Money Management (November 17, 2011)

Print Post Approved PP255003/00299

Vol.25 No.44 | November 17, 2011 | $6.95 INC GST

The publication for the personal investment professional

www.moneymanagement.com.au

DKN DEPARTURES: Page 10 | MULTI-ASSSET FUNDS: Page 20

A matter of principal

By Milana Pokrajac CHARLES Badenach – authorised representative of Shadforth Financial Services – has been named the 2011 Money Management Financial Planner of the Year. Based in Tasmania, he has spent more than 10 years with the group as a principal and private client adviser.

Badenach started his career in commercial law before deciding to become a financial planner in 2001. Although a legal background helped him provide better service to clients, it was his willingness to look outside the financial services industry for inspiration, which truly impressed the judges.

“I was impressed by Charles’ openness to learn from other disciplines and apply those skills for the benefit of his clients,” last year’s Money Management Financial Planner of the Year Catherine Robson said.

Robson referred to Badenach’s Diploma in

Life Coaching, which he said helped him deal with clients during the recent market volatility.

His willingness to mentor his younger colleagues from both within, and outside of, Shadforth’s network has also impressed the judges.

Badenach is also very passionate about improving financial literacy in his community. He has developed a financial literacy program for the Migrant Resource Centre in Tasmania, and authored a self-help financial book which was donated to every school in the state.

Authorised representative of Professional Investment Services, Rob McGregor, scored the runner-up spot, while two-time winner George Flack and Fiducian’s William Johns were also included in the final four.

Full report on page 15.

Financial Planner of the Year 2011

FINANCIAL PLANNER OF THE YEAR 2011

Winner

Charles Badenach

Platforms shift from consolidation to upgrades

By Chris Kennedy

MAJOR platform providers across the industry are now moving away from a heavy period of platform consolidation to focus on developing and upgrading the remaining products, particularly from a technological perspective.

IOOF completed a major overhaul of its platforms earlier this year that r e s u l t e d i n e i g h t o f fe r i n g s b e i n g reduced to three. IOOF general manager of distribution Renato Mota said work in the next six to 12 months will

revolve around upgrading the technology of platforms and systems.

There are still a couple of different technologies running across the three platforms, which will be something to work on in the longer term, he said.

The next wave of enhancements for IOOF’s independent financial adviserfocused Pursuit platform will focus on front-end functionality and online portfolio management, and on developing online tools to help advisers with opt-in.

“We’re trying to remove legacy products.

We’re trying to create an environment

where we continue to evolve existing products rather than building new products,” Mota said.

“As soon as you release new products you’re creating legacy issues for your advisers, which creates administration issues in the back office, which we’re trying to avoid.”

AMP director of sales Barry Wyatt, who was previously general manager of marketing and strategy at AXA, said the group’s flagship North platform had this year completed an upgrade to move beyond its traditional guarantee product

to also include a full platform offering with a share trading service and term deposits from different banks, while increasing the managed funds available from roughly 100 to 200.

AXA’s Summit and Generations platforms are still on sale and serve as a complement to North. Although they are unlikely to be consolidated further in the medium term, the group is looking to consolidate the technology behind them to run the same as North, Wyatt said.

Continued on page 3

Connect with Vanguard™

Invest far and wide (and low).

The indexing specialist > vanguard.com.au/etfs > 1300 655 205

Vanguard’s range of ETFs offers a low-cost way to diversify your portfolio. © 2011 Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFSL 227263 / RSE Licence L0001335) (“Vanguard”) is the product issuer. Vanguard ETFs will only be issued to Authorised Participants, that is, persons who have been authorised as trading participants under the ASX Operating Rules. Retail investors can transact in Vanguard ETFs through a stockbroker or financial adviser on the secondary market. Investors should consider the Prospectus and Product Disclosure Statement (PDS) in deciding whether to acquire Vanguard ETFs. Retail investors can only use the Prospectus and PDS for informational purposes. We have not taken individual circumstances into account when preparing this publication so it may not be applicable to your clients’ circumstances. You should consider your clients’ circumstances and the relevant PDS and/or Prospectus before making any investment decision. You can access the relevant PDSs and/or Prospectus at www.vanguard.com.au. Past performance is not an indicator of future performance. This advertisement was prepared in good faith and we accept no liability for any errors or omissions. Not all articles are prepared by Vanguard so they may not represent our views.‘Vanguard’ ‘Vanguard Investments’ ‘Plain Talk’ and the ship logo are trademarks of The Vanguard Group, Inc. © 2011 Vanguard Investments Australia Ltd. All rights reserved.

News

Steady as she goes at Challenger – Stevens

By Andrew Tsanadis WITH Challenger Limited naming Brian Benari as chief executive officer designate, incumbent CEO Dominic Stevens says it’s business as usual at the investment manager.

As the current chief operating officer, Benari is set to take over from Stevens in February 2012.

Challenger chairman Peter Polson described Stevens’ work in recognising the retirement income opportunity and pivotal role of annuities as key to the company’s success.

Stevens said Benari is well known to the board and well-versed in investor relations. He said Benari’s shared view on business strategy will be key in the rollback of his duties until Stevens officially

departs Challenger in June.

Stevens said the reason for his departure was due to personal reasons and that Benari’s appointment would be the only change at the company.

“It’s business as usual. The next nine months will see Brian and I work closely, as we have in the past,” Stevens said.

“All the director boards will remain in place and all the business structures will remain the same.”

Over the past 12 months, Challenger has been focused on distribution, marketing, branding and technology in the wake of its advertising campaign, Stevens said. He said the focus going forward would be on growing the retirement incomes and the planning arm of the business.

“One thing that we are focusing on is

deferred lifetime annuities and working with the Government to change some of the laws around the retirement system,” Stevens said.

He said the impediment faced by retirees is that deferred lifetime annuities are not available in the list of authorised retirement planning products, and this is a serious concern in managing longevity risk.

“I don’t see much of a change in strategy at Challenger. It will be more of the same over the next nine months, and even a year or two after I leave. It’s steady as she goes,” Stevens said.

Under Challenger’s succession plan, current deputy group CFO Andrew Tobin will be appointed group chief financial officer when Benari becomes CEO.

Dominic Stevens

Chris Freeman

Platforms shift from consolidation to upgrades N o r t h i s n ow a l s o being rolled out to some AMP Financial Planning and Hillross advisers and is seeing rapid take-up, he added.

E xe c u t i ve g e n e r a l manager of investment platforms for MLC and N A B We a l t h M i c h a e l Clancy said the group had just finished a major migration of 30,000 c l i e n t s , s h i f t i n g f ro m Masterkey to MLC Wrap, and would be doing a major relaunch of mass offering Masterkey Fundamentals in the next few weeks.

The group would now look from consolidation to upgrades, and could l o o k to i mp l e m e n t i n g changes that would be required under Future of Financial Advice reforms once the Government p rov i d e d s o m e m o r e clarity around them.

B T F i n a n c i a l G ro u p general manager adviser distribution Chris Freeman said the group is looking to spend $150 m i l l i o n ove r t h e n ex t three years on project Next Gen, a whole new p l a t fo r m to t a ke t h e group’s business and platform offering to the next level.

It is currently cumbers o m e t r y i n g to m a ke changes because the systems that the current BT Wrap platform was built on were developed in the late ‘90s.

T h e n ew p l a t fo r m would be built on current te c h n o l o g y, w h i c h i s modular and internetb a s e d , a n d wo u l d b e more nimble with less paper, he said.

The group will also spend around $20 million in the next 12 months on compliance-related platform enhancements, he said.

Future-proof your Of the options available, client’s retirement with few are as dependable Challenger annuities. as Challenger annuities.

While your clients may have become more cautious, their priorities, like preserving capital, generating reliable income and beating inflation over the long term, remain exactly the same.

12814/1111

Continued from page 1

With capital and income payments guaranteed by an APRA-regulated life company, Challenger annuities provide regular income for terms from one to fifty years, or for life.

Performance is not sacrificed for security because annuity rates have usually exceeded other fixed income products like bond funds and term deposits.

Make Challenger annuities a part of your clients’ portfolios.

For more information, visit challenger.com.au or call 1800 252 870.

With Challenger annuities you can protect and grow your clients’ retirement savings.

Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 (Challenger Life) issues Challenger annuities. Consider the current product disclosure statement for the applicable annuity (available from www.challenger.com.au) and the appropriateness of the annuity (including any risks) to your circumstances before deciding whether to acquire or continue to hold an annuity. Past performance is not a reliable indicator of future performance. Challenger Life’s obligation to make guaranteed capital and income payments is a contractual obligation and is subject to the terms and conditions of the applicable annuity and the Life Insurance Act (Act). The payment obligations of Challenger Life are limited to the available assets of the Challenger Life Statutory Fund No. 2, except if otherwise provided under the Act. www.moneymanagement.com.au November 17, 2011 Money Management — 3

News

Macquarie Private Wealth expands national advice team

By Andrew Tsanadis

MACQUARIE Private Wealth has bolstered its advice team with the a p p o i n t m e n t o f 19 n ew a d v i s e r s across six of its state offices in the past six months.

J o i n i n g t h e B r i s b a n e te a m i n Queensland are Scott MacKenzie and Emmet Ryan, who will both focus on Australian equities, and Matthew Cahill and Joshua Derrington – both specialising in providing asset allocation

based advice. Ben Kirkegaard will focus on high net worth families and Lawrence Williams will cover self-managed superannuation funds.

In Canberra, Paschal Leahy and Luke Furner will deliver planning solutions for defined benefit superannuation recipients, while Bob Backer will cover retirement planning and super in the defence and public sector. Hena Power and Penny Ponder will specialise in portfolio management and advising clients with self-managed super funds.

Michael Harwood, Michael Moursellas, Ryan Wareing and Andrew White have made the move from Plan B Wealth Management to Macquarie’s Perth office, and will be responsible for providing asset allocation based advice for corporate executives and professionals.

I n Ad e l a i d e , D av i d D u n c a n w i l l deliver investment advice for business owners and self-funded retirees, while James Inglis will focus on personal and group insurance advice.

Melbourne have taken on Paris Magdalinos to provide advice on direct equities, while in Sydney, Patrick Hunt will focus on the domestic and international equity markets.

Commenting on the appointments, head of Macquarie Wealth Eric Schimpf said advice is a real focus for the industry at the moment and it was important for Macquarie to strengthen its team with professionals that have the skills to meet the broad investment needs of clients.

Douglas Latto

Intra-fund advice threat to corporate super

By Chris Kennedy THE Corporate Super Specialist Alliance (CSSA) is concerned that when the third tranche of Future of Financial Advice (FOFA) reforms is released, intra-fund advice provisions will lead to a blurring between advice and administration costs.

The intra-fund advice fee may be bundled in with the administration fee and also include personal advice.

However, CSSA president Douglas Latto said any personal advice should be explicit, and paid for by individual members on a case by case basis rather than bundled in with the administration fee.

