Retirement funds under management held in APRA-regulated funds has increased almost 50% since 2015, meaning there’s never been a better time to specialise in retirement planning. But first, it’s important to know what options are on the table for retirees.
Learn more at the Best Practice Forum on Retirement Income, as we assist financial advisers in navigating strategies and key considerations for clients transitioning to or already in retirement.
Having now been in force for some months, focus has turned to how best to measure the success of the Retirement Income Covenant, however doing so may prove as difficult as devel oping the strategies themselves and then some.
The RIC came into force in July, requiring all super funds to articulate strategies for maxim ising financial outcomes for retiree members. Specifically, trustees must maximise expected retirement income while managing risks and providing flexible access to funds.
The legislation affords trustees the discretion ary power to define the cohorts within the fund or sub-classes of beneficiaries, how the trustee defines the meaning of retirement income and the period of retirement. Further, APRA and ASIC don’t intend to issue detailed regulatory guidance on how super funds should implement the Covenant.
However, three months on, Mercer research found that interpretations of the RIC obliga tions differ vastly across super funds.
“We found variations in size, detail, target audience and messaging. Some trustees have adopted a compliance-based approach, while others focus on embracing the intent of the Cov enant obligations,” Mercer stated.
Moreover, Mercer discovered a great deal of inconsistency between funds with respect to the website accessibility of its strategies. The asset consultant also claimed that many summaries were brief and had the feel of being little more than a placeholder.
Regulators have confirmed they will release further detail and observations, plus give ex amples of best practice, to assist the industry in continuing to evolve retirement income strate gies. But there still remains little to no guidance on measuring the success of these strategies.
At the recent JANA Annual Conference, Bennelong chief client strategy officer Amara Haqqani said the super industry is so used to fundamentally simple and one-dimensional quantitative measures of success. However, retirement is innately individual. Another con sideration is that success is consequently not defined inside a product but rather by its appli cation to its user, she added.
“The problem in our industry is that it’s an intellectually superior quantitative world for us and survey results and net promoter score
(NPS) are never as important or sexy or valu able as hardcore returns,” Haqqani said.
“In this industry, we tie ourselves in knots over anything outside the norm. Retirement has taken so long to embed in this part of the indus try as a concept because it’s not simply the usual transactional, ‘Give us your money, we’ll apply our intellectual superiority and invest it for you in a proprietary black box and give it back to you when you need it, hopefully with a larger amount than what you gave us’.”
Haqqani said this approach isn’t what will af ford members a satisfying retirement. Rather there are things beyond the investment pale that determine success, like health, community, feel ings of belonging and participation in society, of which money is just the enabler.
Haqqani says funds will be succeeding for members the minute retirement isn’t treated as just another product to produce. Likewise, when regulators stop viewing retirement prod ucts as something else to benchmark against eachother and when super funds are coming together, bridging their investment and non-in vestment silos inside their organisations to solve client problems together, she said.
“The top member problem is that of con sumption of investable assets for and during retirement. We know that we’re getting there and for me then we know that our commercial successes are aligning with our member’s inter ests,” Haqqani said.
“We know when it isn’t just about us and our intellectual superiority, it then becomes about the member and their interests.”
Meanwhile, for Australian Retirement Trust head of asset liability management Brnic Van Wyk, a measure of success in retirement is prob lematic because you’ll only be able to know there was enough income or whether all needs were met properly when a life ends.
“I look at what we have in our industry now af ter 30 years of becoming quite sophisticated with making investment decisions and running appro priate sophisticated investment teams, we’re now starting to see measures of that,” Van Wyk said.
“This shows that it took quite some time in a very mature part of our industry for us to be able to appropriately compare, contrast and measure success. We need to allow ourselves that same time, growth and maturity before we’re actually able to do that as well in retirement.” fs
Amara Haqqani chief client strategy officer Bennelong
Most Financial Planning Association of Australia (FPA) members only support the introduction of an experience pathway if there is a sunset period included.
In formulating its submission on the proposed education pathway for experienced financial advisers, the FPA surveyed its members, majority of which have already completed the existing education requirements.
