much volatility reduction occurred after just 20 stocks? a) Three-quarters b) One-quarter c) Half d) One-third 5. High conviction ideas must not only meet a return objective with a margin of safety (and have an assessed low distribution of returns), but also have another characteristic. This is? a) A skewed or asymmetric pay-off b) A straight line or linear pay-off c) A guarantee that the investment will pay off over time d) There is no other characteristic

TO SUBMIT YOUR ANSWERS VISIT https://www.moneymanagement.com.au/ features/tools-guides/building-blocks-portfolio

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

31/03/2021 11:32:08 AM

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26/02/2021 10:18:18 AM

34 | Money Management April 8, 2021

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

Appointments

Move of the WEEK Margaret Cole Executive board member APRA

Margaret Cole has been appointed to the Australian Prudential Regulation Authority (APRA) executive board and will be primarily responsible for overseeing APRA’s activities in relation to superannuation.

Helen Rowell, APRA deputy chair, would now be primarily responsible for overseeing APRA’s activities in relation to general, life and private health insurance.

The change is significant because it comes

Life insurance provider Integrity Life has appointed Russell Hannah as general manager of distribution and marketing.

Hannah joined from MLC Life where he served as general manager of retail distribution partnerships for the past five years; prior to that he held senior roles with BT Life, Aviva and ING. Chief executive, Sean McCormack, said Hannah brought with him more than 20 years’ experience across life insurance and had a deep understanding of the importance of partnerships.

“In addition to this, he is a thought-leader and champion for change with a genuine passion for protecting customers along with strengthening and evolving all aspects of our industry,” McCormack said.

Resolution Capital has appointed experienced infrastructure analysts, Mark Jones and Sarah Lau, as senior investment analysts.

Jones joined from 4D Infrastructure where he was senior equity analyst – listed infrastructure and utilities.

Before 4D, he was vice president and equity analyst at

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as the APRA heatmaps continue to be an issue and as debate continues around legislation empowering APRA to conduct superannuation fund performance assessments.

Cole would take up her new role on 1 July, 2021, for a five-year term, replacing Geoff Summerhayes whose five-year term expired on 31 December, 2020.

Wayne Byres, APRA chair, said Cole’s appointment provided a natural opportunity

Goldman Sachs with coverage of Australian listed infrastructure and utilities.

Lau was previously an analyst in the global listed infrastructure team at HRL Morrison and Co, and prior to that was a long-standing analyst at Ausbil Investment Management.

The two appointments brought Resolution Capital’s investment team to 15 members.

Praemium has appointed HUB24’s head of strategic sales, Shane Muscat, into the same role, as well as Dale Wright to the southern region sales team.

Wright was appointed to the Praemium southern region sales team and joined from Centrepoint Alliance where he was national sales manager for the Ventura managed account portfolios.

Bennelong Funds Management has appointed Amara Haqqani to the newly-created role of chief client strategy officer.

In the role, Haqqani would focus on identifying the needs of Bennelong’s clients, both domestically and offshore, and to ensure investment products and

to review and refresh the allocation of responsibilities amongst the APRA members, and to take advantage of the mix of skills and experience amongst the group.

The appointment was made by the Treasurer, Josh Frydenberg, who said Cole would bring a strong enforcement background and global perspective to APRA, which would further strengthen APRA’s leadership capability.

solutions were developed to meet those needs.

Haqqani was most recently a director for actuarial consulting firm Milliman, and had also held senior policy and compliance roles at the Financial Services Council, Challenger Limited and RBC Global Asset Management, as well as product roles at Equity Trustees, Orchard and Aviva.

She would be based in Sydney and report to chief executive, Craig Bingham, while Marta Galli, senior product manager, would report to Haqqani.

Emilio Gonzalez is to step down as chief executive of Pendal Group after 11 years in the role.

The company announced the move to the Australian Securities Exchange (ASX) and said his successor would be Nicholas Good who was current chief executive of JO Hambro Capital Management operations in the US. Pendal chairman, James Evans, thanked Gonzalez for his contribution and referenced Pendal’s robust succession plan which had allowed the appointment of Good.

Gonzalez would work out a sixmonth transition period.

Former Clime Investment Management chief executive (CEO), Rod Bristow, has been appointed as CEO of seed investment group, Investible.

Bristow had over 25 years’ experience in the asset management, wealth management and consulting sectors.

He had also held senior executive roles with CommSec, national wealth management group Infocus Wealth Management and environmental non-government organisation (NGO) Greening Australia.

His initial focus would be to lead Investible in successfully raising a $50 million early-stage fund.

BetaShares has appointed Tony Pattison as its head of high net worth (HNW) groups where he will be responsible for the firm’s activities with private banks, family offices, and the HNW investor groups.

