Money Management | Vol. 36 No 7 | May 05, 2022

MAGAZINE OF CHOICE FOR AUSTRALIA’S WEALTH INDUSTRY

www.moneymanagement.com.au

Vol. 36 No 7 | May 5, 2022

14

INFOCUS

Platform results

ESG

22

Lack of definition

INSURANCE

General v personal

Affordability causes 100,000 to cease advice

BY LAURA DEW

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Reviving the life insurance sector LIFE insurers and friendly societies are adjusting to the latest round of industry reforms being introduced by the Australian Prudential Regulation Authority.

These have included changes to contract terms for individual disability income insurance (IDII), part of a package of reforms to IDII, which had previously been delayed in May 2021.

With the industry reeling from large payouts over the last few years, this has made the product less valuable for policyholders.

While there is broad acceptance that change was needed to the sector, it is further change that advisers and insurers need to adapt to and which will take time to filter through the system.

Michael Pillemer, chief executive of PPS Mutual, said: “There’s been an issue of who moves first to bring in change with new product design, and quite frankly, it just wasn’t being resolved.

“We’ve had some increases in relation to income protection, and premium reductions in relation to our insurance and TDP products.

But it will take a while to see any kind of noticeable uptick in terms of profitability.”

For full feature, see page 16

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26

ADVICE

THE latest Adviser Ratings’ (AR) Landscape Report has revealed advice affordability has led to 100,00 people being orphaned or ceasing to receive advice.

Based on six projects completed over five months and more than 40,000 surveys of financial advisers, the report found there were 100,000 fewer customers and 3,323 fewer advisers than 12 months ago.

This meant the number of advised Australians had fallen below two million for the first time since AR tracked the data.

The largest cohorts who opted out of advice were those aged 35-44 and 45-54 which reflected cost pressures and financial anxiety, a willingness to replace advice with technology or online

information and a heavier reliance on accountants.

The cost of advice had risen to $3,256, a rise of 8% in the past year and a 40% rise in the past three years, although this had coincided with improvements in standard advice provided and the higher educational qualifications of advisers. However, only 6% of Australians said they could afford to pay more than $2,500 for advice.

It had also been driven by higher compliance and remediation costs which was causing advisers to position their businesses for more sophisticated clients.

AR said it expected the advice gap to grow as a further 2,387 advisers were likely to depart this year which would cause the number to fall below 15,000.

Continued on page 3

Where does the solution to SoAs lie?

BY LIAM CORMICAN

THE solution to the complexity and time-consuming problem of Statements of Advice (SoA) lies somewhere between a one-page letter, as prescribed for accountants, and SoAs as they exist today, according to a panel.

Speaking at the SMSF Association conference in Adelaide, Marisa Broome, chair of the Financial Planning Association of Australia (FPA), said the main aim was for clients to understand their financial advice arrangements, something she said she could achieve without a 100-page SoA. Continued on page 3

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May 5, 2022 Money Management | 3

News

AMP sells real estate and infrastructure businesses

BY LIAM CORMICAN

AMP Limited has entered into agreements for the sale of Collimate Capital’s real estate and infrastructure equity businesses.

In announcements to the Australian Securities Exchange, AMP said the real estate and domestic infrastructure equity business would be sold to Dexus Funds Management for an upfront cash consideration of $250 million.

Meanwhile, the international infrastructure equity business would be sold to DigitalBridge for an upfront consideration of $462 million and total value of $699 million.

Included in the DigitalBridge deal was $9 billion in international infrastructure equity assets under management, the management platform, all of AMP’s seed and sponsor investments in international infrastructure equity funds and a substantial portion of the teams in UK, Europe, North America and Asia.

Dexus would acquire all of AMP’s existing ($180 million) and committed ($270 million) sponsor

stakes in the platform for cash consideration expected to be up to approximately $450 million, subject to discussions with fund investors, pre-emptive rights processes and applicable consents.

Key employees from both divisions would move to the new businesses to ensure continuity for clients, AMP said.

AMP said the transaction would significantly strengthen AMP’s capital position and that it intended to use the proceeds to pay down corporate debt and to return capital to shareholders.

Affordability causes 100,000 to cease advice Continued from page 1 There were 6,929 practices in Australia (15% decrease on 2020) averaging 2.50 advisers per practice in 2021.

Angus Woods, chief executive of AR, said: “The advice industry has been in a state of flux for a number of years, and we continue to see that change today.

“The advice and wealth management industries continue to evolve, and the impacts across the board, from product providers through to consumers, is significant. Our research asks many questions on how Australians will receive advice in the future, and who will advise them.

There is more change to come.”

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Chief executive, Alexis George, said: “In DigitalBridge and Dexus, we are confident we have found the right owners for both businesses. They are focused on delivering strong returns for Collimate Capital’s clients and opportunities for our people.

“We expect both will add significant value through their scale, capability and depth of talent, which our teams will complement”.

Dexus was expected to be completed in the second half of 2022 and the deal with

DigitalBridge was forecasted to be completed in Q4 2022.

As a result of the sales, AMP said it would no longer be pursuing a demerger with Collimate Capital as it believed, when evaluated against a demerger, the two deals offered greater value and certainty for shareholders. It would also accelerate the realisation of value and provide greater stability for Collimate Capital’s clients and employees.

AMP chair, Debra Hazelton, said: “The transactions we have announced represent a strong outcome for AMP shareholders and Collimate Capital stakeholders.

“It was clear in our 2021 portfolio review that we had two businesses that would be better separated and simplified and in doing so realise greater value and that is what we have achieved.

“Post separation and these sales, AMP has a focused strategy to grow AMP Bank and wealth management businesses under CEO Alexis George’s leadership with the benefit of stronger capital and liquidity position.”

Where does the solution to SoAs lie?

Continued from page 1 “There’s got to be something in the middle that really makes that informed consent concept easily met,” she said.

Broome said the solution may come from technology, plugging Ben Marshan, FPA head of policy, strategy and innovation, and his work on a digital SoA system for the FPA. Association of Financial Advisers chief executive, Phil Anderson, said the solution lay in creating a level playing field between disciplines.

“We don’t want one set of standards that applies to advisers and another set of standards that will apply in the SMSF space to accountants,” he said.

“I think that the accountants are going to be providing advice on establishment structuring and closing down and maybe a little bit in the contribution space - I think less so in pensions.

“We got to make sure that we do two things here: one we make sure those basic requirements are in place and the second thing is… we got to move away from [100-page SoAs].”

Speaking from a client perspective, SMSF Association chief executive, John Maroney, said he found far more value from direct advice and investment related correspondences with his adviser rather than the 100-page SoA he was handed.

28/04/2022 12:05:33 PM

4 | Money Management May 5, 2022

Editorial

laura.dew@moneymanagement.com.au

BUT AT WHAT COST TO THE CONSUMER?

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

The latest Adviser Ratings Landscape report has laid bare the state of the financial advice industry and the impact of adviser departures on consumers.

Editor: Laura Dew Tel: 0438 836 560 laura.dew@moneymanagement.com.au Journalist: Liam Cormican

MUCH has been read and written about regarding the impact educational requirements and rising compliance are having on advisers and their subsequent departures but less has been covered about how this has affected consumers.

The annual research report did not hold back, stating that 100,000 clients have either been orphaned by their adviser or ceased receiving advice, causing the number of advised Australians to fall below two million people.

This was the result of the cost of advice rising to $3,256, a 40% rise in the past three years.

Other reasons were a willingness to use technology or online advice and a heavier reliance on accountants.

Adviser Ratings noted, however, the increasing cost was in line with a higher standard of advice provided to consumers and the higher educational standards.

But if consumers cannot afford this higher-quality advice then what was it all for? Were forecasts done at the time on how much costs would likely rise by as a result of the change and the costs

Tel: 0438 789 214 liam.cormican@moneymanagement.com.au ADVERTISING Account Director: Damien Quinn Tel: 0416 428 190 damien.quinn@moneymanagement.com.au Account Director: Amy Barnett Tel: 0438 879 685 amy.barnett@moneymanagement.com.au Junior Account Manager: Karan Bagai Tel: 0438 905 121 karan.bagai@moneymanagement.com.au PRODUCTION Graphic Design: Henry Blazhevskyi

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that consumers would pay? Will advice now become exclusively concentrated in the high-networth sector, where so many firms are now focusing their efforts?

With inflation, rent and living costs rising, it is unsurprising that 60% of unadvised Australians say they cannot afford advice while only 6% say they could afford to pay more than $2,500, still $756 less than the average cost.

If younger or less-wealthy people are opting to seek advice, then they should be encouraged

and praised for taking that step to improve their situation, not sent packing to seek advice online because they are viewed as being ‘low value’.

It is a cruel irony that the people who cannot afford advice due to increased costs are probably the ones who need it most and for this reason, the Government and the industry needs to find a solution that does not exacerbate the problem.

Laura Dew Editor

WHAT’S ON Factual information vs financial product advice

The Regulators 2022

Navigating your client’s ethical preferences

VIC YFP – The Diversity Forum

10 May Online superannuation.asn.au

13 May Sydney finsia.com/events

18 May Online fpa.com.au/events

19 May Melbourne finsia.com/events

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28/04/2022 11:41:18 AM

6 | Money Management May 5, 2022

News

Prescriptive PY produces problems

BY LIAM CORMICAN

PRESCRIPTIVE Professional Year (PY) requirements are hampering the advice industry in a time of declining adviser numbers, says two industry associations.

Speaking at the SMSF Association conference in Adelaide, Marisa Broome, Financial Planning Association of Australia (FPA) chair, said the biggest challenge for its 1,000 student members was cracking that first job to become qualified financial planners.

“So we haven’t got a problem attracting people into the study because they can see the amazing opportunities about entering into being a professional financial adviser,” she said.

Being the holder of a licensee, Broome said she lacked the time to supervise a new entrant under the current PY arrangements.

“Do I think the PY is a

good program? In principle, I do,” she said.

“It’s very prescriptive and I can’t manage that so we need to find more opportunities to train them and give them the experience.”