The FPA said 55% of the survey respondents oppose the introduction of the pathway as proposed. Further, 73% said they would only support its introduction if it came with a sunset. The completion of an ethics unit should still be required though, 80% said.
“While the FPA shares the government’s goal of making financial advice more affordable and accessible to Australian consumers, simply providing an experience pathway alone is not going to achieve a reduction in the cost to produce advice as it does not address the regulatory inefficiencies
Continued on page 4
Quality of Advice Review chair Michelle Levy believes providing financial advice with a focus on best interests duty and duty of priority is doing things the wrong way.
Commenting on her proposal to replace the best interests duty and duty of priority with a requirement to give good advice, Levy said she has chosen that formulation to provide customers with what they want.
“Let’s actually put that in the law, an obligation to give good advice. It’s a big shift because the current law very much focuses on best interest duty, duty of priority for that process,” she said.
Levy said she has had a lot of discussions around the current “checklists”.
“ASIC talks about this; you go through the safe harbor that’s in the current law and if you comply with those process steps then you are taken to have acted in the best interest of your client,” Levy said.
Is greenwashing a serious issue in Australia’s funds management sector? It’s a question we put to Financial Standard readers recently, and the results we got were rather telling.
Close to 70% of respondents said that it is, 17% said it’s not and a further 14% said they can’t be sure.
Releasing its priorities for 2023 recently, ASIC said this would be one of its key focus areas. The regulator is already understood to be investigat ing several listed entities, superannuation funds and product issuers over possible greenwashing or overstating of green credentials.
This is in large part because the number of sustainability-labelled products on offer in Aus tralia more than doubled between 2019 and 2021. On a global scale, assets held within these product types are expected to hit US$53 trillion in the next three years.
But what actually came of ASIC’s muchhyped review into the issue? Apparently, not a whole lot. ASIC itself confirmed to FS Sustain ability that it would not be releasing results of the review. Instead, its review simply helped shape the guidance the regulator put forth about half way through this year – we’ll never know which super funds or fund managers, or which of their products, have so far potentially duped investors.
So, what’s the point? What good is a review of ESG or impact investing products if none of those invested in the products are made aware that their money may not be making the differ
ence they thought it was? I don’t believe for one second that every product was perfect, and no evidence of greenwashing was uncovered.
It’s ironic ASIC would choose to not release the findings, given one of the key pillars that underpins the ESG movement is the demand for greater transparency. In a recent article, ASIC deputy chair Karen Chester herself said: “Transparency and trust are paramount as the market for these products continues to develop and grow… Misdirected investment here will inevitably be at great economic cost.”
It’s also all about holding industry to ac count for the consequences of the investments it makes; I don’t see a whole lot of that going on at the moment from ASIC. It’s almost like the regulator is more concerned with being seen to be doing something than actually doing it…
It’s also apparently working with the Austral ian Consumer and Competition Commission and the Clean Energy Regulator to clamp down on corporates, the ACCC said in September.
But, based on what we’ve seen so far, ASIC seems to be taking a rather soft approach on the funds management side. Yes, it’s an evolving space, but if they know enough of these prac tices to put in place information sheets, regula tory guides and the like, then they know enough to recognise greenwashing when they see it and call it out, surely?
My concern is whether this approach threat ens to undermine ESG altogether. There has
been a very concerted, anti-ESG movement emerging in recent times around the world. This “anti-woke” crusade is being led by US conservatives like Florida governor Ron De Santis, who recently banned the state’s pension funds from making investment decisions based on ESG factors and “ideological agenda”.
Just days before writing this editorial I read of an ETF manager in Idaho who spent sev eral years investing with a “conservative ESG strategy”, only to switch to a “Biblically respon sible” approach. He’s stripped any mention of ESG from his products, renouncing ESG which he now believes has been co-opted to push a “harmful, Marxist agenda”.
Now, the US is obviously quite different to many other nations around the world in many ways, but if we look at the UK, the newly in stalled pensions minister Alex Burghart has an extensive record of voting against measures pro posed to prevent climate change.