“In its proposed form, this [intra-fund advice] fee is hidden within the admin fee and is likely to include personal advice,” he said.

“This is in complete contradiction to what the [Industry Super Network] and the Government claim they are trying to remove through their introduction of opt-in. This demonstrates double standards,” Latto said.

In its proposed form, the fee would be set by the fund rather than by the person giving or receiving the advice. The fee should also be able to be negotiated with each employer, because some employers wanted a much higher level of service than others, he said.

You see smaller companies We see hidden gems At Ausbil, smaller companies represent new territory with rich pickings for surefooted investors.

With the new Ausbil MicroCap Fund, we’ve pinpointed Australian small companies we expect to outperform, creating a high-growth portfolio that lets your clients profit from small in a big way.

Of course, we’ve applied the same precision, conviction and rigour as ever, giving us the confidence to take a strong investment position. To learn more about the approach that earned us a Lonsec recommendation, visit www.ausbil.com.au

Money does not perform. People do.

*The Lonsec Limited (“Lonsec”) ABN 56 061 751 102 rating (assigned February 2011) presented in this document is limited to “General Advice” and based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from the Fund Manager for rating the product(s) using comprehensive and objective criteria.

Ausbil Dexia Limited (ABN 26 076 316 473) (AFSL 229722) offers financial products. This advertisement does not provide advice on investment and should not be relied on as such. The information contained in the advertisement does not take account of your investment objectives, personal needs or financial situation. You should consider the Product Disclosure Statement available from us and assess whether this product fits your investment objectives, personal needs or financial situation. Neither Ausbil Dexia or any member of Ausbil Dexia Limited guarantee the return of capital, distribution of income, or the performance of any of the Ausbil Dexia funds. Investments in Ausbil Dexia funds are subject to investment risk including possible delays in repayment and loss of income and principal invested.

AUSD0011-MM01

www.moneymanagement.com.au November 17, 2011 Money Management — 5

News

US experts see sovereign wealth fund as key for Australia

By Mike Taylor

AUSTRALIA would be well-advised to establish a sovereign wealth fund to take full advantage of the current resources boom and provide for the period thereafter, according to participants in a Money Management/Super Review roundtable conducted in New York last week.

The Boston Company senior managing director of Global Core Equity, Sean

Fitzgibbon, told the roundtable he believed Australia needed to be wary of the boom-bust cycle so commonly associated with commodities, and put in place something that could act as a cushion in the down-times.

BNY Mellon global markets strategist Jack Malvey said he believed the establishment of a sovereign wealth fund by Australia made great sense, just as it had made great sense in Norway when it had sought to have an endowment

fund established from its oil wealth.

Man Investments executive director Mark Enman said Australia needed to be conscious of the finite nature of commodities, just as Saudi Arabia needed to be conscious of running out of oil and spending all its money.

Standish global macro strategist and senior vice-president Thomas Higgins said a sovereign wealth fund strategy made sense for Australia, as did the Government implementing tax changes.

He suggested the Government could provide tax incentives for investment in other areas so there was less reliance on commodities over the long haul.

“It would be good to foster some diversity in the economy, given the concentration of growth in that area [commodities],” Higgins said.

M o n ey M a n a g e m e n t a n d S u p e r Review will be publishing the full conte n t o f t h e ro u n d t a b l e i n c o m i n g weeks.

Aussie ETF growth surges

By Keith Griffiths

A measured investment approach The highly-rated Tyndall Australian Share Income Fund is suitable for investors seeking a tax-effective income stream with the opportunity for stable long-term capital growth.

Managed by the skilled and experienced Tyndall Australian equities team, the award-winning Tyndall Australian Share Income Fund uses the same rigorous intrinsic value investment style and research approach they’ve successfully used over two decades.

For more information on the

Tyndall Australian Share Income Fund visit www.tyndall.com.au/shareincome The value of an investment can rise and fall and past performance is no guarantee of future performance. Any information contained in this advertisement has been prepared without taking into account an investor’s objectives, financial situation or needs. Investment decisions should be made on information contained in a current Australian Equities Product Disclosure Statement ‘PDS’ and its supplementary PDS (“SPDS”) and applications to invest will only be accepted if made on an application form attached to a current SPDS available from Tyndall. The Responsible Entity of the Tyndall Australian Share Income Fund ARSN 133 980 819 is Tasman Asset Management Limited ABN 34 002 542 038 AFSL No 229 664 (trading as Tyndall Asset Management). ‘Tyndall’ means Tyndall Investment Management Limited ABN 99 003 376 252 AFSL No 237 563.

2277

6 — Money Management November 17, 2011 www.moneymanagement.com.au

AUSTRALIANexchange traded fund (ETF) market capitalisation continued to grow in October, more than doubling its September intake, according to the latest BetaShares Australian ETF Review.

Currently, the ASX ETF market cap is trading around $5.2 billion. The review also highlighted that October was one of the largest month-onmonth increases in ETF growth, with 7 per cent or $342 million in new units created. This compares to 3 per cent on average over the past 24 months.

“Also encouraging was the strong trading and inflows across a variety of asset classes,” said Drew Corbett, head of investment strategy of BetaShares.

International ETFs saw net buying and trading volumes increase “indicating a perceived value in global equities,” the report stated.

With the increased volatility in the AUD/USD the currency ETF was also popular, increasing 32 per cent in traded volume over the period.

Precious metals had a mixed couple of months with new money going into silver, platinum and palladium.

However, unhedged gold holdings had net outflows of $14 million, with hedged gold ETFs receiving approximately $5 million in new money.

Creation and redemption activity was mixed across the providers. The State Street broad S&P/ASX 200 ETF had significant net new money of around $64 million, while the Russell Dividend ETF had a significant net redemption of $42 million. iShares had increased interest in emerging market ETFs and experienced a 23 per cent increase in October to over $600,000 per day, the report found.

The most valuable details often lie beneath the surface

Based on a culture of curiosity, Fidelity’s global research team delves deeper to uncover investment opportunities that have delivered consistent performance.

Research on 90% of the world’s largest listed companies every 90 days*

Analysts on the ground around the world sharing ideas every day

Top quartile performance over the past 5 years for our Global Equities Fund, as ranked by Mercer**

The sum of our parts is performance. To learn more visit www.fidelity.com.au

Past performance is not a reliable indicator of future performance.

This advertisement was issued by FIL Investment Management (Australia) Limited ABN 34 006 773 575 AFSL No. 237865 (“Fidelity Australia”). Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity Worldwide Investment. You should consider whether this product is appropriate for you. You should consider the Product Disclosure Statements (“PDS”) for Fidelity products before making a decision whether to acquire or hold the product.

The relevant PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading from our website at www.fidelity.com.au. This document may not be reproduced or transmitted without the prior written permission of Fidelity Australia. The issuer of Fidelity funds is Perpetual Trust Services Limited (“Perpetual”) ABN 48 000 142 049. Perpetual is not the publisher of this document and takes no responsibility for its content. *Company contact data is based on FIL Limited coverage of the MSCI World Index as at 31 August 2011. **Based on the Mercer Wholesale-Equity-Australia-All Cap-Core Universe and Mercer Wholesale-Equity-Global-Large Cap-Core Universe as at 31 October 2011. Notes about the Mercer universe: includes funds according to criteria determined by Mercer – it does not include all international share funds available in Australia. Should be distinguished from the Mercer institutional performance surveys.

Performance data is sourced from Lipper. The Fidelity Australian Equity Fund and Global Equity Fund’s relative performance/ranking may change if compared with a different universe. Fidelity, Fidelity Worldwide Investment, and the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. © 2011 FIL Investment Management (Australia) Limited.

CATHY DOYLE Group Executive, Equities Perpetual Investments

perpetual.com.au/always

CONSISTENCY. IN THE INVESTMENT BUSINESS, THAT’S THE NAME OF THE GAME. Cathy Doyle is Perpetual’s Group Executive of Equities, overseeing a team that looks after around $20 billion in funds. Yet unusually for someone in her position, she doesn’t come from a background in managing money.

A human resources professional with a degree in psychology, she specialises in managing the people who manage the money, so that they can consistently perform at the highest level.

“This really is a people business, and I think our talent management and succession planning is the real difference at Perpetual.

My role is like a coach I suppose – to make sure we have the best team in Australia and to house them in the right culture and environment for them to continue to deliver returns to investors, year after year.

“Some of our portfolio managers have been with us for over 20 years. Matt Williams, our Head of Australian Equities, has been here for 18. A lot of these guys started at Perpetual in junior roles, and have steadily risen through the ranks. So they know how things are done around here, they know the different fund mandates intimately.

They’re very self-motivated and they’re very competitive. They talk, eat and sleep stocks.”

As Cathy explains, the focus on promotion from within means Perpetual’s processes and philosophy are deeply ingrained. “Our team has a lot of unique people with great individuality and initiative, but in the end we’re all working for the same outcome.

And that is using Perpetual’s quality approach, aiming to beat the market, and delivering a consistency of returns over time for our investors.

That’s what they expect from us.”

The bottom line is that talent begets talent; a phenomenon Perpetual has employed to its great advantage for 125 years. The ability to consistently attract and keep top performers has been vital to Perpetual’s longevity and a key to its success as one of Australia’s premier investment houses. Quite simply, when you place investments with Perpetual, you can rest assured that you’re with a company that invests in the best people in the business.

It always has, and it always will.

This advertisement has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It contains general information only and is not intended to provide financial advice or take into account your objectives, financial situation or needs. You should consider the relevant PDS (available at www.perpetual.com.au) issued by PIML before deciding whether to acquire or hold units in a Perpetual fund.

News Butterworth move not based on latest departures WHK appoints

By Chris Kennedy A DECISION from former DKN chief executive Phil Butterworth to leave the group following a merger with IOOF to join BT Financial Group was made regardless of whether other DKN and Lonsdale executives would also make the switch, Butterworth said.

BT separately looked after the appointments of former Lonsdale chief executive Mario Modica, former Lonsdale executive director Kon Costas, and former DKN executive director of distribution Andrew Rutter, he said. “I was going to be taking on the position whether they joined or not, [it] was a standalone decision,” he said.

Butterworth will start at BT in March as the managing director of a new business unit that will also include Modica

from May, as well as Costas and Rutter who both start in February, BT stated.

Butterworth said the full strategy of the unit won’t be released until the new team is on board, but will involve using the combined scale of the BT Group to deliver solutions to practices that will help them in the rapidly changing wealth management environment.

It will still be very much an adviser-focused role, Butterworth said. “That’s our passion, delivering to practices, and I’m really looking forward to the new opportunities ahead,” he said.

“Setting up a new business unit within a large institution will have a lot of pluses in regards to the scale and opportunity that you can leverage, as opposed to in a smaller environment such as DKN,” he said.

Phil Butterworth “The challenge for the institutions is to be able to still customise and deliver the solutions that practices need and still be nimble. The BT Group have indicated they can still do that and have a fantastic innovative culture that we can leverage off.”