Association of Financial Advisers chief executive, Phil Anderson, said there needed to be more done to retain the good advisers who remained in the industry.

“There are something like 880 who still have the opportunity to pass the

exam,” he said.

“So we’re going to provide them with as much support as possible and we can’t just judge them in terms of whether they should have passed the exam. Some of them are dealing with issues around the mindset and it is not necessarily a reflection of their capability.

“Whilst we want to reduce the numbers that are dropping out, we want to make sure we’re getting as many new entrants coming in as possible.”

How popular are ESG accounts?

BY LAURA DEW

PLATFORMS are seeing strong growth of products themed around environmental, social and governance (ESG) with assets in those funds outpacing those in non-ESG options.

In data provided to Money Management, BT said net flows into investments that prioritised ESG across all BT platforms increased by 162% from June 2020 to June 2021. For managed accounts, net flows to ESG managed portfolios on BT’s platforms increased by 520% in the same period.

In its quarterly results for the three months to 31 March, 2022, the firm added it planned to launch seven more ESG managed portfolio options on its BT Panoroma platform by the end of June which would bring the total to 12.

Praemium told Money Management the

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year to 11 April had seen the largest change on its ESG managed funds which had risen 232% from $13.9 million to $46 million.

ESG exchange traded products (ETPs) had risen 166% on the platform from $23 million to $63.4 million while ESG managed portfolios had risen from $39 million to $98.6 million, a rise of 151%.

However, ESG managed portfolios had seen the largest product growth, rising from 12 products to 23 over the period which represented growth of 98%. ESG ETPs had risen from 19 to 32 while ESG managed portfolios had grown from 34 to 45.

Over at AMP, its North platform had seen assets under management for its ESG investment options increase by 100% to $600 million during 2021. Options had increased to 60 investments with 13 added in 2021 and the firm said ESG investments had grown 6.5x faster than non-ESG options.

Drilling down into the SDB WITH the Single Disciplinary Body (SDB) in operation but yet to convene a panel, Michelle Huckel, Stockbrokers and Investment Advisers Association (SIAA) policy manager, has explained its proposed processes and procedures.

Falling under the Better Advice Act which came into effect on 1 January 2022, the new SDB expanded the role of the existing Financial Services and Credit Panel (FSCP) and created new penalties and sanctions for misbehaving financial advisers.

Speaking at a SIAA webinar, Huckel said the panel must comprise a minimum of at least two industry participants, which the Australian Securities and Investments Commission (ASIC) must select from a list of eligible persons appointed by the minister.

The chair of the panel would always be an ASIC staff member with both a deliberative and casting vote.

A convened panel would have the power to take action against individual financial advisers, not licensees while disciplinary action against licensees and authorised representatives that were not financial advisers would continue to be administered by ASIC. Huckel divided panel convening circumstances into two parts, when panels must be convened and when panels might be convened.

The circumstances which required peer review by an FSCP and where ASIC must convene a panel were: • Where ASIC was aware that a financial adviser had become insolvent under administration or had been convicted of fraud; • Where ASIC reasonably believed that the person was not a fit and proper person to provide financial advice; • Where the adviser failed to meet the education and training requirements (exam, education qualifications, PY requirements), failed to approve a Statement of Advice prepared by a provisional financial adviser, or provided personal financial advice while unregistered; • Where ASIC reasonably believed that the adviser had breached a financial services law or had been involved in another person’s breach of a financial services law, and ASIC formed a reasonable belief that the breach was serious; • Where the adviser had at least twice been linked to a refusal or failure to give effect to a determination made by the Australian Financial Complaints Authority (AFCA) and ASIC reasonably believed that the consequences of those refusals or failures was serious; and • ASIC had not exercised and did not propose to exercise any of its powers under the Corporations Act legislation, ie by imposing a banning order or accepting an enforceable undertaking.

Huckel said ASIC had a lot of discretion when it may convene a panel, which allowed it to convene a panel at any time even if the convening circumstances were not present.

“In our submission to the consultation we have argued that there has to be an overarching principle of fairness applied in its exercise to ensure that it’s not arbitrary. And we’ve argued that the Single Disciplinary Body currently seen to be acting punitively against advisors or using the panel as a way of pursuing standards of conduct that exceed the law.”

27/04/2022 5:49:36 PM

May 5, 2022 Money Management | 7

News

RIC to set good retirement strategy practice

BY LIAM CORMICAN

THE Retirement Income Covenant (RIC) may set a benchmark when it comes to what is good practice for retirement strategy without coming at a cost to the value offered by financial advice, according to Accurium.

Speaking at the SMSF Association conference in Adelaide, Accurium SMSF technical services manager, Melanie Dunn, said Australian Prudential Regulation Authority (APRA) funds were engaging consultants to understand key characteristics that may influence retirement solutions, addressing longevity and market risk.

“It might be things like age, level of savings in the super fund, and their expected Age Pension eligibility,” said Dunn.

“We’re not actually going to know what they’re going to produce; it’ll be really interesting to see 1 July when they have to publish a public version of their retirement strategy on their websites.”

But according to Dunn, the key difference between APRAregulated funds and financial

advisers was that advisers knew more about their clients than superannuation funds knew about their members.

“The retirement strategies offered by super funds are a bit like your kit home, you might ask for a few key characteristics about your members, or you might identify these and you’ll build a set of strategies that’s going to suit those cohorts.

“Financial advice is a bit like an architecturally-designed house.

You get that retiree, you can know what fixtures and fittings they want, how many bedrooms they need, what size garage they want, and you can tailor that house to

what they want to live in.”

Dunn said there was a real opportunity for advisers to add value in response to the RIC, even for self-managed super fund (SMSF) advisers who were not bound by the covenant.

“As APRA funds start doing more engagement, about retirement, [SMSF advisers] might become more aware of the risks and the need to have a comprehensive retirement strategy.”

Dunn also said there was broad alignment between SMSF advisers’ investment strategy regulatory requirement to address liquidity risk and cashflow and the RIC.

Making adjustments for the financial adviser exam

BY LIAM CORMICAN

MINDSET management is one of the most important factors to financial adviser exam success, according to a Griffith University lecturer, and something that can be easily alleviated by seeking reasonable adjustments.

Griffith University financial planning lecturer, Katherine Hunt, said the Australian Council for Educational Research (ACER) candidate information booklet was very helpful because it set out the conditions for reasonable adjustment.

Factors eligible included a physical disability, hearing impairment, neurological condition, mental health condition or long-term medical condition such as diabetes.

“An easy way to take a little bit of the weight off our own shoulders is to apply for extra time which they call reasonable adjustments,” Hunt said.

“Turns out, pretty much everyone can get extra time if they need it.

“Think about it, there’s no downside, applying for extra time doesn’t mean you have to use the extra time.”

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Hunt said common reasonable conditions included anxiety caused by the exam, which could be proven by a doctor’s certificate, and vision impairment.

“Bottom line, 54% of Australians have an eye disorder which results in them wearing glasses,” she said.

“I have a lot of friends who wear glasses, and they tell me that wearing glasses and looking at computer screens is not a good mix. They tell me that they get headaches, blurred vision, they get the inability to concentrate when they look at a computer screen too much.

“So just consider if you do want extra time for the exam… and you wear glasses then then that’s quite a simple process to follow.”

If a candidate was thinking of seeking reasonable adjustments, Hunt suggested they clearly specified what adjustment they required, such as asking for a 20-minute break per hour to look away from the exam.

Reasonable adjustments did not affect exam results, however, and scores were not adjusted for disadvantages.

CSLR - is the cure worse than the disease?

THE post-election Government will need to make sure The Compensation Scheme of Last Resort (CSLR) does not cost more to run than the amounts of compensation involved, according to The Advisers Association (TAA).

TAA chief executive, Neil Macdonald, said the Coalition’s decision not to give the CSLR a ‘swift passage’ through Parliament should give whichever party comes to power after the Federal election pause for thought.

“At face value, the concept of a CSLR, to protect innocent victims of misconduct, is honourable.

However, we believe there has not been enough consideration around either the scope of the problem or the optimal solution,” he said.

Macdonald said the proposed scheme appeared to be attempting to solve a $4 million a year problem with a $16 million plus solution.

“It has been estimated that there will be $4.36 million in unpaid AFCA determinations each year. It’s also been estimated that the levy to fund the scheme in the first year will be around $16 million – with advisers expected to pay $12 million – and around $3.7 million a year just in administration costs.

“At first glance, the proposed CSLR appears to be a clear case of the cure being far worse than the disease.”

Macdonald said the scope of the unmet determinations problem needed closer examination.

“Advisers were responsible for only 1.4% of total AFCA complaints in 2020/21, and only 0.03% of unmet determinations. It seems unreasonable to create a scheme that focuses on solving only 0.03% of a problem.”

AFCA was currently consulting on a proposed user-pays funding model for complaints which it said would reduce the burden on small members like financial planning firms and brokers, as well as other less-frequent users of the scheme.

The six-week consultation period was expected to end on 22 April.

28/04/2022 9:59:36 AM

8 | Money Management May 5, 2022

News

Westpac fined $113m for compliance failures

BY LAURA DEW

WESTPAC has been ordered to pay penalties of $113 million for compliance failures in banking, superannuation, wealth management and insurance.

The Federal Court’s decision followed six matters raised by the Australian Securities and Investments Commission (ASIC).

The six matters were fee for no servicedeceased customers, general insurance, inadequate fee disclosure, deregistered company accounts, debt onsale and insurance in super.

These were fined $40 million, $15 million, $6 million, $20 million, $12 million and $20 million respectively.

More than 70,000 customers were affected by the breaches, ASIC said.

The Westpac businesses affected by the matters were Westpac Banking Corporation, Advance Asset Management, Asgard Capital Management, BT Funds Management, BT Funds Management No.2, BT Portfolio Services, Securitor Financial Group and Magnitude Group.

Across all six matters, Justice Beach noted that systems and compliance failures were a common feature and the misconduct by Westpac was considered serious.