Is this something that could happen in Aus tralia? Only time will tell. But so long as such a high proportion of investment products are thought to have been greenwashed, and so long as ASIC is reluctant to call out offenders and hold them to account, and consumer and lobby groups’ voices are louder than the regulator’s, when details do emerge, penalties are imposed or court proceedings are initiated, investors’ confidence and trust in ESG stands to take quite the hit. fs
chloe.walker@financialstandard.com.au
andrew.mckean@financialstandard.com.au
alex.dunnin@financialstandard.com.au
john dyall@financialstandard.com.au
sanjesh.pinnapola@financialstandard.com.au
stephanie.antonis@financialstandard.com.au
jessica.beaver@financialstandard.com.au
shauna.milani@financialstandard.com.au
mary-clare.perez@financialstandard.com.au
A growing portion of working Australians are worried that they won’t have enough savings for retirement, according to AMP’s Financial Wellness report.
Data from more than 2000 respondents found that concerns about retirement have escalated, with those worried they won’t have enough to retire increasing to three in five Australians (up from two in five in 2020).
Over the same two-year period, the number of people who believe they’ll need to work longer has risen by more than 10%, while one in five don’t believe they’ll achieve their desired standard of living in retirement.
Employees also expect to retire with $200,000 less than what they think they need, the report said.
The data shows women are significantly more anxious about retirement, with 70% having saying they don’t think they’ll have enough to retire, compared to 56% of men.
Almost half of women (45%) and half of the general population aged 50-59 are concerned about how higher costs will affect their retirement lifestyle.
“The research shows that millions of Australians are fearful they will not have enough savings for their retirement,” AMP general manager retirement solutions Ben Hillier said.
“Heightened by increasing cost of living pressures, this fear of running out stems from a basic lack of understanding- an awareness gapof their finances and the retirement system.”
Hillier said that as a result, many Australians are under-spending in retirement, passing away with as much as 90% of super savings untouched.
However, the number of people starting to think about their retirement plans has doubled from two years ago. Those who have no specific retirement goal has dropped from nearly 60% to just around 40%. The key goals identified include paying off the mortgage and saving more super.
“While it’s encouraging that more Australian workers are now thinking about their retirement plans…this still only represents a third of the population,” Hillier said.
“Our collective challenge is to increase this number, but critically, also turn thoughts into actions.”
The good news is that information and support is readily available, and simple steps can help Australians feel more comfortable and confident about retirement, he said.
“And with the government’s Retirement Income Covenant, the superannuation industry is more focused than ever on helping members retire well through better products and services,” Hillier said.
“The Quality of Advice Review should also lead to more affordable and accessible financial advice.”
Mergers and acquisitions are on our agenda but we’re not alone in that.
Diverger managing director Nathan Jacob
sen 01 believes more consolidation must happen within the financial advice industry.
“I think we are one of the larger service pro viders and yet, by listed company standards, we’re small,” he told Financial Standard.
“The industry is fundamentally a cottage industry so more than half the advice firms are less than $1 million dollars of revenue. Scale creates the ability to invest.”
In June, Diverger made a bid to acquire Centrepoint Alliance, but it fell through. Regardless, Jacobsen says that mergers and acquisitions are still well and truly part of its plan.
“Mergers and acquisitions are on our agen da but we’re not alone in that. I think a num ber of the players in the market agree that con solidation needs to happen. How to make that happen is another question,” he said.
The drive to build scale does sit high on the priority list for several firms, WT Financial Group (WTL) being one. In 2021 it acquired Sentry Group and earlier this year Synchron.
WTL managing director Keith Cullen agrees scale is an important part of growth.
“One thing we’ve been able to do is really get integration benefits across the Sentry and Synchron acquisitions and remove any dupli cation out of the business, and then really fo cus on creating the right scale to deliver the right level of services to advisers,” Cullen told Financial Standard
Jacobsen said some of the challenges that the industry faced in the past and led to the Royal Commission are related to the advice infrastructure that was used.
“When I look back, one of the things that we got wrong was we didn’t invest in the in frastructure for advisers and licensees to rely on,” he said.
