Money Management (May 10, 2012)

Vol.26 No.17 | May 10, 2012 | $6.95 INC GST

The publication for the personal investment professional

www.moneymanagement.com.au

LIFETIME ACHIEVEMENT Barry Lambert takes the award for his contribution to the industry

FRACTURED FRONT Call for industry to speak with one voice

MARKETING TEAM OF THE YEAR

BDM OF THE YEAR

AMP Capital wows the crowd

Money Management announces Australia’s top business development managers

Schroders’awesome foursome

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MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

SCHRODER Investment Management will keep wearing its crown for at least another year after the company took the Money Management/Lonsec Fund Manager of the Year title for the fourth consecutive time.

The award was presented to Schroders chief executive officer Greg Cooper (pictured) at the awards night in Sydney, which also marked 25 years since the establishment of Money Management.

Continued on page 4

Fund Manager of the Year 2012

Let the good times roll Money Management’s Fund Manager of the Year Awards have represented an occasion on which the industry has both celebrated excellence and let its hair down. The following array of photographs reflects the mood of past years.

2 — Money Management May 10, 2012 www.moneymanagement.com.au

www.moneymanagement.com.au May 10, 2012 Money Management — 3

Fund Manager of the Year 2012 MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

AUSTRALIAN EQUITIES (BROAD CAP)

Investors Mutual AUSTRALIAN EQUITIES (LONG SHORT)

Regal Funds Management AUSTRALIAN EQUITIES (SMALL CAP)

NovaPort Capital GLOBAL EQUITIES (BROAD CAP)

Independent Franchise Partners GLOBAL EQUITIES (LONG SHORT)

Lighthouse Partners Left to right: Simon Doyle, Greg Cooper and Martin Conlon.

Schroders’ awesome foursome Continued from page 1 The victory follows the investment manager rating well across the board over the last 12 months, according to Lonsec, and excelling in several asset classes. The researcher praised Schroders for its “strong risk management focus and advanced portfolio construction techniques”.

But for Cooper, Schroders’ success can be attributed to two things: long-term strategy and Schroders’ people.

“Partly it comes down to having the right sort of people and culture – that’s basically what funds management is, it’s about people,” Cooper said.

“What we look for are people who are inquisitive, who want to question the status quo and ask ‘why?’,” he added. “I think that’s one of the characteristics that make a good analyst and a good portfolio manager over time.”

Furthermore, with plenty of competition out there in the marketplace, outperformance often comes down to how one can differentiate oneself from others.

“Often that means getting people who are prepared to think in a non-consensus way and come up with non-consensus views,” Cooper said.

As for its investment philosophy, Schroders generally applies a benchmarkunaware, long-term view.

“We generally think benchmarks are quite poor indicators – be it risk or the correct structure of a portfolio,” Cooper said.

“If it’s Aussie equities, we focus on quality growth companies; if it’s fixed interest, we have a top-down macro view of the world; if you follow that down into the balanced fund – from an asset allocation perspective – again, we don’t get too bogged down in benchmarks.”

The secret to success is figuring out what the real drivers are over the next three to five years, basing the investment premise

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012 WINNER

Schroder Investment Management

“

I think it is good to see an organisation like Magellan – an Australian company – doing well managing overseas equities.

”

– Emilio Gonzalez

FINALISTS

PROPERTY SECURITIES (GLOBAL)

UBSGAM PROPERTY SECURITIES (AUSTRALIA)

Cromwell FIXED INTEREST (DIVERSIFIED AND GLOBAL)

Schroder Investment Management REGIONAL/EMERGING MARKET EQUITIES

Aberdeen Asset Management

BT Investment Management

ALTERNATIVE INVESTMENTS

Magellan Financial Group Australia

ETHICAL/SRI FUNDS

around that and not getting caught up in the short-term noise, Cooper said.

Though it sounds simple enough, the execution of such strategies is easier said than done. Ever since the start of the global financial crisis and subsequent disappointing returns, investment managers have had a tough few years trying to regain investor confidence.

But long-term views with true diversification seem to be a trend with our top three managers.

Alongside Schroders, BT Investment Management (BTIM) and Magellan Financial Group Australia also made the shortlist for this year’s top title.

BTIM’s resilience during a tough financial period and its multi-boutique model are attributed to the company’s success over the past 12 months.

“We promote a culture of challenging one’s thoughts; it’s not all about the return, it’s also about ensuring that you understand the risk that you take and being risk-aware,” said Emilio Gonzalez, BTIM’s managing director and chief executive.

While Schroders’ shortlisting was no big

4 — Money Management May 10, 2012 www.moneymanagement.com.au

Winton Capital BT Investment Management surprise, Gonzalez also praised Magellan for playing the global game right. Both BTIM and Schroders are similar, in that they fall into the broader capability type of managers.

“I think it is good to see an organisation like Magellan – an Australian company – doing well managing overseas equities,” he said. “I think that’s significant, it demonstrates that we can play on the global stage in terms of returns, because they’re very much competing against many global managers.”

Head of distribution at Magellan Frank Casarotti said the group’s place in the finals is recognition that Magellan is on the right track.

“We aim to generate long-term returns for investors, reduce volatility, and so far – as we’re approaching the fifth anniversary of the fund – we’ve been able to achieve decent results,” Casarotti said.

This year’s winner – Schroders – has been nominated in four other categories for 2012, taking the top spot in three. For more on Fund Manager of the Year winners and categories, turn to page 19.

MULTI-SECTOR FUNDS

Schroder Investment Management ASSET ALLOCATOR OF THE YEAR

Schroder Investment Management RISING STAR

NovaPort Capital LIFETIME ACHIEVEMENT

Barry Lambert YOUNG ACHIEVER OF THE YEAR

Finn Kelly BEST ADVERTISING CAMPAIGN

Challenger BEST MARKETING TEAM OF THE YEAR

AMP Capital

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Vol.26 No.17 | May 10, 2012 | $6.95 INC GST

The publication for the personal investment professional

www.moneymanagement.com.au

FOFA – A PYRRHIC VICTORY?: Page 16 | AGED CARE IN A CHANGING WORLD: Page 34

Advice heads flag end of the dealer group

By Chris Kennedy ONCE the dust has settled on the current round of industry reforms, the dealer group as we know it may cease to exist, according to senior financial advice figures.

Advice providers will need to be vertically integrated in order to survive, while the boutique model may also flourish in the new post-Future of Financial Advice (FOFA) environment, according to head of practice-based financial planning at ANZ Wealth Neil Younger and outgoing Professional Investment Services general manager Grahame Evans.

“The question whether there will be dealer groups as we know them in the future is a big question,” Evans said at a Financial Services Council and Association of Financial Advisers event in Sydney last week.

He said that with the liability placed on dealer groups, if someone was looking to

Neil Younger start a business and did a cost/benefit analysis, they would not be looking to start a dealer group.

“A lot of the dealer groups, both small

and large, that have not aligned or had the opportunity to be vertically integrated, are really going to struggle. They’ll have to rethink those models and find different ways to generate revenue to provide services, or they’ll be swallowed up by major industry players,” Evans said.

Younger said that current and prior business models used by dealer groups seemed to be very challenged in a postFOFA environment.

“There appears to be some advantage to operating a business model within a vertically integrated shop, notwithstanding that best interests still is prevalent and you’ve got to deal with anti-avoidance provisions in terms of the structures that are put in place,” Younger said.

He said there would emerge a very changed landscape within advice markets, partly because there was still a gap between what a client was prepared to pay for advice

and what it cost to deliver that advice. The situation would require business models to adjust to deal with that, Younger said. “[The boutique] model will flourish in the new environment of enhanced professionalism, or at least enhance its reputation. But I think if you’re in that middle territory and you’re not in a vertically integrated business, it’s a challenging place to be and you’re in an environment that probably won’t be sustainable once this legislation is acted out.”

Earlier at the event, in response to a question on vertical integration, Australian Securities and Investments Commission commissioner Peter Kell said while he could not provide a comprehensive answer on all the aspects of the issue now, it would be covered in ASIC’s best interests and conflicted remuneration consultation papers.

“We’re tracking with interest some of the current developments within the industry,” he said.

Own licence not always ASIC cracks down on false claims of ‘independence’ more expensive ALTHOUGH planners are often told it is cheaper to be the authorised representative of a major licensee, that is not necessarily the case, according to Pathway Licensee Services general manager Kate Humphries.

She said that although large dealers often told authorised representatives that being self-licensed was more expensive – and there were in fact additional costs involved with maintaining one’s own licence – these could be evened out by not having to pass revenue on to a licensee.

Pathway Licensee Services recently rebranded from Paragem Dealer services under new owners netwealth, and incoming general manager Humphries said the three main focuses of the business were: training in the use of XPlan Model Office, compliance and risk man-

agement, and professional development and leadership.

Humphries said she wanted the business to be at the forefront of helping the industry develop into a profession, and supported the Financial Planning Association’s code of professional practice.

“We’re also interested in stimulating conversation around industry structure, and whether some of the relationships that planners have with dealers are in the best interests of clients,” she said.

At the official relaunch of Pathway in Sydney last month, outgoing Senator Nick Sherry, who had responsibility for the financial services portfolio in the early stages of the current round of industry reforms, said the real solution to many of the problems around the Continued on page 7

By Tim Stewart THE Australian Securities and Investments Commission (ASIC) has rapped 21 financial services licensees across the knuckles for incorrectly marketing themselves as ‘independent’.

Following a recent surveillance project, the regulator identified 17 general insurance brokers, three financial planners, and one life broker that made claims about their ‘independence’ in breach of ASIC’s rules.

The licensees in question have all voluntarily complied with ASIC’s requests to remove or amend the references.

ASIC commissioner Peter Kell said the regulator would not tolerate misleading statements made by the gatekeepers of the financial services industry.

Peter Kell “ASIC’s first priority is to ensure people are receiving the information they need to make informed and confident financial decisions,” Kell said.

“This action puts the broad financial services industry

clearly on notice about ASIC’s expectations. Going forward, where we find incorrect information about independence we will be taking stronger action, including publicly naming the licensees involved,” Kell said.

Australian Financial Services Licensees are prohibited from using terms such as ‘independent’, ‘unbiased’ or ‘impartial’ if they receive commissions or volume-based payments, according to ASIC. The regulator conducted the survey of industry practices following a single complaint about the misuse of the word ‘independent’.

However, ASIC’s definition of ‘independent’ is somewhat at odds with the rest of the financial Continued on page 7

Editor

Reed Business Information Tower 2, 475 Victoria Avenue Chatswood NSW 2067 Mail: Locked Bag 2999 Chatswood Delivery Centre Chatswood NSW 2067 Tel: (02) 9422 2999 Fax: (02) 9422 2822 Publisher: Zeina Khodr Tel: (02) 9422 2198 zeina.khodr@reedbusiness.com.au Managing Editor: Mike Taylor Tel: (02) 9422 2712 mike.taylor@reedbusiness.com.au News Editor: Chris Kennedy Tel: (02) 9422 2819 chris.kennedy@reedbusiness.com.au Features Editor: Milana Pokrajac Tel: (02) 9422 2080 milana.pokrajac@reedbusiness.com.au Journalist: Tim Stewart Tel: (02) 9422 2210 Journalist: Andrew Tsanadis Tel: (02) 9422 2815 Journalist: Bela Moore Tel: (02) 9422 2897 Melbourne Correspondent: Benjamin Levy Tel: (03) 9527 7392 ADVERTISING Senior Account Manager: Suma Donnelly Tel: (02) 9422 8796 Mob: 0416 815 429 suma.donnelly@reedbusiness.com.au Senior Account Manager: Jimmy Gupta Tel: (02) 9422 2239 Mob: 0421 422 722 jimmy.gupta@reedbusiness.com.au Adelaide Agent: Sue Hoffman Tel: (08) 8379 9522 Fax: (08) 8379 9735 Queensland Agent: Peter Scruby Tel: (07) 3391 6633 Fax: (07) 3891 5602 PRODUCTION Graphic Designer/Production Co-ordinator – Print: Andrew Lim Tel: (02) 9422 2816 andrew.lim@reedbusiness.com.au Sub-Editor: Marija Fletcher Sub-Editor: Daniel Winter Graphic Designer: Ben Young Subscription enquiries: 1300 360 126 Money Management is printed by Geon – Sydney, NSW. Published every week, recommended retail price $6.95 Subscription rates: 1 year A$280 incl GST. Overseas prices apply.

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An industry for all seasons

T

his edition of Money Management celebrates the publication’s 25th Anniversary – and if 2012 has thus far proved to be a challenging year, then it is worth noting that Money Management was born at the same time as the tumultuous events which shook the markets in 1987.

Indeed, it is worth reflecting that when Money Management celebrated its 20th Anniversary in 2007, the markets were just beginning to experience the US sub-prime meltdown – the beginning of what we now call the global financial crisis.

Despite this, the results of this year’s Money Management/Lonsec Fund Manager of the Year awards are proof that Australia continues to have a vibrant and viable funds management sector, and one that is capable of withstanding not only adverse global events such as the GFC but also the uncertainties which have been part and parcel of minority government in Australia.

It is now only a few short days since the Federal Treasurer, Wayne Swan, brought down his latest Budget. Indeed tonight (May 10), the night of the Fund Manager of the Year Awards, Opposition leader Tony Abbott will be delivering his Budget reply speech.

The Budget contained little seriously good

6 — Money Management May 10, 2012 www.moneymanagement.com.au

“

Money Management has come a long way in a quarter of a century. It has metamorphosed from a monthly publication to become a multi-faceted media entity.

”

news for the Australian financial services industry. The tinkering with superannuation can only serve to undermine confidence in the minds of many investors, while the impact of the Future of Financial Advice (FOFA) changes and those contained in the various tranches of the Stronger Super legislation will create their own dynamic.

However, when these changes are weighed against the quarter of century of progress which has occurred since Money Management was launched in 1987, they amount to very little. The seeming inevitability of a change of Government at the next Federal Election probably puts them into context.

Depending upon how you choose to read the various underlying statements, the 201213 Budget has enabled the Government to be seen to be delivering on its promise to return the Budget to surplus in the upcoming financial year. It remains to be seen whether the cost of that exercise justifies the ultimate outcome.

For its part, Money Management wishes to congratulate Schroders and all the other winners and finalists of its 25th Fund Manager of the Year Awards. Perhaps more importantly, we wish to thank all our readers for their continuing support of this publication.

Money Management has come a long way in a quarter of a century. It has metamorphosed from a monthly publication to become a multi-faceted media entity encompassing the internet via www.moneymanagement.com.au and the digital age via our Money Management iApp. As well, avid readers will know we are accessible via social media such as Twitter and LinkedIn. But irrespective of how things might have changed, Money Management aims to stick to its original task – to report on and inform the Australian financial services industry.

– By Mike Taylor

News

Westpac’s 25 per cent profit decline

By Mike Taylor W E S T PAC h a s s t r u g g l e d a m i d t h e current market volatility to post a 25 per cent decrease in net first-half profit to $2.967 billion.

In an announcement released to the Australian Securities Exchange (ASX), the big banking group acknowledged a 31 per cent increase in impairment charges.

However the organisation preferred to point to its cash earnings, which increased by 1 per cent to $3.195 million.

The company declared a record fully franked interim dividend of 82 cents a share.

Commenting on the result, Westpac chief executive Gail Kelly described it as "sound in a challenging environment".

Sh e s a i d i t re f l e c t e d c o n t i n u e d

progress in building a stronger and more productive organisation, and noted that the highlight had been the strong performance of Westpac's two largest divisions – Westpac Retail and Business Banking and Westpac Institutional bank.

Kelly said St George Banking Group's earnings had been lower, but noted that t h e f o u n d a t i o n s w e re i n p l a c e f o r improved performance, while Bank of Melbourne was showing good progress.

BT Financial Group had "solid operating momentum offset by the impact of softer asset markets and a weaker equities contribution".

Drilling down on the results, Kelly noted that penetration of insurance and wealth cross-sell had increased and was up 70 basis points to 17.7 per cent across the group.

