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Planners shift from managed funds By Mike Taylor ADVISER caution generated by the global financial crisis and its continuing aftermath has served to disguise a general shift away from managed funds, according to new research about to be released by Wealth Insights. The research – the Wealth Insights Planner Segmentation Report – is based on two surveys covering 800 advisers and has revealed the startling bottom line that almost half of planners now place only around 40 per cent of investment flows into managed funds. What is more, the research indicates this trend is likely to continue, with many planners increasingly focused on other
options – particularly direct shares. Wealth Insights managing director Vanessa McMahon said the trend away from the use of managed funds had been evolving for some time, but had been disguised by the fallout around the global financial crisis and more recent events in Europe. “The move away from managed funds appears to have been masked by the general crisis of confidence in investing right now and the subsequent low rate of net flows into the markets,” she said. “However, the migration to other investment products is not cyclical, and even when the money starts moving back into the markets these planners will continue to use other investment
Terminally ill – big tax bill By Tim Stewart TERMINALLY ill clients who attempt to roll over their superannuation could end up with a big tax bill, warns OnePath technical services manager Scott Quinn. If a client satisfies the terminal medical condition ( TMC) of release, they can only receive their benefit as a cash lump sum or a pension – they cannot roll it over to another superannuation fund, he said. “Because tax law doesn’t recognise it as a rollover superannuation benefit, it’s treated as a new contribution and counted against the contribution caps,” Quinn said. The situation could crop up if a client receives a terminal
illness insurance payout in one super fund, and then attempts to roll over the money to a different fund with a more favourable death benefit pension or access to an anti-detriment payment, he said. While the client may be able to utilise the ‘bring forward’ rule to reduce the breach of the non-concessional contributions (NCC) cap, anything over $450,000 will potentially be subject to the 46.5 per cent NCC cap breach, Quinn said. Colonial First State executive manager of technical services Deborah Wixted said the Australian Taxation Office would view any attempted rollover for clients
Planner Investment Flows Planner Investment Flows 100% 16%
Other Investments
84%
Managed Funds
60% 50%
40% 0% Segments Segments 1–3 4–6
products,” McMahon said. She said the bottom line confronting the major managed funds providers was that the financial planning industry had been subjected to fragmentation and the consequent development of new models. “There are now six different planner groups which behave quite differently in terms of their investment product choices, investment strategies and business,” McMahon said. She said three of these segments (accounting for almost half of planners) now placed only 40 per cent of their investment flows into managed funds. “And they expect to decrease their use of
Source: Wealth Insights
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SALARY SURVEY 2012
Pockets of growth MANY sectors within the financial services industry continue to struggle amid volatile markets and legislative change, leaving only small pockets of growth on the recruitment front. Large institutions continue to hire back-office staff and financial planners to accommodate the need for scaled advice, but boutique licensees have almost ground their hiring activities to a screeching halt. In addition, constant consolidation within the financial services industry – as well as cost-cutting company restructures – has seen many high-level executives leave their positions. Colonial First State’s Brian Bissaker, Zurich’s Matthew Drennan and Snowball’s Tony McDonald, to name a few, have had their positions made redundant amid company restructures. But while many executives were pushed out in the second half of 2011, this trend had slowly started to fade in 2012. The challenging financial services employment climate could explain why almost two-thirds of finance professionals are considering changing careers this year. However, salaries in the sector have not fallen. Apart from senior managers working in large institutions, the highest paid employees in the industry include fund managers, BDMs, dealer group managers and insurance underwriters. Full story page 14.
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