“Our view at Diverger is that these chal lenges need to be solved and small advice businesses don’t have the capacity to solve that themselves, because they’re busy serving their clients.
“We see us and others playing a role in building the muscle, building the scale to ac tually go and invest. That includes automating some of these manual processes that means using digital advice tools, but also just bring ing institutional scale to small businesses. That’s how we think about scale.” fs
MLC Life is rolling out its Vivo health and wellness service to the financial advice practices it partners with.
The insurer said making the service available to financial advisers and their staff for free will help ease the high levels of stress in the industry.
The Vivo suite includes access to a panel of doctors for general, non-urgent queries, in-depth reviews of physical conditions by experts, a mental health clinic, fitness consultant and nutrition consultant.
The initiative follows Deakin University’s research that found 73% of advisers experience high levels of burnout from work, while 67% deal with some level of depression. About 17% said they are depressed most or all the time.
“The changes we have seen in the past few years have sadly
brought a huge mental health burden on advisers. Personally, I have spoken to many who want to leave the industry because things are simply too hard,” MLC Life general manager of retail distribution partnerships Michael Downey said.
The service was also made available to all MLC Life customers just last month.
“While we are helping customers to improve their health and wellbeing – from fitness consultations through to a second opinion on a medical condition from a team of experts – we wanted to offer the same service to advisers,” Downey said.
“We’re here to protect our customers, but we also have a responsibility to support the people who provide them with the vital advice that delivers that protection. Our experience shows Vivo can make a significant difference in people’s lives, and we want advisers to access that too.” fs
01: Nathan Jacobsen managing director Diverger Cassandra BaldiniContinued from page 1
created by decades of adding regulatory duplication in the form of eight regulators and overlapping regulatory obligations with little benefit for the end consumer,” the association said.
The FPA has recommended a 10-year sunset period be included in the experience pathway, in addition to 10 years of relevant experience between 2004 and 2019, a clean record, a membership of a professional association or completion of an approved ethics course, and a statutory declaration.
“If despite our concerns the government chooses to make amendments to the education standards at this late stage of the transition framework, the FPA is concerned that simply basing an exemption on 10 years of experience over the 15 years between 2004 and 2019 doesn’t consider the quality or amount of experience obtained over this period,” the FPA said.
“Simply providing an exemption at this point, given the 43% drop in authorised financial planners to date and post the exam compliance cut off, will fail to attract exited financial advisers back, nor will it remove the regulatory burden, duplication and inefficiencies which have led to the significant increase in the cost to provide advice and therefore the affordability of advice for Australians.
“In fact, our members are concerned the proposal will actually worsen adviser numbers over time, by making the profession less attractive to new entrants. If a tertiary qualification is perceived to be no longer a requirement to practice, and there is no date by which it will be, we can no longer tell young students they will be joining a trusted and respected true profession.” fs
Continued from page 1
“In my view, that’s the wrong way around - the process should be driven by the advice that spits out at the end, not the other way.”
She explained that the good advice duty is reasonably likely to benefit the client.
“That means there’s a reasonableness standard, it’s possible that there could be a range of different advice that would be good advice,” she said.
“It also means that you check the advice at the point at which it is given, not with the benefit of hindsight.”
Levy highlighted that current law regulates the provision of financial product advice, then it subdivides into two categories: general and personal advice.
“My first proposal is that what becomes regulated is the provision of personal advice,” she said.
And she suggested that personal advice is broadened somewhat “so that a person will be giving personal advice if they are making a recommendation or expressing an opinion about a financial product or a class of financial product. And they have information about the client’s objective financial situation and needs”.
“The question for the licensee, the bank, insurer, superannuation trustees is, ‘What do I need to do to be satisfied that the advice that’s been given is good?” she said. fs
Five AMP companies will pay $14.5 million for charging close to 1500 superannuation members fees for no service over the course of about three years.
The Federal Court handed the fine to AMP Superannuation, AMP Financial Planning, Charter Financial Planning, Hillross Financial Services and AMP Life, which has since been acquired by Resolution Life. All five companies admitted to the misconduct.
concerned in those contraventions. While the conduct was not deliberate, it was extremely se rious,” the judge said.