De s c r i b i n g t h e o u t l o o k f o r t h e remainder of the financial year, Kelly said the global recover y remained fragile but that Australia's economic fundamentals remained sound, with low unemployment, controlled inflation and low levels of government debt.

However in similar fashion to ANZ chief Mike Smith, she pointed to struct u ra l c h a n g e h a v i n g i m p a c t e d t h e financial services industry, and the c o n s e q u e n t n e e d f o r a s t ra t e g i c response.

Ke l l y s a i d t h a t f ro m a g r ow t h perspective, Westpac was directing effort and investment to those sectors expected to generate higher growth and return outcomes.

Sh e s a i d t h e s e i n c l u d e d we a l t h , deposits, natural resources, agriculture and trade finance.

Gail Kelly

Own licence not always more expensive Continued from page 7

perception of advice and conflicted remuneration was the complete separation of product from advice.

However it was now too late to go down that path, he added.

Humphries also said that product and advice aren’t necessarily aligned, and should be two separate things.

“Product is merely the

vehicle that is used after the advice – it shouldn’t be the other way around,” she said.

The industry needed to consider where the client sat in terms of the structure in the relationship between the dealer and authorised representatives. Product providers seem to direct too much marketing towards advisers rather than to the end consumer, she added.

– By Chris Kennedy

ASIC cracks down on false claims of ‘independence’ Continued from page 7 services industry, according to Association of Financial Advisers chief executive Richard Klipin.

For most financial planners, the concept of independence is linked to the non-institutional ownership of dealer groups, he said.

“Debates within the industry about independent versus institutional is in a sense a related debate, but a separate debate,” Klipin said.

“There is clarity under the Act in terms of the definition of ‘independence’, which may be at odds with the industry debate about who’s independent and who’s not,” Klipin said.

But he stressed that the back and forth between different sections of the financial services industry does not detract from the

fact there is a legal definition of ‘independent’.

“It’s incumbent upon advisers and licensees to be aware of the complexity of the debate, but also be aware of their obligations under the law,” Klipin said.

Financial Planning Association general manager for policy and government relations, Dante De Gori, said the definition of an independent from the legislative perspective versus the practical industry perspective is “completely different”.

The real test of independence would be “what does the consumer think?”, he said.

“Obviously, you have to have correct representation to the consumer as per the law, but consumers will have their own definition of independence – and ownership, I have no doubt, will be part of that,” said De Gori. www.moneymanagement.com.au May 10, 2012 Money Management — 7

News

Government warned on super tax fallout

By Mike Taylor

LEADING up to the Federal Budget, both the industry and the Federal Opposition have continued to warn the Government against further tinkering with superannuation.

The warnings have come as the Government has all but confirmed the Budget measure to increase the 15 per cent tax on earnings inside super for higher income earners, with the only area of doubt being at what point the higher tax will cut in.

Specialist global bond manager Pimco

has emerged as the latest critic of the Government, saying any move to alter the tax treatment of fund earnings inside super would have a negative impact on the retirement savings of all Australians by further distorting asset allocations.

Pointing specifically to a likely Budget move to increase the 15 per cent tax on earnings inside super for higher income earners, Pimco said this would have the side effect of making equities more attractive than lower risk income products such as bonds or term deposits.

Pimco’s head of global wealth management Peter Dorrian said that with an ageing population and a compulsory superannuation system already biased towards Australian equities, increasing the tax on fund earnings would likely encourage members to try to reduce their overall tax imposition by increasing exposure to high yielding, fullyfranked shares.

The Opposition spokesman on financial services, Senator Mathias Cormann, warned the Government against seeking to tax superannuation savers as part of a broader

Government tax grab and therefore undermining the objective of self-funded retirement.

“All these additional Labor Party taxes on superannuation are completely counterproductive,” he said. “They make it harder for people to achieve self-funded retirement to help reduce the burden on the public purse.”

The criticisms of Pimco and the Opposition follow on from broader superannuation warnings earlier this month that continued tinkering with superannuation would only serve to undermine consumer confidence in superannuation.

Industry failing to educate retirees: PwC

By Tim Stewart

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8 — Money Management May 10, 2012 www.moneymanagement.com.au

THE wealth management industry is failing to properly educate retirees about longevity risk and investment risk, according to a survey conducted by PricewaterhouseCoopers (PwC).

The survey – based on interviews with four major wealth management companies, three financial planning organisations and two large superannuation funds – found that advice about retirement planning was often oversimplified and reliant on averages rather than realistic examples.

PwC partner Catherine Vance said financial planners often make the mistake of directing their clients to average life expectancy tables.

“Advisers might focus on picking up a life expectancy table and say ‘at age 65 it’s 84 for men and 87 for women’,” she said.

“For starters, they miss the best estimate mortality improvements, which would push it out to 86 [for men] and 90 [for women].

But it’s also an average: 50 per cent live longer than that. One in five would actually be 94 [for men] and 97 [for women],” Vance said.

Retirees are also poorly served by the industry when it comes to investment risk, Vance said.

She singled out investment calculators that provide consumers with an average rate of return, yet fail to take into account the variability of returns.

“Two people could start with a $500,000 account at age 65. They could have exactly the same average return over 20 years, but because one gets off to a poor start and one gets off to a good start, one could end up with $300,000 at the end of 20 years and the other person could have nothing,” Vance said.

News

Rule changes to prevent moves to inhouse platforms

By Chris Kennedy

CHANGES to the rules governing investor directed portfolio services (IDPS) will make it harder for dealer groups to bring platform services inhouse, according to Minter Ellison partner Chris Brown.

It has been mooted that groups looking to offset a loss of revenue resulting from a ban on volume rebates under Future of Financial Advice changes could look to bring such services inhouse, essentially becoming a product issuer.

Platforms adopting pay-for-use fee model

By Milana Pokrajac PLATFORM providers appear to be embracing a pay-for-use fee model in which they provide a core offering and allow clients to add on new features for which they pay as they go.

The new trend has emerged as the demand for low-cost solutions increases and the pressure to cut costs mounts, and is evident in a number of new product launches from platforms such as Asgard, AMP and netwealth. netwealth has announced the launch of Super Accelerator, which will operate on a pay-for-use, capped fee model. netwealth executive director Matt Heine said the new super product would provide fee and investment flexibility that only charges investors for the service stream they use.

Its ‘core’ menu will start at 35 basis points and cap at $250,000, while its ‘plus’ menu will also have a $1 million fee cap, allowing up to six accounts to be aggregated, Heine said.

Asgard’s Infinity product has a similar offering. At its core is Advance multimanager options, plus cash and term deposits, with additional features available.

Launched last October, the offering has so far attracted close to $1 billion.

“Advisers and their clients have been asking for real alternatives to industry funds and bank-owned products,” Heine said. “Clients now have real choice when it comes to what they want to invest into and the type of insurances they hold.”

But a “long overdue” re-evaluation of RG148, the regulatory guide governing platforms, will make this far trickier, according to Brown.

The Australian Securities and Investments Commission (ASIC) will require IDPS operators to comply with the same net tangible asset (NTA) requirements as managed investment scheme operators, which is the greater of $150,000, 5 per cent of assets under administration, or 10 per cent of gross revenue, he said.

For a dealer group with $1 billion on

platform this would amount to $5 million, which could be achievable but is made more onerous by the liquidity requirement of 50 per cent cash and 50 per cent liquid assets, he said.

That will make it more difficult for smaller, less sophisticated operators to comply, Brown said.

“With a rash of vertical integration, ASIC will look to make it more difficult for dealer groups to obtain this kind of licensing, and this is one way they’ll do it,” he said.

ASIC will also require all IDPS operators

to be public companies, and although there is currently a carve-out for badged operators providing white label services, that may change, he said.

And although the scrutiny on dealer groups is currently similar to that placed on public companies, groups would also then have to comply with Chapter 2related party transaction provisions, meaning “the ability to interact with the company as if it is your own is reduced, and deals now have to be at arm’s length,” according to Brown.

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www.moneymanagement.com.au May 10, 2012 Money Management — 9

News

Govt accused of reincarnating super surcharge

By Mike Taylor THE Federal Government has been warned that any move in the Budget to increase the superannuation contributions tax on high income earners will simply represent a reincarnation of the superannuation surcharge.

The Small Independent Superannuation Funds Association (SISFA) has made the accusation at the same time as questioning the intentions of the Government in imposing a wealth tax on high income earners who make superannuation contributions.

Commenting on the move, SISFA chair Michael Lorimer said that if the move proceeded in the Budget, it would “clearly

(be) a disaster and really is just the surcharge reincarnated”.

“Although it is proposed to only apply to high income earners, the reality is that the costs of administering such a system will be borne by all super fund members, regardless of their balance or income,” he said.

Lorimer claimed the damage done to the perception of superannuation by such a measure would be much higher than the tax actually collected.

“Will it only be a matter of time before people earning less than $300,000 a year will

Be your own success story

also have a higher contributions tax?” he asked.

“This Government and future governments have to get over seeing superannuation and voluntary contributions as some cash cow that can be raided when other revenue channels are reduced. People have to believe that super is worthwhile and have confidence in the system,” Lorimer said.

“And, on top of new rules, we are still awaiting a final announcement on the structure for over-50s’ contributions from 1 July 2012,” he said.

Fair Work Australia should select default funds: ISN

By Tim Stewart

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10 — Money Management May 10, 2012 www.moneymanagement.com.au

THE Industry Super Network (ISN) has called for Fair Work Australia (FWA) to have a hand in the selection of default super funds in modern awards.

In a submission to the Productivity Commission, the ISN proposed FWA should select default funds as part of its modern awards review every four years.

Members of FWA should be joined by “a panel of recognised superannuation experts to assist in such deliberations”, said the ISN. “Each application from an eligible fund should be considered in the context of the relevant award and the industry it serves,” said the ISN. “FWA should consider the views of the representatives of those who pay (employers) and those who receive superannuation payments (employees) and the ability of the fund to provide relevant members and employer services to potential members covered by the relevant award, including the appropriateness of the insurance offering for that demographic,” said the ISN. In addition to the proposed role of the FWA, the ISN argued the main selection criteria for default funds should be longterm net returns.

The ISN also recommended that a typical modern award should have a minimum of two and a maximum of six default funds, since doing so “will ensure that employers are not overloaded by choice and that employees are protected by having more than one option to rely on”.

Funds that ‘flip’ their members into higher priced MySuper products should not be eligible to be named as a default fund in a modern award, added the ISN.

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News

FOFA lobbying highlights need for united front

By Chris Kennedy ONE of the key outcomes to be derived from the Future of Financial Advice (FOFA) lobbying effort and resultant outcomes is the need for the financial advice industry to start speaking with a single voice on key issues.

That is the opinion of a panel of experts assembled to discuss the future of the industry postFOFA, with AMP’s director of political policy Al Kinloch claiming the industry could have “won” on opt-in if it had maintained a united stance.

If it had got to 10pm on 22 March, the night FOFA was voted on in the House of Representatives, and there had been no deal done on opt-in, the legislation

Richard Klipin would have been referred to the next session of Parliament in May, he said.

The numbers in the Senate

would have been more favourable at that point, with Labor numbers dwindling further since then, he said.

“In May, if you think of the numbers, we just need one person to switch over, not two – and we had [independent MP] Rob Oakeshott,” Kinloch said.

Referencing a compromise struck between the Financial Planning Association, the Industry Super Network and Financial Services Minister Bill Shorten agreeing to include opt-in but with a carve-out for planners who are bound by a suitable professional code of conduct, Kinloch said “all we had to do was close ranks for another three or four hours and we would have got the result on that last argument. So a united

front is better for the consumer and the adviser”.

Association of Financial Advisers chief executive Richard Klipin highlighted as a key issue the costs and inefficiencies of having multiple bodies each campaigning separately.

“Is it smarter to have everyone doing their own thing or is it smarter to create a board as the accountants do?” he asked. “A lot of energy and resources have been expended; there must be a smarter, more effective way to do it.”

He said margins across the board at every part of the value chain were heading south, and the ability to fund extra costs such as implementing and policing a code of conduct would cause serious Budget-setting issues.

There are enough interests aligned within the profession to justify a single body representing all parts of the advice value chain, Klipin said.

Head of practice-based financial planning at ANZ Wealth Neil Younger said he had been disappointed over the years with the reluctance of many planners to be part of a professional association, but said one reason for this was that planners were frustrated with the lack of consistency from industry bodies and the resulting lack of effectiveness in lobbying government.

“There is work to be done in getting more singular in some of our policy settings and the voice we have with the regulators,” he said.

Shadow shop response underway as ASIC outlines failures THE Financial Planning Association’s (FPA) shadow shopper workshops got underway in Brisbane yesterday amid calls from planners for the Australian Securities and Investments Commission (ASIC) to provide clarity, while at the same time ASIC commissioner Peter Kell spoke on the issue in Sydney.

Kell told the audience at a Financial Services Council (FSC) and Association of Financial Advisers (AFA) breakfast that the two out of 64 plans assessed that were rated ‘good’ had met client needs and satisfied the law, featuring product recommendations that followed rather than directed the strategies.

The 37 plans deemed “adequate” fell short in one or more areas, and missed an opportunity to provide value to the client.

The 25 plans assessed as “poor” did not meet their objectives, and in many cases would actually be detrimental to the client – for example, by switching them to a product with higher fees but no tangible benefits, he said.

Responding to a question from the audi-

ence pointing out that more expensive products often have other benefits such as improved insurance and investment options, Kell said some clients were switched to a higher fee product with no additional benefit, and in some cases actually had fewer options than they had in the cheaper product.

One plan even had the previous client’s details on the statement of advice (SoA), he added. Other poor examples included glaring omissions – for example, not addressing the fact the client’s retirement funds would run out four years into retirement. “There were too many examples where the limitations weren’t explored,” Kell said.

While ASIC would not be undergoing a formal review with licensees involved in the shadow shop, it would be providing some feedback where there was a problem with poor plans, he said.

Participants in the shadow shop were all consumers who sought out and paid for their own advice, while an expert advisory panel assessed the delivery of results, he said.

Govt capricious on super tax

Peter Kell Around 150 FPA planner members attended the opening shadow shop workshop in Brisbane, according to the FPA, and heard from a panel comprising representatives from ASIC, the Financial Ombudsman

Service, the FPA and a Certified Financial Planner professional.

The workshop featured a presentation on the shadow shop methodology and a discussion of a hypothetical case study containing elements of good, adequate and poor advice.

Participants requested further information on what needs to be included in a SoA, how to balance detail with brevity in a SoA, how to best assess and disclose scope of advice, and how to communicate product replacement recommendations in a SoA, according to the FPA. Members indicated improved communication and education from ASIC to facilitate good advice was needed.

“We know that it’s not easy to determine objective measures for ‘quality advice’, but the FPA’s key message is that the most effective strategy and the answer to the issues highlighted in the ASIC shadow shopper report is to work to the FPA Code of Professional Practice,” said FPA chief professional officer and panel member Deen Sanders.

Kell outlines code of conduct requirements

By Mike Taylor

By Chris Kennedy THE Federal Government has been accused of taking a “backward and capricious step” by altering the tax settings on superannuation in the forthcoming Federal Budget.

Financial Services Council (FSC) chief executive John Brogden told a joint FSC/Association of Financial Advisers Forum that the Government’s forecast Budget approach was more about meeting political Budget objectives than improving superannuation.

John Brogden Brogden said consultation with the industry “has been half-hearted at best”.

The FSC chief executive said earlier that his organisation remained opposed to the Future of Financial Advice bills in their current form, but particularly with respect to best interests and scaled advice.

He said in those circumstances the FSC would continue to lobby both the current Government and any future government for change.

12 — Money Management May 10, 2012 www.moneymanagement.com.au

COMPLIANT industry codes of conduct deemed to obviate the need to comply with opt-in requirements will have to meet a hefty set of criteria, according to the Australian Securities and Investment Commission (ASIC) commissioner Peter Kell.

Speaking at a Financial Services Council (FSC) and Association of Financial Advisors (AFA) post-FOFA breakfast, Kell said he expected multiple codes to be submitted and it was not ASIC’s place to take a view on who should be able to submit a code, although he expected submitters to be representative bodies of the financial advice industry.