ASIC deputy chair, Sarah Court, said: “The breaches found by the Court in these six cases demonstrate a profound failure by Westpac over many years and across many areas of its business to implement appropriate systems and processes to ensure its customers were treated fairly.

“Westpac, like all licensees, has an obligation to be honest and fair in its provision of financial services. Despite this, Westpac failed to prioritise and fund the systems upgrades necessary to help fulfil this obligation.

“Over the course of 13 years, more than 70,000 customers have been affected by these failures, either by being incorrectly charged or

given the wrong information. The sheer scale of this impact suggests that, at the time, Westpac had a culture that did not prioritise compliance.”

In all matters other than debt onsale and insurance in super, ASIC alleged and the Court found that Westpac failed to ensure that its financial services were provided efficiently, honestly and fairly.

Westpac admitted to the allegations in each of the proceedings and would remediate more than $80 million to customers. Westpac consented in each of the matters to the orders made and to the penalties and cooperated with ASIC in resolving the matters.

AIST appoints former Treasurer to board

ASIC suspends Dixon Advisory’s AFS licence

THE Australian Institute of Superannuation Trustees (AIST) has announced the appointment of former Federal Treasurer and deputy prime minister Wayne Swan to its board.

Swan was also chair of Cbus Super and filled the trustee-elected director vacancy which had been left by Sonya Beyers from BUSS (Queensland).

It had also appointed Sarah Adams, group executive strategy for reputation and corporate affairs at Australian Super.

Adams was filling the staff-elected vacancy, formerly held by her AustralianSuper colleague Louise du Pre-Alba.

Both appointments were effective from 1 April.

AIST president, Catherine Bolger, said: “It’s a privilege to welcome two more high calibre directors to our Board as we continue to navigate the organisation through the challenges of a world impacted by the pandemic while continuing to set it up for success in the future”.

ASIC has suspended the Australian Financial Services (AFS) licence of Dixon Advisory & Superannuation Services Pty Limited (DASS).

The suspension followed the appointment of Stephen Graham Longley and Craig David Crosbie as joint administrators to Dixon Advisory in January 2022, after civil penalty proceedings were carried out by the Australian Securities and Investments Commission (ASIC) against Dixon Advisory in September 2021.

The firm was put into administration in January as its directors determined mounting actual and potential liabilities meant it was likely to become insolvent.

The administrators informed ASIC that most Dixon Advisory clients had transitioned to alternate financial services providers of their choice.

The terms of the suspension: • Allowed Dixon Advisory’s AFS licence to

07MM050522_01-14.indd 8

BY LIAM CORMICAN

continue to operate until 9 May, 2022 so that existing clients who had not yet transitioned to an alternate provider could continue to access financial services; • Required the maintenance of dispute resolution arrangements including Australian Financial Complaints Authority membership until 8 April, 2023; and • Required the maintenance of compensation arrangements that comply with s912B of the Corporations Act 2001 until 8 April, 2023.

Under the Corporations Act 2001, ASIC had the power to suspend or cancel an AFS licence, without holding a hearing, where the AFS licence was held by a body corporate which was placed under external administration.

Dixon Advisory had a right to seek a review of ASIC’s decision at the Administrative Appeals Tribunal.

ASIC was also undertaking inquiries in relation to the transition of former clients of Dixon Advisory to Evans & Partners Pty Ltd, a related entity.

27/04/2022 5:50:11 PM

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28/04/2022 11:42:43 AM

10 | Money Management May 5, 2022

News

Bipartisan support needed on NALE rules: SMSF Association

BY LIAM CORMICAN

THE non-arm’s length expenditure (NALE) rules will have broader consequences on the superannuation sector, resulting in self-managed superannuation funds (SMSFs) being taxed at 45%, according to the SMSF Association.

Speaking at the SMSF Association national conference in Adelaide, deputy chief executive, Peter Burgess, said: “Prior to the introduction of the NALE rules we were certainly not coming across SMSF members who were undercharging for services provided to their fund as a deliberate strategy to circumvent the contribution caps or to artificially inflate the fund’s investment earnings”.

Burgess called for a bipartisan approach to the NALE rules, arguing it was imperative that they were appropriately targeted and fit for purpose.

“In our view, amendments are

needed to exempt general expenses from these provisions, and ensure penalties only apply to expenditure shortfall amounts rather than to some or all of the fund’s income,” Burgess said.

One of Burgess’ complaints was the linking of the NALE to some or all of a fund’s income, and then the application of penalties to that income, could give rise to inappropriate and poorly-targeted outcomes.

“Breaking this link and only

penalising the shortfall amount is, in our view, an appropriately targeted legislative response,” he said.

“The penalty could be treating the shortfall amount as a taxable contribution or dealing with it through the contributions regime.

“So, the solution may well lie in the amendments the Australian Taxation Office are making to contribution ruling TR 2010/1, which is now expected to be released in the second half of

2022”, Burgess said.

Burgess noted that the Government had announced plans to amend the NALE rules to ensure they were operated as intended, an announcement which had been welcomed by the association.

“We were pleased to see this announcement and we look forward to a bipartisan approach to addressing this issue and ensuring the rules work as intended,” he said.

T. Rowe Price moves overweight on Australia

BY LAURA DEW

T. Rowe Price has increased its positioning to Australia to an overweight after eight months in neutral positioning.

The firm moved to a neutral position last September after a year as it expected economic growth and earnings would be lower going forward.

However, in a monthly asset allocation update, the firm said it had decided to move back to an overweight in April.

The increased weighting to Australian equities was funded by trimming Japanese and emerging market exposure as it believed the global economic slowdown would reduce the appeal of those markets.

It said: “By its geography, Australia is first isolated from the geopolitical tensions and second a beneficiary of the re-allocation

07MM050522_01-14.indd 10

of commodity trading activity. The domestic economy emerged from the last COVID lockdowns on a solid footing: unemployment is down, PMIs [purchasing manager index] still in expansionary mode, and business surveys suggest this should continue in the near term.

“While elevated, inflation is only slightly higher than the RBA target range, implying a lower burden to the economy relative to other developed economies. These positive drivers have been seen by the outperformance of the Australian stockmarket year to date.

“Given the positive trend in earning revisions, we believe this outperformance can continue in the near term. We also believe that the underperformance of Australian yields might prove to be overextended in the near term, hence we reduce

the underweight to that asset class tactically.”

Positive traits of the Australian market were a tight labor market and healthy savings rates, reasonable earnings expectation given the improved prospects for materials and financials and the fact that Australian assets were proving to be more resilient to geopolitical risks.

However, problems remained around deteriorating business conditions, a dovish stance from the Reserve Bank of Australia and rising yields on the horizon.

Elsewhere it had moved from neutral to underweight on global equities as it was concerned about lingering effects of the pandemic and geopolitical risks from the Russia-Ukraine war. It was also worried about persistent inflation and central bank missteps arising from that.

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28/04/2022 11:47:12 AM

12 | Money Management May 5, 2022

News

Insignia forecasts stabilisation in adviser exits

BY LAURA DEW

INSIGNIA Financial has reported a downturn in funds under management and administration of $8.6 billion as a result of market volatility.

Announcing its quarterly results for the three months to 31 March, 2022 to the Australian Securities Exchange (ASX), the firm said group funds under management and administration (FUMA) was down 2.7% to $317 billion.

This was the result of unfavourable market movements as well as institutional outflows.

There were 1,682 advisers in the Insignia network which was a decline of 83 advisers, divided between 49 from the self-employed space and 32 from the self-licensed channel.

Departures from the selfemployed channel were typically

smaller structures and reflected the reset of management fees charged by Insignia to self-employed advisers.

It said it expected adviser numbers to stabilise from 1 July, 2022 but said it expected a further 30 adviser departures between now and July.

This included the Bridges and MLC Advice businesses to be integrated under a refreshed Bridges advice model.

Insignia chief executive, Renato Mota, said: “The next phase of our advice simplification will see us bringing two of our employed advice businesses together, combining the strength of both businesses and unifying them under one brand and culture. This is a key step in our transformation to ensure we have a sustainable and accessible advice business into the future”.

Stagflation less likely but not off the mark: Aviva

BY LIAM CORMICAN

MARKET comparisons to the stagflationary environment of the 1970s are probably excessive, according to Aviva Investors, but there are still similarities.

Aviva expected global growth to slow in 2022 but remain robust with world gross domestic product (GDP) growth likely to be around 4% this year and then fall slightly to just above 3% in 2023.

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The asset management firm said high inflation was already eroding household real incomes and hurting sentiment, both of which would act as a brake on growth this year and next.

“Inflation is still expected to fall back later this year and during 2023, but the risk of a more damaging and lasting episode has risen,” it said.

Michael Grady, head of investment strategy and chief

economist at Aviva Investors, said: “Recent events in Ukraine serve to highlight the fragility of the global geopolitical and economic order. These are likely to usher in a period of greater uncertainty, increased economic and market volatility and more challenging asset allocation decisions.

“With growth expected to remain above trend this year, and corporate pricing power

seemingly robust, we prefer to be modestly overweight equities in developed markets, with a more neutral view in emerging markets. Recent spread widening in credit markets has provided an opportunity to move from a preferred underweight to neutral.

“With positive inflation surprises more likely and policy rates rising significantly to address overshoots, inflation risk premia need to be higher, while real rates need to adjust to slow growth. As such, we prefer to be underweight duration.”

Aviva Investors said slower growth and high inflation had put central banks in a difficult position, but most had clearly signalled a need for significantly tighter monetary policy, with the most forceful message coming from the US. “Policy rates may need to move above neutral to slow growth and bring inflation back to target. This raises the risk of excessive policy-induced slowdown,” the asset management firm said.

28/04/2022 10:00:44 AM

May 5, 2022 Money Management | 13

News

Asset managers consider key-man risk

BY LAURA DEW

KEY-MAN risk is becoming an issue for investors who are seeking confirmation their asset managers have succession plans in place.

In April, SG Hiscock appointed a new chief executive in Giles Croker and highlighted his appointment had been “in development for a number of years”. This included Croker assuming senior internal operational roles, acting as joint CEO for five months and being an active contributor at board level.