BT Financial Group’s general manager of advice, Mark Spiers, said a highly disrupted market is driving many financial advisers to reconsider their future.

“Advisers who want highly successful and sustainable businesses are now looking at who they should partner with for the next decade and beyond,” he said.

“While we continue to attract planners into our salaried workforce to ensure our banking customers receive quality financial advice, we want to ensure we are best positioned to continue attracting those advisers into our aligned channels who want to partner with a high quality brand with sound strategies and an unquestionable focus on clients and leadership.”

ASIC concerned about AFS Group advice

By Milana Pokrajac THE financial services regulator has raised several concerns with respect to advice provided at the Australian Financial Ser vices (AFS) Group, and will impose additional license conditions on the dealer group.

The Australian Securities and Investments Commission (ASIC) undertook a six-month surveillance of the AFS Group, which included a review of client files to examine the appropriateness of advice given, as well as the dealer group’s ability to handle complaints and conflicts of interest.

ASIC raised concerns about the group’s management of conflicts of interest in relation to “advice recommending clients switch their investments to financial

products associated with and/or related to the licensee”.

The regulator also identified compliance issues when “advice recommends replacement of one financial product with another”; the group’s dispute resolution system and its supervision of staff and representatives were also questioned by ASIC, according to the regulator’s announcement.

As a result, AFS Group has agreed to engage an independent expert to review and make recommendations regarding its compliance practices, processes and resources, according to ASIC. ASIC Chairman Greg Medcraft said investors must be able to confidently rely on the accuracy and appropriateness of information provided by financial services.

“All Australian financial services licensees

10 — Money Management November 17, 2011 www.moneymanagement.com.au

Greg Medcraft are gatekeepers, and are expected to properly manage and supervise their representatives and employees, and make sure conflicts of interest are managed or avoided and client complaints are dealt with promptly,” Medcraft said.

Mercer for research WHK Group has appointed Mercer to provide investment research support and Macquarie Private Wealth to provide share execution services following a competitive market tender process.

The appeal of each lay partly in having access to a blend of services from both Mercer’s expertise in strategic asset allocation on funds management and Macquarie’s direct shares expertise to form a “best of breed” solution, said John Cowan, WHK’s head of financial services.

Macquarie and Mercer had worked together previously in Macquarie Private Wealth Management, which added to the appeal, Cowan said.

WHK have also made the internal appointment of incumbent Jeremy McPhail as head of research following a market review, and Cowan said it was pleasing to see an internal candidate standing tall.

“I am excited about coordinating our use of Mercer’s expertise for research throughout WHK, accompanied by Macquarie Private Wealth’s services to help put that research into practice for our clients,” McPhail said.

“Their expertise, when combined with our existing internal capabilities, will provide a greater depth of expertise for our growing base of advisers and diverse needs of our clients,” he said.

Mercer’s Head of Wealth Management in Australia and New Zealand Brian Long said Mercer went to tender in partnership with Macquarie as a joint offering and did not want to be involved with a second tier direct share offering. WHK embraced the joint offering early in the tender process, he added.

Long described the appointment as a major win for Mercer, which earlier this year stated its intention to make a push into the retail space as a multi-faceted service provider that could provide not just investment research and asset allocation but consulting and governance services, as well as having a global reach.

SMSF Weekly Govt must address concessional caps

By Mike Taylor

Russell Mason

THE broad thrust of the Government’s Stronger Super package has been welcomed by a roundtable of industry experts, but the same panel has been critical of its failure to address the issue of concessional contribution caps.

The roundtable, run by Money Management’s sister publication Super Review, concluded that the Government’s decision to cut the

concessional contribution caps during its first term now seemed like a regrettable error.

The roundtable concluded that while lifting the superannuation guarantee from 9 per cent to 12 per cent was desirable, it would still not guarantee a comfortable retirement for many Australians – something which added impetus to the arguments for a further review of concessional caps.

NGS Super trustee John Quessy said the timing of the

Government’s decision to cut the caps – in the direct aftermath of the global financial crisis – had been particularly unfortunate.

Deloitte partner Russell Mason said that while he could understand the issues which had confronted the Government, the question of concessional caps needed to be reviewed in the context of the ultimate cost of a comfortable retirement and reducing pressure on the age pension.

Multiport enhances gearing package FOLLOWING the launch of its gearing package in May of this year, self-managed super fund (SMSF) administrator Multiport has announced further enhancements to the service, originally launched as a natural extension to the business’ core administration services.

According to John McIlroy, chief executive officer of Multiport, the new offer is aimed at advisers who already have preexisting relationships with mortgage brokers.

“After speaking with advisers about their experience with the package

launched in May, we found a more tailored approach would benefit some,” he said. “ We now provide both the traditional solution and our new offer, which has all elements other than loan facilitation.

“This more streamlined approach is cost effective for the adviser who already has pre-existing relationships with a mortgage broker and doesn’t require our help with putting the loan in place,” McIlroy continued. “They’ll leverage their existing mortgage broker relationship instead.”

McIlroy said both solutions would be

linked to either daily or annual Multiport SMSF administration services.

“Gearing through SMSFs is becoming an increasingly popular strategy,” he said.

“Our latest investment patterns survey showed 16 per cent of all trustees were using some form of gearing.

“As this segment grows rapidly, we are finding trustees are falling into some common traps,” McIlroy added. “And mistakes such as executing a property in a personal name or using personal funds for a deposit are some of the more common traps.”

SPAA welcomes abolition of SG age limit THE Self Managed Super Fund Professionals’ Association (SPAA) has welcomed the Government’s undertaking to lift the age limit on the Superannuation Guarantee (SG).

Commenting on the announcement by Assistant Treasurer and Minister for Financial Services Bill Shorten last week, SPAA chief executive Andrea Slattery described the move as a breakthrough for senior Australians.

She said that, recognising the age limit currently stood at 65, SPAA had been urging the Government for the sort of change

announced by the Minister.

Shorten has said he would abolish the superannuation guarantee age limit from 1 July 2013 – something which has also been signalled by the Opposition.

“SPAA congratulates the Government on the SG age limit measure, as it will allow more senior Australians the opportunity to save for retirement, particularly as many of them transition to part-time and casual work,” Slattery said.

She said SPAA also supported the main feature of the Superannuation Guarantee (Administration)

Amendment Bill 2011, which is to raise the SG from 9 per cent to 12 per cent between 2013 and 2020.

However, Slattery urged the Government to also address related superannuation issues which affect Australians saving for retirement.

“We call on the Federal Government to address other superannuation contribution issues, such as raising the annual concessional superannuation caps and finding a resolution to the excess contributions tax problem so confidence and certainty in the superannuation system can be restored,” Slattery said.

12 — Money Management November 17, 2011 www.moneymanagement.com.au

Andrea Slattery

Peter Hogan

Estate planning needs greater focus

By Damon Taylor THOUGH self-managed super funds (SMSFs) have continued to enjoy solid growth in 2011, making preparations for those unforeseen events that can take place in a trustee’s life remains an area in need of increased focus, according to Peter Hogan, principal of Plaza Financial.

“It’s an estate planning issue, clearly, but because there are now more people staying with their self-managed super funds into retirement, it is one that trustees need to pay close attention to,” he said. “Like it or not, we all have to accept that there comes a point with all of us where perhaps a lack of interest or capacity is going to occur.”

Hogan said it was also important to realise that loss of capacity wasn’t necessarily an issue solely related to old age.

“It can be incapacity for any reason, and it needs to be planned for appropriately and, given the responsibilities that individuals have as trustees of their own fund, it’s clearly an essential part of the advice that’s given to clients,” he said. “Advisers need to be sure that there are things like enduring powers of attorney in place, because the ATO [Australian Taxation Office] has made it clear in a number of rulings that, when there is some incapacity, it is indeed possible to have an enduring power of attorney who can take the place of the trustee in order to run the fund.

“That person is then in the position to assess whether the fund can continue or should be wound up and the money rolled over.”

+ + + + + + + + -+

InFocus PLANNING JOBS SNAPSHOT

Advertised vacancies 31 October 2011 (compared to 1 August) NSW & ACT

-3.8%

Melbourne, regional VIC & TAS

-26.3

%

Brisbane & regional QLD

Talking ourselves into a funk

Australian investors seem certain to close out the year with their allocations set to conservative and with half an eye on a struggling Europe, but as Mike Taylor reports, the view from the US is far less pessimistic.

A

s the most recent research from Wealth Insights and data from Plan for Life has confirmed, Australian financial planners look certain to end 2011 dealing with clients who remain spooked by events in Europe and uncertain economic news coming out of the United States.

But there is evidence that the factors driving investor negativity in Australia are more imagined than real in circumstances where their counterparts in the US appear to have embraced a more optimistic outlook and, albeit cautiously, to have moved back into the market.

This became evident during a roundtable exercise conducted by Money Management and its sister publication Super Review in New York last week, and in meetings with investment market senior managers in both New York and Boston.

While the US investment managers acknowledge that there is some way to go before the US is thoroughly out of the woods, they broadly hold that the worst is behind them and that best interests are served by taking a more optimistic approach and adapting to what they say was the fundamental change driven by the global financial crisis.

What puzzles the US investment managers is the degree to which Australians have become spooked by events in Europe, in circumstances where there appears to be little correlation between the Australian economy and those in Europe.

They say that Australian investors – like many of those in the US – need to look to a decoupling which allows the Europeans to deal with their problems while the rest of the world gets on with seeking to drive growth.

Indeed, they are seeing positives in pursuing investment in the context of the strength which will be generated in both the US and emerging markets next year.

From almost the beginning of the global

“

What puzzles the US investment managers is the degree to which Australians have become spooked by events in Europe.

”

financial crisis, investment managers in the US and Europe have looked at the state of the Australian economy and expressed both admiration and envy for the position in which Australia finds itself.

As Bank of New York Mellon global markets strategist Jack Malvey made clear at last week’s New York roundtable, Australian investors would seem to have little to be concerned about, and little reason to have adopted an unduly defensive stance.

So what is driving the negativity which has seen adviser sentiment, as measured by Wealth Insights, and fund flows as measured by Plan for Life, in such conservative territory?

To a degree, there exists a perception that Australians and Australian investors have not coped well with the nation’s first minority Federal Government in more than half a century – something which has combined with negative economic news coming out of Europe and elsewhere to drive down investor sentiment.

The degree to which investor and industry sentiment has been impacted by the minority Gillard Labor Government in Australia was evidenced late last month during a Money Management roundtable held to consider the implications of the first tranche of the Government Future of Financial

Advice (FOFA) legislation.

What became evident at that roundtable was that financial services industry players were factoring in the inevitably of a change of Government at the next Federal Election and positioning themselves accordingly.

According to many of those who have discussed the issue with Money Management, one of the greatest challenges in dealing with the Government has proved to be the uncertainty around what will ultimately be delivered by the Gillard Government, and what might then survive the election or a Coalition Government.

While the US is facing its own electoral imponderables around Republican majorities in both houses and questions around the longevity of President Barak Obama, this did not emerge as a major issue in the minds of the investment professionals attending the New York roundtable.