Codes would need to comply

with the Corporations Act, would need to be reviewed regularly, and provide guidelines to members over and above what is contained in the legislation. They would need to be free-standing documents written in plain English and need to be enforceable on members, Kell said.

They would need to be independently administered with ongoing review, and member compliance with the codes to be monitored and enforced with appropriate sanctions, he said.

“We expect the code to address issues not contained within the legislation, and clearly explain to members what needs to be done to comply with legislation,” he said.

“In other words – they must be

taken seriously.”

Kell expected the codes would take time to develop and ASIC would take weeks or months to assess each one.

Kell said it was unlikely that industry codes of conduct would be required to incorporate a ban on asset-based fees on non-geared investments.

ASIC did not wish to see codes put forward without adequate input from stakeholders. Codes should address other aspects of FOFA besides opt-in, he added. To obviate the need for opt-in, codes should require an obligation to clients that would achieve the same results as opt-in, including that clients are not paying for advice they do not receive, he said.

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As ASIC moves to translate the FOFA Acts into a new regulatory environment, there appears every chance that opt-in obligations may need to become an integral part of industry codes of conduct.

O

nce the Government’s Future of Financial Advice (FOFA) bills pass through the Senate, it will be the Australian Securities and Investments Commission (ASIC) which gives them their regulatory shape and texture.

As is always the case when governments develop legislation and negotiate it through the Parliament, anything that is not expressly stated in the bills or the e x p l a n a t o r y m e m o ra n d u m b e c o m e s subject to the interpretation of the regulator, ASIC. Thus it was last week informative to hear ASIC Commissioner Peter Kell explain a few things to a forum jointly convened by the Association of Financial Advisers (AFA) and the Financial Services Council (FSC).

What Kell made clear was that while, consistent with the Government’s obligations, financial advisers adhering to an approved code of conduct would receive class-order relief from the FOFA opt-in provisions, the codes of conduct themselves would need to address the issue of opt-in.

In other words, what was being touted as an important concession with respect to opt-in wrangled in the final days of the FOFA negotiations, might ultimately prove to be largely meaningless if ASIC imposes commensurate requirements for complying codes of conduct.

Of course, Kell made clear that there was a long way to go before ASIC could ultimately finalise the regulatory environment flowing from FOFA in circumstances where, at the time of addressing the FSC/AFA forum, the legislation had still not passed through the Senate.

16 — Money Management May 10, 2012 www.moneymanagement.com.au

He might also have added, as did the AFA policy director Phil Gallagher, that implications for the regulatory environment would also be flowing from the Government’s Stronger Super legislation, which has not yet moved beyond tranche stage.

Indeed, Gallagher made an important point to the forum that, depending on the nature of any code of conduct opt-in requirements, many financial planners might find it more expedient to work within the two-year opt-in regime specifically outlined in the legislation.

Indeed, Kell’s address to the forum made clear that a great deal of uncertainty will continue to surround the whole question of opt-in and codes of conduct for some weeks to come, not least around whether it is only industry organisations which can deliver such codes.

Kell said that as far as he could tell, there was nothing to preclude another type of body seeking to have such codes of conduct endorsed, and it then became a matter of how those codes, which would need to have an element of uniformity, were policed.

But for OnePath head of financial plann i n g Ne i l Yo u n g e r, t h e o u t c o m e w i t h respect to opt-in was last week looking like a disappointment.

“To now, as an industry, be in a position where we fought hard against opt-in, to find ourselves in a position where the code of conduct will essentially deliver the same result, is problematic for us all,” he told the forum.

Further, Younger argued that the whole process of turning the vague legislative outline into regulatory substance simply added more time, cost and uncertainty to the exercise.

“The time to then see a code in place, and the work the industry will need to go through to work out if it’s in the best interests of advisers in our respective networks to be part of that code, introduces further delay and uncertainty that’s unwelcomed by us all,” he said, AMP Limited’s Al Kinloch was particularly vocal in his condemnation of what now appeared to be the outcome of all the industry’s efforts with respect to opt-in.

In a n o t - s o - v a g u e re f e re n c e t o t h e perceived deal between the Financial Planning Association (FPA) and the Industry Super Network, Kinloch suggested that it had represented the undoing of some hardwon gains by the major planning organisations, which were capable of extracting a more acceptable outcome with respect to opt-in.

“We could have won on opt-in, we could have ticked every single box, we were that close to winning opt-in,” he told the forum.

The bottom line for Kinloch and AFA chief executive Richard Klipin is that some important lessons have been learned from the FOFA exercise, not least the need for the financial services industry to have the capacity to speak with one voice.

Klipin believes much can be learned from the manner in which the industry superannuation funds have continually presented a united front, while Kinloch spoke of a single body representing the i n t e re s t s o f t h e i n d u s t r y t o b o t h t h e Government and the bureaucracy.

In the meantime, all sides are waiting to see what the new regulatory environment ultimately delivers.

– By Mike Taylor

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MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

FUND MANAGER OF THE YEAR 2012 Winner Australian Equities (Broad Cap) Australian Equities (Small Cap) Australian Equities (Long Short) Regional/Emerging Market Equities Global Equities (Broad Cap) Global Equities (Long Short) Fixed Interest (Diversified and Global) Asset Allocator of the Year Property Securities (Australia)

18 — Money Management May 10, 2012 www.moneymanagement.com.au

19 20 20 21 22 22 23 23 24 24

Property Securities (Global) Ethical/SRI Funds Alternative Investments Multi-Sector Funds Rising Star Lifetime Achievement Young Achiever of the Year Best Advertising Campaign Marketing Team of the Year BDM of the Year

25 26 26 27 27 28 29 30 30 32

Fund Manager of the Year 2012

It’s all about the people The winning team talks about its culture and what it takes to become part of Schroder.

Milana Pokrajac reports.

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012 WINNER

Schroder Investment Management FINALISTS

BT Investment Management Magellan Financial Group Australia THE financial services industry often relies on its people more heavily than other sectors. But when it comes to funds management, it is all about the people.

This is why Schroder Investment Management chief executive Greg Cooper attributed the continued success of the company to its team and the culture.

Schroders was named Money Management/Lonsec Fund Manager of the Year for the fourth consecutive time, also taking the top spot in three out of four other categories for which it was nominated this year.

“There are plenty of competitors out there in the market place, so if you’re going to outperform – it’s about how you can differentiate yourself from the others,” Cooper said.

Cooper spent more than 20 years in financial services, having started his investment career in 1992. He worked in the United Kingdom, Hong Kong and Singapore before joining Schroders in 2000.

He also sits on the board of the Financial Services Council (FSC) as deputy chairman and co-chairs the council’s investment board committee, among his other duties at the FSC. Apart from Cooper, there is a team of distinguished executives and their

Left to right: Simon Doyle, Greg Cooper and Martin Conlon. respective teams who sit behind the scenes of Schroders’ success, such as head of Australian equities Martin Conlon and head of fixed income and multi-asset Simon Doyle.

Conlon is involved in the portfolio construction process for Australian equity mandates, while also retaining analytical responsibility for several other sectors. He began his career in 1989 as an accountant, but joined Schroders in 1994.

Doyle spent 15 years at AMP Henderson before moving to Schroders in 2003.

He now has direct portfolio management responsibility for the fixed income, cash, balanced and real return funds, while also sitting on the Schroders Global Asset Allocation Committee.

“The team is critically important,” Doyle said. “We’ve been very fortunate at Schroders over the last four of five years to have made pretty good asset allocation decisions, but also to have a capable group of investors sitting behind their desks and making the stock selection decisions.”

But when it comes to hiring new talent, it is not just the formal qualifications that matter. Cooper said the focus is mostly on

those candidates with the smarts.

“What we look for are people who are inquisitive, so people who want to question the status quo,” he said.

For Cooper, being prepared to have a “non-consensus view” is one of the characteristics which would make a good analyst or a good portfolio manager over time.

“If your view is just the consensus, then while you may be right, you’ll be right along with everyone else,” Cooper said.

“Where you stand out is when you’re right and the rest of the market is wrong, and that requires an ability and process to think outside of the square.”

While Schroders took their Fund Manager of the Year trophy home for the fourth consecutive time this year, two other companies – very different from one another – highly distinguished themselves in the overall category.

Runner-up BT Investment Management (BTIM) is particularly proud of not getting distracted by the short-term noise, having stayed true to their convictions.

“I think during the course of the year it is very easy to potentially lose your way,”

said BTIM chief executive and managing director, Emilio Gonzalez. “We were firm in terms of what we believed were the right investment opportunities and we’ve stuck by them; eventually they’ve come true.”

Gonzalez agrees the company’s culture is important.

“We have a multi-boutique model and our investment managers are independent in their thinking; we promote a culture of challenging one’s thoughts,” Gonzalez said.

Also making the cut on the shortlist was boutique Magellan Financial Group Australia, which specialises in international equities.

Casarotti said Magellan has two objectives: preserving the capital and generating a reasonable risk-adjusted return.

Standing next to giants Schroders and BTIM in the overall Fund Manager of the Year category presents a huge honour for Magellan, he added.

“It’s recognition that we are on the right track,” Casarotti said. “Ours is a more concentrated specialist-type role, as distinct from both BT and Schroders, who arguably are experts in many classes.”

Finding the Fund Manager of the Year winners for 2012 THE process Lonsec implemented to select the winners for each award category is consistent with last year’s process and consisted of three primary components.

Firstly, as an initial screen, fund managers needed to be rated by Lonsec in their category. Lonsec’s managed funds research process is qualitatively skewed.

Lonsec believes that managing money is a combination of art and science, and that there are a number of critical ingredients that combine to produce a quality investment product. Lonsec’s assessment of people and the investment process they employ has the greatest impact on its rating process.

From this screened universe, Lonsec utilised two equally weighted components to select the Fund Manager of the

Year winners in each category.

The first component was the one-year excess return for representative funds for calendar year 2011. Since the majority of retail flows are invested in wholesale trusts via platforms, wholesale trusts were used as the vehicles for performance calculation for managers.

The second component was a qualitative analyst ‘momentum’ score which the Lonsec research team determined for fund managers in each category. Factors that were considered in this momentum score included process enhancements, team stability and depth, management of funds under management (FUM) capacity and risk management.

The highest scoring fund manager, from the aggregate

of these two equally weighted components, was declared the winner in each category.

In summary, managers who have performed well against the benchmark within their category and have strong positive qualitative momentum, as assessed by Lonsec, are finalists for these awards.

In regards to the overall Fund Manager of the Year award and the Rising Star award, Lonsec used a voting process involving the Lonsec research team.

Firstly, nominations were made for managers. Secondly, nominated managers were then ranked by senior members of the Lonsec research team. The highest ranking manager was declared the winner in each category.

www.moneymanagement.com.au May 10, 2012 Money Management — 19

Fund Manager of the Year 2012

Overcoming the hurdles INVESTORS Mutual has fought a tremendous fight-back to be named as winner of the Australian equities broad cap category this year.

The absorbing of Cannae Capital partners in 2010 brought an influx of new personnel into the company, enabling it to overcome tough times in 2008-2009 when it suffered from poor performance and staff turnover, according to Lonsec.

The appointment of former Cannae Capital managing director Hugh Giddy as IML head of research has added extra support for the fund.

Absorbing Cannae Capital has been a major boost for the fund, refining its investment processes and creating a wellresourced investment team. The Australian Share Fund now has 11 investment analysts.

The usual staff ownership, plus the institutional backing of Treasury Group, has also given IML the benefits of a boutique with significant resources behind it.

Portfolio manager Anton Tagliaferro emphasised IML’s careful investment as an important factor in the fund’s win.

“We’ve always been a low-risk manager, and [over] the last two years we’ve invested in good quality stocks that represent value,” Tagliaferro said.

IML has searched for companies with

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

AUSTRALIAN EQUITIES (BROAD CAP) Winner:

Investors Mutual Australian Share Fund Finalists:

Fidelity Australian Equities Fund Schroder Australian Equity Fund

Anton Tagliaferro recurring earnings, good management, and companies that have continued to perform despite the past few years. They also look for companies with the ability to deliver dividends throughout the next year.

That careful analysis has led to returns of 13.03 per cent in the three years leading up to March 2012.

Cyclical companies need to be avoided, Tagliaferro says.

“Companies that can grow their earnings independently of the economy will continue to do well,” he said.

Investing in cyclical companies often comes down to timing, and making sure that they are at the bottom of the economic trough, he added.

Former winner Fidelity was named as a finalist thanks to its strong and committed 12 per cent per year returns, according to portfolio manager Paul Taylor.

The three portfolio managers and eight analysts are a key advantage over its rivals,

Taylor says.

The Fidelity Australian Equities fund has a rigorous, institutionalised process, Taylor said.

“The more people that we talk to, the better we do. We’re trying to outwork our competitors,” he said.

Fidelity also has analysts throughout the world, to deepen its breadth of research and knowledge. Competitors, suppliers, and distributors are all within Fidelity’s sights.

Global research is relevant even for domestic companies, Taylor said.

Having global research access to companies can mitigate the potentially biased stockbroker research widely available to investors in Australia, Taylor said.

“There’s a lot of information out there, but you have to go out there and source that information, and for a smaller domestic Australian company that’s very difficult,” he said.

The stable investment team at Schroder Australian Equity Fund led to it being named a runner up this year.

“That has certainly paid dividends in an environment which over recent years has been pretty challenging,” Schroder’s head of Australian Equities Martin Conlon said.

– By Benjamin Levy

Boutique sets the bar high FIRST-TIME winner NovaPort Capital can thank its benchmark-unaware investment approach and concentrated portfolio for being chosen for the award this year.

NovaPort looks for just two criteria before investing in a company, but they are demanding.

“We want to see 50 per cent upside, and we want to see it within three years time, and we want to see higher quality than the average company,” said coprincipal Sinclair Currie.

Novaport only has 30 to 40 stocks in its Wholesale Smaller Companies Fund, which is concentrated compared to their competitors, Currie said.

Small cap managers need to avoid simply matching the index, he said.

“The small caps index is not a great representation of value or something you want to emulate – what you are looking for is trying to pick the future large caps, or the best quality businesses,” he said.

Rather than buying into a stock and then holding on to it, NovaPort sets out a target price for the stock before it makes an initial investment. Once the stock reaches that price target or exceeds it, it sells the stock and buys into another up-and-coming company.

Lonsec picked out the deep investment experience of co-principals Currie and Alex Milton, and a singular focus on small company management, as reasons for NovaPort’s nomination.

“Pleasingly, in a weak year for small cap market performance, the fund has delivered strong performance outcomes relative to benchmark in 2011,” the researcher said.

NovaPort is also more attractively positioned than many of its peers when considering capacity, Lonsec stated.

Hyperion head of Australian equities Joel Gray nom-

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

AUSTRALIAN EQUITIES (SMALL CAP) Winner:

NovaPort Wholesale Smaller Companies Fund Finalists:

Hyperion Small Companies Growth Fund Investors Mutual Future Leaders Fund inated the search for strong value as the reason the Small Companies Growth Fund was chosen as a finalist in the small cap category this year.

“When people are watching what they spend, both at the customer level where they’re spending less, and at the business level, where they’re watching their expenditure, then companies with strong value propositions do win market share,” Gray said.

Hyperion is uncompromising on its definition of quality, Gray said.

“We just disregard the rest, so we run with very concentrated portfolios,” he said.

That high quality should create a 20 per cent return over the next five years, Gray added.

Hyperion adopts a five-year view of the market, and plays to that short-term cycle.

The fund is prepared to look through market concerns, making its investment horizons a lot longer

20 — Money Management May 10, 2012 www.moneymanagement.com.au

Sinclair Currie term than the overall market, Gray said.

Investing only in high quality stocks is why Investors Mutual was chosen as runner-up this year, according to senior portfolio manager for the Future Leaders fund Simon Conn.

Investors Mutual is founded on the belief that good quality industrial companies will outperform over a three-to-five year period, Conn said.

“We’ve come to a pretty volatile market, and these stocks are steaming out at the moment and presenting good value,” he said.