The move highlighted how important it was for firms to implement succession plans to reduce dependence on any one person or ‘star manager’. This was highlighted by the temporary departure of Magellan founder Hamish Douglass which led to outflows for the firm.

Speaking to Money Management, founder Stephen Hiscock said: “There has been a succession plan in place for many years. The

company has seen this as essential and there are succession plans in place for all senior levels of management.

“The board believes one of the most important functions it has, is to ensure the smoothest possible succession for all levels of the firm and has steps in place to ensure that all key roles have back-ups and plans.”

It was also important how the change was communicated to the market to reduce the likelihood of outflows.

“Major ratings agencies and asset consultants were informed directly, and clients were informed via a newsletter.

“The majority of external commitments and relationships, including clients, head of ESG, and the chief investment officer role, that Stephen has held in the past, will continue to be held by him. As such, the change from an external perspective is regarded as relatively modest.

“In conversations with clients, there has been very pleasing feedback that this is the right decision by the Company and the right time; given that the company and its funds are performing extremely well,” he said.

Laird Abernethy, managing director for Australia and New Zealand at GQG Partners, also said that key-man risk was becoming a common question asked by investors, particularly since the firm listed on the Australian Securities Exchange last October.

“A negative risk that we have had to counsel our clients through is around key person risk and that’s been elevated more recently. We are really focused on telling clients that we are a multi-generational business and have been thinking about succession planning since 2016.

“It is a really topical issue, everyone is asking us about it. It is important and needs to be done in a clear and transparent way.”

Sustainable investing is not only good for sustainability.

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Kathy Vincent, MD – Platforms & Investments, BT *Source: From Values to Riches 2020, Responsible Investment Association of Australasia https://responsibleinvestment.org/wp-content/uploads/2017/11/From-values-to-riches-Charting-consumerattitudes-and-demand-for-responsible-investing-in-Australia-2017.pdf. This information was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714. This information is for advice professionals only. This information provided is factual only and does not constitute financial product advice. Before acting on it you should seek independent advice about its appropriatenessness to your and your clients’ objectives, financial situation and needs.

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07MM050522_01-14.indd 13

27/04/2022 5:51:23 PM

14 | Money Management May 5, 2022

InFocus

GROWTH IN PLATFORM INFLOWS With the Australian wealth management platform industry surpassing $1 trillion in assets under administration, Liam Cormican unpacks the factors leading to growth.

DATA FROM PLAN For Life showed each of Australia’s largest platform providers have enjoyed growth in their funds under management (FUM) in 2021, increasing by $138.8 billion over the calendar year, and surpassing the $1 trillion threshold.

Overall, masterfunds were up 15.7% over the whole of 2021, reaching $1.024 trillion, while the wraps grew by 24.8% to $550 billion, according to the research house.

Insignia Financial experienced the highest annual growth, growing by 180.4% between December 2020 to December 2021 to $213.2 billion, beating out BT as the new market leader.

HUB24 came in at second place with an annual growth rate of 127.6% to $50 billion due to their takeover of MLC and Xplore while Netwealth jumped to $56.7 billion, up 46%.

The data followed the release of several March quarterly updates by platforms to the Australian Securities Exchange, with net inflows for HUB24, BT Panorama and Praemium growing by $2.6 billion (+36.4% compared to March quarter 2021), $1.5 billion (+130%) and $725 million (+82%) respectively.

Total funds under management for HUB24 sat at $68.3 billion, up comprised of platform funds under administration (FUA) of $51 billion (+43.3% compared to March quarter 2021) and portfolio, administration, and reporting FUA of $17.3 billion (+9.7%).

Meanwhile, Praemium FUA was $47.7 billion, comprised of platform FUA of $20.7 billion (+23% compared to March quarter 2021), portfolio, administration, and reporting FUA of $21.4 billion (+28%) and international FUA of

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$5.6 billion (+28%).

BT Panorama had $155.18 billion in total funds under management with its managed accounts FUA increasing to $10.9 billion, up 57% compared to the March quarter in 2021.

As of 2021, according to Investment Trends, 53% of advisers were using managed accounts for their clients, jumping from 44% in the previous year, and from 16% a decade ago.

Speaking to Money Management, Andrew Alcock, HUB24 chief executive, said HUB24’s consistent FUA growth over recent years was due to a number of factors, especially its approach to enhancing its proposition and platform capability to deliver efficiencies for advisers and value for clients.

“HUB24 has built a reputation for collaborating with licensees

and advisers to build solutions that make a difference for them and their clients, we have strong relationships with privately-owned licensees which is a segment which continues to grow even though the number of advisers overall is increasing,” he said.

Alcock said platforms were changing the structure of the value chain.

“Enhanced functionality on platforms like HUB24 are enabling the adviser to be more efficient and leveraging technology to deliver what we call ‘platform alpha’ to add value to client portfolios for example through innovative managed portfolio capability.”

Praemium said it had been investing for growth over the last few years.

“We’ve increased our investment in our distribution

team to gain greater presence nationally and allow for increased interactions with advisers and in marketing to strengthen our brand awareness. The acquisition of Powerwrap in 2020 further strengthened our offering in the private wealth market.

“We’re also seeing a convergence of needs across private wealth advisers and progressive advice firms who are seeking a single platform technology to manage their entire client book, one that allows them to manage and administer custodial and non-custodial solutions with total wealth reporting.

“Praemium is the only platform to truly allow advisers to do this and we’re seeing this in the increasing number of advisers we’re onboarding and the strength of our pipeline for new business opportunities.”

BT Platforms and Investments, managing director, Kathy Vincent, said there were two key factors driving growth in its platforms.

“Firstly, digital features that appeal to advisers and their clients are essential for any contemporary platform. “[It’s] no longer a ‘nice to have’, it’s essential to offer mobileenabled functionality, and continually invest in digital capability so the platform can evolve to meet the changing needs of advisers and clients.

“Secondly, platforms must have a broad, well-governed investment menu. Managed accounts capability is especially important as a key driver of platform selection.

“At BT we are catering to advisers’ demand – in the 2021 calendar year alone, there were 64 new managed portfolios added to BT Panorama.”

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28/04/2022 11:43:40 AM

16 | Money Management May 5, 2022

Insurance

REVIVING THE LIFE INSURANCE SECTOR The industry watchdog has been forced to step in and mandate changes to disability income insurance in a move designed to protect consumers, writes Nina Hendy.

BEHIND CLOSED DOORS, the nation’s life insurers and friendly societies are adjusting to the latest round of industry reforms introduced in March by the industry watchdog.

The Australian Prudential Regulation Authority (APRA) has implemented a suspension on individual disability income insurance (IDII) contract terms for at least two years after consulting with the Australian Securities and Investments Commission (ASIC).

The changes to contract terms are being ushered in within a package of reforms which are focused on bolstering the

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sustainability of the IDII sector.

The arrangement would have seen new income insurance contracts from October 2022 capped at a maximum term of five years, rather than being guaranteed renewable – typically until the retirement age of the policyholder – as was presently the case.

While policyholders would have the option to re-apply for cover, the risk was that new contract terms and conditions may have changed, and policyholders would be underwritten again based on possibly changed income, occupation and pastimes.

It follows APRA’s decision in May 2021 to defer the implementation of this measure to allow time for the development of solutions that meet its expectations to address the risk of unsustainable contract terms.

The suspension was deemed necessary given that life insurers and life companies have suffered substantial losses from individual disability income insurance in recent years. This has resulted in substantial premium increases, making the product less valuable for policyholders.

It means that consumers will be protected from buying an

insurance product that doesn’t suit their needs as part of a planned package focused on improving the sustainability of the IDII market.

THE BLACK SHEEP OF THE INDUSTRY The issue is that IDII experiences a higher claims frequency and greater dispute lodgment ratios than other life insurance products, with the latest APRA figures on life insurance claims and dispute statistics highlighting the problem.

Figures over the year to 30 June, 2021 reveals that the life insurance industry lost $345.5 million from individual disability

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May 5, 2022 Money Management | 17

Insurance

income insurance and lost $1.29 billion the year prior.

APRA has been clear that there is value in life companies having mechanisms other than price to address the risk of unsustainable product terms. The ultimate goal is to improve the sustainability of the individual disability income insurance sector.

In an open letter to life insurers and friendly societies last month, APRA explained that if it was left unaddressed, there was a material risk that IDII cover would no longer be available or affordable, prompting it to step in to introduce a package of measures to address the sustainability of IDII. APRA has been quite clear that it expects industry players to demonstrably strengthen customer engagement while the suspension was in place.

“This includes collecting information on changes to policyholders’ circumstances, including occupational and financial circumstances and dangerous pastimes, to enhance the ability of life companies to understand and manage the risks of their portfolios,” APRA said.

The industry watchdog has reminded life companies that premiums should be set with the objective of providing policyholders with a reasonable degree of stability over the lifetime of their products.

APRA’s letter states: “Where upfront premium discounts are applied, the appropriateness and level of these discounts should be carefully considered from a

07MM050522_16-27.indd 17

sustainability perspective. The temporary nature of such discounts should also be made clear to policyholders”.

ADAPTING TO CHANGE There appears to be broad industry acceptance that a stalemate had been reached, and that APRA’s hand was forced to step in and implement a change of some sort.

But it’s another change that advisers and insurers needs to adapt to, which will take some time to filter through the internal systems and procedures. It’s early days, and industry players are keeping their cards close to their chest as they reshuffle the decks to find a better market fit.

APRA’s changes have been welcomed by the Financial Planning Association of Australia (FPA) and the Association of Financial Advisers (AFA), which had both been advocating for this change along with ASIC. And now, some industry players admit that there had been a reluctance to make a move to change their IDII product, despite a distinct lack of market fit.

“APRA had to do something to ensure a more sustainable product bubbled to the surface,” Michael Pillemer, chief executive of PPS Mutual, said.

The intervention has created an environment more conducive to new and better products being designed for the market, which had been suffering from a ‘first move reluctance’ among industry players, he said.