AMP was aware it was charging fees for no service to these members but did not take the proper steps to prevent it from continuing.
Breaking the penalty down, $4.8 million will be paid by AMP Financial Planning; $720,000 by Hillross; $480,000 by Charter; $2.5 million by AMP Superannuation; and $6 million by AMP Life.
The fees for no service were charged to 1452 Flexible Super members who had access to general advice through their employer. Despite moving on from that employer and no longer having access to the services, they continued to be automatically charged the advice fee.
Between July 2015 and September 2018, AMP deducted more than $350,000 in fees even though it was aware these members had ceased their employment. While the institution remediated almost $700,000, the court found AMP didn’t investigate whether it was a system ic issue or not, even though a significant number of complaints were received.
“Put simply, the advice licensees took money to which they were not entitled from the super annuation accounts of the affected members and continued to do so for a long period of time after many complaints had been made. AMP Superannuation and AMP Life were knowingly
“AMP was aware it was charging fees for no service to these members but did not take the proper steps to prevent it from continuing. AMP admitted liability regarding these fail ures and admitted it did not have the proper systems and compliance arrangements in place to ensure the payments ceased when members left their employer,” ASIC deputy chair Sarah Court 01 said.
“Superannuation trustees should treat the penalty imposed today as an important remind er to maintain robust internal governance and assurance arrangements. Trustees are respon sible for ensuring they only deduct fees from member accounts for services actually provid ed. If they fail in this obligation, they could face significant penalties.”
In handing down his decision, Justice Moshinsky said the failure to investigate the is sue reflected poorly, particularly on AMP Life, calling into question its corporate culture.
“It is surprising and concerning that repeated complaints that the [fee] had been wrongly debited from the superannuation accounts of members who had ceased employment with their employersponsor did not lead anyone within the defend ants (in particular, within AMP Life) to question whether there was a systemic issue,” he said.
“While it is not suggested that senior man agement were involved in the contraventions, in my opinion it reflects very poorly on the organi sational culture that this type of questioning did not occur.” fs
Dixon Advisory will pay $7.2 million for providing inappropriate advice and not meeting client best interests obligations.
The Federal Court found that six Dixon Advisory representatives did not act in the best interests of eight clients on 53 occasions. Each instance involved advising the clients to acquire, roll over or retain interests in the US Masters Residential Property Fund and URF-related products.
The conduct took place between October 2015 and May 2019. The URF is a unit trust and a registered managed investment scheme that sought to take advantage of the significant drop in house prices in the US during the Global Financial Crisis.
It was determined that the six representatives did not conduct a reasonable investigation of the clients’ circumstances before providing the advice. In some cases, the poor advice resulted in the clients’ SMSFs being insufficiently diversified and exposed to risk of capital loss, ASIC said.
Justice McEvoy said there is no evidence that reasonable investigations into the products or alternatives were conducted, nor that the personal circumstances of the clients were considered.
“The contraventions were not the result of isolated or unauthorised conduct of the representatives. Six representatives committed the contraventions over a period spanning some three and a half years,” the judge said.
The total penalty applied was $10.38 million but Dixon Advisory was given a 30% discount for its cooperation and will instead pay $7.26 million.
ASIC deputy chair Sarah Court said: “Licensees need to ensure their representatives are taking into account their clients’ specific needs and circumstances.”
“Advice that fails to reflect client circumstances − or advice models that lead to one-size-fits-all outcomes – are less likely to meet best interest duty obligations and can expose clients to a risk of capital loss.”
Dixon Advisory is currently in voluntary administration but, if it resumes business, it will be forced to have appropriate systems and policies in place to ensure the conduct doesn’t occur again. It has also said it is confident it can pay the penalty.
Dixon Advisory was also ordered to pay ASIC’s costs of $800,000. fs
01: Sarah Court deputy chair ASICKPMG has proposed a Carers’ Income Tax Offset (CARITO) as part of a wider effort to properly value time dedicated to unpaid work.