Resilient businesses with strong brands can continue to grow market share and to attain pricing power, Conn said.

– By Benjamin Levy

Long shorting experience wins LONG and superior experience in shorting stocks has led to fund manager Regal Australia being named as winner of the Australian Equities Long Short category in this year’s Money Management/Lonsec Fund Manager of the Year awards.

Part of Regal’s edge over its rivals is its long experience in shorting, according to chief investment officer Philip King the fund is allowed to short up to a maximum of 50 per cent of its assets, consequently reinvesting the proceeds into long positions.

“We are able to extract alpha on the short side as well as on the long side,” King said.

It’s more difficult for a lot of investors to extract alpha from short stocks, but the fund’s expertise has allowed them to find value even through the volatility, he said.

Regal’s short plays mean they need a strong stock-picking ability.

“Unlike many funds, the ability to short stocks means that more of our risk is stock-picking as opposed to just relying on the market to go up,” King said.

Regal also takes macro factors into account when picking stocks. While King asserts that the fund doesn’t have a topdown approach, they also don’t pick stocks blindly.

Regal benchmarks against the ASX300,

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

AUSTRALIAN EQUITIES – (LONG SHORT) Winner:

Regal Australia Long Short Equity Fund Finalists:

Perpetual Wholesale SHARE-PLUS Fund Smallco Investment Fund with the top 20 companies making up the larger holdings in the company.

King also watches for changes that may cause the shares to be revalued, and watches the market for any mistakes it may make in investing.

“We don’t want to invest with consensus, we want to be a little bit contrarian,” he said.

Lonsec named King himself as a key reason for its award this year.

Philip King King has 17 years’ industry experience, with a strong heritage in hedge fund investing, Lonsec said.

He has also specialised in relative value and special situations, and held roles in sell-side research at Macquarie.

In contrast to Regal, finalist Perpetual uses their expertise to construct the long side of the portfolio first.

“From that process, it leads you to a universe of stocks that I guess are the starting point for the short portfolio,” said portfolio manager Paul Skamvougeras.

The long portfolio needs to be com-

prised of high quality and value stocks, while what is left over can be used as the starting point of their short portfolio.

Perpetual applies a management test, an interest cover test, a recurring earnings test, and a business quality test to screen out companies that are not appropriate for investment, Skamvougeras said.

The stocks that are accepted are further refined by Perpetual’s analysts, ranking them against their universe of stocks.

The portfolio manager will then make a final decision on what stocks to include in their portfolio.

Perpetual has managed to outperform as a manager across all time periods because of that strong process, Skamvougeras said.

Finalist Smallco Investment fund focuses on the $100 million to $500 million market capitalisation to find bargain value in the market, managing director Rob Hopkins said.

Larger companies are usually well researched and therefore properly priced, he said.

The fund’s researchers spend most of their time on fundamental research to choose the companies to invest in, Hopkins said.

– By Benjamin Levy

www.moneymanagement.com.au May 10, 2012 Money Management — 21

Fund Manager of the Year 2012

An international perspective A WEALTH of international experience has led to Aberdeen Asset Management’s Emerging Opportunities Fund receiving the highest accolade for the second consecutive year in the Money Management/Lonsec Fund Manager of the Year Awards in the Emerging and Regional Markets category.

Lonsec said the manager’s deep heritage in Asian equities investment and on-theground resourcing in Latin America were key factors in Aberdeen’s offer.

Stuart James, senior investment specialist at Aberdeen, said their own propriety research – rather than third party or broker research – drove the sourcing of quality companies.

“We have over 35 dedicated emerging market managers around the world located as close to the markets in which they invest as possible. Everywhere from Sao Paulo through to Europe and Asia,” he said.

Lonsec said Aberdeen’s patient and intensive company research process and high corporate governance radar served emerging markets well, and investors over the long-term.

James said emerging markets were full of “spice”, but it was a matter of understanding the businesses they invest in and not reacting to the market or bowing to the benchmark.

Stuart James “The growth naturally is there in emerging markets. It’s about finding a disciplined and quality way to access that growth without chasing the faddy end of the market,” he said.

James joked that his Scottish heritage assured they got the best prices, and prices were how they controlled risk rather than relative to the benchmark.

“For us, risk really is either buying a poor quality company or overpaying for a good

quality company,” he said.

T. Rowe Price’s ex Japan Equity Fund was a finalist in a year that emerging market investors found difficult, Lonsec said.

Murray Brewer, director of T. Rowe Price for Australia and New Zealand said the fund was led by an experienced fund manager and 13 researchers who were integrated into global sector teams.

“We’re not just looking at the local factors, it’s also the global trends that we assess,” he said.

Brewer said the benchmark-unaware fund relied on their research to buck trends targeting periphery markets with emerging consumers in high growth areas like Indonesia, Thailand and the Philippines.

“We try and stay away from … fixed asset investing to some of the consumer stocks that are really growing rapidly as a result of that emerging middle class or the wealth of a lot of the Asian populations,” he said.

Premium China Fund’s Premium Asia Fund was shortlisted for the fourth year in a row.

Jonathan Wu, associate director and head of distribution and operations said between Hong Kong, China and Taiwan, they have over 40 investment professionals in the “fastest growing region” of the world.

Wu said investors and advisers should

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

REGIONAL/EMERGING MARKET EQUITIES Winner

Aberdeen Emerging Opportunities Fund Finalists

T. Rowe Price Asia ex Japan Equity Fund Premium Asia Fund alter traditional ways of thinking and educate themselves about the region because it is our “closest and largest trading partner”.

He said high debt levels in Western economies mean “investors are looking for a region to spearhead the next round of economic growth” which is “where Asia will play its key role in taking over the baton from the West”.

– By Bela Moore

Quality puts IFP at the top A DOGGED dedication to high quality companies has seen Independent Franchise Partners’ (IFP) Global Franchise Fund take the Money Management/Lonsec Fund Manager of the Year Award in the Global Equities Broadcap category.

Adrian Stewart, head of distribution for Macquarie Professional Series (Australia’s gateway to the fund), said one of the beliefs underpinning IFP’s investment strategy is that high quality companies are rare.

“They take quite a while to find a company because obviously high quality companies are very difficult to find and they’re rare, but when they do find them they invest with conviction and they will hold,” Stewart said.

He said IFP rely on valuation not benchmarks, capping their stocks at 40 and holding just 30 stocks in their portfolio currently.

“They simply look for high quality companies at value and they don’t deviate from that, and that is how they’ve been able to generate performance for clients,” he said.

Lonsec said the fund’s focus on quality companies produced some growth characteristics throughout the cycle and allowed them to perform well in difficult conditions.

Staying true to their investment discipline, IFP managed to protect their client’s assets from some recent turbulence while large amounts of capital were lost to other areas of the market, Damien Green, IFP’s head of Asia and Australia said.

Stewart said the fund’s focus on capital preservation ensured consistent performance through all market conditions.

“They’re just such a compelling manager in a market where global equities has proven to be a really difficult space for financial advisers to find,” he said.

Stewart said the benchmark hadn’t really delivered a return for the past decade, which made finding the right fund manager “absolutely critical”.

Lonsec also praised IFP’s focus on valuation and not overpaying for cashflows.

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

GLOBAL EQUITIES (BROAD CAP) Winner

IFP Global Franchise Fund Finalists

Magellan Financial Group Grant Samuel Epoch Global Shareholder Yield (Unhedged) Fund Magellan’s Global Equity Fund also made the finals.

Director Frank Casarotti said their fund’s sector-specific strategy combined macro observations with deep company analysis.

“What we’re trying to do is identify the sectors we think will have the tail wind in the world and then zero in on what we think are ultimately the highest quality companies operating in that sector,” he said.

Buying into multinationals with pre-existing sales in emerging markets, being underweight European financials and positioning for the US recovery were macro considerations that contributed to the fund’s performance in 2011, Casarotti said.

Grant Samuel’s Epoch Global Shareholder Yield Fund was chosen by Lonsec to complete the finalist trilogy.

Andrew McKinnon, chief executive for Grant Samuel said their focus on free cashflow and the ability of companies to use cashflow to pay relatively high dividends, buy back stock or reduce debt had given their clients some downside

22 — Money Management May 10, 2012 www.moneymanagement.com.au

Adrian Stewart protection during volatile times.

McKinnon said many people were talking about being overweight equities, and in some cases cashflows had been negative, but Grant Samuel had seen positive cashflows for some time.

He said their New York based partners since 2007, Epic, had been integral to delivering the strategy.

“You get the people, process, and ultimately you get good performance,” he said.

– By Bela More

Winner weathers volatile markets

Steady hand on the tiller Schroders took out first place in a closely contested Fixed Interest – Diversified and Global category for this year’s Money Management/Lonsec Funds Manager of the Year awards.

The Schroder Fixed Income fund is a relatively conservatively run ‘fund of funds’, and outperformed its peers in terms of risk-adjusted returns in the 2011 calendar year, according to Lonsec.

Schroder head of fixed income and multi-asset, Simon Doyle, said fund is designed to be the core defensive holding within a diversified portfolio.

“Fixed income is there to preserve capital, provide liquidity and really diversify away equity risk,” said Doyle.

“When equity markets and risk assets are declining in price, you want the fixed income part of your por tfolio to be delivering positive returns,” he added.

The fund is structured around a ‘core-plus’ framework, with half of the assets invested low-risk, local, UBScomposite benchmark core portfolio, Doyle said.

“Then we look to allocate the rest of the portfolio to those parts of the fixed income universe that make the most sense – to add value or lower risk,” he said.

Up to 50 per cent of the portfolio can be in cash, or it can be invested in local and global credit, he said.

One big factor that differentiates the Schroder fixed income from its peers is the fact that it is managed locally, he said.

“It was designed in Australia for Australian investors. All of the decisions that we take in that portfolio are taken here in Sydney.

“For some of the other global funds there’s more centralisation in the decision-making,” Doyle said.

As for his outlook for the fixed income sector, Doyle said credit spreads are looking “reasonable” and managers should see more stability in terms of their overall returns – as long as they keep their duration relatively low and avoid exposure to government bonds.

Last year’s winner, PIMCO, came in second this year with its PIMCO/EQT Global Bond Fund.

T h e f u n d i s r u n by B i l l G ro s s , founder, managing director and cochief investment officer of PIMCO. Gross is supported in Australia by PIMCO Australia head of portfolio management Rob Mead, along with 45 credit analysts and 45 regional specialists worldwide.

The real yields available in Australia in terms of fixed income are continuing to be outliers in the devel-

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

FIXED INTEREST (DIVERSIFIED AND GLOBAL) Winner

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

GLOBAL EQUITIES (LONG SHORT) Winner

Schroder Fixed Income Fund

HFA International Shares Fund Wholesale

Finalists

Finalists

EQT PIMCO Global Bond Fund BlackRock Wholesale International Bond Fund

Acadian Wholesale Global Equity Long/Short Fund Five Oceans World Fund Craig Mowll

“

For some of the other global funds there’s more centralisation in the decision-making.

”

– Simon Doyle

oped world, said Mead. “ We’ve continued to see good opportunities for either Australian bonds – or global bonds hedged to Australian dollars – as both ver y attractive real yield generators,” said Mead.

However, with the global economy in a ‘risk-off’ phase, there could be an “implicit cap on how high the yields on these ver y high-quality instruments could rise”, he added.

BlackRock rounded out the finalists in the category, with the mana g e r ’ s Au s t r a l i a n h e a d o f f i xe d income Steve Miller pointing to the strength of his funds’ “cohesive and centralised investment process”, which involves frequent conference calls with BlackRock’s fund managers around the world.

Miller said the global economic outlook is still very uncertain.

“I don’t think we can escape the likelihood that Europe will have a recession in 2012, and 2013 will be challenging as well,” Miller said.

– By Tim Stewart

THE market volatility that characterised much of 2011 proved a key decider in the Money Management/Lonsec Fund Manager of the Year Awards for the Global Equities Long / Short category, with Lighthouse Partners’ (LHP) HFA International Shares Fund (ISF) taking out the top spot.

Lonsec said LHP was a quality “fund of hedge funds” manager and praised ISF’s low volatility approach, particularly in light of high levels of volatility over 2011.

The fund aims to produce a portfolio with low correlation between underlying hedge fund managers and equity markets.

Craig Mowll, chief executive of Lighthouse’s Australian partner Certitude Global Investments, said volatility was the one theme that had dominated investment markets since the global financial crisis. “ The fund has delivered on its promise, delivering consistent positive returns with far less volatility than traditional global equity investments. As uncertainty continues, investors don’t want swings and roundabouts with their investments but are craving stability of returns,” he said.

Mowll attributed the fund’s success to the team’s long working history of more than a decade, and its track record of delivering risk-adjusted returns.

Lonsec agreed, saying ISF’s competitive advantage was inherent in the quality and culture of the investment team and the investment process’ emphasis on risk management.

Acknowledging 20 years of managing global equities and over nine years managing long/shor t por tfolios, Acadian’s Global Long/Short Fund was runner-up in the category.

Graham Hand, general manager of funding and alliances for Colonial First State, Acadian’s partner, said their

investment process was systematic, objective and consistent, which was “very important to managing long/short portfolios where disciplined portfolio construction is a crucial component”.

Hand said return potential and risk control were at the core of the fund, which uses quantitative methods to make investment decisions in a systematic way.

“The investment process is supported by a research team that includes 16 Ph.Ds dedicated to continually improving performance results,” Hand said.

He said the long/short nature of the fund’s research-driven investment strategy allowed them to source global stocks with high potential and take advantage of opportunities created by potentially underperforming stocks.

Five Oceans World Fund rounded out the finalists. Chief executive at Five Oceans Asset Management Ross Youngman said its strategy focused on bottomup research to find mispriced companies in the market.

He said disciplined stock selection to locate competitively positioned businesses, coupled with strong risk management, separated its fund from the pack.

Youngman said the fund’s track record had been delivered with lower volatility than the market and had outperformed the MSCI World Index by an average of 5.26 per cent since the fund’s inception in July 2006 to the end of Q1 2012.

Mowll said after the win LHP would set its sights on benefitting from dislocations caused by a lower correlation environment more focused on fundamentals than macroeconomic concerns.

He said the award would be excellent recognition for Lighthouse Partners and “could add to the momentum that is already building around the fund with (their) supporters.”

– By Bela Moore

www.moneymanagement.com.au May 10, 2012 Money Management — 23

Fund Manager of the Year 2012

Another one in the bag THE Schroder Real Return Fund has taken out this year’s Asset Allocator of the Year award as part of the 2012 Money Management/Lonsec Fund Manager of the Year awards.

The fund specifically targets a rate of return above inflation of 5 per cent.

“That is the thing that we focus on delivering, and we focus on delivering it in the least risk way we can,” said Simon Doyle, head of fixed income and multi-asset at Schroders.

Research house Lonsec praised the fund’s flexible approach to asset allocation, which proved particularly effective in 2011 with the fund significantly outperforming traditional growth style funds.

“The fund returned 3.9 per cent over t h e 1 2 m o n t h s t o De c e m b e r 2 0 1 1 , versus the Morningstar Multi-Sector Growth Index return of -4.1 per cent,” Lonsec said.

Portfolio managers Doyle and Simon Stevenson – who have a proven track record in asset allocation and portfolio construction – are held in high regard

by Lonsec. “[Stevenson] and I work very closely together on the strategy and that gives

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

ASSET ALLOCATOR OF THE YEAR

been very fortunate here at Schroders over the last “fourWe’ve or five years to have made pretty good asset allocation decisions, but also to have a capable group of investors sitting behind the desk and making the stock selection decisions.

- Simon Doyle

”

Winner

Schroder Real Return Fund Finalists

Mercer Growth Plus Fund Perpetual Wholesale Balanced Growth Fund it a robustness that seems to be supported by the individual investors of the underlying strategies that we invest in,” Doyle said.

Doyle and his team see valuation as a very important element of their process.

“The difference of our approach to the standard approach that most people take is that we don’t have any bias to any particular asset class,” he said.

