MAGAZINE OF CHOICE FOR AUSTRALIA’S WEALTH INDUSTRY
www.moneymanagement.com.au
Vol. 33 No 2 | February 28, 2019
22
TECHNOLOGY
How can tech help advice practices post-RC?
13
SURVEY
What will removing grandfathering cost advisers?
FE CROWN RATINGS
Using technical advice to achieve client goals
AFA object to ALP’s 2019 end-date for grandfathering BY MIKE TAYLOR
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Crown rebalance reflects Aussie market slump THE biannual recalculation of the FE Crown Ratings reflected a broad-based fall in the markets last year. Only nine Australian broad cap equity funds received a fivecrown rating, compared with over four times that in the September calculation. Inversely, the global broad cap equity sector saw 25 five-crown rated funds, compared with nine at the last calculation. And, while most Aussie broad caps battled against sentiment flowing on from the Royal Commission, a drop in house prices and a pretty tough Q4 last year, some stalwarts, like Macquarie Investment Management and SG Hiscock & Company managed to grab hold of a five-Crown rating. Looking at style more generally, the market showed no mercy to value or growth, but cyclicals, which dominate in value styles, were hit the hardest, meaning the market worked against value more than it did growth. Strategies that managed to encompass diversity in terms of both geography and stock selection, however, were those which shone in the period. FE’s head of data, Australia and New Zealand, Stuart Alsop, said the equity market in general has become more volatile in recent times, and there are signs this volatility is here to stay, so now, more than ever, it is an opportunity for fund managers, portfolio managers and strategies to set themselves apart and excel in active management.
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Full feature on page 15
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WIFS
THE Association of Financial Advisers (AFA) has issued a statement formally objecting to the Australian Labor Party (ALP’s) plan to ban grandfathered commissions on investment and superannuation products by the end of 2019. The AFA chief executive Phil Kewin said his organisation believed that such a move would hand yet another victory to the big end of town at the expense of small financial advice businesses and their clients. “Attempting to turn off grandfathered commissions in such a short time frame will only serve to benefit institutions who will be able to hold onto them, with no compulsion to pass any benefit on to consumers,” he said. “Many clients currently receiving advice
services for these payments will lose access to them, without any reduction in their fees.” “If the concern is that some advisers are receiving grandfathered commissions without providing a service, then there are other options to address this issue, without negatively impacting those clients who are in grandfathered commission paying products and are happily receiving services and advice from their financial adviser,” Kewin said Kewin said the argument that grandfathered commissions have continued for too long is not reflected in the facts claiming that “there were zero cases of inappropriate financial advice as a result of grandfathered commissions during the Banking Royal Commission hearings and Continued on page 3
13 super funds head for the exit THIRTEEN superannuation funds have accepted they can’t cut the mustard under the Australian Prudential Regulation Authority’s (AFCA’s) member outcomes arrangements and are exiting the industry. APRA chairman, Wayne Byres has told the Senate Economics Committee that the regulator had identified an initial group of 28 funds which it believed where delivering poor outcomes for members “across a range of dimensions”. He said the trustees of those funds were challenged by APRA to justify how they were delivering value for members. “Of these, 13 have looked at the evidence and have exited or are exiting the industry, and another seven have changed product pricing or fees in some way to make their offerings more competitive,” Byres said. He said that, of the remainder, five were deemed on further exploration to have better performance than first appeared, and actions in relation to the other three were expected to be agreed shortly. Continued on page 3
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