Pattison was most recently director of sales at Legg Mason, now Franklin Templeton, and oversaw their HNW channel.

The firm also hired two associate directors of distribution in Nathan Lui and Ben Rohrt.

31/03/2021 10:38:56 AM

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26/02/2021 10:55:29 AM

OUTSIDER OUT

ManagementApril April8,2,2021 2015 36 | Money Management

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

Sotto voce not the language of ASIC leadership aspiration

Will the real Tim Wilson please stand up?

IT has been a long time since Outsider involved himself in thespian pursuits but he does recognise a ‘stage whisper’ when he hears one.

Stage whispers are almost as old as the stage itself – Outsider feels sure that Shakespeare occasionally uttered behind the scenes whispers when he noted one or other his leading men (and they were all men) forgetting their lines.

However, Outsider believes the current deputy chair of the Australian Securities and Investments Commission (ASIC), Karen Chester, would do well to remember that things have moved on since the days of London’s Globe Theatre and that modern microphones are very sensitive devices which miss very little of what is said, particularly during video conferences.

Thus, Outsider believes that those who are vetting the candidates to replace James Shipton as chair of ASIC will have noted the manner in which Chester may have mastered the art of the stage whisper

OUTSIDER is giving 10 out of 10 to the Australian Prudential Regulation Authority (APRA) for deftly avoiding becoming entangled in the somewhat arcane politics of superannuation.

Indeed, Outsider is wondering quite what the rather staid executive of APRA made of a claim by the chairman of the House of Representatives Standing Committee on Economics, Tim Wilson, that the Government was being “bullied and intimidated” by industry superannuation funds.

It seems that the bullying and intimidation Wilson was referring to was the rather vanilla television advertising campaign launched by Industry Super Australia aimed at the Government’s Your Future, Your Super legislation.

So, hearing Wilson’s pleas to APRA, Outsider was left to wonder whether this was the same Tim Wilson who prosecuted the Government’s campaign against franking credits during the last Federal Election, the same Tim Wilson who has used his committee to relentlessly interrogate superannuation funds over their activities and the same Tim Wilson who is now campaigning to put home ownership ahead of super?

Are there two Tim Wilsons, one of whom is a victim?

but may not have mastered the auditory acuity of modern microphones.

Outsider is not at all sure that Chester’s colleague ASIC commissioner, Danielle Press, needed the whispered advice during ASIC’s recent appearance before the House of Representatives Standing Committee on Economics to “take it on notice”.

Chester has admitted throwing her hat in the ring to be the next chair of ASIC and seems unafraid to give voice to reinforcing those leadership ambitions.

Is there anything Persevering Jane should be telling her boss?

OUTSIDER finds it interesting and just a bit baffling that someone who would advocate that financially-stressed female victims of domestic violence should be able to raid their superannuation accounts simply to put food on the table has become the Minister for Women’s Economic Security.

Outsider is, of course, referring to none other than “persevering” Jane Hume who will fit this key portfolio responsibility into her already busy schedule as Minister for Superannuation, Financial Services and the Digital Economy.

Senator Hume was amongst a bevy of Coalition females to find themselves promoted as the Prime Minister, Scott Morrison, undertook

OUT OF CONTEXT www.moneymanagement.com.au

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some feminine reshaping of his Cabinet amid the fall-out from the Brittany Higgins Parliament House rape allegations and the controversy surrounding the historical and unproven rape allegations against the no longer Attorney-General, Christian Porter.

By Outsider’s observation, while Hume has been a popular minister amongst many women in the financial services sector, she is not quite so much the flavour of the month, year or even decade amongst those who might describe themselves as being of a somewhat left-leaning persuasion, not that she probably cares.

But let it be said that not only has Hume worked for the likes of NAB,

Rothschild and Deutsche Bank she has also worked as a “senior strategic policy adviser for AustralianSuper” – something which makes her pre-parliamentary careers look almost bipartisan even if her Parliamentary track-record says otherwise.

But back to the question of whether female victims of domestic violence should obtain early access to their superannuation, and Outsider really does wonder whether Hume ought to read Jess Hill’s book on domestic violence – See What You Made Me Do – and when she is finished perhaps lend it to her boss.

Outsider feels that

Prime Minister Morrison might find reading such a book useful in fulfilling his self-appointed role as the co-chair of the new cabinet taskforce that is overseeing the government’s response to women’s equality, women’s safety, women’s economic security, and women’s health and wellbeing.

"What superannuation is about is personal empowerment...

You shouldn't be forced to eat your own home."

"[Senator Marise Payne] is effectively, amongst her female colleagues, the prime minister for women."

– Former Prime Minister, Paul Keating.

– Scott Morrison, Prime Minister for men.

Find us here:

31/03/2021 6:04:33 PM