“We will own equities, but only if

equities make sense to own, we’ll own fixed income if it makes sense to own fixed income, and if it doesn’t make sense to own any asset because there’s no risk premium available to us – the investor – we’re happy to sit in cash.”

It is important to the strong capability in both asset allocation and underlying assets that you invest in.

“We’ve been very fortunate here at Schroders over the last four or five years to have made pretty good asset allocat i o n d e c i s i o n s, b u t a l s o t o h a v e a c a p a b l e g ro u p o f i n v e s t o r s s i t t i n g behind the desk and making the stock selection decisions,” Doyle added.

Also making the shortlist for Asset A l l o c a t o r o f t h e Ye a r w e re Me rc e r

G row t h Fu n d Pl u s a n d Pe r p e t u a l’s Wholesale Balanced Growth Fund.

Mercer leverages off its large global resources, but senior partner Simon Eagleton said the team prides itself in staying true to diversification.

“Coming out of the financial crisis, I think many investors (us included) took the opportunity to examine why many of the then “diversified” strategies weren’t indeed as diversified as people thought,” Eagleton said.

Apart from winning the overall Fund Manager of the Year and Asset Allocator of the Year awards, Schroders took the trophy in two other categories.

– By Milana Pokrajac

Staying true to active management FOR the second year in a row, the Cromwell Phoenix Property Securities Fund has been named the 2012 Money Management/Lonsec Fund Manager of the Year for Australian property securities.

The high conviction, ‘benchmark unaware’ manager outperformed the Australian real estate investment trust (A-REIT) market by 11.5 per cent after fees.

“The manager has increased its funds under management (FUM) over the past 12 months, and as a result, is now profitable,” Lonsec said.

Phoenix Portfolios managing director Stuart Cartledge said the fund is not constrained to own stocks just because they are big parts of the index, opting for a 20 per cent maximum stock holding limit to ensure strong diversification.

“We see property as a total return game. We intend to keep a strict limit on our funds under management to enable what Ism calling a truly active management style,” he said.

In regards to his forecasts for the sector, Cartledge said his view is that the current discount that A-REITs are trading on will either close or become substantially reduced. In addition, the universe of stocks available for trade will increase.

“Property stocks are now back to their old style in the sense they have sensibly-geared balance sheets and it's a predicable income stream, and therefore it's not difficult to see a small but steady growth in earnings,” he added.

As a small boutique investment manager, the fund is jointly owned by Cartledge and Cromwell Property Group, which took an equity stake in the business in early 2009.

“In order to be able to run profitably with a low fund, you can't have too big a team and too big an infrastructure,” Cartledge said.

“As an investor, I would always prefer to go with a small manager with a low fund. I think they've got an edge just

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

PROPERTY SECURITIES (AUSTRALIA) Winner

Cromwell Phoenix Property Securities Fund Finalists

EQT SGH Wholesale Property Income Fund Legg Mason Property Securities Trust Stuart Cartledge because of their nimble abilities to get in and out of things.”

EQT SGH Wholesale Property Income Fund came in second place in Lonsec’s analysis, spurred on by its longstanding distribution relationship with Equity Trustees.

“We are categorised as a value investor, but not deep value, as we aim to buy undervalued securities which have a positive or improving fundamental outlook,” said SG Hiscock & Company managing director Stephen Hiscock.

He said the fund will always look for fundamentally attractive REITs which are undervalued, but “what will inevitably change slowly over time – as it has done in the past – is how we measure fundamentals and valuation.”

In terms of its growth prospects, Hiscock said his investment team is starting see signs that investors

24 — Money Management May 10, 2012 www.moneymanagement.com.au

are gradually warming again to this sector after suffering huge losses during the global financial crisis.

Third-placed finalist, Legg Mason Property Securities Fund said that it is its approach to research that has made the fund a standout in this sector.

“We focus on replacement costs and that probably got lost a bit during the financial crisis, so that's allowed us to really benefit as the market has refocused back on fundamentals and things have began to normalise again,” Legg Mason portfolio manager Ashton Reid.

“We’re consistently focussed on valuation and we've incorporated that quality as a second pillar in our investment process.”

– By Andrew Tsanadis

Outperforming its peers FOLLOWING a year of strong performance, UBS Clarion Global Property Securities Fund has been crowned the winner of the 2012 Money Management/Lonsec Fund Manager of the Year award for the global property securities category.

Although UBS Global Asset Management became the responsible entity for the fund on 1 March 2012, the portfolio has continued to be managed by a team of professionals based in Philadelphia and sub-managed by CB Richard Ellis Clarion Securities since its inception in October of 2005.

Lonsec stated that despite the changes, the manager delivered 1 per cent excess returns over 2011 after fees, and subsequently outperformed all other funds in the global property securities peer group.

CB Richard Ellis Global Real Estate Securities portfolio manager Steve Carroll said that over 2011 the fund maintained considerable exposure to the US real estate investment trust (REIT) market which, on the back of continued improvement in the capital market environment and recovering commercial property fundamentals, had propelled the sector positively.

“Companies are continuing to have tremendous access to capital, both equity and debt, through the public and private

markets and are now finding a greater volume of investment opportunities, particularly on the acquisitions front,” he said.

“While we acknowledge that today’s macro-environment introduces a level of variability with regards to the outlook for both economic growth and the equity markets, we believe that global listed property stocks are well positioned and should provide investors with healthy returns in 2012,” he said.

Carroll said the manager had a very deep investment team centred by seven senior global portfolio managers. Its competitive advantage was based on the team’s experience of covering companies through multiple cycles and understanding what truly drives these stocks over the long-term.

“Our investment process is very much rooted in a deep understanding of real estate, and having the capability as a part of the largest global real estate services firm to identify information in the market that is not readily available to other investors, which helps us identify where those mispricing opportunities exist,” he said.

“We are fortunate to have 35 fully dedicated investment professionals located in our Philadelphia headquarters as well as in our offices in London, Tokyo, Hong Kong and Sydney, who are responsible

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

PROPERTY SECURITIES (GLOBAL) Winner

UBS Clarion Global Property Securities Fund Finalists:

EQT SGH LaSalle Global Listed Prop Secs Vanguard Int Property Securities Index Fund (hedged) for executing our investment strategy.”

With its sole real estate focus, second place finalist EQT SGH LaSalle Global Listed Property Securities undertakes a top-down market research, bottom-up company analysis and quantitative assessment of relative value to construct its portfolios.

“We believe that long-term performance of real estate securities will be

driven by the performance of their underlying assets and the ability of management to create value,” LaSalle associate Kentaro Takao said.

The manager has over 60 employees worldwide fully dedicated to the global real estate securities program, and Takao said that this organisational structure – combined with the team’s understanding of real estate – provided the fund with a competitive advantage.

“If you have a global real estate securities fund, you have to have a sound global platform to manage the fund,” he said.

Rounding out the top three in the peer group was the Vanguard International Property Securities Index, which Vanguard head of product management and development Robyn Laidlaw said provided investors with a low-cost way to secure returns from global property securities.

She said the strategy of tracking the index was undertaken by either holding all of the benchmark securities, or a representative sample of those securities. She added that it was this low-cost, disciplined and risk-controlled approach that set the fund apart in the sector.

– By Andrew Tsanadis

www.moneymanagement.com.au May 10, 2012 Money Management — 25

Fund Manager of the Year 2012

Investing in the team always a win BT INVESTMENT Management (BTIM) has leveraged the input of over 30 investment analysts to take out the Ethical/Socially Responsible Investment category in this year’s Money Management/Lonsec Fund Manager of the Year awards.

The BT Wholesale Ethical Share Fund is managed by BTIM head of equities Crispin Murray.

Co-portfolio manager of the fund Rajinder Singh said Murray’s experience helped the fund outperform its benchmark by 0.55 per cent for the 12 months to 31 March 2012.

The BT Wholesale Ethical Share Fund employs negative and positive screens to limit the universe of stocks the fund can invest in, Singh said.

The negative screen excludes companies involved in alcohol, tobacco, weapons manufacture and gambling. It also screens out companies that fail on the sustainability front with environmental, human rights or corporate governance breaches, Singh added.

“The positive screen looks for two types of companies: Leaders in their industry that set a standard well above their peers, or companies that are in sustainable industries,” Singh said.

The fund employs Regnan (which is partly owned by BTIM) to carry out its ethical/sustainability research.

“They have over 12 people that specialise in this area, with offices in Sydney and Melbourne,” said Singh.

In addition to the analysts at Regnan, the fund also utilises the BT equities team which consists of over 20 stockpickers, making it “one of Australia’s largest research teams”, said Singh.

Singh said the fund is receiving increasing interest from investors who are interested in environmental, social and governance (ESG) issues.

“People are realising the benefits of having appropriate corporate governance structures in the companies they’re

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

ETHICAL/SRI MANAGER Winner

BT Wholesale Ethical Share Fund Finalists

Australian Ethical Smaller Companies Trust Alphinity Socially Responsible Share Fund investing in. There’s no point having a great franchise if the board and management aren’t incentivised or structured the right way,” he said.

The BT Wholesale Ethical Share Fund has funds under management of just under $150 million.

Taking out second place in the category is Australian Ethical, with its Smaller Companies Trust.

Australian Ethical chief investment officer David Macri said his company has an ethical charter that is “quite onerous” and green credentials that “date back over 25 years”.

While the fund does invest in some larger companies that are best of sector, it is more tilted to innovative biotech, IT and telco companies, said Macri.

The outlook for the ethical sector is brighter than ever before, he said.

“There’s a lot more focus on it and acceptance that you don’t have to sacrifice returns investing this way, and indeed

Rajinder Singh there’s actually a positive correlation between ESG factors and alpha,” said Macri.

Rounding out the category is boutique manager Alphinity Investment Management with its Socially Responsible Share Fund.

Alphinity principal and portfolio manager Bruce Smith said the fund uses research provider CAER’s database for the screening process.

One of the biggest challenges in the current market is finding defensive stocks that aren’t screened out by the fund’s ethical charter, said Smith.

Since companies such as Woolworths, Wesfarmers and Fosters are unavailable, Alphinity has looked to Telstra and Australian infrastructure stocks to play a defensive role in the portfolio, Smith said.

– By Tim Stewart

Alpha bet pays off for Macquarie OFFERED exclusively through the Macquarie Professional Series, the Winton Global Alpha Fund has once again been awarded the Money Management/Lonsec Fund Manager of the Year award for the alternative investments sector.

The managed futures hedge fund was highly praised by Lonsec for its well diversified portfolio, which takes positions in exchange-traded futures contracts over share indices, bonds, interest rates, currencies and commodities worldwide.

“Lonsec regards Winton as a high quality manager and believes it has competitive advantages in the quality and track record of its founder and head of research David Harding and the extensive resources the firm has to apply to research and development to ensure its systems remain leading edge,” Lonsec said.

Winton Capital Management head of Asian sales Charles Allard said the manager currently employs 100 scientists in the fields of database construction, numerical simulation, statistics and portfolio construction.

“The investment objective is to achieve long-term capital appreciation through compound growth – investing through Winton is a marathon, not a sprint,” Allard said.

“This goal is achieved by pursuing a diversified trading scheme across more than 100 futures markets and does not

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

ALTERNATIVE INVESTMENTS Winner

Winton Global Alpha Fund Finalists

Aspect Diversified Futures AQR Delta Fund rely upon favourable conditions in any particular market, nor on market direction.”

He said Winton’s trading system is “dynamic and constantly evolving”, depending on such factors as changes in the liquidity or volatility in markets or the long-term expectation of market interrelationships.

“Winton is more technical than fundamental in nature. We have built a trading system robust enough to survive such market dislocations,” he added.

Winton’s approach is evident in its strong returns (+10.4 per cent), outperforming its managed futures (hedged) peers and the broader alternatives sector, according to Lonsec’s review.

Runner-up, Colonial First State (CFS)

26 — Money Management May 10, 2012 www.moneymanagement.com.au

Aspect Diversified Futures Fund said that its success over the past couple of years has been due to investors’ continued concerns over the future of equity markets.

“We’ve seen that both in the success of our deposit products but also an alternative product like Aspect where the returns are not correlated to the equity markets,” said Graham Hand, CFS general manager for funding and alliances.

“The retail take-up [of Aspect] has been exceptional for something that you would consider to be a non-traditional asset class.”

Hand said the change in investors’ perception of the role of alternatives in the portfolio construction process has also had a positive effect on the interest generated in the fund.

Like Winton, Aspect has a strong commitment to research, and this is reflected in the over 140 staff located in its headquarters in London. Hand added that the most compelling prospect of its research team is that they are strictly focussed on managed futures.

Coming in third-place in the alternatives sector is AQR Wholesale Delta Fund. AQR Capital Management head of institutional business Australasia Jeff Dunn said that unlike other hedge funds, the Delta Fund explicitly hedges market exposure.

“The fact that the industry has not been able to deliver uncorrelated assets is not

Charles Allard actually a problem with the underlying strategy, but a problem with the structure that they're actually run – they're not hedged properly,” Dunn said.

“It's certainly been a big part of how we've been able to deliver on what people are actually consuming from the alternatives portfolio and making sure that we're doing that in a transparent way.”

– By Andrew Tsanadis

Succeeding in a tough market THE rocky investment markets of 2011 made life difficult for multi-sector managers, and Schroders was one of the few asset allocators to add value in the adverse conditions, according to Lonsec.

The Schroder Balanced Fund has around 60-80 per cent of its funds invested in growth assets, and is similar to the standard industry fund model, according to Schroders head of fixed income and multi-asset Simon Doyle.

The investment team looks at the asset allocation of the fund roughly every year, said Doyle.

“About a year ago we changed the strategic asset allocation to reduce the bias to Australian Equities within the equity component of the portfolio, and we increased the global equity component,” said Doyle.

He acknowledged that many investors in default multi-sector funds have been disillusioned with their returns over recent years.

“The reason the returns are poor is because they’ve had so much equities exposure. If we can get better as an industry at thinking about asset allocation and how we build that into portfolios, that’s a real benefit to investors,” he said.

Doyle was optimistic about the outlook for multisector funds in general.

“In the last probably two years we’ve seen a real shift back to thinking about asset allocation as being the key driver of total returns,” Doyle said.

“It’s not just us – you’re seeing more multi-sector funds going to market at the moment. Super funds, research houses – the retail space is really strong at the moment,” he said.

Advance Asset Management came second in the category for its Wholesale Balanced Multi-Blend

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

MULTI-SECTOR FUNDS Winner

Schroder Balanced Fund Finalists

Advanced Wholesale Balanced Multi-blend Fund ipac Diversified Investment Strategy No.2 Fund, replicating its performance from last year.

Advance chief investment officer Patrick Farrell said his team was focused on assessing the big topdown risk factors that are going to shape investment markets over the next five years.

Farrell has overseen a reduction in the equities exposure of the fund in recent years, with a higher allocation to Advance’s alternatives sector fund.

“We still hold equities and they still play an important part in the growth strategy, but we think that we’re not necessarily going to get the return for the risk that we’re taking over the next couple of years,” said Farrell.

The third finalist in the categor y was ipac, receiving special mention for its Diversified Investment Strategy No. 2.

Simon Doyle ipac chief investment officer Jeff Rogers said the fund paid careful attention to diversifying risk premia when it awarded mandates.

“Some bond managers are allowed to credit risk, [whereas] some can only take interest rate risk – instead of having the combined version,” Rogers said.

The benefit of the approach was to achieve a greater spread of risk in the portfolio, leading to a “smoother ride” for investors, said Rogers.

– By Tim Stewart

Old team drives new boutique AS part of Challenger’s restructure to a pure boutiques model in 2010, the firm transitioned its inhouse small companies team comprised of Alex Milton (pictured), Sinclair Currie and Lachlan Hughes to a brand new vehicle – NovaPort Capital.

This year they are taking home the title of Money Management/Lonsec Rising Star award, which is attributed to a process which lasted a lot longer than the boutique itself.

NovaPort Capital commenced its operations in January 2011, but its team was always highly regarded by Lonsec. Currie has been a small cap portfolio manager for over a decade, while Milton has been researching small cap stocks since 1992.

Hughes has been working in this sector for four years and, just like his colleagues, comes from a stockbroking background.