Rather, they took the view that the US economy was beginning to move in the right direction and that, with the uncertainty generated by the political failure to find agreement around the debt ceiling behind them, there were no near-term major issues likely to significantly alter market sentiment.

For those looking at Australia’s economic position from the outside, few believe local investors have any reason to be as pessimistic as the most recent survey data and fund flows would suggest.

They argue that Australian investors have little reason to be unduly worried about events in Europe, and that while Chinese growth may be more constrained in the future, it should still be sufficient to generate solid ongoing demand for Australian commodities.

Is it possible that Australian investors, confronted by negative news out of Europe and an indecisive political and policy environment at home, have simply talked themselves into undue conservatism?

-31.5

%

Adelaide & regional SA

-15.8 Perth & regional WA

+30.5

%

Source: eJobs Financial Planning’s latest quarterly ‘Market Commentary’

What’s on VIC Small Funds Discussion Group 22 November 2011 Pitcher Partners, Melbourne www.superannuation.asn.au/

Insto FX Congress 30 November 2011 Sheraton on the Park, Sydney www.intrepidminds.com.au/

Financial Services Council Deloitte Lunch 30 November 2011 Four Seasons Hotel, Sydney www.fsc.org.au/

VIC GenXt Social Networking Party 1 December 2011 CQ Functions, Melbourne www.afa.asn.au/profession_eve nts.php

AFA Sydney Chapter Christmas Lunch 8 December 2011 Hilton, Sydney www.fpa.asn.au/

www.moneymanagement.com.au November 17, 2011 Money Management — 13

Elevate Insurance gets better every year

Regular improvements to Elevate make it easier to do business With improvements to our range of award winning insurance products, you can continue to offer your clients more comprehensive and enduring protection.

Our recent improvements build on the updates made to Elevate earlier this year. We’ve made our premiums more flexible and improved our income, trauma, TPD and life insurance plans. This gives you more comprehensive and competitive insurance packages.

To find out more please contact your AXA business development representative on 1800 655 655 or visit axa.com.au/adviserinsurance

Elevate at a glance • New split premium options: Flexibility to nominate premium styles for each component of a life insurance plan with trauma and/or TPD options.

• New Business rewards: 5 per cent premium discount on TTT plans and options.

• Improved trauma definitions: To prostate cancer (under cancer early payment), coma, benign brain tumour and severe burns.

This advert has been issued by The National Mutual Life Association of Australasia Limited. ABN 72 004 020 437. AFSL 234649.

Financial Planner of the Year 2011

A matter of principal Commitment to financial literacy, strategic advice and client service has seen Charles Badenach crowned the 2011 Money Management Financial Planner of the Year, Milana Pokrajac reports.

Winner A FIRM advocate of financial literacy and strategic financial advice, Shadforth Financial Group’s Charles Badenach has won this year’s Money Management Financial Planner of the Year award.

According to the judging panel, Badenach excels at demonstrating clear value to clients and uses innovative methods in retaining existing and finding new business – skills which will be highly sought after in the new regulatory environment.

Badenach’s commitment to the community and willingness to look outside of the financial services industry for inspiration in improving client service were admired by the judges and his colleagues alike.

Based in Tasmania, Badenach has worked for Shadforth Financial Group as principal and private client adviser since 2001, following a brief career in commercial law.

“Upon my return from overseas in 1996 I commenced work as a commercial solicitor with Murdoch Clarke in Hobart; both personally and professionally I was not enjoying working as a lawyer,” Badenach said.

That is when he decided to acquire a Diploma of Financial Planning and become a Certified Financial Planner, before undertaking further studies including a Graduate Diploma in Applied Finance and Investment, as well as a Diploma of Life Coaching.

Since joining the industry 10 years ago, he won the Financial Planning Association

National 2010 Value of Advice Award in the pre-retirement category. But it was Badenach’s thinking outside of the box that truly impressed our judges.

“I was impressed by Charles’ openness to learn from other disciplines and apply those skills for the benefit of his clients,” last year’s Money Management Financial Planner of the Year, Catherine Robson, said.

“Clearly, his clients have benefited from his legal training, but I also think that his life coaching studies will also prove to be the way of the future for many advisers – he is clearly an individual of great energy, intelligence and forward thinking,” Robson added.

Charles Badenach

“This has helped my clients make informed decisions when the temptation is to act on the ‘media noise’ and make shortterm decisions based on emotion,” he said.

“Client education on volatility has been a major focus over the last 12 months.”

Managing director of Matrix Planning Solutions and one of the members of this year’s judging panel, Rick Di Cristoforo, said that Badenach was a true example where “true client engagement and value of advice is a reality”.

Another member of the judging panel, former FPA chair Julie Berry, noted that Badenach’s client testimonials demonstrated good relationships and strategic advice that has helped his clients achieve their goals.

Advice – not sale With a background in commercial law, Charles Badenach said that he had always focused on the strategic value rather than just selling a product.

“In many instances, these clients have no investible assets and simply want strategic advice such as cash flow modelling,” he says.

“This is an example of how I have been able to provide comprehensive financial planning advice without even discussing financial products which focus on concepts such as goals-based investing.”

Over the past 12 months, Badenach had adopted a proactive approach on issues such as the importance of asset allocation, lifestyle planning and cashflow modelling, given the difficult investment conditions.

Promoting financial literacy Since joining the industr y in 2001, Charles Badenach has been very passionate about improving financial literacy in his community, and this is evident from the activities he has undertaken to date.

Badenach developed a financial literacy program for the Migrant Resource Centre in Tasmania, which has now been replaced by a similar program run by the Australian Securities and Investments Commission.

He had also authored a self-help financial book Old Head on Young Shoulders, which was released in April 2011.

Badenach donated the book to every school in Tasmania and made it available to school and parents and friends associations.

Following this, Badenach spoke to high school students around the state about common financial mistakes made by young people and how to avoid them.

He regularly runs educational workshops for migrants and helps them understand Australia’s housing and investment market.

Community commitment Badenach’s involvement with the community, however, does not stop there. He provides his skills and financial expertise to a number of charity and community organisations in Tasmania.

In addition to being a board member of the children’s charity Variety, Badenach is also chairman of the appeals committee which considers applications for financial assistance for medical and physiotherapy aids for the financially disadvantaged.

As a fellow of Jane Franklin College, he assists with the development of the college’s long-term business plan, reviews monthly budgets and financial statements and provides strategic advice to the college on how to maintain their relevance in the business community going forward.

Badenach is also a board member of the Family Planning Association of Tasmania, where he manages budget development and cashflow, among other responsibilities.

In his application, Badenach mentioned his desire to mentor younger financial planners both within the Shadforth Financial Group and outside of its network.

www.moneymanagement.com.au November 17, 2011 Money Management — 15

Financial Planner of the Year 2011

It’s all about the value Other Rob McGregor scored the Financial Planner of the Year Award runner-up spot in what was a very close race to the top, writes Milana Pokrajac.

ONLY one point kept runner-up Rob McGregor from coming equal-first with this year’s Financial Planner of the Year Award winner, Charles Badenach.

Nevertheless, McGregor – an authorised representative of Professional Investments Services – was recognised by the judging panel for his innovative approach to business and client segmentation, winning the well-deserved runner-up prize in this year’s award.

He was nominated by his colleagues at Holman McGregor Financial Services – a Sunshine Coast-based financial planning practice where he is founder and principal.

McGregor’s team admires his “commitment to making a difference in his clients’ financial lives and his contribution to the financial planning industry, to other advisers and their clients”.

He spent nearly two decades working in stockbroking, banking, funds management, futures broking and financial planning before launching his own practice in Noosa, Queensland.

What impressed our judging panel was McGregor’s dedication to client education.

He had launched a financial management program called Pathway to Help, which helps investors better understand the world of property, shares, superannuation and insurance. McGregor now trains and mentors other financial advisers in providing this service to their clients.

For McGregor, innovation in the value proposition process is one of the most significant aspects of financial planning in the current market environment.

“I have found that Statements of Advice are rarely read by our clients and hold little or no value to them, despite the important information they may include,” he said.

He has since developed visual tools for presenting financial plans to his clients.

The volatility of world markets resulted in practices having to “enhance explanations to clients about market volatility and that changing their investments will impact their financial goals,” he added.

Managing director of Matrix Planning Solutions and one of this year’s judges, R i c k Di Cr i s t o f o ro, s a i d Mc G re g o r excelled in client engagement and solutions development.

finalists

George Flack A two-time winner of the Money Management Financial Planner of the Year award (1996 and 2004), George Flack has again demonstrated his continued commitment to the financial planning industry.

After 22 years with RetireInvest, his practice (then RetireInvest Bendigo) rebranded as Flack Advisory in August this year and switched licensees to Charter Financial Planning in becoming the latest ipac equity partner. George has almost 40 years experience in banking, social security and financial services.

Runner up

Rob McGregor

demonstrates excellent value of advice as illustrated “byRob his client endorsements. ” – Julie Berry

William Johns “He presents an example of an adviser who has understood the importance of corporatising and client segmentation within his advice business model,” Di Cristoforo added.

For Julie Berry – managing director of Berry Financial Services and former Financial Planning Association chief – dedicating a large part of his time to faceto-face meetings with his clients was particularly impressive.

“Rob has undergone a thorough process in segmenting his clients and reviews this regularly; he demonstrates excellent value

of advice as illustrated by his client endorsements,” she added. “Both Charles and Rob are passionate advocates of professional financial advice.”

For several years Rob has been actively involved with a local surf lifesaving club in Marcoola. He had been an active lifesaver since 2002 and is now patrol captain, supervising a patrol team every two to three weeks during the surf season.

His practice has provided support for many char ity events including the annual Row for Cancer and various local charities.

William Johns belongs to the younger generation of financial planners. He is a 29-year-old Certified Financial Planner working at Fiducian Financial Services and specialises in helping clients with special and complex needs.

When he started with Fiducian, Johns implemented the Benefiting the Community model, where each client nominates a charity and donates part of the advice fee payable to Fiducian to that charity.

He is a member of the policy and regulation committee at the Financial Planning Association.

Selecting the 2011 Financial Planner of the Year FOUR judges had the considerable task of selecting the 23rd Financial Planner of the Year: Money Management managing editor Mike Taylor, last year’s winner Catherine Robson, former Financial Planning Association (FPA) chair Julie Berry and the managing director of Matrix Planning Solutions Rick Di Cristoforo.

The judges evaluated each application in its entirety and awarded points to each candidate in seven separate areas, including education, quality of advice and customer service.

The results produced both a clear winner and runner-up.

The award, which aims to recognise and reward excellence in the provision of financial advice, required nominees to submit entries that highlighted their contribution to the financial planning profession, their career milestones to date and their service to the community at large. The process involved two parts, with applicants who were successful in the first part moving on to the final part.