“There’s been an issue of who moves first to bring in change

“There have also been significant cost hikes, which makes it hard to manage client expectations, especially when so-called ‘level premium policies’ have seen increases over 100%.”

– Chris Holme, HH Wealth. with new product design, and quite frankly, it just wasn’t being resolved,” Pillemer said.

APRA’s suspension on contract terms gives insurers some breathing space to digest all the changes to IDII that have been made over the last couple of years, he said.

“There has been a lot of regulatory reform take place in recent years, so this provides the industry and regulator more time to assess the impact.”

When asked about the changes implemented at PPS Mutual, he said: “We’ve had more of a ‘rebalancing’ in terms of our premium. We’ve had some increases in relation to income protection, and premium reductions in relation to our insurance and TDP products. But it will take a while to see any kind of noticeable uptick in terms of profitability.

“But I think that if you look at the losses as an industry across a whole, the losses will continue to come down quite substantially, Pillemer said.

INSURERS EVOLVE THEIR PRODUCTS MLC Life Insurance admits it has been evolving its products for some time in the lead up to the suspension.

Michael Downey, general manager retail distribution partnerships, said: “Anecdotally, the licensees and advisers we have been speaking to think these products address the key needs of their clients, and/or have focused on the benefits and features that their clients find most valuable.

“We will continue to work closely with advisers who are managing existing client relationships who may prefer to leave their clients in their current product suite and / or where appropriate from an advice perspective to help them transition their clients across to the new on-sale products.

“More broadly, the changes have had a positive and healthy effect on competition amongst insurers, and everyone should welcome that.”

He added: “We know APRA will be keeping a close eye on how the new products are performing so we will have to keep evolving our new products to ensure premiums are affordable in future. We continue to invest heavily in product innovation, so the new products are just the latest step in this”.

Pillemer hopes that all insurers look to implement more sustainable products are lacking Continued on page 18

27/04/2022 3:23:39 PM

18 | Money Management May 5, 2022

Insurance

Continued from page 17 within the sector. “Whenever we make a change to our products, we always consider whether it will be in the best interests of our members. That’s where the process starts, and we end up having very different practices to other insurers in the market”.

For example, PPS Mutual has never been engaged in frontloaded discounts for first or second year discounts, special deals for advisers.

“We don’t engage in any of those practices, because it just goes to sustainability, which the regulators are trying to address,” he said.

A spokesperson from TAL admits the change has created a period of adjustment for the life insurance market and financial advisers.

“It has also provided an opportunity to reframe the income protection product market to generate greater long-term pricing stability, certainty and value for customers,” the spokesperson said.

Advisers are adjusting to the new products being rolled out, which have been created after TAL drew upon insights from claims, underwriting, health services, distribution and adviser education to build its product solutions.

“This approach has enabled us to be well prepared for the changes that would flow through across our business as a result of the new product implementation,” the company said.

THE PROBLEMS However, regulatory change means that internal processes, systems and structures need to catch up, which is likely to impact the bottom line in the interim.

HH Wealth director, Chris

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Holme, admits that the changes are having an impact on the time it takes to recommend a policy and compare it against other providers.

“New policies don’t compare very well to policies held within industry super, so we are finding that we are retaining more policies obtained through industry super or default plans,” he admitted.

“There have also been significant cost hikes, which makes it hard to manage client expectations, especially when so-called ‘level premium policies’ have seen increases over 100%.”

He continued: “We have been finding that insurance companies are becoming stricter on underwriting, particularly mental health. With COVID, world events, cost of living etc, mental health issues are becoming more prevalent, so we are seeing more clients with exclusions.

“While there’s still a huge need for insurance and we see cover as a value add, it is becoming harder to recommend retail cover.

“We have made the decision to not take insurance commission due to writebacks and uncertainty around revenue. Plus, if we don’t take commission, we’re able to obtain a decent discount for clients.”

BOLSTERING SUSTAINABILITY It’s a shame the industry was unwilling to self-regulate its life insurance products to bolster product sustainability without intervention, Pillemer said.

“Really, the industry should be required to self-regulate when it comes to product re-design if they aren’t fit for market anymore,” he said.

Ineffective life insurance policies are equally as unsustainable as the practice of offering front-loaded discounts to lure new customers - also rife in the industry.

Research commissioned by PPS Mutual conducted by Rice Warner in 2020 revealed that premiums started increasing higher than the industry average after three years among insurers that offered front-loaded discounts, Pillemer said.

“When the discount comes off after the first year, the client could be facing 40% in their premiums.

This has also been a major issue for the industry for large premium increases over the last few years.”

But front-loaded discounts appear to remain fair game for now, at least.

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28/04/2022 11:43:11 AM

20 | Money Management May 5, 2022

ESG

WADING THROUGH THE ESG NOISE There is a lack of industry definition for environmental, social and governance investing, writes Dugald Higgins, which can make it difficult to explain the differences to clients.

WHEN IT COMES to responsible investing, it is easy to be bombarded by the numerous acronyms and confused by the different definitions and terminology.

Environmental, social and governance (ESG), responsible investing (RI), sustainable investing and impact investing are everywhere these days, and rightly so. But the array of options can be confusing for the financial adviser looking at a product and trying to work out which best suits their client’s needs.

There is a lack of a common language or common definitions around many of these terms.

While some professional bodies are looking to introduce standard definitions – the CFA Institute has recently come out and set global standards on how funds consider ESG issues in their objectives and processes that we hope become widely embraced – advisers need support when it comes to explaining responsible investing to their clients.

07MM050522_16-27.indd 20

THE RIGHT DEFINITIONS It is helpful to start off by looking at RI investing by breaking it down into three key approaches.

At one end of the spectrum there is the values-based approach, or the ethical investment approach, that’s been around for decades, which avoids companies and industries where you don’t want your money to be invested.

At the other end of the spectrum, there is sustainability and impact investing, where people invest their money to advance certain criteria, or to have a positive impact. And in the middle is the concept of ESG integration, which looks at risks and opportunities through ‘E’, ‘S’ and ‘G’ lenses but can also overlap with both ethical and sustainable approaches.

The biggest issue with terms like RI, sustainability and ESG, is that much of the market uses them interchangeably. But they are not substitutes for each other, and should not be used in that way.

For example, an ESG-driven

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May 5, 2022 Money Management | 21

ESG

approach isn’t necessarily about ‘sustainability’. When it comes to sustainability, we believe the investment has to be pursuing and actively articulating quite a narrow set of themes contributing to sustainable solutions. If it encompasses impact investing, it has to be able to define the difference the investment is going to be making.

But if it is just a matter of looking at your investment universe through the lens of ‘E’, ‘S’ and ‘G’, that’s a different thing altogether given that, in and of itself, ESG incorporation is not about applying a moral judgement.

TOOLS TO WORK WITH If it is hard for the industry to agree on definitions for the different kinds of responsible investing, then it will obviously be confusing for the end investor

and the financial adviser advising them. We have spent a considerable amount of time assessing how best to help advisers with this problem after deciding to more formally address this need in 2019.

It is important to provide tools that can assist advisers in deciphering the RI credentials of any product they are looking at and, as such, in 2021 we finished rolling out our RI classifications across Zenith’s Approved Product List (APL), which now totals more than 950 funds.

We decided to start by putting together a series of classifications that simply distil and describe how much ESG is incorporated into a particular fund by its fund manager during the investment process. Is it a lot, a little, or none at all? We feel the benefit of this approach is that it can be applied

to any asset class, investment style or implementation method – equity or credit, value or growth, index or active. It is a means of creating a level playing field on every fund that we cover.

It is important to recognise that the classifications are a tool to identify ESG incorporation rather than an assessment of ‘greenness’ or ‘goodness’. As such, Zenith’s five RI categories are detailed below: • Traditional – seeks to achieve a stated investment outcome, with little to no regard for RI/ ESG factors; • Aware – seeks to achieve a stated investment outcome, taking into consideration a broad range of factors including RI/ESG; • Integrated – seeks to achieve a stated investment outcome, expressly taking into

“We believe it is equally important that investors can accurately identify which superannuation strategies meet their needs and align with their investment beliefs.”

Chart 1: RI categorisation across asset classes

Source: Zenith

07MM050522_16-27.indd 21

Continued on page 22

27/04/2022 4:21:23 PM

22 | Money Management May 5, 2022

ESG

Continued from page 21 consideration RI/ESG factors which materially alter the fund’s permitted investment universe and portfolio allocations; • Thematic – seeks to achieve an investment outcome that includes an explicit RI/ESG objective that is both measurable and reportable; and • Impact – targets investments aimed at generating a positive, measurable social and environmental impact alongside a financial return.

Chart 1 displays the RI categorisation of our APL across different asset classes.

It is important to note that the Thematic and Impact categories highlight funds that are extending their approach and objectives beyond the Integrated classification.

Funds in these categories are required to display a robust assessment of both RI issues and formal engagement along with suitable objectives and processes.

Thematic products invest specifically in themes or assets related to sustainability such as renewable energy, sustainable agriculture or affordable housing. Impact products, however, must be designed to generate a positive, measurable impact in addition to a financial return with full transparency and enhanced engagement activities.

Among Zenith-rated funds, listed property and infrastructure as well as unlisted real assets have the largest proportion classed as ‘Integrated’, meaning they expressly take into consideration RI and ESG factors during the

07MM050522_16-27.indd 22

investment process.

We see this is logical as operators in the built environment have long considered issues around energy, air and water as being accretive to their bottom lines. In addition, their role in generating carbon emissions has only further propelled these industries into the forefront of addressing sustainability challenges. While Australian and international shares funds also have a large number of funds incorporating RI and ESG factors, just over half of the universe have incorporated ESG comprehensively.

For advisers seeking to consider ESG or RI as part of their product selection, these classifications will help them

understand whether or not a fund manager is thinking deeply about those issues at a product level. If they want to include products that are run by managers truly embracing responsible investing, then tilting the product selection towards those that are ‘Integrated’ can provide benefits in achieving fund objectives.

However, if advisers want to use managers that are going further and trying to initiate change in an industry or a sector, they can also include funds that have Impact or Thematic classifications.