“The team’s strong heritage in small cap investing, coupled with a business model that blends the benefits of a boutique (such as majority staff ownership) with the backing and support of an institution in Challenger, and a lack of any capacity issues, forms the basis of Lonsec’s view that NovaPort Capital is the emerging manager of the year,” Lonsec said.

NovaPort runs a process which focuses on a benchmark-unaware and concentrated portfolio, according to Currie.

“What we look for is companies which have got a higher than average quality,

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

RISING STAR Winner

NovaPort Capital Finalist

Bennelong Australian Equities Partners where we see a minimum of 50 per cent upside over a three-year time horizon,” he said. “We see small caps as a game of picking companies which have good quality and good valuation upside, and not so much trying to emulate an index.”

The success mostly comes down to independent research and coming up with investment propositions which are based around making money for NovaPort’s clients “as opposed to worrying about what the index is doing”.

Runner-up in this category is Bennelong Australian Equity Partners (BAEP).

BAEP was established in 2008 by chief executive officer Paul Cuddy and chief investment officer Mark East – in partnership with Bennelong Funds Management.

Cuddy and East have worked together in

Alex Milton the five years leading up to the formation of BAEP as co-heads of equities at ING Investment Management.

Cuddy said the biggest challenge the team faced was setting up a business in the second half of 2008, just as the global financial crisis hit the market.

“It doesn’t matter how well you performed, people weren’t going to invest, especially not with a manager that wasn’t very well known at the time,” Cuddy said.

BAEP now managers around $2.6 billion

using a “genuinely active” strategy, he added.

Looking at the year ahead, NovaPort’s Currie said investment managers will remain cautious in the next couple of years.

“It’s about selecting your investments more carefully and focusing more strongly on quality, because over time quality businesses will be around for a lot longer and tend to give you a sustainable investment,” Currie said.

– By Milana Pokrajac

www.moneymanagement.com.au May 10, 2012 Money Management — 27

Fund Manager of the Year 2012

Counting Lambert’s contribution THE founder of Count Financial, Barry Lambert, has been awarded Money Management’s Lifetime Achievement Award for 2012.

Lambert, the former Commonwealth Bank staffer who founded Count back in 1980, was selected for the award not only on the basis of the significance of having established one of Australia’s largest independent dealer groups, but also because of his long-term contribution to the broader financial services industry.

Lambert is the second recipient to be honoured with the Money Management Lifetime Achievement Award. The inaugural recipient was Gwen Fletcher in 2011.

The judging panel at Money Management determined that Lambert was an appropriate recipient in 2011/12 because it represents the 12-month period during which Count Financial was acquired by the Commonwealth Bank.

Notwithstanding Lambert’s continued involvement with the dealer group, the judging panel regards the sale of Count as representing the end of an era and one which this publication believes needs to be recognised.

As well, the panel recognised that Lambert’s contribution to the industry extended well beyond the successes

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

LIFETIME ACHIEVEMENT AWARD

Barry Lambert recorded by Count, through to the considerable charitable endeavours of the Count Charitable Foundation.

It was agreed that while Lambert was still likely to play an active role in the financial planning industr y via his continued involvement with Count Financial and Count Plus, his contribution to financial services and financial planning had been both considerable and enduring.

It is a measure of Lambert’s approach to the financial services industry that he spent 19 years within the Commonwealth Bank before moving to establish Count, and the manner in which he moved into the dealer group planning space is indicative of the man’s broader approach to both life and business.

As any reading of the Count Financial history will show, Lambert utilised his accountancy qualifications and supplemented his income by preparing tax

Barry Lambert returns at night. As a result, he quickly came to understand that his tax clients often asked broader investment questions.

T h i s p r o m p t e d Ba r r y t o l o o k a t becoming appropriately licensed to provide advice and to scope out the types of organisations that could

provide that licensing cover.

That exercise led him to conclude that the organisations which existed at the time were largely sales-based and unsuitable. On that basis, and understanding the scope for accountants to provide advice, he resigned from the Co m m o n w e a l t h Ba n k a n d b e g a n providing specialised advice and training to accountants in Public Practice so that they could give professional investment advice to their tax and accounting clients.

It is a measure of Barry’s broader contribution to the financial planning industry that, on top of establishing Count and its offshoots, he was a founding director of the body which preceded the establishment of the Financial Planning Association, and was NSW president of that body in 1985 and national president in 1988.

While Barry claims that he has recently wound back some of his industry involvements, he remains closely connected to the financial services sector and its fortunes. Further, he continues to be a valued source of analysis of industry trends and events.

– By Mike Taylor

New name, same leading investment managers Challenger Boutique Partnerships has a new name, Fidante Partners.

Fidante Partners invests in and forms long-term alliances with talented investment professionals to grow and support specialist, boutique funds management businesses.

For more information visit www.fidante.com.au or call 1800 195 853.

A division of Challenger Limited

Issued by Fidante Partners Limited ABN 94 002 835 592 AFSL 234668 and Fidante Partners Services Limited ABN 44 119 605 373 AFSL 320505.

28 — Money Management May 10, 2012 www.moneymanagement.com.au

13625/0412

Enhanced performance rewarded MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

YOUNG ACHIEVER OF THE YEAR

Finn Kelly Finalist

At just 27 years of age, Kelly has an “extensive resume that seems incongruous with his age – particularly when you take into account the fact that he spent seven years as an army officer with the Australian Defence Force.

”

Tom Whitelaw

Finn Kelly WEALTH Enhancers chief executive Finn Kelly was a finalist in the Money Management Young Achiever of the Year category last year and has gone one step better in 2012.

At just 27 years of age, Kelly has an extensive resume that seems incongruous with his age – particularly when you take into account the fact that he spent seven years as an army officer with the Australian Defence Force.

A member of the Association of Financial Advisers (AFA), Kelly was nominated for the AFA’s Rising Star Award back in

2010 and was a national finalist in that award in 2011.

Last year also saw Kelly win the AFA’s Excellence in Education Award at both state level (for Victoria) and nationally.

Kelly says he is a firm believer in education and has a Bachelor of Science majoring in maths and physics, a Diploma of Financial Services (Financial Planning), a Graduate Diploma of Education (Secondary), a Diploma of Government and a Diploma of Management.

When hiring advisers for the business, Kelly prefers degree qualified candidates because he believes it shows a commitment to the journey of personal development and improvement that advisers need to help impart to their clients. He pushes his team to engage in ongoing formal education and says the current minimum educational requirements for financial planners are inadequate.

Kelly heads up the portfolio management arm of the Wealth Enhancers business and manages the investment portfolios of over 40 private clients. The Synchron-aligned firm has a focus on high income and high net worth clients, with a particular focus on AFL players.

Kelly attributes his time in the defence force with building his leadership and business skills. Recently, Kelly has led a push to expand the Wealth Enhancers business in Sydney where it opened an additional office earlier this year – a process that included hiring a number of new staff and overseeing a move into new premises – and hopes to expand the business further in the future.

This year’s runner up in the Young Achiever category is Morningstar co-head of fund research Tom Whitelaw, who at 29 has a strong history as an investment analyst working in the UK for financial planning groups and insurance giant Aviva. He joined Morningstar in the UK in 2007 prior to moving to Australia and leading large and small cap equities review before taking on his current role earlier this year, remaining lead analyst for Morningstar’s Australian coverage.

– By Chris Kennedy

Australian and New Zealand Institute of Insurance and Finance

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INTRODUCTORY OFFER AVAILABLE To make the most of our special introductory offer, contact Georgina Nasis on (+61 3) 9613 7282, and find out how ANZIIF can help you meet your training needs.

www.theinstitute.com.au

www.moneymanagement.com.au May 10, 2012 Money Management — 29

Fund Manager of the Year 2012

Real stories, real results CHALLENGER’S ‘Real Stories’ campaign capturing the true experiences of Australian investors during the global financial crisis (GFC) has prevailed as Best Advertising Campaign for 2012.

Centred around a 60-second television commercial with three 30-second versions and a 15-second ad, Challenger presented consequences of over-exposing in equities for retirees and those approaching retirement.

The campaign had dual objectives – to promote Challenger as a specialist retirement income brand and revive the Australian annuities market.

Challenger improved their association as a retirement income provider recording a 180 per cent increase in advisers choosing Challenger as the first brand to come to mind, unprompted in relation to retirement income.

Annuity sales grew as a result of ‘Real Stories’ by a record 56 per cent for the 2011 fiscal year.

The campaign was rolled out across TV (free-to-air and subscription), web video, print, cinema, radio live reads, radio ads and online, and Challenger grew.

Hunter Hall’s submission – a campaign of

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

BEST ADVERTISING CAMPAIGN OF THE YEAR Winner

Challenger Finalists

Colonial First State Solaris Investment Management Perpetual From left to right – Rebecca Payne, Stuart Barton, Samantha Pierce, Amanda Irving, Andrew Rice. verbs defining what the investment company does – explores their strategy and demonstrates the firm’s long-term effectiveness. Launched in March 2012, it has already garnered positive feedback from publishers.

Solaris said they believed they had the best campaign of the year and achieved it on a

“beer budget”, utilising advertising opportunities in Money Management’s Bluebook newsletter.

They said their limited budget meant they had to “zero in on the most effective means of impact” and focus on specific channels in the retail/adviser market.

Hunter Hall Other submissions included Perpetual’s ‘Perpetual Way’ advertising campaign, Colonial First State’s ‘Wealth generation integration’ campaign and Solaris’ ‘perfectly aligned’ campaign.

– By Bela Moore

A winning position for AMP Capital AMP Capital collaborated with parent brand AMP as well as senior stakeholders and research agencies to revitalise their brand and take out Money Management’s Marketing Team of the Year for 2012.

The fund manager seized on AMP’s rebranding efforts following their merger with AXA, and after research revealed AMP’s position in decline with advisers from 2007. They aimed to forge an identity with promise, energy and dynamism.

AMP Capital’s marketing team directed a total rebrand, including new logo design and brand repositioning, and produced three advertising campaigns showcasing the investment funds’ uniqueness and experience.

Leveraging off parent brand, AMP allowed the fund manager to wrap the inherent values and experience of AMP’s 160-year heritage in a contemporary package achieved through typography.

The extent of AMP Capital’s reversal in popularity was evident in Wealth Insights 2011 Adviser Market Trends from Q3 2011 which showed the fund manager as one of a few to improve in popularity over the year.

The company’s standing amongst advisers who viewed their campaign improved dramatically, registering a 43 per cent increase in approachability and 40 per cent improvement in trust.

Colonial First State (CFS) just missed out with their ‘Wealth generation integration’ campaign which aimed to create an ‘imagined community’ among potential CFS investors and position the fund manager as a ‘helping-hand’ brand.

They also wanted to increase adviser preference of the

The AMP Capital marketing team FirstWrap platform, and saw $212 million flow into the platform over the campaign period.

CFS’ campaign involved a website acting as an information hub, an ongoing superannuation rollover campaign, conversion to a paperless environment and their annual ‘Super Topup’ campaign.

In its’ second year, the annual ‘Super Top-up’ campaign garnered $200 million in consolidation superannuation money in 2011, while the conversion of over 6 per cent of investors to email communications saved Colonial $440,000 and 9.2 tonnes of paper annually.

30 — Money Management May 10, 2012 www.moneymanagement.com.au

– By Bela Moore

MONEY MANAGEMENT LONSEC FUND MANAGER OF THE YEAR 2012

MARKETING TEAM OF THE YEAR Winner

AMP Capital Finalist

Colonial First State

BDM of the Year 2012

A point of difference BDM OF THE YEAR WESTERN AUSTRALIA Nathan Kerr, TAL Limited

I

t was Nathan Kerr’s understanding of his client base and the undying commitment to the industry that earned him this year’s Money Management BDM of the Year title.

Kerr, who currently works for TAL Limited, was named state winner for Western Australia in last year’s awards, having been beaten to a national title by one of this year’s members of the judging panel, BT’s Michelle Woodgate.

Woodgate said Kerr was clearly focused on looking after his advisers above and beyond, and more importantly, he is “very passionate about the industry”.

“One point of difference with Nathan is that when I initially called him he was seeing a client at the gym at 7am to win the business, working around the adviser’s schedule,” Woodgate said.

Kerr was humbled by the nomination, and has praised a very strong and supportive team at TAL that has helped him along the way.

His story started in 2002 in London, when he was appointed general manager of MAD Advertising after being head hunted by the company director due to his sales record and motivational skills.

Kerr moved to Brisbane in 2005, where he joined ANZ as relief manager and senior personal banker.

He then gained his Diploma of Financial Planning and moved to Suncorp, where he worked as a financial adviser for almost two years. While at Suncorp, Kerr was in the ‘top five’ nationally for risk sales and number one risk writer in Brisbane West.

In July 2008, Kerr moved to TAL (formerly Tower Australia) where he is currently key account manager, specialising in business

development, relationship management, and sales.

For Kerr, the main challenges facing the industry at the moment are not coming from Future of Financial Advice reforms or the state of the global economy.

The biggest challenges for financial services come from the lack of younger people who are attracted to the sector and low levels of financial literacy among this demographic.

“The lack of younger generations attracted to our industry is of great concern – especially financial planning, where the average age of advisers is still over 50 and they are not getting any younger,” Kerr said. “For those advisers looking to exit the profession, the lack of younger advisers coming in makes realising the value of their business even harder, and the younger advisers already in the industry struggle to finance the purchase, with the real loser being the end client.”

All BDMs have a product to sell, but Kerr said he always lived by the old adage ‘people buy you, not the product’.

“I want to revert to that old adage by creating, innovating and marketing a product so it sells itself by challenging the paradigms through creative thinking, selfdirection, and the fundamental sales philosophy of ‘people don’t buy what you do, but why you do it’,” he said.

The judging panel recognised Kerr’s passion for the industry. Shadforth Financial Group’s principal and private client adviser, Charles Badenach (who was also named 2011 Financial Planner of the Year), said Kerr was an outstanding example of a person who has transitioned himself from an adviser to a BDM, where he is able to pass on his knowledge and skill-set to his clients.

“His focus on continuing development

32 — Money Management May 10, 2012 www.moneymanagement.com.au

and education has enabled him to remain at the forefront of the industry changes,” Badenach said. “This desire to continually improve himself and his client value proposition are what sets him apart from his peers.”

While Kerr took home the national title, four other state winners were also presented with their respected trophies at the Money

Management/Lonsec Fund Manager of the Year awards night in Sydney. They are: Brad Tyley from BT Financial Group (QLD), Elise Sanders from AIA (SA/NT), Ian Percy from MLC (NSW) and BlackRock’s Simon Rafferty (VIC).

– By Milana Pokrajac

BDM of the Year 2012

State winners

Meet the judges

QUEENSLAND Brad Tyley, BT Financial Group

Michelle Woodgate

Brad Tyley joined BT Financial Group in 2011 after two years spent at TAL Limited (then Tower Australia) and a five-year gig at Macquarie Bank prior to that.

Over the past year at BT, Brad has been dealing with the independent financial adviser market, assisting with the development of the distribution footprint for BT Life.

As part of his role, he undertakes discussions with dealer group heads about possible strategies that could be implemented in their adviser practices.

A large part of Brad’s role is also facilitating group presentations and one-on-one discussions with businesses, aiming to assist practices with the tools to develop their service offering.

Brad said his growth in the financial services sector could have been somewhat different if not for the mentoring of certain individuals in the market, to whom he is very grateful.

Michelle Woodgate joined Asgard in 2008 as a sales consultant business development manager. She spent 10 years working in financial planning before moving into sales and business development. Her 15 years experience in the financial services industry earned her the national Money Management BDM of the Year title in 2011.

Michelle currently works on the Asgard platform AdviserNET and is responsible for the growth in revenue derived from funds under management on the platform.

Neil Kendall SOUTH AUSTRALIA/NORTHERN TERRITORY Elise Sanders, AIA Australia Elise Sanders is state manager, client development manager for South Australia and Northern Territory. Her role entails developing business partnerships and relationships with advisers and helping them consider new alternatives to business processes in order to create sustainability within their practices. She also works on identifying opportunities to develop new product, concepts and ideas to drive more business to AIA Australia.