CARITO would be a non-refundable tax offset, credited against any income tax payable upon people returning to work after caring for children, people with a disability or elderly parents.
The maximum amount of CARITO would be calculated as the basic offset amount multiplied by the total number of weeks of unpaid caring work performed.
“Under this system, where the value of the credit relates to the amount of time spent out of the workforce on caring responsibilities, carers on lower incomes would gain a larger proportional benefit upon their return to work,” KPMG said.
“Furthermore, by not phasing the credit out as the recipient’s income rises, additional work and career progression would not be disincentivised.”
Another reform advocated by KPMG is to ensure employers can enact affirmative policies to provide higher super payments and other workplace benefits to female employees.
This recommendation would help to address the super and pay gaps and could be achieved by amending the Sex Discrimination Act to ensure companies can make higher super payments for their female employees. Alternatively, developing clear guidance to employers on how they could apply for exemptions from the Act to allow them to pay women higher super contributions.
KPMG Australia chair Alison Kitchen said: “Allowing employers to make higher superannuation contributions for female employees is an obvious move and would be a continuation of the principles enshrined in the Affirmative Action Act 1986, which require companies to proactively support women’s participation to overcome engrained social norms.”
“Ironically, it’s the landmark Sex Discrimination Act that makes it difficult for employers to do so, unless they can successfully navigate a lengthy process.” fs
Jamie Williamson
Felicity Cooper from Cooper Wealth Management has taken out the title at the Association of Financial Advisers national conference.
Cooper was named the winner of the award, which is sponsored by Zurich, at the AFA’s annual gala dinner. The award is presented to extraordinary and visionary advisers, recognising qualities of leadership, innovation, customer focus and professional excellence.
“The AFA congratulates Felicity for winning this award and for her role as an ambassador for the profession in advocating for advice and the great outcomes it delivers,” AFA chief executive Phil Anderson said.
“Felicity is a previous winner of AFA’s Excellence in Education Award and her natural enthusiasm for the advice profession, along with her innovative approach to the delivery of quality financial advice provided a compelling case.” fs
The Australian Competition and Consumer Commission (ACCC) is “actively monitor ing” green claims and won’t hesitate to take en forcement action if consumers are being misled or deceived by greenwashing.
range of issues relating to sustainability.”
False or misleading sustainability claims un dermine consumer trust in all green claims and reduces confidence in the market - something the ACCC is keen to guard against, she added.
Deputy chair Delia Rickard said the ACCC will be considering what steps to take to im prove the integrity of green claims, including engaging with industry and producing guid ance for businesses.
“The ACCC is not the only regulator inter ested in these types of claims,” Rickard said in
“Unfortunately, the ACCC is hearing growing concerns that some businesses are falsely promot ing environmental or green credentials to capital ise on changing consumer preferences,” she said.
“Sometimes despite best intentions, business es may inadvertently mislead consumers for a variety of reasons, such as a poor understanding of their supply chain, a lack of due diligence be
Volatile markets pose unique challenges for investors. Returns have become hard to find without exposing retirement capital to a multitude of risks. Incorporating a defensive asset alternative like Future Safe can help to rebalance the risk profile of retirement portfolios and protect capital. Seek out market-linked returns with greater certainty. Future Safe. The defensive alternative.
Find out more at allianzretireplus.com.au/harness-returns
Retire+).
Retire+
a registered business name of Allianz Australia Life Insurance Limited.
information is current as at July 2022
otherwise specified.
information has been prepared specifically for authorised financial advisers in Australia, and is not intended for retail investors.
does not take account of any person’s objectives, financial situation or needs. Before acting on anything contained in this material, you should consider the appropriateness of the information received, having regard to your objectives, financial situation and needs. The returns on the Future Safe product are subject to a number of variables including investor elections, market performance and other external factors, and may differ from the information contained herein. Past performance is not a reliable indicator of future performance. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material. Allianz Australia Life Insurance Limited is the issuer of Future Safe. Prior to making an investment decision, investors should consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) which are available on our website (www.allianzretireplus.com.au). PIMCO provides investment management and other support services to Allianz Australia Life Insurance Limited but is not responsible for the performance of any Allianz Retire+ product, or any other product or service promoted or supplied by Allianz. Use of the POWERED BY PIMCO trade mark, or any other use of the PIMCO name, is not a recommendation of any particular security, strategy or investment product.