However, labels aren’t everything, and it is important to consider responsible investing on a principals-led basis. Is an approach fit for purpose? It

27/04/2022 4:21:34 PM

May 5, 2022 Money Management | 23

ESG

doesn’t make sense to look at an index fund the same way an adviser would look at an active manager that is trying to run an impact strategy, for example, but both types of funds can have a role in a portfolio even if they have quite different RI classifications.

‘Greenwashing’, or products being intentionally mislabelled as pursuing RI principles, is an ongoing issue, as is ‘greenwishing’ where funds might genuinely seek to be pursuing positive goals, but are conflating ambition with reality.

However, it is also important to be wary of the source of ‘greenwashing’ allegations. One of the challenges of RI is that it is judgement based and the field of view depends on where you stand.

While one adviser or investor might consider a fossil fuel company quite ‘green’ if they are actively transitioning towards sustainable energy, another might just draw a line through all fossil fuel companies as being ‘brown’.

An adviser needs to understand what a fund’s objectives and definitions are first before they can make a judgement call.

SUPERANNUATION We have also adopted the same RI classification approach to superannuation funds. Our superannuation research and consultancy business, Chant West, has incorporated this framework into its ratings for multi-manager options.

The classifications also work to assist fund members and their advisers to understand the

07MM050522_16-27.indd 23

integration of a superannuation fund’s RI themes into their processes and the associated impacts on the final portfolio outcome.

Just as advisers use these classifications to assist end investors, members of superannuation funds can use them to understand their particular fund’s investment option’s approach to RI investing.

While we understand that fund managers and super funds need to be able to measure and demonstrate the role of RI in their investment strategies, we believe it is equally important that investors can accurately identify which superannuation strategies meet their needs and align with their investment beliefs.

This is particularly important in the superannuation space where investors have long-term retirement goals and need to align both their investment goals and RI preferences with their long-term objectives.

THE PROCESS Increasingly, responsible investing is becoming more of a critical part of any fund manager’s risk process. Fund managers not thinking deeply about how they incorporate ESG into their investment process may need to question whether or not they are fulfilling their fiduciary duty.

At Zenith, we do not have a separate team responsible for examining RI. While we have an internal Responsible Investment Committee that oversees our processes in this space, we also

think it is very important that every research analyst takes a hands-on role in considering RI when they review and assess funds and their management.

By not isolating our RI process in a separate team away from the rest of our analysts, we can avoid siloing ESG in a way that may be potentially unhelpful.

We believe it should be at the forefront of every analyst’s mind, in the same way that factors such as processes, fees and performance are considered.

The Responsible Investment Committee exists to support all our analysts and to keep them up to date with new initiatives, new thoughts and new views, and continue upskill them on developments in responsible investing.

The committee is also drawn from all aspects of our business - from our research team, our portfolio consulting team, our legal and compliance team and our data team. This diversity of thought and views is important in order to be able to come up with the most effective set of solutions possible, as we are also about to launch additional tools to help advisers in this space.

Ultimately, the RI classifications provide advisers with an additional tool to differentiate between funds, and identify those best suited to clients seeking to add ESG sensitivity to their portfolios. But like all tools, it works best in conjunction, not in isolation.

Dugald Higgins is head of responsible investment at Zenith.

27/04/2022 4:21:53 PM

24 | Money Management May 5, 2022

Fixed Income

USING PROPERTY TO SUPPLEMENT FIXED INCOME An allocation to real estate private debt can be a useful way to supplement fixed income exposure in portfolios, writes Omar Khan.

UNQUESTIONABLY, THE LAST few years have been tough for advisers positioning portfolios for clients close to or in the retirement phase. Clients already in retirement have uncomfortably ridden the long, steady grind of lower interest on term deposits and cash, all the way to record-low levels.

For this group of investors, the fact that the rate cycle has finally turned, and rate rises are back on the agenda is cause for some celebration. But they should be wary of the fact that interest rates – and thus, returns on their old-favourite yield-generating

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investments – are not going to get back to what they might consider ‘normal’ anytime soon.

Further, depending on the level of their continued exposure to bonds, some are likely to return capital appreciation previously enjoyed whilst rates were declining over the last decade.

Since the Global Financial Criss (GFC), private debt has grown in importance as an asset class. Though there are several sub-categories of private debt, direct lending continues to grow in scale in Australia. This growth, is largely attributed to the changes in banking regulation and

subsequent deleveraging of banks that occurred globally post the GFC. From an investor standpoint, private debt offered returns that were not dissimilar to equities, whilst allowing institutional investors to diversify away from equity market volatility.

In Australia, there is an added dynamic. The Australian Prudential Regulation Authority (APRA) has publicly noted that “poorly underwritten, monitored, and controlled credit exposures to commercial real estate (CRE) borrowers have historically proven to be a key source of credit loss for banks.”

As a result, APRA initiated a thematic review of the banks in 2016, to better understand underwriting quality and rectify processes if it was required.

Secondly, to put in place monitoring to identify future deterioration in CRE lending.

The outcome of this review was that banks tightened their lending standards and restricted the real estate development sector from debt capital. As can be observed in Chart 2, development finance dropped from ~9% of CRE exposure in 2016 to ~6% end of 2021; a 33% drop over this period.

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May 5, 2022 Money Management | 25

Fixed Income Banks have reduced their exposure to real estate debt primarily by increasing conditions or ‘hoops’ that developers need to jump through to obtain finance. For example, the equity banks require from developers has doubled since the APRA-review in addition to requiring a materially higher pre-sale debt cover on projects.

Even when they will lend, the exhaustive and slow bank process can result in delays and uncertainty for developers, and hence they increasingly seek alternatives.

This funding vacuum has been filled by non-bank lenders, whose skill base lies in assessing, making, monitoring, and managing specialist loans. Key executives at the non-bank lenders have generally come from institutional firms with capital primarily sourced from institutions or family offices.

More recently, these strategies have been made available to advisers through platform friendly vehicles as well as Listed Investment Trusts (LITs).

Even though the real estate private debt sector in Australia is still relatively small by global standards, circa $15 billion - $20 billion, where in many comparable jurisdictions the market share is between 20% – 30%; representing a $90 billion to $100 billion market opportunity.

Investors have sought out well-managed real estate private debt to supplement fixed income portfolios for the following key reasons: • Lower risk relative to other alternative assets or yield options (e.g. core real estate); • Higher yield compared to traditional bonds; • Security of underlying real estate (CRE debt only); • Diversification as counterparties are typically mid-market private entities; • Very low correlation to equity markets; and • Low volatility which can buffet portfolios in extreme events like COVID. Alceon lends to mid-sized developers in Australia, with senior secured loans (typically

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Chart 1: Average term deposit rates as of March 2022

Source: Finder.com.au

Chart 2: ADI Commercial Property Exposure ($m)

Source: Alceon

Table 1: CRE (Development Finance) Key attributes Purpose

Acquire or improve (develop, value-add) real estate

Security

Secured, first mortgage over the underlying real estate

Target net returns

5% - 7%, typically fixed return due to short-dated loans

Term

Typically, 9 months – 24 months

Capital value

Loan are not typically revalued given typical short tenor

Liquidity

Short loan duration builds in natural liquidity in the portfolio

Source: Alceon

first-mortgage) with a loan-tovalue ratio of between 45% and 65%. Such loans go to development projects (typically residential real estate projects, but sometimes commercial property) of high-quality development businesses, across Australia and select locations in New Zealand.

Given the size of Sydney and Melbourne relative to other cities, they dominate the locations of our counterparties or sponsors.

For the calendar year 2021, the

retail fund achieved an annual return of 8.03%. Alceon believes that in the current interest-rate environment, risk-adjusted returns of this level meet the requirements of many incomefocused investors.

More importantly, these returns are uncorrelated to equity markets, and are generated in Australia, through lending to an industry with which most investors are familiar.

There are many lenders active in the marketplace, with an

income-bearing investment product available, and this kind of investment offers advisers an attractive option for the portfolios of their income-oriented clients.

And, given that the non-bank lending sector is increasingly filling the void in development lending left by the banks’ retreat, this style of product has benefits for both its investors and its borrowers.

Omar Khan is director, real estate, at Alceon.

27/04/2022 3:25:17 PM

26 | Money Management May 5, 2022

Advice

DOES GENERAL ADVICE PLAY A ROLE IN SUPPORTING CONSUMERS? General advice may help you reach a broader audience, but personal advice provides a better way to meet client needs and manage compliance risk, writes Steve Davison.

THERE’S A DIFFERENCE between general advice and personal advice. The problem for the industry is the consumer does not appear to care and the line separating them is not always clear. A 2019 research report commissioned by the Australian Securities and Investments Commission (ASIC) found that consumers find it difficult to understand the difference between general and personal advice, even when it is explained to them .

The paradox for advice providers is that general advice - which must not consider a consumer’s personal circumstance or make product recommendations - is at odds with the goal of personalisation for client experience, marketing and providing financial help.

The rule of thumb that general advice is easier to provide and promote to a wide audience has been challenged. ASIC’s case against Westpac is one of the few examples of case law in this area.

It suggests the scope of general advice may be narrower than first assumed and that financial services are to be provided efficiently, honestly, and fairly .

Arguably, general advice has become too generic to be relevant to consumer expectations for guidance and help.

For advice providers, the

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restrictive boundaries and business risk of providing general advice mean the commercial returns may no longer outweigh the costs of providing personal advice. It is now accepted that personal advice remains even more difficult to produce because of the administrative burden; it is strangled by excessive regulation and red tape, making it expensive and putting it out of reach of most ordinary Australians.

The Treasury has been tasked to review how the regulatory framework could better enable the provision of high quality, accessible and affordable financial advice for retail investors as part of the Quality of Advice Review .

With a report from the Quality of Advice Review not due until 16 December, 2022 and no certainty yet about when potential regulatory changes will come into effect, the industry should not wait for regulations to catch up - there are already options in the market seeking to make a difference to consumers and advice providers’ needs around personal advice.