Part One required applicants to submit a comprehensive review of their personal attributes and career

16 — Money Management November 17, 2011 www.moneymanagement.com.au

achievements, including contributions to the community. Part Two asked entrants to complete a questionnaire about the practical application of advice principles, and provide three client testimonials that detailed how the financial adviser had met the client’s needs.

This year’s winner receives a trip to the US 2012 Financial Planning Association (FPA) annual conference – a prize to the value of $10,000.

The winner was announced at the 2011 FPA national conference.

Financial Planner of the Year 2011

Meet the judges Money Management thanks this year’s members of the judging panel. These distinguished representatives of the financial services industry have applied great effort in selecting our Financial Planner of the Year.

Catherine Robson Catherine Robson won the Money Management Financial Planner of the Year award last year after showing unrelenting professionalism and firm commitment to training and education.

Catherine is the founding principal of Affinity Private, a boutique private wealth advisory practice. She has been delivering strategic wealth advice to sophisticated, private clients for 15 years.

Robson has also been heavily involved in training and mentoring at NAB Private Wealth, where she used to work as a senior wealth adviser.

Catherine has an honours degree in law and a bachelor of arts (majoring in Asian Studies) from the Australian National University, a master of laws (majoring in tax) from the University of Melbourne, a graduate diploma in applied finance and investment from the Securities Institute of Australia, having also completed the requirements to become a Certified Financial Planner.

During her career, she was also awarded the inaugural Outstanding Wealth/Investment Advisor of the Year at the 2010 Australian Private Banking Awards.

Financial Planner of the Year

Hall of Fame 2011 Charles Badenach 2010 Catherine Robson 2009 Anne Graham 2008 Peter Roan 2007 Julian Battistella 2006 Neil Kendall

Rick Di Cristoforo With 21 years finance industry and accounting experience – of which, five have been with Matrix Financial Planning – Rick Di Cristoforo certainly deserves a place on the judging panel.

He is the managing director of Matrix Planning Solutions – a company he has been with for the past five years.

Previously, Rick held the role of Product Manager for AUSMAQ for 7 years, developing their product functionality and approved IDPS product list. He has also held positions with Westpac and the Reserve Bank of Australia.

Rick is the course author of Kaplan’s Investment Planning 1 and 2, as well as a writer of numerous investment and advice related articles.

Rick is also a course author for Kaplan Education and has written the Investment Planning courses for both the Diploma and Advanced Diploma of Financial Services (Financial Planning), along with more than 100 investment related professional development articles.

2005 David Haintz 2004 George Flack 2003 Nick Bruining 2002 Robert Kiddell 2001 John Wotherspoon 2000 Dominic Alafaci

Julie Berry

1999 Peter Dunn

Julie Berry had completed her three year term as the chair of the Financial Planning Association in November last year, having been an elected Board director since 2003.

Julie has been a financial planner for over 21 years. She is currently the managing director of Berry Financial Services Pty Ltd in Port Macquarie, New South Wales, and an authorised representative of Clearview Financial Advice.

In her professional life, Julie’s success is built on long-term relationships with her clients, and providing them with quality advice and personal service.

Julie’s commitment to the FPA is a longstanding one. She was chair of the mid-north coast chapter for eight years, and the recipient of a distinguished service award in 2000. Julie was awarded life membership in 2010, and has been a national judge for the FPA Value of Advice Awards since inception.

1998 Kevin Bailey 1997 Neil Heriot 1996 George Flack 1995 Ray Griffin 1994 Geoff Crowe

Mike Taylor Mike Taylor is managing editor of the financial services publications Money Management and Super Review. He has been a journalist for the past 35 years, with a career spanning coverage of financial services, federal and state politics, and industrial relations.

Mike began his career in New Zealand, before moving to Joh Bjelke-Petersen’s Queensland in the early 1970s where he cut his teeth on state politics before joining the Australian Financial Review (AFR) in 1979. At the AFR Mike, again, found himself covering state politics and industrial relations, as well as financial services.

He moved back to Brisbane in 1984 as the AFR’s bureau chief in the Queensland capital, before moving to Canberra in late 1985 to become the AFR’s Canberra bureau chief of staff.

He was lured away from the AFR to The Australian’s Canberra bureau, before a few years’ later family commitments saw him put down roots and join the Canberra Times as chief of staff, and then national affairs editor.

After a brief flirtation with public relations, Mike returned to journalism, and he is now managing editor of a number of magazines published by Reed Business Information, including Money Management and Super Review.

1993 Neil McKissock 1992 Bill Bundey 1991 Neil McKissock 1990 Robert Keavney 1989 David Worley

www.moneymanagement.com.au November 17, 2011 Money Management — 17

FPA 2011 National Conference

Thursday 17 November 07.00 - 16.45

Registration for the National Conference open

07.00 for

Conference networking breakfast

Future / new planner breakfast

07.15 - 08.15

Darren Carr

Noel Whittaker CFP® AM

Open to all delegates

Open to future planner, new planners and student delegates

08.00 - 17.35

Trade Expo open

08.30 - 08.35

Conference welcome – Andrew Klein, Master of Ceremonies

08.35 - 08.45

FPA Board Chair welcome - Matthew Rowe CFP®, Chair, Financial Planning Association

08.45 - 09.00

Report to members - Mark Rantall CFP®, CEO, Financial Planning Association

09.00 - 09.45

Develop a winning culture David Smorgen OAM CPD = Assessed onsite

09.45 - 10.10

Morning tea in the Trade Expo

10.10 - 11.05

Threats to discretionary trust.

Personal efficiency and building

Can trust still be trusted?

Government Update

Masterclass 2

Masterclass 1

time for change in your business Dante De Gori

Implementing the FPA Code of

FPA / Portfolio Construction

EmmaWoolley

Cyril Peupion

Professional Practice into your

Masterclass brought to you by

CPD = 1

CPD = 1

business

PortfolioConstruction Forum

Dr June Smith

Developing your international

CPD = 1

11.00 - 11.10

Session changeover

11.10 - 12.05

Trust succession and estate

Contribution caps and insurance Understanding employment law

John Bacon

equities policy

planning

pitfalls – getting it right’

Karl Rozenbergs

CPD = 2

Moderator: Graham Rich

Michael Schneider

Deborah Wixted

CPD=1

CPD=1

CPD= Assessed onsite

Tim Farrelly, Lukasz de Pourbaix, Tim Murphy, Jeff Mitchell,

12.05 - 13.00

Lunch in the trade expo

13.00 - 14.05

Philanthropy - it’s good for your

Academic showcase

Stump the strategist

Understanding how social media and Jeff Wells

business

Facilitator:

Ashton Bishop

can build your business

CPD = 4

Chris Cuffe

Dr Deen Sanders

Jeff Cooper

Rachel Staggs

This session will include a

Kelley McLendon CFP®

Dr Mark Brimble

CPD = Assessed onsite

Owen Cope

working lunch break.

CPD = 1

CPD = 1

14.05 - 14.15

Session changeover

14.15 - 15.15

The Hon. Bill Shorten, MP

Jonathan Ramsay, David Wright

CPD = 1.5

CPD = Assessed onsite This session will include an address from Future2 15.15 - 15.45

Afternoon tea

15.45 - 16.45

Going for professional gold Kieren Perkins OAM CPD = Assessed onsite Proudly sponsored by MLC Financial Planning *This session will include the presentation of the FPA Honorary Awards.

19.30 - 24.00

Colonial First State Best Practice Gala Dinner *The dinner will host the presentation of the FPA Best Practice Awards.

Attendance is limited to Masterclass sessions. If you wish to attend this Masterclass you must pre-register your interest during the conference registration process. Please note some Masterclass sessions will require pre-reading materials which will be provided to attending delegates closer to the event. Please note, this program is subject to change without notice.

18 — Money Management November 17, 2011 www.moneymanagement.com.au

FPA 2011 National Conference

Friday 18 November 08.00 - 15.00

Registration for the National Conference open

08.30 - 14.15

Trade Expo open

09.00 - 10.20

The future of financial advice Q&A Facilitator: Tony Jones, Host of ABC’s Lateline and Q&A Greg Cook CFP®, Senator Mathias Cormann, Simon Hoyle, Mark Rantall CFP® and DavidWhiteley CPD = Assessed onsite

10.20 - 10.45

Morning tea in the Trade Expo

10.45 - 11.45

Ethics in financial planning commissions Dr Simon Longstaff, Executive Director, St James Ethics Centre CPD = 2 This session includes the FPA AGM.

11.45 - 11.55

Session changeover

11.55 - 13.20

The client perspective: seeing the

Bad practice

The emotional intelligent adviser

SMSF 2012 Essentials

Masterclass 4

world through their eyes

Facilitator:

Sue Langley

Jo Hall CFP®

Are You Fit for FOFA Masterclass

Neer Korn

Dr Deen Sanders

CPD = 1.5

Peter Hogan

Grand Holley, Tim Netherocte,

CPD = 1.5

Jocelyn Furlan, Prof. Dimity

CPD = Assessed onsite

Matt Fogarty, Alastair White

13.20 - 14.15

Kingsford-Smith, Alison Maynard

CPD = 3

and Delia Rickard

This masterclass session

CPD = 1.5

includes a working lunch break

Lunch in the Trade Expo The Trade Expo will close at the conclusion of lunch.

14.15 - 15.10

Walking and talking the black dog

FOFA implementation for small

Making a safe exit from your

Tales from a technical team –

– coping with mood disorders

licensees and responsible

business – business succession

Super questions which make us

and depression

managers

planning in action

go hmmm

Matthew Johnstone

ClaireWivell-Plater

Jeffrey Scott CFP®

John Perri

CPD = Assessed onsite

CPD = 1

CPD = 1

CPD = Assessed onsite

15.10 - 15.20

Session changeover

15.20 - 16.15

Creativity has the power to change any business Todd Sampson, CEO, Leo Burnett CPD = Assessed onsite

16.15

Conference close

Attendance is limited to Masterclass sessions. If you wish to attend this Masterclass you must pre-register your interest during the conference registration process. Please note some Masterclass sessions will require pre-reading materials which will be provided to attending delegates closer to the event. Please note this program is subject to change without notice.

www.moneymanagement.com.au November 17, 2011 Money Management — 19

Multi-asset funds

New kid on the block Are multi-asset funds the next big thing, déjà vu – or perhaps a bit of both? Janine Mace reports.

IT’s always tough being the new kid on the block.

But it’s even tougher when nobody knows what to call you and everyone expects you to prove yourself but is reluctant to give you a chance.

Just ask the fund managers responsible for Australia’s new breed of multi-asset funds – or is that real return funds, goalbased funds or objectives-based funds?

Schroders’ head of fixed interest and multi-asset Simon Doyle is the first to admit it’s tough marketing a new product when no one agrees on what to call it, or what product category to put it in.

“The challenge is that this industry operates on boxes. So you need to fit into one of them,” he says.

