Print Post Approved PP255003/00299
Vol.26 No.20 | May 31, 2012 | $6.95 INC GST
The publication for the personal investment professional
www.moneymanagement.com.au
DEALER GROUP HEADS ROLL: Page 12 | EQUITIES EQUILIBRIUM: Page 23
Executive exits a sign of the times By Andrew Tsanadis and Bela Moore A NUMBER of recent high profile executive departures reflect the current economic environment and cost-cutting measures being undertaken across financial services and banking organisations, according to recruitment experts. Australian Financial Services (AFS) chief executive and managing director Peter Daly was one recent executive made redundant from his position after the AFS board decided he was pursuing different objectives. Similarly, Perpetual 2012 chief executive Chris Ryan left in February after disagreeing with the board on the company’s future direction. Simone Mears, Profusion’s head of executive management, said macro-concerns and political uncertainty in Australia were driving leadership exits. “Investors haven’t had confidence in the market locally, inflows into platforms have been very low and this has impacted the
Peter Daly financial planners, impacted the fund managers and everyone else in the corporate structure,” she said. Despite this, she doesn’t believe there has necessarily been a higher turnover of executives than in the past. “When organisations have made roles redundant based on cutting costs or making decisions to shut down businesses
or projects, I don’t think senior executives are being targeted, I think it’s across the board”, Mears said. Mergers and internal restructuring have impacted a number of executives, including former chief executive of Colonial First State Brian Bissaker and former Snowball chief executive Tony McDonald. Bissaker’s position was cut after a significant reshuffle separated the advice function from the day-to-day business, while McDonald left Snowball in October last year after it merged with Shadforth. Matthew Drennan found himself on the line when his role as executive general manager of investments at Zurich Financial Services was made redundant after a company reshuffle in February. According to Collins Consulting managing partner Sharon Mackie, the funds management industry is going through a “white collar recession”. Executives in funds management businesses are no longer looking for the lucra-
tive packages that were offered in the past. Instead, the majority were stepping down in search of more rewarding positions, Mackie said. Indeed, a series of high-end executives have left major funds to start their own companies. When former chief executive of Professional Investment Services (PIS) Robbie Bennetts moved on, the company started losing some staffers as they chose to join him in his private venture, Robbie Bennetts Enterprises. Bennetts left after PIS merged with Centrepoint Alliance in June 2011, staying on as a part-time consultant until October when the relationship suddenly broke off. After overseeing the successful integration of Tyndall and Japanese fund manager Nikko Asset Management, Craig Hobart chose to resign as managing director in March and said he was looking forward to a change. “Executives are looking for a role that is going to provide them with the challenge and the mandate to make a difference,” Mackie said.
Platforms should take haircut on fees Planners missing a trick on software By Benjamin Levy
CONSENSUS is building in the wider financial services industry that platforms and asset managers should shoulder the burden of lower advice fees being demanded by clients. Speaking at a recent Vanguard roadshow in Melbourne, Vanguard head of intermediary distribution Michael Lovett said planners should be putting pressure on other parts of the value chain to meet client demands for lower fees, rather than cutting their own cost margins. Lovett said that advisers could give clients a fee discount for advice, but suggested that the rest of the value chain – including active managers – should pay for it. “If you were to play around with
the platform fee, you could bring that down to 0.4 per cent, while the manager fee could be as low as 34 basis points ... you can bring the fees to the client down to $4,000, saving 20 per cent of the fees the client is paying,” Lovett said. Lovett used figures of 0.5 per cent for a platform fee, a manager fee of 0.9 per cent to 1 per cent, an advice fee of 0.5 per cent, and a dealer group fee of 0.1 per cent. Funds management company fees could also drop, he said. With the amount of work required from advisers, their costs should be kept intact, while other parts of the value chain should come under pressure, he said. BT Financial Group head of platform product Kelly Power said
they were working to enable advisers to offer low-cost advice. The growth in one-off advice and scaled advice was putting more pressure on the platforms to offer one-off fee capability to charge for transactional advice, she said. The entire industry was facing margin compression and BT was responding by offering a broader range of index options and launching low-cost alternative platforms, Power said. Advisers shouldn’t carry the whole burden of low-cost advice, she added. However, Pengana portfolio manager Steve Black said that clients would accept higher costs if the fund manager was providing added value. Continued on page 3
By Chris Kennedy MANY independent financial planners are not taking full advantage of the capabilities of their financial planning software, contributing to practice inefficiency and missed business opportunities. Managing director of The Risk Store Peter Wincott said that the client relationship management (CRM) opportunities provided by software are being particularly under-utilised. “A lot of financial advisers, whether in the risk space or the wealth creation space or both, are still not utilising technology and the software that’s available to them these days to drive efficiencies,” he said. If all the relevant client data was
correctly entered, software could be used to send referral notifications to businesses with which the planner shared a referral relationship, such as an accountant. That way the accountant knows the clients he or she has referred are being serviced and will have greater confidence in the referral relationship, Wincott said. Software can also be set up with family information so the planner can send the client a message on their birthday, or their children’s birthdays. By adding family information the planner can also keep track of whether to offer clients child trauma insurance, and it can also Continued on page 3