The right technology can make personal advice very efficient for common use cases - covering the needs of many Australians - and digital has the potential to become the go-to channel for these needs.

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May 5, 2022 Money Management | 27

Strap Advice

“For advice providers, the restrictive boundaries and business risk of providing general advice mean the commercial returns may no longer outweigh the costs of providing personal advice.”

Consumers often wait to build their wealth, and with it their financial confidence, before seeking professional advice. Access to an affordable entry-level advice option could encourage consumers to seek personal advice at an earlier stage.

With financial products so readily accessible, helping consumers get strategic advice before purchase may be a small step to improved financial decisions.

Some superannuation funds and fintechs are already using digital advice technology to offer online and adviser-supported statements of advice. Midwinter’s digital advice technology underpins these types of services for some of Australia’s largest superannuation funds, collectively serving more than three million Australians.

Advice providers can use this technology to offer their clients more efficient, simple personal advice that is digitally engaging and may just set them on a path to building a longer-term relationship over their lifetime.

Digital advice technology also improves the efficiency of their entire advice process, from collecting client data to automating statements of advice that address the client’s circumstances and objectives.

Few advice groups and wealth managers are doing it today because they are not ready to

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invest or have become inherently conservative after years of excessive regulatory oversight.

The unfortunate reality is, they are passing up an opportunity for significant growth.

A more efficient way to provide personalised advice could also help onboard a new generation of younger clients that do not yet have substantial assets but are set to spend or inherit trillions of dollars from their Baby Boomer parents.

These investors could benefit from advice but are often turning to less-than-optimal sources.

About 3.5 million (or 17%) of Australians aged 14 and over say they have been asked for financial advice by their friends or families, according to Roy Morgan research.

‘Finfluencers’ and social media sources are becoming a go-to source of information for generation Z, millennials and firsttime investors. The reach of these unlicensed individuals has become substantial with ASIC now taking a closer look at their activities and warning companies to be mindful of regulatory risks when engaging the services of finfluencers .

These sources of financial information – or misinformation - are ultimately a form of competition, and whilst regulation may reduce the chance of poor advice, the alternative is to ensure

more people seek good personal advice and the consumer protections it affords.

Advice providers can differentiate from the finfluencers by pre-emptively moving ahead of possible regulatory changes and help existing and prospective clients before they turn to friends, social media, or simply choose to go it alone.

A digital advice journey enabled through Midwinter’s software can provide personal advice around a specific topic such as retirement or insurance and is an ideal introduction for younger consumers, or those new to financial advice, who often have simple or single-topic advice needs.

By providing an accessible digital advice offering, businesses can minimise a clients’ reliance on alternatives such as general advice - or the sometimes-questionable information [advice] from finfluencers and chat rooms helping their brand differentiate the substance of their offer.

The businesses that adopt digital advice technologies now may find they have a significant head start – and thus advantage – over their competition.

Steve Davison is chief commercial officer at Midwinter Financial Services.

27/04/2022 4:19:47 PM

28 | Money Management May 5, 2022

Toolbox

UTILISING THE ADVANTAGES INVESTMENT BONDS

Investments bonds offer a number of flexible, tax-advantaged benefits, writes Emma Sakellaris, but these are often overlooked as old fashioned when it comes to portfolio allocations.

INVESTMENT BONDS ARE often considered an old fashioned investment option, and as a savings vehicle they can be overlooked by financial advisers and their clients. But the reality is that investment bonds have a number of advantages that make them well worth a closer look.

If you were to develop, from scratch, a flexible, tax-advantaged investment that would help Australians build up their wealth outside their superannuation and enable the smooth transition of

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wealth across generations, you would be hard pressed to come up with a better option than an investment bond.

An investment bond is a tax-advantaged, simple and flexible savings vehicle that pools an investor’s money in a similar fashion to a managed fund, to help them grow their savings over time.

As with a managed fund, an investment bond is a good option for those saving for long-term financial goals. These bonds benefit from a distinctive tax treatment that can be

particularly useful for advisers and their clients.

An investment bond is a great way to save for a large purchase such as a house – or to supplement retirement savings as a more flexible alternative to superannuation, assist in estate planning and intergenerational wealth transfer, invest on behalf of children, ensure you are covering your funeral expenses in a way that won’t impact your social security entitlements, or simply invest tax effectively.

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May 5, 2022 Money Management | 29

Toolbox

TAX-EFFECTIVE INVESTING There are many benefits of investment bonds – not least their tax benefits. Investors pay no personal tax on investment earnings while their money is in the investment bond. Plus, any withdrawals made after 10 years are tax-free, subject to what is known as the 125% Contribution Rule.

Under the 125% Contribution Rule, the contribution amount in the first year of the investment bond is uncapped. However, from the second bond year onwards, contributions cannot exceed 125% of the previous year’s contributions, each year. Withdrawals made before 10 years will be taxable, but may receive a tax offset for tax already paid in the fund. This is because the investment bond pays tax on investment earnings at the business tax rate of 30%.

While they are invested in the investment bond, investors do not need to record investment earnings on their personal income tax returns.

Investors typically choose to invest an amount upfront, in addition to frequent contributions during the period the bond is held, depending on their personal savings goals and investment objectives.

Investors and their advisers can choose from a range of investment options, from conservative to growth as well as the option to invest sustainably, in the same way as they can with a managed fund.

A COMPLEMENT TO ESTATE PLANNING An investment bond is also a useful estate planning tool, and can be a good way to help plan for

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the distribution of an estate. This makes it a particularly attractive option for blended families. An investment bond can effectively complement a Will to enable the smooth transition of wealth across generations.

Many people find setting up legal structures in a Will, such as testamentary trusts, a complex and sometimes confronting process.

However, setting up an investment bond as a way of leaving a lump sum to beneficiaries is much more straight-forward.

Clients can nominate beneficiaries anytime to receive the proceeds of the investment bond in the event of their death—tax free— without the hassle of a probate or the concern that the estate may be potentially contested. No yearly renewal is required, and the nominated beneficiaries can be updated at any time.

Naming beneficiaries in the investment bond means there is no disputing your intentions and the investment will be distributed to nominated loved ones, tax free, without delay.

Additional contributions can also be made year by year on behalf of the beneficiary if an ongoing plan is established.

An investment bond is also an option for those looking to invest for their children or grandchildren as it allows for the simple transfer of wealth between generations, tax free.

Ordinarily, any investment held in the name of a minor is taxed at the highest marginal tax rate. However as the tax on an investment bond’s earnings is paid within the fund, a child does not need to declare the income from their bond on their personal tax return.

Further, when a nominated child reaches an age of your choosing, there is no capital gains tax paid on the transfer of the policy.

Additionally, the start date of the 10-year rule remains from the start of the policy, so the child is closer to tax-free withdrawals from the fund.

Once the child receives the money, they can spend it however they like, with no further restrictions on its use.

A TAX-EFFECTIVE SUPERANNUATION ALTERNATIVE As a result of their heritage in the friendly society space, investment bonds have the unique advantage of offering a lower tax rate than almost any other investment option, outside of superannuation.

But unlike superannuation, an investment bond has no limits on how much—or how often— investors can contribute to their investment, providing they meet the 125% Contribution Rule. What’s more, they can access their funds at any time. And by meeting the 125% Contribution Rule, the investment income will become tax-free after 10 years.

For people who have reached their superannuation contribution limits but have additional funds that they would like to save for their retirement, investment bonds offer a flexible tax advantaged approach.

Because investment bonds have a maximum tax rate of 30% on earnings in the bond, it is also very tax-effective option for people on a higher personal tax rate.

Furthermore, investors do not have to pay any personal tax on the money invested or the interest while funds remain invested.

If the bond is held for 10 years

Continued on page 30

28/04/2022 10:01:38 AM

30 | Money Management May 5, 2022

Toolbox

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

Continued from page 29 or more, any withdrawals are not liable for personal income tax and are not required to be included in tax returns.

For those concerned about locking their money away in superannuation, investment bonds have the further advantage of allowing people the flexibility to access the funds whenever they wish.

FUNERAL BONDS A funeral bond is a type of investment bond that is specifically designed to help pay for future funeral expenses. It allows clients to save for the costs of a funeral over time. Like all investment bonds, the tax paid on the income earned is paid within the bond, so clients do not need to declare any income earned on their investment.

Because a funeral bond investment is specifically designed to contribute towards future funeral expenses, funeral bond savings are set aside to cover the funeral costs and the investment proceeds can only be accessed at the time of death. There are special measures in place to ensure that the money invested is only used for the funeral service, helping to ease the financial burden that would otherwise be faced by family and providing them with peace of mind.

Any excess funds remaining after payment of the funeral expenses are either paid to the deceased’s estate or back to the investor if the bond has been taken out by an investor on another person’s life.

MAXIMISING AGED PENSION ENTITLEMENTS Funeral bonds are designed to be exempt for the purposes of the assets test, income test and deeming provisions including the Age Pension, Carer Payment or Disability Support Pension - up to what is called the Funeral Bond Allowable Limit.

The Funeral Bond Allowable Limit as at 1 July, 2021 is $13,500, and it is indexed in line with CPI pension increases every 1 July.

The Funeral Bond Allowable Limit applies to the total contribution you have invested in the Bond, net of fees and increases in value of the Bond over time. To satisfy the requirements of this legislation, the investment must be kept solely to contribute towards funeral expenses, must be a reasonable estimate of the cost of the expenses, and cannot be withdrawn prior to death.

Considering the cost of funerals in Australia, this can be a good investment option. The ASIC MoneySmart website says private funerals typically cost somewhere in the region of $4,000 for a basic cremation up to $15,000 for a more elaborate burial. No small costs to be faced by families on the death of a family member.

It is clear there are many benefits of investment bonds that may be overlooked by financial advisers and that it is a vehicle that can provide a valuable tax effective option.

As far as regular savings plans are concerned, the advantages of an investment bond are hard to beat. Advisers and their clients can typically choose to invest an amount upfront and also make regular additional contributions over time, secure in the knowledge that their investment had been made in a tax advantaged environment.