Lonsec senior investment analyst –

managed funds, Deanne Fuller, agrees the uncertain nomenclature is making life difficult for these new products, with some ratings agencies currently lumping multiasset funds into their ‘alternatives’ category. (Lonsec currently rates multi-asset funds offered by Schroders, AMP Capital, Select and MLC.) “They don’t fit into the nice neat boxes we have created as an industry for funds,” she admits.

“We tried calling them things like total objective funds and real return funds, but we are still trying to find the right name.

We will probably settle on something by the end of the year.”

Another problem is how these funds sound a little like the ideas behind the 1980s version of single manager diversified

20 — Money Management November 17, 2011 www.moneymanagement.com.au

“

A lot of people got burnt with single balanced managers in the past, but those products were based on quant models with managers making big calls.

– Leanne Bradley

”

funds, where one manager was responsible for investing across all the asset classes.

Fuller agrees the new generation of multi-asset funds resemble this early incarnation of diversified funds. “It is funny how it goes in circles,” she says.

The similarities have slowed acceptance of the multi-asset fund concept, according to Aberdeen Asset Management’s senior investment specialist Leanne Bradley. “That is why the market has not embraced these funds as quickly as you would think they would.”

However, she points out that the new funds are very different to their predecessors. “A lot of people got burnt with single balanced managers in the past, b u t t h o s e p ro d u c t s we re b a s e d o n

Multi-asset funds quant models with managers making big calls.”

Attracting adviser interest Although a formal category name for the new funds is still being debated, they are starting to garner interest in the Australian market. This follows a strong start in the United Kingdom, particularly among defined benefit pension funds.

AMP Capital is the latest manager to take advantage of this interest, recently extending its Multi-Asset Fund into the retail market. This followed extensive research which identified an opportunity to improve on existing diversified funds, according to Matthew Hopkins, senior portfolio manager for the new fund.

“

There is increasing awareness of the potential benefits of these types of funds and we are seeing some good performances.

– Matthew Hopkins

”

“We looked at diversified funds globally and came to the conclusion they could be managed more flexibly and there were better ways of managing risk.

Previously there had been a concentration on equity premium risk, but we believe a more flexible approach is needed,” he explains.

“We make assumptions and change our return expectations depending on market conditions and what assets best meet those expectations.”

The new fund is likely to find a receptive audience, with adviser interest in the multi-asset fund concept rising.

“There is increasing awareness of the potential benefits of these types of funds and we are seeing some good performances,” Hopkins says.

“They have been a continuing success overseas and are a well-established component of the market in the UK.” Doyle agrees interest is strong. “The multi-asset space is seeing a lot of engagement at multiple levels and we are being asked to come and talk to different groups, including super fund trustees – especially about the postretirement phase – consultants and dealer groups.”

He says the products were the subject of significant adviser attention during Schroders’ recent national road show and he believes the timing is right for these funds. “There is strong interest in the real return concept and we have seen a dialling up of interest levels.”

Hopkins reports a similar positive response. “For planners, researchers and platforms, the message has resonated.

“Other funds have also been finding a positive reaction and financial advisers have indicated they plan to use them.”

Certain aspects of the multi-asset fund story have real appeal in the current market. “In particular the message about actively managing risk has resonated with advisers. We have a big focus on risk management,” Hopkins explains.

Bradley is another who believes there is definitely a place for multi-asset funds in the local market.

“We are seeing a positive response – and particularly to our income product – as many funds on the market at the moment focus on a single asset class. Advisers are very receptive to a fund generating income from multiple asset classes,” she says.

Continued on page 22

Volatility. It’s a dangerous beast. But we’ve found a way to manage it.

To find out more speak to your Key Account Manager, call us on 1300 139 267 or visit our website.

AMP Capital Investors Limited ABN 59 001 777 591, AFSL 232 497

ACI0037/MM/ST

www.moneymanagement.com.au November 17, 2011 Money Management — 21

Multi-asset funds

Continued from page 21 Fuller believes the introduction of multi-asset funds is a welcome development. “There is a change in focus to risk and volatility in the market and this is a good step towards dealing with that. This is a positive trend for the industry.”

“

For financial planners, there could be a loss of control as they are delegating more of the investment function out.

– Simon Doyle

”

Some way to go Despite the good adviser response, inflows have been slow.

“We are seeing an exponential increase in interest, but cashflows are not matching it as yet,” Doyle admits.

Fuller agrees the new funds are yet to see the dollars flow. “It is going to take a track record from some of the funds before the inflows really follow.”

Hopkins believes the key is for advisers and trustees to learn more about the advantages of multi-asset funds. “A lot of education is needed on the aim of achieving after-inflation returns over time.”

Bradley agrees advisers need more information about what the products can do for some clients. “Our industry is one still focussed largely on the accumulation phase and model portfolios based on a sector-specialist strategic asset allocation approach. While this method works for accumulators with a long-term horizon, timely active asset allocation with a solution focused on the total return is increasingly important in the retirement phase.”

Benefits for everyone Despite the slow take-up, there are several advantages with multi-asset funds.

Fuller lists these as including better downside risk control, lack of a structural bias to any asset class, higher probability of reaching their objectives and lower volatility. “These funds target volatility much more than traditional funds.”

The emphasis on downside risk control is particularly appealing in a post-GFC world. “The whole portfolio construction and risk management part is more prominent in these funds. The fund responds to changing market conditions,” Hopkins explains.

In the superannuation sphere, this rapid response to market developments can make life easier for fund trustees.

“It takes a lot of pressure off trustees and planners as less monitoring is required. We can adjust asset allocation in a timely manner and do not have to wait for trustee approval,” Bradley notes.

“It also avoids the implementation risk of having multiple managers, which is a big issue for super funds as the market moves too quickly for trustee board meetings and there is often not timely decisionmaking. It is the same for planners if they do not have the appropriate administration and approvals in place.”

She contrasts this with the monthly – or even daily – meetings held by investment managers to reassess the fund’s asset allocation. “In volatile times you need to reassess both the portfolio and strategic decisions regularly.”

Another advantage of multi-asset funds is responsibility for performance falls squarely on the investment manager’s shoulders.

“There is enhanced manager accountability as they have to stand by their calls.

This is a massive change and it is brave of these guys to be pushing this, as it is a hard sell,” Fuller notes.

Doyle agrees it is up to the fund manager to perform. “If you put money into traditional balanced funds, then it means you are happy with the strategic asset allocation. However, if you put money into our Real Return Fund, then it means we are accountable for the return and how we allocate risk,” he says.

“This is a big shift in accountability. The manager is in the best position and has

22 — Money Management November 17, 2011 www.moneymanagement.com.au

the flexibility to do it.”

Hopkins believes this new approach makes sense for investors. “There is an alignment of interest between the investment manager and the investor.”

Multi-asset managers believe there are also benefits for advisers’ own businesses if they embrace the new investment model.

“The logical conclusion is if financial planners have a couple of objective-based portfolios they use, then that costs less and leads to a better relationship with single managers, rather than having limited relationships with multiple managers,” Doyle argues.

It also provides savings in time and administration. “A single manager is responsible for implementation of portfolio changes, versus the time involved in dealing with 100 managers. There is a real advantage in having a much simpler strategy,” he says.

“It makes enormous sense for financial planners to use two to three portfolios as this provides sufficient diversity in style and manager selection, coupled with ease of implementation.”

In a post-FOFA world, there are also benefits in terms of client relationships.

“There is an advantage to the adviser in that they can spend more time with the client and on building their business,” Doyle says.

Negatives as well While there are many advantages in using multi-assets funds, there are also some downsides.

“They rely heavily on manager skill and the ability to pick where the market is going,” Fuller notes.

Bradley agrees this can be an issue: “Planners need to get their heads around it to use them.”

They are also unlikely to be worldbeaters in specific market conditions.

“There will be environments where they will underperform,” Hopkins admits.

Doyle believes this is more of an issue for certain investors than others. “Peer risk is very important for some investors such as super funds and this leads to everyone following the same model.”

It could mean underperformance will

lead to asset outflows. “There is a lot of business risk in these funds if managers can’t attract strong inflows – especially in strong bull markets as they will not look as flash then,” Fuller explains.

From the adviser’s perspective, the main disadvantage comes down to control. “For financial planners, there could be a loss of control as they are delegating more of the investment function out,” Doyle notes.

He says advisers who are seeking to develop bespoke portfolios may find multi-asset funds unsuitable. “There is less ability to tailor individual portfolios.”

Hopkins agrees control can be an issue. “The fund can change and advisers may feel as though they do not always know what they will get, but it is very transparent.”

However, the major hurdle for multiasset funds seems to be helping advisers work out how to use them when they are constructing a client portfolio.

“Everyone is very interested in the concept, but the retail industry is uncertain how to use them in a total portfolio, or in a model portfolio with multiple other managers. They do not fit the model portfolio system and this creates problems,” Bradley says.

Hopkins believes multi-asset funds can be used in several ways. “We see a variety of applications. They could be a major component, or used in combination with other diversified funds. They are quite flexible in how they can be applied by the financial planner and used in a client portfolio.”

According to Fuller, multi-asset funds do not fit easily into current financial planning software, leaving advisers struggling on how to use them. “They do not fit a growth/defensive framework and the question is how to fit them into the core portfolio.”

She believes planners are likely to end up using multi-asset funds either as the core of the portfolio with satellites around it, or as part of the alternatives allocation within the portfolio.

Although the software issue is holding back their appeal at the moment, Fuller says this will change in time. “There are a few hurdles to overcome, but we like them as a new product.”

MM

To find out more speak to your Key Account Manager, call us on 1300 139 267 or visit ampcapital.com.au

AMP Capital Investors Limited (ABN 59 001 777 591) (AFSL 232497). This information has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives or financial situation. An investor should, before making any investment decisions, consider the appropriateness of this information, and seek professional advice, having regard to their objectives and financial situation.

ACI0047/MM/FPC

Multi-asset funds

The rise of multi-asset funds Asset allocation is becoming critically important in a world of shorter and more extreme investment cycles. This is where multi-asset funds come in, writes Janine Mace.

ADVISERS could be forgiven for thinking they just can’t win. As if the FOFA reforms weren’t enough, now they are facing calls to junk their traditional approach to portfolio construction.

After years of investment portfolios being based on static asset allocations which use the historical performance of different asset classes to determine the weighting to growth and defensive assets, the latest thinking about portfolio construction is to go back to the past. Back in fact, to the days when asset allocation ruled.

According to AMP Capital Investors head of investment strategy and chief economist, Dr Shane Oliver, the past decade’s focus on benchmarks and competitors has meant asset allocation has only played a limited role in investment portfolios.

“The 1990s saw a decline in the importance of asset allocation as all assets provided pretty good returns together and under the sector specialist/multi-manager model, in many cases it just didn’t figure at all,” he noted in a recent article.

“However, in a world of shorter and more extreme investment cycles, and more negative correlations between equities and bonds, asset allocation is becoming critically important.”

Many experts agree, and believe the new investment environment means a dynamic approach to asset allocation within investment funds is required.

Schroders head of fixed interest and multi-asset, Simon Doyle, is one who sees views changing.