Challenge and diversity are what Elise enjoys most about her role as BDM. She created the Claims Care Kit, which supports advisers around their value proposition at claims time. She is also very passionate about fighting underinsurance in Australia.

NEW SOUTH WALES Ian Percy, MLC Risk Ian Percy commenced as an adviser with MLC on the Gold Coast in 1981, quickly developing an undeniable passion for his work.

Ian moved to business development in 1994, joining Colonial State Bank and then Commonwealth Financial Planning, where he trained advisers in the selling of risk and developing referral processes.

He returned home to MLC in 2005, and in 2010 Ian took the role as BDM for the central and mid-north coast of NSW. The thing he most enjoys about being a BDM is working with advisers, sharing ideas and concepts to add value to their businesses.

VICTORIA Simon Rafferty, BlackRock Australia

Neil Kendall is the managing director of Tupicoffs, an independent financial planning practice based in Brisbane, and has clients in Brisbane, Sydney, Melbourne and Perth.

He has developed a specialist niche providing advice to high-net-worth clients. Kendall is a regular industry speaker on improving the quality of financial advice and has spoken throughout Australia and overseas.

Kendall was the Money Management Financial Planner of the Year in 2006, and the runner-up in 2009.

Charles Badenach 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.

He is a firm advocate of improving financial literacy in his community. He 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.

In 2011, Badenach was named Money Management Financial Planner of the Year – an award which recognised his commitment to strategic financial advice and passion for the industry.

Mike Taylor

Simon is vice president and account manager at BlackRock, where he is responsible for generating new revenue into the business through BlackRock Australia’s retail and institutional suite of products.

A large part of Simon’s role involves working and consulting with BlackRock’s financial advisers, assisting them in building client portfolios.

Though he worked as a BDM outside of the financial services sector, Simon decided to enter financial planning, before moving back to the BDM side in 2007 – this time at BlackRock.

One of the major challenges for the industry identified by Simon is to break away from the “old way” of building portfolios with a traditional mix of stocks and bonds.

Mike Taylor is managing editor of the financial services publications Money Management and Super Review. He has been a journalist for the past 40 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 Queensland in the early 1970s. He held senior roles in publications such as The Australian, the Australian Financial Review (Brisbane and Canberra base) and The Canberra Times.

Finding the 2012 BDM of the Year EACH year the Money Management BDM of the Year attracts an outstanding group of candidates, and 2012 was no exception.

In February this year, Money Management called for industry participants to nominate business development managers (BDMs) they felt were worthy of the award. Companies Australia-wide were represented in the final nomination pool, which featured a list of 20 BDMs. A voting advertisement, which listed the 20 finalists, was published in Money Management over two issues and was

also published on the Money Management website.

Financial planners were asked to vote for the BDM they considered most worthy of the title BDM of the Year, and score their technical skills and/or product knowledge, practice development and adviser relations on a scale of one to five.

Money Management received approximately 800 voting forms, which were checked to ensure only financial planners voted.

The number of votes received for each

candidate was tallied and an aggregate score calculated. Taking aggregate scores and qualitative information provided by each of the 20 finalists, Money Management’s senior editorial panel then decided state winners.

State winners’ biographies as well as their responses to a series of questions were provided to an external panel of judges. Along with this information, we forwarded their scores and number of votes received.

Each judge individually assessed the

final contenders and offered their vote for who should be named national BDM of the Year. These votes were then tallied and, after careful consideration, national BDM of the Year was determined.

Money Management would like to thank those who nominated and voted for the BDMs, and for their overwhelming interest in the award.

We would also like to extend our gratitude to the members of the judging panel for their time and commitment to making a tough decision.

www.moneymanagement.com.au May 10, 2012 Money Management — 33

OpinionAged care

Aged care in a changing world General awareness among financial planners about issues associated with aged care is one thing, but having a strong knowledge in this area is another, writes IOOF’s Martin Breckon.

W

e all know we have an ageing population, and the Australian Bureau of Statistics confirms this. In the 20 years between June 1991 and June 2011 the proportion of the population aged 65-plus years increased from 11.3 to 13.7 per cent.

In real terms this means that in 12 months, the number of people aged 65-plus increased by 97,600 people and the number of people aged 85-plus increased by 20,900 to reach 415,400.

Similarly the Productivity Commission Report (released 28 June 2011) stated that “over one million older Australians receive aged care services. The range and quality of these services have improved over past decades, but more needs to be done. Future challenges include the increasing numbers and expectations of older people, a relative fall in the number of informal carers, and the need for more workers. By 2050, over 3.5 million Australians are expected to use aged care services each year.”

The list of supporting reports and evidence is long, but when it comes to financial advisers, being generally aware of these issues is one thing, having a strong knowledge of aged care issues is another. In time, more will be required from advisers as competition in this area will increase, and if an adviser only has general knowledge in aged care, they will need to establish a relationship with an aged care specialist.

The new Future of Financial Reforms (FOFA) legislation, particularly the best interest duty, states that if you do not have the skills, knowledge and expertise in an area, you should decline to advise. If you do advise, then subsection 961B(2)(g) requires that you “…take any other steps as regarded as being in the best interests of the client at the time the advice is provided”. This means you need to confidently and professionally be able to provide advice in this area.

Here to find help Irrespective of which party is in government, aged care issues will remain and will continue to be a difficult area of policy making because of the level of government regulation, subsidy funding and private sector investment.

All governments are aware of the implications of inadequate policymaking and the sensitivity of how to finance and care for our elderly parents and relatives. The issue resonates with ageing baby boomers, who have a tendency to change what they dislike. Admittedly, federal funding has increased over the last five or six years, but the demand for facilities continues to rise and currently demand exceeds supply.

More money will be required as we still face a funding gap, and ultimately the family home or the inheritance will be used to fund aged care unless viable alternatives can be found.

The latest federal initiatives are more inclined to a user-pays system. When you combine this with the fact that many Australians are under-funded in superannuation, it may mean that increasingly people will have to sell the family home or the next generation’s inheritance is lost or reduced.

An ever-increasing challenge If as individuals we consider aged care too expensive, nationally we have a greater challenge. The Productivity Commission stated in the June 2011 report that “Australians aged 85 and over are projected to increase from 0.4 million in 2010 to 1.8 million (5.1 per cent of the population) by 2050, and it is expected that over 3.5 million older Australians will access aged care services each year.

“There is increasing diversity among older Australians in their preferences and expectations (which continue to increase), including a greater desire for independent living and culturally relevant care. This is particularly relevant for many culturally and linguistically diverse, sexually diverse, and Indigenous communities”.

The Intergenerational Report 2010 estimated that federal spending on aged care would increase from 0.8 per cent of GDP in 2010 to 1.8 per cent of GDP by 2050.

The current government is taking steps to reform the sector, partially alleviating under-supply by increasing funding for home care packages. However, this only addresses a part of the problem: inevitably our ageing population will require the extra

34 — Money Management May 10, 2012 www.moneymanagement.com.au

care which can only be supplied in specialist facilities.

The level of funds required for this level of care is currently so high, it is as if residents were still earning income from fulltime employment. This disparity may result in a larger number of informal aged carers in the future (for example a wider number of family members stepping in to help the elderly family member, though how we cope with the in-laws extended visit is another question).

The Government to the rescue?

Recent federal announcements propose significantly increased funding for nursing home places and an increase to aged care staff salaries. But these facilities and trained staff won’t appear overnight. To complicate issues, the Federal Government needs to find this additional funding in an environment of conflicting priorities, decreasing revenue and a promise to balance the Budget in 2013. Alternatives could include diluting existing tax concessions, more stringent means testing for the age pension and a heavier reliance on user pays (which seems to be the trend).

We have already witnessed a federal propensity to allocate tax concessions and social welfare benefits to those considered the most deserving, with the introduction of reportable superannuation contributions, halving of concessional contribution caps, deferring contribution cap indexation and halving the co-contribution.

In subsection 292.5 of the Income Tax Act 1997 dealing with excess superannuation contributions, it is stated that “the object of this division is to ensure that the amount of concessionally taxed superannuation benefits that a person receives results from superannuation contributions that have been made gradually over the course of the person's life”.

The same philosophy could be promulgated in the allocation of subsidised aged care beds.

What we should do?

The Government knows that the majority of superannuation tax concessions are directed at the 30 per cent to 37 per cent

tax rate. If these are tightened and a similar basis is used for qualifying for aged care subsidies, then there will be challenges in understanding the ramifications (for example, the downstream impact on the income-tested fee).

The challenge for financial advisers will be to identify how these impacts may result in increased costs for existing or new clients, and how the required capital and revenue will need to be generated.

The average baby boomer is still underfunded in superannuation and will continue to be so in the future, irrespective of an increase in the level of superannuation guarantee contributions. Simply, boomers do not have another 20 to 30 years of working life to make up the difference, and they need to be encouraged to make additional voluntary contributions. They are inadequately prepared to fund user-pays aged care costs. It may mean your clients will need to create another accumulation

wealth account separate to superannuation to fund aged care.

Similarly, if aged care issues (such as funding and increasing expenses) gain recognition as a national priority and a user-pays philosophy is developed, then your role as a financial adviser will be to add value to the process, and so the system should be fostered and encouraged.

When the superannuation contributions caps were introduced, advisers quickly recognised the necessity of adequate cash flow management into superannuation and the need for early recognition of when clients required an accelerated investment plan.

A similar initiative has to be taken with aged care issues. As an industry we should proactively respond to the challenges of an underfunded ageing population with pre-planning and preparation. We need to realise that selling the family home is not the only solution. Timely research,

considered planning and objective negotiation can produce a better outcome.

We need to accept that aged care advice will become a medium- to -long term financial strategy. It is doubtful that baby boomers will be satisfied if their only solution for funding aged care means creating an over-supplied property market by all simultaneously divesting the family home, whilst also trying to achieve fair market value.

Only a financial adviser dealing with the client and their family can provide the objectivity and expertise to not only supply the best financial solutions, but also to help minimise stress and family discord at a time when it is most required.

Decisions made in haste Frequently aged care decisions are made in haste simply to secure a bed. These decisions may not be the most appropriate from a location, facilities or a price

perspective. Decisions are made on an emotive or expedient basis, where the fear of missing out or settling family discord takes priority over the balanced consideration of complex issues and financial affairs, particularly where the biggest asset is the family home.

This is when a financial adviser can provide significant value-added professional services. Many families make decisions when they are unaware of some of the fundamentals such as: • The options with the family home • Alternatives to fund an accommodation bond • The existence of means-testing exemptions, and • The ability to objectively negotiate reduced fees with the aged care facility.

i s a g e d c a re a d v i c e a va l u e - a d d e d service which comfortably sits in the fee-for- service regime, but securing a constant source of referrals in this changing world needs to be a strategic priority handled with competence and confidence. Timely advice from a financial adviser who is a specialist in aged care will not only provide a positive result for clients, but it will also provide the adviser longer and stronger relationships with clients.

Whether it is lobbying the Government to increase the level of support for aged care, or increasing your knowledge in aged care services, addressing aged care issues has moved from “maybe we should get involved” to a “we have to get involved” for advisers - and all of us in the financial advice industry.

Adviser realities in this area Aged care is a growing opportunity for professional financial advisers. Not only

Martin Breckon is the technical services manager at IOOF.

www.moneymanagement.com.au May 10, 2012 Money Management — 35

Asset Allocation

Strategic or tactical?

When it comes to asset allocation, the focus has shifted from beating benchmarks to the requirement that liabilities are met, writes Richard Skelt.

A

sset allocation has never been more important than in this post-financial crisis period.

Determining a sensible strategic asset allocation is the key determinant of long-term performance, but it can be daunting.

A retail investor selecting an appropriate portfolio for retirement savings or an institution investing on behalf of others is faced today with a bewildering array of choice.

The options have expanded beyond recognition since a portfolio of government bonds was the norm.

The fundamental challenge when setting allocation policy is the lack of certainty about returns across the investment landscape. If we consider a simple stocks, bonds and cash portfolio, what can we say about likely returns for the next five years? Or the next 25?

A key point is that our assumptions must reflect reasonable beliefs about the future rather than simply mirroring the experience of the past. It is all too easy to take the last fifteen or twenty years of market data and feed it into an optimiser to come up with a recommended portfolio. However, unless we see an exact repeat of the same financial conditions and returns, this approach is highly unlikely to be optimal.

The performance of bonds in recent decades illustrates this neatly. Most of the major bond indices have their start date in the early 1980s – a time when government yields were in double digits. Since then, we have seen yields fall to low single digits. The drop in yields has led to a steady tailwind of capital appreciation so that bonds have shown very strong returns both in absolute terms and relative to other asset classes. But with government yields of 2 per cent or lower in the major economies, there is precious little prospect of matching those past returns from this starting point. A reversion of yields to their long-term average would result in low or negative returns. Were we to use the last thirty years of the Government bond index as a predictor of returns over the next thirty years, we would be doomed to disappointment.

If we can’t use historical returns as the input for our modelling then what can we do? This is where some hard thinking is needed to create a robust framework for estimating future returns for asset classes and also their statistical distributions.

Many people choose to use a risk premium approach when addressing the question of returns. The idea is that investors are compensated for holding risky assets, so that over the long run they receive a greater return than they would achieve in a risk free asset. This additional return is termed a risk premium.

Historical analysis over a period of more than a hundred years and over several geographies suggests a defensible risk premium assumption for equities would be something like 4 per cent a year over cash.

Does this mean that we should expect equity returns to be 4.5 per cent over the next 12 months given a current cash rate of 0.5 per cent?

No. The concept of risk premium only makes sense when considering very long periods of time. Equity markets are volatile and the chance of us seeing a 4 per cent excess return in any 12-month period is slim. However, the longer the holding period the more confident we should be of achieving an annualised excess return over cash of this order of magnitude.

History tells us that buying equities when they are expensive results in a

36 — Money Management May 10, 2012 www.moneymanagement.com.au

significantly lower five to 10 year return than if we buy them when they are cheap.

However, we do not think it is right to factor current market valuations into longterm return assumptions. It is a good discipline to think of long run return assumptions on the basis of money that will be invested five or 10 years from now when the situation is likely to be very different from today. This is helpful, because it allows us to separate opportunistic thinking from long-term strategic thinking. If we take a long enough time horizon we can ignore short-term market dynamics.

In practice, we model strategic allocations over 40 years. While we can reduce the length of the modelling period, we have to recognise that this increases the variability of outcomes.

Forty years is a period consistent with the lifecycle of a typical worker making

contributions into a pension scheme or with the sort of time horizon a sovereign fund storing wealth to distribute to future generations may have in mind. If one of the asset markets in our allocation is currently judged to be at an extreme, then we aim to address this through a tactical asset allocation discipline which explicitly seeks to take positions according to shorter term inputs in order to generate additional return or to protect capital.

This approach allows us to be very clear about the proportion of the total portfolio held in a particular asset class that derives from long-term considerations and how much derives from short-term tactical positioning. Attempts to create a less wellseparated approach led to a lack of clarity about exactly what role each percentage holding is playing in the portfolio and how its performance should be judged.

One area where timescale is at the forefront of the asset allocation question is ‘target date’ funds. These are funds where the investment manager explicitly manages the asset allocation to match the investor’s time horizon. An investor in their twenties saving for retirement should be able to tolerate a lot of equity risk. Their largest asset, when projected to the expected retirement date, is the value of contributions yet to be made. A bear market in equities would allow them to buy at lower prices and profit from the recovery, even if this takes a long time.

An investor in their sixties will not have the same tolerance for equity risk. If they have 100 per cent exposure to equities just before retirement and markets fall significantly, there is a real risk they will be unable to make good the damage done – either through a recovery in the market or through increased contributions. This argues for a far more conservative allocation.

So over a 40-year time period, the asset allocation should change from a more growth oriented portfolio to a much more conservative one. Many investors struggle to implement such a strategy unaided.

Asset allocation is the key factor in determining the performance and volatility of long-term investments. Deciding on an appropriate strategic asset allocation requires the consideration of a wide range of factors.