Emma Sakellaris is chief executive of Foresters Financial.

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1. Investment bonds are tax effective because: a) Although investors pay personal tax on investment earnings while their money is in the investment bond, any withdrawals made after 10 years are tax-free, subject to the 125% Contribution Rule. b) Investors pay no personal tax on investment earnings while their money is in the investment bond. But any withdrawals made after 10 years are taxed, as a result of the 125% Contribution Rule. c) Investors pay no personal tax on investment earnings while their money is in the investment bond. Plus, any withdrawals made after 10 years are tax-free, subject to the 125% per cent Contribution Rule. d) Investors pay no personal tax on investment earnings while their money is in the investment bond. Plus, any withdrawals made after five years are tax-free, subject to the 125% Contribution Rule.

2. Under the 125% Contribution Rule: a) The contribution amount in the first year of the investment bond is uncapped.

However, from the second bond year onwards, contributions cannot exceed 125% of the previous year’s contributions, each year. Withdrawals made before 10 years will be taxable, but may receive a tax offset for tax already paid in the fund. b) The contribution amount in the first year of the investment bond is capped.

From the second bond year onwards, contributions cannot exceed 125% of the previous year’s contributions, each year. Withdrawals made before 10 years will be taxable, but may receive a tax offset for tax already paid in the fund. c) The contribution amount in the first year of the investment bond is uncapped.

From the second bond year onwards, contributions cannot exceed 125% of the previous year’s contributions, each year. Withdrawals made before 10 years will not be taxable. d) The contribution amount in the first year and subsequent years of the investment bond is uncapped. Withdrawals made before 10 years will be taxable, but may receive a tax offset for tax already paid in the fund.

3. If the bond is held for 10 years or more: a) Any withdrawals are liable for personal income tax and are required to be included in tax returns. b) The investment bond can’t be held for 10 years or more. c) No further withdrawals can be made. d) Any withdrawals are not liable for personal income tax and are not required to be included in tax returns.

4. a) b) c) d)

The Funeral Bond Allowable Limit as of 1 July, 2021 is: $10,250, and it is indexed in line with CPI pension increases every 1 July. $10,250, and it is indexed in line with CPI pension increases every 1 January. $13,500, and it is indexed in line with CPI pension increases every 1 July. $13,500, and it is indexed in line with CPI pension increases every 1 January.

5. The Funeral Bond Allowable Limit applies to the total contribution you have invested in the Bond, net of fees and increases in value of the Bond over time. To satisfy the requirements of this legislation: a) The investment must be kept solely to contribute towards funeral expenses, must be a reasonable estimate of the cost of the expenses, and can be withdrawn at any time. b) The investment must be kept solely to contribute towards funeral expenses, must be a reasonable estimate of the cost of the expenses, and cannot be withdrawn prior to death. c) The investment must not be kept solely to contribute towards funeral expenses, must be a reasonable estimate of the cost of the expenses, and cannot be withdrawn prior to death. d) The investment must be kept solely to contribute towards funeral expenses, can cover the expenses no matter the cost, and cannot be withdrawn prior to death.

TO SUBMIT YOUR ANSWERS VISIT https://www.moneymanagement.com.au/ features/tools-guides/ utilising-advantages-investment-bonds For more information about the CPD Quiz, please email education@moneymanagement.com.au

28/04/2022 10:01:28 AM

May 5, 2022 Money Management | 31

Send your appointments to liam.cormican@moneymanagement.com.au

Appointments

Move of the WEEK David Sharpe Board chair Financial Planning Association of Australia

Financial Planning Association of Australia board member and deputy chair, David Sharpe, became chair of the board, taking over from Marisa Broome who has been chair since November 2018.

Sharpe joined the FPA in 2003 and became a board member in

2016. He was appointed deputy chair in February 2021.

Sharpe started his career in financial planning in 2003 and is based in Perth, having founded Globe Financial Planning in 2009.

He became chair of the Western Australia FPA Chapter in

2014 after two years as treasurer.

Broome said the transition to Sharpe’s tenure was the result of a long-term succession plan, and he was well-placed to build on the membership engagement and advocacy activity of the leadership team.

Cathie Armour, commissioner for the Australian Securities and Investments Commission (ASIC), will exit the corporate regulator in June.

Armour, who joined the regulator in 2013, had previously had her term extended until June 2022 and a spokesperson confirmed that she would depart on 2 June.

She was initially appointed in 2013 and her term was extended in 2017 for another five years.

Prior to joining ASIC, she had worked as legal counsel for J.P. Morgan and Macquarie.

The news came to light in her last Senate estimates appearance where ASIC chair, Joe Longo, thanked her for her service.

Lifespan Partnership’s selflicensee solution accommodated self-licensees and aspiring self-licensees, who preferred the freedom of individual licensing but also wanted support tailored to their needs.

at ART, responsible for developing and implementing the fund’s approach to managing climate change risks and opportunities, including aligning the fund to netzero and the ambitions of the Paris Accord.

Prior to joining ART, Parks was an ESG analyst at Credit Suisse and at Regnan.

Lifespan Financial Planning has appointed Tony Mantineo as the national practice consultant and head of Lifespan Partnership.

Based in Melbourne, Mantineo joined Lifespan with a financial services career spanning 30 years, much of which was spent in general management and national roles financial organisations, including Clearview – Matrix/ LaVista, Australian Unity Advice, Financial Wisdom Ltd, and AXA.

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Redpoint Investment Management added to its impact investing capability with the appointments of Hunter Page and Chris Parks as portfolio managers.

Page and Parks both joined from Australian Retirement Trust (ART) and had over a decade’s experience developing and implementing investment strategies that target improved environmental and social outcomes.

At ART, Page was responsible for managing the socially responsible investment option.

Prior to joining ART, Page was the head of new business at Regnan, an impact investment manager which was part of the Pendal Group. He had also worked at UBS, where he developed and implemented its global environmental, social and governance (ESG) strategy in Zurich, Switzerland.

Parks was most recently a sustainable investment strategist

Bennelong Funds Management appointed Mai Platts as account director, NSW and ACT, adding 16 years of funds management experience to the firm, spanning key account, dealer group and adviser relationship management.

Platts would be based in Sydney, working alongside account director David Whitby, and would report to Bennelong’s head of distribution, Jonas Daly.

Prior to joining Bennelong, Platts worked as director, key accounts and adviser business at BetaShares, a position she held since 2018. In this role, she was responsible for supporting the business’s distribution activities, working with key accounts and intermediary channels.

CareSuper appointed Linda Scott as its board chair, following the

completion of a four-year term by Terence Wetherall while Jeremy Johnson has taken over as deputy chair, replacing Scott.

Scott joined the CareSuper board in 2018, and was appointed as deputy chair in 2020. She was an experienced board director, previously serving as the first female chair of Local Government NSW and currently serving as president of the Australian Local Government Association.

Scott was also a councillor on the City of Sydney Council and was formerly deputy lord mayor.

She continued to serve on several other boards and advisory bodies, including the National Reform Federal Council with the Prime Minister, Premiers and Treasurers, the Commonwealth Government’s Regional Banking Taskforce and the NSW Environmental Trust.

Johnson was an experienced board director with a strong depth of chair experience in various organisations including current chair of the Great Ocean Road Regional Tourism Board, immediate past chair of the Central Highlands Water Board and chair of the ACCI Tourism Restart Taskforce.

28/04/2022 10:01:17 AM

OUTSIDER OUT

ManagementMay April5,2,2022 2015 32 | Money Management

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

Vote for Toto as PM DURING a frantic Federal campaign ahead of May’s election, it was bad news for Labor’s candidate, Anthony Albanese, who contracted COVID-19.

Ahead of interstate travel to Western Australia, Opposition Leader Albanese returned a positive PCR test and was forced to isolate for seven days at home in Sydney.

Posting on Twitter, Albanese showed a picture of himself at home with his

isolation companion, Toto the dog.

Outsider couldn’t help but notice that cavoodle Toto was sporting a rather natty ‘Albo for PM’ bandana around his neck. The bandana was even colour co-ordinated in the Labor colour scheme of red and white.

Given he is unable to attend election rallies in person or meet his team, at least Albo has one loyal supporter for his campaign by his side.

Can’t control the weather WHEN it comes to a merger of two superannuation funds worth billions of dollars in assets, Outsider would recommend it always pays to do your forward planning and due diligence.

However, there is no amount of due diligence that can control the weather unfortunately.

For QSuper and Sunsuper, its merger, which had been two years in the making, took place on the same weekend as the Brisbane floods.

With buildings flooded, staff unable to reach the office and children kept off school to run wild during Zoom meetings, it made for a difficult time to announce a merger between the two Queensland-based funds.

Not only that, the weekend also brought with it the start of the Russia-Ukraine war, causing chaos in stockmarkets and leaving members wondering whether the downturn in performance was due to the war or an unfortunate side-effect of this new fund merger.

Tour de bedroom OUTSIDER is inspired by the news that Wilson Asset Management would be the official partner of the 2022 UCI Road World Championships, an Olympic-scale celebration of cycling in New South Wales, enough to get back on his own bike.

The 2022 UCI Road World Championships will be held from 18-25 September in Wollongong, Australia, when 1,000 of the best cyclists from 70+ countries will compete for a gold medal and coveted jersey in front of 300,000 spectators.

OUT OF CONTEXT www.moneymanagement.com.au

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Oiling up his chain and pumping his tyres on the bike he found dumped in front of his neighbour’s house last year, Outsider has found a new hobby in cycling.

With a new lease on life, Outsider will use his indoor bike trainer in front of the tele to shred till he gets to his happy place of below 100 kilograms, so he doesn’t look ridiculous for the event in Wollongong.

That and so Mrs O doesn’t have any reason to make fun of him in front of his cyclist friends.

"I'm certainly not going to the Mirage."

"Not a Pacific step-up but a Pacific stuff-up."

- APRA's Margaret Cole declines to attend a superannuation conference.

- Labor's Stephen Jones reacts to the Solomon Island news

Find us here:

27/04/2022 5:51:56 PM