“Traditional diversified portfolios were constructed around a fixed asset allocation, and in the 1980s and 1990s this suited the conditions of a bull market, but in the past 10-12 years, it has been a very different story. However, asset allocation and portfolio construction have not changed,” he notes.

Doyle believes asset allocation is returning to the heart of the portfolio construction process.

“There has been a reawakening of the importance of asset allocation in the portfolio. If you get better at developing the asset mix, then that is more important than manager or stock selection,” he says.

According to Doyle, the existing approach needs to be refined. “The current model ignores valuations. If there is a zero per cent expected return for equities, why be in them?”

Aberdeen Asset Management senior investment specialist, Leanne Bradley, agrees the current investment environment provides fertile ground for new thinking about the importance of asset allocation.

“Active asset allocation is important in a time of changing markets. There has been increasing focus on it as markets recognise the need to change the investment approach of the past few years,” she says.

Lonsec senior investment analyst – managed funds, Deanne Fuller, is less

certain there is a major shift in thinking about investment management underway.

“We see this type of conversation after every major market event. Static asset allocation does not work in all market conditions, but no investment process does.”

Out with the old The debate has led to growing questioning of the asset allocation approach being used by diversified funds, according to the senior portfolio manager of AMP Capital’s Multi-Asset Fund, Matthew Hopkins.

“Conditions in the past two years or so have led to concerns about traditional diversified funds. They still have a growth versus defensive paradigm. A fund like ours can go from 80 per cent growth to 20 per cent growth, depending on market conditions,” he says.

The discussions around the suitability

24 — Money Management November 17, 2011 www.moneymanagement.com.au

of existing diversified funds have led to the emergence of a new breed of so-called ‘dynamic asset allocation’ funds, explains Fuller. “Dynamic asset allocation emerged post the GFC, but in the past 12-18 months, real return or total outcome funds have also appeared.”

She says this is part of a trend towards higher conviction management. “This is also occurring in other asset classes as we are seeing more concentrated portfolios.”

Hopkins believes the ongoing market turmoil has created real investor frustration with the way the current investment model works. “Even if the GFC had not happened, these types of funds had been gaining traction in the UK (especially among defined benefit pension funds) and they suit the trend in the industry here of moving from the accumulation phase to transition to retirement.”

Bradley agrees the concerns about asset allocation in diversified funds are keenly felt by superannuation investors. “We believe the active management of asset allocation is particularly important in the retirement phase or for those nearing retirement.”

Another factor in the push for a more dynamic approach to asset allocation is the growing recognition investors are more interested in absolute (rather than relative or benchmark) returns.

Doyle believes the focus by multi-asset or real return funds on achieving an absolute return objective (such as CPI plus 5 per cent per annum), is more in line with what investors are now seeking.

He says the message investors are sending via their continuing use of term deposits is that they live in a world where good performance relative to a benchmark does not help when it comes to paying the bills. “You can’t spend relative return on groceries, you can only spend absolute return.”

Doyle believes investors want “a stable real rate of return and are prepared to trade away some upside. A term deposit is really a simple form of objective based portfolio”.

Bradley agrees clients are looking for outcomes – not relative outperformance.

“It is about protecting the downside for clients – not worrying about underperforming your peers,” she says.

“There is a shift in the mind of end users and the industry needs to change to meet the needs of investors.”

However, the current investment model places little emphasis on achieving an investor’s underlying objective.

“Currently, assessing an investor’s return expectations leads you to being put into a portfolio that is defined by its equity market exposure,” Doyle says. This means investors defined as ‘conservative’ go into a portfolio with 30 per cent equities, while ‘growth’ investors have a higher level.

“If you are not getting rewarded for taking equity risk, then why go there? You need to build a portfolio that achieves a desired outcome. There is a mismatch between the objectives and the asset classes being used,” he argues.

Hopkins agrees: “There needs to be a recognition that you need to spread the return sources as broadly as possible.”

Fuller believes the new breed of multiasset or real return funds are one way to deal with this problem.

“Traditional static asset allocation funds have done reasonably well for the past 25 years and are not a dying product, but these new funds cater to a different client requirement,” she says.

Hopkins agrees they have a role to play.

“If more attention is given to current conditions, then multi-asset is more suitable. However, there is a place for both types of funds – traditional diversified and multi-asset.”

MM

Toolbox FOFA, FOFA…TOFA? While the proposed Future of Financial Advice changes and their potential impact on financial advisers remain the hot topic, there is another acronym – TOFA – which deserves attention, according to David Barrett.

T

he impact of Future of Financial Advice on financial planners dominates the financial press, but there’s another similar acronym, TOFA, which also deserves some attention. TOFA (Taxation of Financial Arrangements) refers to a new division of the Income Tax Assessment Act (ITAA) 1997 that aims to provide a modern, more efficient and lower compliance-cost taxation regime for financial arrangements.

Many superannuation funds and managed investment schemes began complying with the TOFA provisions from 1 July 2010. The substantial administration system changes required have come at considerable cost to many funds, for what now appears to be a relatively minor revenue gain for the Government.

Nonetheless, as the 2010/11 taxation reports begin to filter out to clients, the impacts for some clients will be evident.

In this article we explain the key impacts on clients stemming from the TOFA regime.

Who and what does TOFA affect?

TOFA became effective for certain taxpayers voluntarily from 1 July, 2009 and was mandatory for those who didn’t opt in from 1 July, 2010. However, the threshold tests result in many taxpayers falling outside the TOFA regime, unless they voluntarily opt in. The threshold tests are: • Authorised Deposit-taking Institutions (ADIs), securitisation vehicles and financial sector entities, with an aggregated turnover of $20 million or more in the previous income year • Superannuation entities, managed investment schemes and foreign entities similar to managed investment schemes, if the value of their assets is $100 million or more • Other entities (not individuals) who meet any of the following thresholds in the previous income year; (i) Aggregated turnover of $100 million or more (ii) Assets of $300 million, or (iii) Financial assets of $100 million or more.

Individual taxpayers are generally not required to comply with the TOFA regime, unless they choose to opt in.

Broadly, TOFA is a shift from taxation based on realisation of certain receipts, to an accruals basis of taxation where financial gains and losses are attributed as derived rather than as realised.

funds and managed funds, where those entities exceed the $100 million asset threshold. Generally, TOFA will not apply to SMSFs. However, for superannuation funds the capital gains taxation provisions in ITAA 1997 explicitly take precedence over the TOFA provisions. Hence TOFA generally has application only to a limited range of mostly debt and fixed interesttype investments held by superannuation funds, including term deposits, certain convertible notes and a limited number of stapled securities.

The impact of TOFA on the taxation of term deposits largely relates to the timing of income being bought to account. Prior to the commencement of TOFA (1 July, 2010 for those funds which chose not to start from 1 July, 2009), interest from term deposits was subject to taxation only in the year it was paid to the fund. TOFA, on the other hand, apportions the income generated by a term deposit over the accrual period. The change in treatment is best understood by looking at an example.

Diagram 1:

Pre-TOFA tax position $6,000 interest paid and taxable in 2011/12

$100,000 12-month term deposit, purchased 15 Jul 2010 1 July 2010

Diagram 2:

1 July 2011

TOFA tax implications 2010/11 accrual period 351 days: TOFA income = 351/365 x 6.0% x $100,000 = $5,770

Likely impact on clients (and financial advisers)

Switching to pension phase

For those clients who don’t opt in, the most likely impact of TOFA is taxation adjustments to their superannuation

Suppose now that Jenny switches to pension phase on 1 February 2011.

O rd i n a r i l y ( t h a t i s, p r i o r t o TO FA

26 — Money Management November 17, 2011 www.moneymanagement.com.au

2011/12 accrual period 14 days: TOFA income = 14/365 x 6.0% x $100,000 = $230

12-month term deposit purchased 15 July 2010 1 July 2010 (assumed TOFA commencement)

1 July 2011

14 July 2011

Diagram 3: 2010/11 accrual period 150 days: TOFA income = 150/365 x 6.0% x $100,000 = $2,466 (exempt)

Example Assume Jenny is a member of a large retail superannuation fund. On 15 July 2010 she directs the fund to purchase a 12-month term deposit (TD) with $100,000. The TD yields 6 per cent, payable upon maturity on 14 July 2011.

Prior to the commencement of TOFA, the $6,000 interest payment would have been taxable in the year it was paid to the superannuation fund; ie, 2011/12. See Diagram 1.

The introduction of TOFA changes this tax position significantly. TOFA requires the superannuation fund to attribute the income on an accruals basis, and apportion it to both the 2010/11 and 2011/12 income years based on a prorating of the days of the investment term. This apportioning results in $5,770 of taxable income in the 2010/11, and $230 in 2011/12. See Diagram 2.

It’s important to bear in mind that although TOFA causes an increase in taxable income for the superannuation fund in 2010/11, this is simply a bringing forward of a tax liability that generally would otherwise have applied in 2011/12 anyway. The impact is simply a timing issue.

However, in some situations the impact might be more than a simple timing difference, as described below.

14 July 2011

2010/11 accrual period 201 days: TOFA income = 201/365 x 6.0% x $100,000 = $3,304 (taxable)

2011/12 accrual period 14 days: TOFA income = 14/365 x 6.0% x $100,000 = $230 (exempt)

$100,000 12-month term deposit 1 July 2010

1 Feb 2011

1 July 2011 14 July 2011

Switch to pension

commencing) the interest from her TD would be paid to the fund (on 14 July 2 0 1 1 ) w h e n Je n n y ’s a c c o u n t i s i n pension phase, and the income would be exempt from taxation.

With the introduction of TOFA, the current industry practice is that the income attributed to the period prior to switching to pension phase is taxable at 15 per cent. So Jenny’s account incurs $495 more tax (ie $3,304 at 15 per cent) than it would have under the pre-TOFA rules. Diagram 3 illustrates the taxation implications of a pension switch on 1 February 2011.

Conclusion TOFA is unlikely to have a large impact on most clients of financial advisers. Some clients might, depending on their investment selections, experience a greater tax liability on their accounts with large superannuation funds and managed funds in

the year TOFA applies to that fund (generally 2010/11). This may be apparent where the superannuation fund reporting provides detail of the tax liability deducted from individual accounts, but many superannuation funds may not provide this level of detail.

Ultimately the impact of TOFA may simply be a bringing forward of certain tax liabilities in relation to certain securities – in general no additional tax liability is incurred, if the timing difference is ignored. However, in some situations a tax liability may result prior to income being distributed, possibly resulting in funding issues for that liability. In addition, some income that was previously exempted in pension phase may now be partially taxable in proportion to the period attributable to accumulation phase.

David Barrett is head of MAStech, Macquarie Adviser Services.

Appointments

Please send your appointments to: andrew.tsanadis@reedbusiness.com.au

Macquarie Portfolio Services, Lonsdale Financial Group and Asgard.