In a time when markets seem particularly unpredictable, disciplined asset allocation provides a way to generate more consistent returns at reduced volatility by taking calculated risks. The importance of experience and common sense as well as a robust and well considered approach to modelling should not be underestimated.

Richard Skelt is chairman of asset allocation at Fidelity Worldwide Investment.

Toolbox

Can members

have their cake and eat it, too?

A recent decision made by the ATO could potentially allow members to maximise both their super contributions and other related tax deductions without exceeding their cap.

I

n March the Australian Taxation Office (ATO) released Interpretative Decision ID 2012/16 Superannuation Excess Contributions Tax: concessional contributions – allocation of contributions (the ID). It provides support for the use of contribution reserves to allow members to make contributions in one financial year, but to not have them included in their contribution cap until the following financial year.

This is important as it could potentially allow a member to maximise both their contributions and any related tax deductions, but without exceeding their contribution cap.

Facts of the ID A self-managed super fund (SMSF) member (under age 50) made a number of concessional contributions to their fund as follows: • 4 April 2011 – personal deductible contribution of $25,000, which the trustee immediately allocated to the member’s account

• 28 June 2011 – personal deductible contribution of $25,000, which the trustee applied to an unallocated contribution account • 4 July 2011 – the trustee allocated the second $25,000 contribution to the member’s account as per Superannuation (Industry) Supervision Regulation 7.08(2) which requires a contribution to be allocated to a member within 28 days after the end of the month in which the contribution was made, or within such longer period as is reasonable in the circumstances In the ID, the ATO confirmed that the member was allowed a deduction of $50,000 for the personal deductible contributions they made in the 2010-11 financial year, but they were not assessed to have exceeded their concessional contribution cap in that year as the second contribution was treated as a concessional contribution in the year of allocation rather than the year of receipt.

In outlining its reasoning, the ATO noted that where a concessional contribution is allocated to a member’s account

in a different year to when it was made, the strict application of the relevant tax provisions appears to result in the contribution being counted twice, namely when it was received by the fund and when it was allocated to their account. In reviewing the Explanatory Statement to the relevant regulations, the ATO determined that it shows a clear intention not to include a contribution in concessional contributions twice. Consequently, the ATO confirmed that the second contribution should be treated as concessional contribution in the year it was allocated to the member’s account, not it the year it was made.

Practical issues Before trustees start applying the concepts in the ID to their own circumstances, there are some important practical issues that advisers should be aware of. These are summarised as follows: Contributions won’t align with deductions claimed Where a member makes a personal

deductible contribution to an SMSF in a year and the trustee then allocates that amount to a contributions reserve, the trustee is not required to report the contribution as being made for the member in the SMSF’s annual return that year. Instead, the ATO has advised t h a t t h e t r u s t e e s h o u l d re p o r t t h e amount allocated from the reserve as an assessable reserve allocation in the year it’s allocated. The ATO will then include the reserve allocation in the member’s concessional contributions for that year.

As a result, the amount the member claims as a deduction for their personal contributions in their tax return will not align with the amount of personal contributions the trustee will report for them in the SMSF annual return that year.

Therefore, in a situation like the ID, the ATO would disallow $25,000 of the $50,000 deduction claimed, as the trustee will only have reported personal contributions for the member of Continued on page 38

www.moneymanagement.com.au May 10, 2012 Money Management — 37

Toolbox Continued from page 37 $25,000. While this situation can be resolved by advising the ATO of what has occurred, the member and their accountant should be advised to expect the deduction to be challenged.

Use of suspense accounts instead of contributions reserves In both the ID and in National Tax Liaison Group meeting minutes of June 2009, the ATO confirmed that a contribution does not need to be allocated to a re s e r v e b u t m a y b e p a i d i n t o a n account, such as a suspense account or unallocated contribution account, prior to allocation to fund members.

Howe v e r, t h e u s e o f a s u s p e n s e account instead of a contribution reserve could potentially cause problems, as it is not clear how the trustee would be required to report the amount in the annual return, as it has not technically been allocated from a reserve.

For example, if the amount allocated is reported as a personal contribution instead of as a reserve allocation, the ATO would likely incorrectly categorise a personal deductible contribution as a non-concessional contribution, as the member will not have claimed a corresponding tax deduction for the amount in that year. Depending on the client’s circumstances, this could then trigger an unexpected non-concessional contributions tax liability which may take some time to rectify.

Therefore, in the absence of any guidance from the ATO on when and how an allocation from a suspense account should be reported, trustees may wish to consider allocating contributions to an actual contributions reserve. In this case, trustees would need to confirm that their trust deed allowed for reserves to be established, and the trustees would also need to formulate and implement a reserve management strategy. However, this would not normally be expected to be particularly onerous.

Does the ID apply to other types of contributions?

Although the ID refers to concessional contributions, there is no reason why the same rationale could not apply to o t h e r t y p e s o f c o n t r i b u t i o n s. Fo r example, the ID could potentially allow a 6 7 - y e a r- o l d m e m b e r w h o i s s t i l l working full-time, but who is about to retire, to maximise contributions while

CPD Quiz This activity has been pre-accredited by the Financial Planning Association for 0.25 CPD credit, which may be used by financial planners as supporting evidence of ongoing professional development. Readers are invited to submit their answers online: www.moneymanagement.com.au.

1. Where a trustee allocates a personal contribution made in June of a financial year to a contribution reserve, within what period must the trustee allocate the contribution to the member’s account? a) By the end of the month in which the contribution was made b) By the end of the following financial year in which the contribution was made c) By the end of the month following the month in which the contribution was made, or within such longer period as is reasonable in the circumstances d) Within 28 days after the end of the month the contribution was made, or within such longer period as is reasonable in the circumstances

they are still eligible to contribute by making two $150,000 non-concessional contributions to an SMSF in June, and then to arrange for the trustee allocate one of those contributions in the following financial year.

Beware Excess Contributions Tax avoidance strategies While the ID provides support for the use of contributions reserves, trustees should not rely on them as a strategy to avoid the application of Excess Contributions Tax. For example, an SMSF trustee may wish to refrain from breaking up single contributions that have partly exceeded a member’s contribution cap for the purpose of allocating the excess portion in a separate financial year. In this situation, the member risks being deemed to have entered into scheme to avoid Excess Contributions Tax. Craig Day is senior technical manager at Colonial First State.

38 — Money Management May 10, 2012 www.moneymanagement.com.au

2. In relation to ID 2012/16, which of the following statements is correct? a) The member was allowed a deduction of $50,000 in the 2010/11 financial year despite the fact that the trustee only reported personal contributions of $25,000 for the member b) The member was allowed a deduction of $25,000 in the 2010/11 financial year because the trustee only reported personal contributions of $25,000 for the member c) The member’s $50,000 deduction was completely disallowed on the basis that they were judged to have entered into a tax avoidance scheme d) The tax law only allows a deduction to be claimed for a member for a personal contribution in the year the contribution is allocated to the member’s account 3. Under a strict application of the tax provisions, how many times would a personal deductible contribution that was allocated to a reserve prior to being allocated to a member’s account in accordance with SIS Regulation 7.08(2) be counted as a concessional contribution? a) Once – when it is allocated to the members account b) Twice – once when it was made to the fund and then again when it was allocated to their account c) Once – when it was made to the fund d) It will not count at all if the contribution was allocated to a reserve

For more information about the CPD Quiz, please contact Milana Pokrajac on (02) 9422 2080 or email milana.pokrajac@reedbusiness.com.au.

MONEY MANAGEMENT iPad® edition

Try our interactive CPD Quiz, available in the Money Management iPad® edition FREE from the App StoreSM. iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

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

HEAD OF ADVICE Company: Terrington Consulting Location: Adelaide Description: A renowned organisation in the financial services sector with a national presence is currently seeking a highly motivated, energetic and experienced general manager to head up their Adelaide team.

The successful candidate will be accountable for delivering budgeted revenue and funds under management results, managing risk, and for the overall management of a team of highly experienced and qualified financial advisors.

The ability to build collaborative relationships with both internal and external stakeholders and a proven ability to coach and mentor in a financial services setting are essential attributes.

Previous experience as a financial advisor with the relevant qualifications (ADFP minimum, CFP desirable) would be highly regarded.

For more information and to apply, visit www.moneymanagement.com.au/ejobs or call Myra Crowell from Terrington Consulting on 0499 771 629.

FINANCIAL ADVISER Company: Terrington Consulting.

Location: Adelaide Description: A boutique financial advisory firm is seeking a talented and proven financial adviser with the ability to bring clients with them via an existing book of business.

Opportunities

The successful candidate will have an excellent knowledge around superannuation, tax and Centrelink, and experience in dealing with HNW individuals.

They will be dedicated to providing their clients with a high quality, specialist and strategic approach and have the ability to procure new clients via their own centres of influence.

In return the successful candidate will have access to an excellent remuneration package, as well as the ability to build equity under a corporate structure.

For more information or to apply, visit www.moneymanagement.com.au/ejobs or call Myra Crowell on 0499 771 629.

RISK ADVISER Company: Terrington Consulting Location: Adelaide Description: A leading business advisory firm is currently seeking an enthusiastic individual to join their wealth management team as a financial adviser – risk specialist.

As a financial advisor – business risk specialist, your predominant responsibility will be for the detailed delivery of risk insurance advice for the firm's business clients. An excellent knowledge of tax structures, entities, estate planning and SMSF is therefore essential. You will work with clients to review their risk insurance needs and ensure they have appropriate cover. The ability to identify and capitalise upon business growth opportunities for the firm will be a crucial

aspect to your role.

A proven record in a similar financial planning role is a must. A demonstrated ability to build and maintain effective client relationships is also required of successful candidates.

You will be rewarded with an enjoyable and stimulating work culture, with state-of-the-art facilities and a competitive remuneration package.

For more information visit www.moneymanagement.com.au/ejobs or call Myra Crowell on 0499 771 629.

PARAPLANNER Company: Terrington Consulting Location: Adelaide Description: A financial services business is currently seeking a self-motivated and energetic paraplanner to join their growing team.

Successful applicants will have demonstrated practical experience in the preparation of SOAs, excellent market and technical knowledge (including risk, investment and superannuation strategies) and have an extremely high level of analytical skills and attention to detail.

The completion of a Diploma of Financial Services and RG146 compliance are essential, though the completion or commencement of an Advanced Diploma would be favourable.

Candidates with experience using XPlan will be highly regarded.

For more information and to apply, visit www.moneymanagement.com.au/ejobs or call Myra Crowell on 0499 771 629.

SERVICE ADMINISTRATOR – COMPLIANCE Company: Terrington Consulting Location: Adelaide Description: One of Australia’s largest financial services organisations, which provides a variety of products and services to its longstanding client base, is looking for an administration officer to join their busy compliance team.

In this position, you will be required to provide timely and quality customer service and administrative support to various departments within the organisation, working within daily workflow requirements and service level agreements. As the successful candidate, it will therefore be essential that you have excellent written and verbal communication skills, a high attention to detail, the ability to prioritise well and a methodical approach to your daily workflow. Previous experience working within financial services is essential, and specific knowledge of financial markets, investments (including direct equities and fixed income products), managed funds or general accounting/financial planning terms and practices will be a distinct advantage.

For more information and to apply, visit www.moneymanagement.com.au/ejobs or call Myra Crowell on 0499 771 629.

THIS EVENT SOLD OUT IN SYDNEY, SO

SAVE YOUR SEAT

REGISTER NOW www.moneymanagement.com.au/ professional-development/seminars and follow the prompts

SMSF Essentials 2012 – Melbourne This CPD accredited one day workshop is an essential event for financial planners, accountants, trustees, lawyers and SMSF professionals who are looking for an update on the latest issues, rulings, strategies and developments in the SMSF sector.

SMSF: What’s hot

Top 5 Strategies

The latest issues and legislative changes.

Tips and traps of the leading strategies.

Strategic Modelling

Super death benefits and blended families

Applying actuarial modelling skills to some common and emerging strategies.

How to structure an appropriate and tax-effective financial result for all family members.

Earn

CPD points

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9-10 points expected SILVER PARTNERSHIP

MELBOURNE WEDNESDAY 30 MAY 2012 ATLANTIC GROUP, DOCKLANDS

www.moneymanagement.com.au May 10, 2012 Money Management — 39

Outsider

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

We put the fun in funds management

O

utsider once again will dust off his top hat and tails to attend this year's Money Management Fund Manager of the Year Awards.

He will do so not only because he wouldn't miss the annual knees-up for quids, but because it’s Money Management's 25th anniversary.

Of course, many of the people who will attend the inaugural awards are no longer in the industry, and a few have gone on to another sort of reward, but Outsider knows one or two of the originals who will be there.

Those not attending will include federal politicians – not only because this is Budget week in Canberra, but

because the MM awards coincide with Opposition leader Tony Abbott's Budget reply speech.

Outsider knows there's plenty of good entertainment at the fund manager awards, but he's not sure it compares with current events in the national capital.

CEOs show bags of sympathy

The aye of the beholden

HAVING reported on salaries and bonuses that some financial services executives receive, Outsider can only conclude that these chaps sleep on mattresses which are made of money and attached to gold-plated frames.

Knowing that many fortunate individuals tend to forget about the ugly issues of the world, Outsider was touched by the number of CEOs from the financial services industry who have chosen to do exactly the opposite for a night.

It is not often that Outsider feels all warm and fuzzy inside, so this marks a momentous occasion.

On 16 June, CEOs and senior executives from all over the country will “rise to the challenge”, get their sleeping bags out and spend a night on the streets – all in a bid to raise awareness about homelessness.

As usual, the financial services industry is not underrepresented. Senior execs from institu-

OUTSIDER has always been a fan of political comedy, and as such would like to doff his cap to an emerging and talented political satirist called Bill Shorten.

Not since the days of ABC’s Rubbery Figures satire has Outsider had as good a belly laugh as the one he enjoyed watching some of Shorten’s latest work.

It is already well documented that Shorten’s attempt to mock a mis-speak from Opposition Leader Tony Abbott regarding the date of a Reserve Bank meeting backfired spectacularly on the Minister when he repeatedly and incorrectly insisted the Bank met on the second Tuesday of every month.

But it turns out Shorten was just warming up.

Taking his role as Prime Ministerial lap dog to new extremes, Shorten turned a recent interview on Sky News PM Agenda into complete farce by repeatedly insisting his views were the same as those of the Prime Minister – while freely admitting he did not yet have any idea what those views were.

As if in a scene from Yes Minister come to life, Shorten, when asked for his views on whether Peter Slipper should return to Parliament as Speaker before sexual harassment

tions such as Macquarie, UBS, Bendigo and Adelaide Bank, FIIG Securities and State Trustees will experience homelessness for a night, already having raised thousands of dollars for St Vincent de Paul’s homeless services across the country.

Even this year’s winner of the Young Achiever of the Year award and chief executive of Wealth Enhancers, Finn Kelly, will participate in the challenge.

Outsider will not take part in this year’s challenge, but he reckons three decades sleeping next to Mrs O definitely constitutes “sleeping rough”.

40 — Money Management May 10, 2012 www.moneymanagement.com.au

claims were resolved, started off by stating that Prime Minister Julia Gillard had addressed this matter already, and “I haven’t seen what she said but let me say I support what it is that she said”.

A bemused David Speers asked, “hang on, you haven’t seen what she said” – before Shorten cut him off with “but I support what she said”.

Further pressed for his own views but determined to keep digging a hole for himself, Shorten unashamedly asserted “my view is what the Prime Minister’s view is”.

When pushed firmly into a corner, Shorten eventually conceded that he was actually opposed to sexual harassment. But then, realising that it almost sounded as if he actually held an opinion, Shorten quickly got back on message.

“These matters have yet to be established and I support what our Prime Minister has said,” he repeated.

“But you don’t know what that is!” confirmed an incredulous Speers.

“Well, I’m sure she’s right!” Shorten shot back.

Outsider is attempting to picture former Labor heavyweights Keating, Hawke or Whitlam as junior ministers repeatedly insisting they held no views of their own – but it turns out it’s just not something a future PM would do.