The Council of Australian Life Insurance (CALI) has said a full board will be announced soon, with appointments already made.
AIA Australia chief executive and managing director Damien Mu provided an update at the Association of Financial Advisers Thrive Conference, saying there has been a lot of work going on behind the scenes.
“CALI has been established as an entity, it’s board has been established, all of the guests on this panel here today are part of the original founding board,” he said.
Mu referred to the other founding members as Zurich chief executive, life & investments Justin Delaney, TAL group chief executive and managing director Brett Clark, and MLC Life Insurance chief financial officer Kent Griffin who will replace MLC chief executive Rodney Cook.
“CALI has started to represent itself in key policy matters as an additional voice. But obviously being very mindful that we’re not fully established that there’s a presence there,” Mu said.
“We’re working with the AFA already around how we can collaborate to get a stronger voice into Canberra and to regulators.”
Mu said progress has been made and everyone in the room can understand why its establishment is important.
“As the AFA has been doing a lot of heavy lifting for financial advisers, the life insurance industry also has been in a significant scrutiny and through a lot of change,” he said.
“We need to make sure that we are collectively working on these matters in an efficient way, but actually leading the conversation and not the recipient of the outcomes so CALI will be full time focused on that.” fs
The firm has appointed Tomoko Ueda as APAC head of corporate strategy and development, joining from Nikko Asset Management where she was most recently global head of strategic planning and management information.
She will work with business leaders to formulate and execute the firm’s strategy to support its clients in the region, BlackRock said.
“BlackRock is consistently ahead of the curve in terms of its vision for both the industry and the region. I am eager to leverage its global expertise and client focus to advance a strategy designed to help investors in APAC and globally,” Ueda said.
In addition to Nikko, her previous roles include director, equity capital markets at Merrill Lynch Japan Securities and head of equity capital markets at Morgan Stanley.
Meanwhile, Aarti Angara has been named APAC head of product, charged with leading product creation and implementation to regional and global investors.
She joins from Caravel Asset Management where she was chief investment officer. .
“BlackRock is known for challenging itself to think differently, and I look forward to deepening the APAC investor perspectives that are at the heart of the firm’s regional offerings,” Angara said. fs
The corporate regular has refreshed guid ance on remediation activities, as it reveals close to $2 billion in redress remains unpaid.
Over the past six years, ASIC has overseen at least $5.6 billion in remediation for an estimated seven million consumers for failures identified across the financial system. A further $1.6 billion is yet to be paid to about 2.7 million consumers.
It also helps licensees understand how reme diation interacts with other obligations, like in ternal dispute resolution.
“Our guidance puts the onus on industry to get on with fair and timely remediations – returning the money they owe to wronged consumers,” ASIC deputy chair Karen Ches ter 01 said.
ASIC has updated its Regulatory Guide 277 (RG 277) following two years of public consul tation with both consumer and industry stake holders. The updated guide provides a clear di rection on remediations and is underpinned by licensees’ legal obligation to operate efficiently, honestly and fairly, the regulator said.
Specifically, the updated RG 277 clarifies the nine principles for conducting a remediation, provides 28 examples to assist in the practical application of the guide, introduces guidance on the use of assumptions, updates product specific guidance on possible monetary and non-mone tary remedies, updates guidance on the use of a low value compensation threshold and payment channels, and presents guidance on what to do if a consumer cannot be contacted or paid.
“Licensees must do better at identifying and remediating problems earlier to avoid the costly lag and drag of remediation.”
Going forward, while ASIC may need to intervene in some isolated cases, it cannot and should not oversee remediations for consum ers to receive fair and timely outcomes, Ches ter said.
In addition to RG 277, ASIC has released an updated version of Making it right: How to run a consumer centred remediation, a best practice guide for licensees to consider when designing and executing remediation programs.