Phil Butterworth BT Fi n a n c i a l Gro u p has appointed former DKN chief executive Phil Butterworth to head up a new financial planning business unit that will include the Magnitude brand.

Butterworth will be joined in the new unit by former Lonsdale chief executive Mar io Modica, former Lonsdale executive director Kon Costas and former DKN executive director of distribution Andrew Rutter.

BT ’s general manager of advice Mark Spiers said the expansion program reflects the environment of a changing regulatory framework and a growing consumer demand for sound strategic advice.

With a career spanning 18 years, Butterworth founded and led DKN for more than eight years. He previously worked in senior roles at

WHK has announced the internal appointment of Jeremy McPhail as head of research.

McPhail’s new role comes amid the appointment of Mercer and Macquarie Private Wealth to provide WHK with investment research and share trade execution suppor t, respectively.

In his new role, McPhail will work with both Mercer and Macquarie Private Wealth to provide research and market data for WHK’s adviser base.

McPhail was previously Prescott Consultants research and product development manager and also worked as a paraplanner at Ord Minnett.

THE Financial Planning Stand a rd s Bo a rd (FPSB) has appointed A M P Fi n a n c i a l Services director of financial planning, advice and services Steve Helmich as its 2012 board chairperson-elect.

Helmich will act as 2012 chairperson of the FPSB Council, before assuming duties as a board chairperson in 2013, the association stated.

Move of the week ANZ Wealth has appointed Neil Younger to lead practicebased financial planning.

In this role, Younger will assist ANZ Wealth’s licensees (RI Advice, Financial Services Partners and Millenium3) in preparing for regulatory change.

He will start his new role on 5 December and will work closely with ANZ Wealth’s general manager advice and distribution, Paul Barrett.

Before his appointment, Younger was Commonwealth Financial Planning general manager and held several executive positions at BT Financial Group. He previously sat on the board of the Financial Services Council’s Financial Advisory Network Board and the Financial Planning Association’s Future of Financial Planner Committee.

a member of the 2010 and 2011 FPSB Compensation and Succession Planning Committees. He is currently responsible for two of Australia’s largest financial planning licensees in his current role with AMP Financial Services.

Steve Helmich Commenting on his appointment, 2011 FPSB chairperson Co r i n n a Di e t e r s said that Helmich’s successful financial planning model at A M P demonstrates how certified financial planner (CFP) professionals can add value at large firms.

Helmich previously served as

B R AV U R A S o l u t i o n s has appointed Jason Wilby in the newly-created role of global strategy, risk and planning manager.

Based in Sydney, Wilby will report to Bravura’s chief financial officer Rebecca Norton, where he will be responsible for deliver ing effective r isk

Opportunities BUSINESS DEVELOPMENT MANAGER – AGRICULTURAL FOCUS Location: Tamworth & North West NSW Company: Terrington Consulting Description: An Australian-owned bank is looking for a BDM who is capable of driving growth, building brand equity and providing holistic and tailored solutions.

The successful candidate will possess outstanding relationships skills, a solid understanding of credit risk, and the ability to manage long-term relationships.

The position is an excellent opportunity for successful commercial lenders or BDMs within aligned industries to join a successful bank.

To find out more and to apply, visit www.moneymanagement.com.au/jobs, or contact Emily at Terrington Consulting - 0422 918 177 / (08) 8423 4466, emily@terringtonconsulting.com.au.

Location: Far North Coast, NSW Company: Terrington Consulting Description: A financial services firm is seeking an experienced and established financial planner.

The firm has excellent brand and market reputation and you will be rewarded with a highly competitive salary package and

management and developing organisational performance, increasing efficiency and enhancing effective governance.

Bravura stated that the role will help to identify key risks and provide greater certainty around the achievement of strategic objectives.

Norton said the company has been focussing on process improvement.

Wilby joined Bravura in 2008 as the head of human resources – global wealth management.

Before taking on his new role he was Bravura’s head of change – global wealth management.

For more information on these jobs and to apply, please go to www.moneymanagement.com.au/jobs

incentives. You will also have access to research, professional facilities, established systems and an opportunity to grow your portfolio.

In this role you will be engaged in a range of financial services offerings, including stockbroking, strategic planning, superannuation, SMSF, insurance, portfolio management and fixed interest.

You will have several years experience delivering to a diverse range of clientele. You will also have proven sales skills and networking capabilities.

For more information and to apply, visit www.moneymanagement.com.au/jobs, or contact Myra at Terrington Consulting - 0422 918 177 / (08) 8423 4466, myra@terringtonconsulting.com.au.

SENIOR ANALYST – COMMERCIAL FINANCIAL PLANNER

Neil Younger

Location: Adelaide Company: Terrington Consulting Description: A team of professional bankers is currently looking for a commercial analyst to provide risk and credit support to a major client group portfolio.

On a daily basis you will be responsible for researching and preparing detailed credit submissions, liaising with existing portfolio clients, conducting reviews and identifying

opportunities to improve existing portfolio service levels.

You will have accounting or auditing experience or have provided credit services within the SME or commercial sector.

Aspiring commercial bankers who currently work within the SME space are encouraged to apply.

To find out more and to apply, visit www.moneymanagement.com.au/jobs, or contact Emily at Terrington Consulting - 0422 918 177 / (08) 8423 4466, emily@terringtonconsulting.com.au.

CLIENT SERVICES MANAGER Location: Adelaide Company: Terrington Consulting Description: An Adelaide-based financial services firm is looking for a relationship-focused and highly professional client services manager.

In this role you will be assisting the planner to maintain and build client relationships; become the key contact for clients; provide administrative support as needed; prepare financial planning documentation and client reviews; and manage compliance procedures.

You will have experience with financial planning processes and have the ability to maintain client relationships. Previous experience using Xplan or similar planning

solutions would be a distinct advantage.

To find out more and to apply, visit www.moneymanagement.com.au/jobs, or contact Myra at Terrington Consulting - 0422 918 177 / (08) 8423 4466, myra@terringtonconsulting.com.au.

FINANCIAL PLANNER Location: Hong Kong Company: ipac Asia Description: An international financial advice and investment group is looking to hire a financial planner for its Hong Kong office.

In this role, you will be responsible for portfolio and risk management and will provide financial planning advice for retirement, children’s education, insurance, and employee benefits and business continuity.

The successful candidate will receive an attractive base salary and bonus package; have the opportunity to attend overseas conventions; be involved in comprehensive professional training programs and have access to ongoing personal growth and development support; and engage with a wide range of product choices and excellent back office support.

To find out more and to apply, visit www.moneymanagement.com.au/jobs, or forward your resume to the ipac human resources department, vivian.chan@ipac.com.hk.

www.moneymanagement.com.au November 17, 2011 Money Management — 27

Outsider

A LIGHT-HEARTED LOOK AT THE OTHER SIDE OF MAKING MONEY

Sea eagle, meet bald eagle OUTSIDER is a traditionalist rather than a nationalist and has for many years lamented the export of US culture to Australia.

But just as the Australian dollar has recently asserted itself over the greenback, so it seems Australian sporting culture is asserting itself among US financial services types.

Outsider found himself sitting in on a New York roundtable discussing the state of global markets when he was startled from his reverie by the words “Manly Sea Eagles”.

Surely he must have misheard this reference, during a meeting on the 44th floor of 200 Park Avenue, to the

“

Out of context

“Look up enterprise data management, and then look up disasters.”

winners of the National Rugby League Premiership?

But Outsider's ears were not deceiving him. It was one-time Sydney northern beaches resident, Man Investment's Mark

Enman, who used Manly as an analogy for winning.

Given the confusion on the faces of the other Americans at the table, Outsider concluded they were Roosters supporters.

Beer and roaming in Las Vegas?

IN these somewhat straitened times for the financial services industry, Outsider imagined that executives were tightening their belts and travelling in economy rather than up the front of the airplane.

Indeed, he believed that most sensible financial services types were only travelling when they absolutely had to and conducting most meetings by teleconference.

Thus, your humble correspondent was somewhat gobsmacked to encounter a certain, relatively young operative taking his ease in the Qantas Club before, by his own admission, having a few days of rest and relaxation in Las Vegas.

Of course, Outsider only spied this young chap because

he himself was making an extreme sacrifice and putting other nobler pursuits aside to travel to the US to gain a global view of financial and economic matters in the interests of better informing

the hungry readers of Money Management.

And so, as Outsider and this young chap quaffed a pleasant glass of shiraz and nibbled cheese and bikkies as they awaited their flights,

talk turned to just how challenging conditions currently are in the financial services industr y – and to mutual acquaintances who are currently between jobs or on gardening leave.

Because of the obvious sensitivity attaching to people indulging in flights of fancy in challenging economic times, Outsider will decline to name the young chap beyond saying that he always brings a chill into the room. He also accepts the young fellow’s assurances that he was simply using up some frequent flyer points.

For his par t, Outsider offers only the famous quote from W.C. Fields: "All things considered, I'd rather be in Philadelphia”.

It’s official: big bosses are batty HAVING trodden the financial services path for a number of years, Outsider is now on a first-name basis with the very cream of the financial industry crop. As such, Outsider was not surprised to l e a r n t h a t h e m i g h t c u r re n t l y b e mingling with a number of mentally unstable individuals.

He recently came across a British study that compared the psychological profile of senior business executives with those of mental patients in a hospital for the criminally insane.

The study suggested the business leaders came up trumps in a number of character traits normally used to identi-

fy the emotional side of psychopaths.

They included superficial charm, e g o c e n t r i c i t y, m a n i p u l a t i v e n e s s, g ra n d i o s i t y, n a rc i s s i s m , a l a c k o f empathy, stubbornness and dictatorial tendencies.

Rather than being committed for psychiatric assessment, these people are in positions of power and authority.

Some are even driving the very ship of our financial landscape.

And rightly so – who better to ride the storm of economic turmoil than the off-kilter senior executive? History h a s s h ow n t h a t s o m e o f t h e m o s t mentally abnormal individuals have

28 — Money Management November 17, 2011 www.moneymanagement.com.au

become the greatest leaders.

Needless to say, these same individuals regularly bring some most welcome colour to the pages of Money Management. And given his regular dealings with said individuals, Outsider was relieved to hear they are less likely to share other personality traits of the criminally insane – traits such as physi c a l a g g re s s i o n , p a ra n o i a , l a c k o f remorse and irresponsibility with work and finances.

Such traits are far more likely to be found in jaded, cynical journalists than financial services executives, Outsider reckons.

– DST Global Solutions managing director – Asia-Pacific, Philip

Hogan, on the shortfalls of some data aggregation tools.

“We probably don’t do ourselves any favours calling this a ‘strategic asset allocation’ – we might just call it ‘a long-term recommendation about what’s going to happen’.”

– van Eyk head of research John O’Brien isn’t a fan of industry jargon.

“We could have said, ‘sell everything you have, including your house, and put it all in gold’. We don’t believe that’s the right approach, but that would have been newsworthy.”

– O’Brien again. Unfortunately for the media, it seems clients take precedence over headlines at van Eyk.