Chester said: “The release of our expanded guidance, along with the updated Making it right field guide, delivers licensees all they need to achieve the right remediation outcomes on their own.” fs
WT Financial Group (WTL) EBITDA jumped to $3.92 million for FY22 from just $36,000 in FY21, driven by its recent acquisitions.
WTL managing director Keith Cullen attributed the positive results to its B2B restructure and the acquisition of Synchron and Sentry Group.
He said when you invest $20 million in acquisitions then you probably want it to reflect in your results.
“The neat part is it shows we’ve got a group of shareholders that are very committed to the space. You don’t go and invest $20 million in acquisitions without having real confidence in the financial advice landscape,” he told Financial Standard
“We’ve indicated to the market that we expected this sort of result for the year. The key thing is it’s reflective of how well we’ve integrated both Sentry and Synchron.”
Cullen explained it’s important to factor in the “significant investment made” and its climb in scale when comparing FY22 and FY21 results.
“Our focus is exactly what we say to our advisers in the group. You’ve really got to focus on the efficiencies within your business and make sure that you’ve got your pricing proposition, perfecting your asset and drive profitability,” he said.
WTL further reported total revenue was up 664% to $103.63 million from FY2021 $13.56 million.
It had an underlying operating loss of $998,000 last year and wrote off $2.89 million in restructuring costs.
The FY22 NPAT was reported at a loss of $3.29 million.
“I think we will see the cost of the business stablise because we’ve picked up integration benefits as well as the benefit of full-year revenue contribution from both Sentry and Syncron so it will all go very well for the shareholders,” Cullen said.
He predicts the positive trend will continue over the next year.
“We’re guiding at $7 million plus EBITA for this year and a net profit before tax of about $5 million and net profit after tax (NPAT) about $4 million plus,” he said.
“There’s been a lot of challenges over the past few years, but the demand for advice continues to grow. The number of advisers has shrunk but for those of us who remain in the space, that means higher demand with less people so it’s an opportunity to run very efficient and profitable business.
“We’re pretty excited about what 2023 holds, not just for our business, but I think for financial advice in general.” fs
01: Karen Chester deputy chair ASICLicensees must do better at identifying and remediating problems earlier to avoid the costly lag and drag of remediation.
There’s never been more Australians enter ing retirement than right now. Due to the complexities and uncertainties of retirement, there’s also never been a greater need for sound financial advice offering retirees financial free dom in retirement.
According to Natixis Investment Managers’ re cent Global Retirement Index, 2022 is the hardest year to retire due to the perfect storm we’re endur ing of difficult markets, low rates, and inflation.
“Those who step out of the working world run the risk of taking retirement distributions from an already depleted pool of assets,” the report stated.
“At the same time, it’s likely they will have to take greater risks with their portfolio to make up the ground they’ve already lost. Both will make it hard to preserve retirement savings and make it harder to attain a secure retirement.”
The pain is two-fold, as retirees already face significant challenges, including those posed by longevity risk. All these factors are causing retir ees to live too frugally in the early years of retire ment and feeling the regret of having done so in their later years, Generation Life executive direc tor and general manager Felipe Araujo 01 says.
“Many retirees don’t feel confident enough to spend their savings in the early years of retirement and really enjoy their lifestyle while they’re still ac tive and able to enjoy it the most,” he explains.
“Once they reach their later years, they feel a sense of regret from being overly frugal or con servative in the early years as they’ve now reached a point where they are no longer able to enjoy the life style they desired. This is known as ‘regret risk’.”
It’s this particular risk that Generation Life is trying to combat, working closely with financial advisers to make sure their clients have not only a financially secure retirement, but also one that is enjoyable.
However, when it comes to investment prod ucts for this client segment, options have been limited. This is especially the case in recent years as annuities have lost their sheen, their popularity waning in the face of a prolonged low-rate environment.
“Financial advisers have therefore found it difficult to recommend an annuity which will provide a return on their client’s investment with the flexibility they need to tailor their in vestment to their client’s changing needs and risk profiles,” Araujo says.
“As more Australians move into the retire ment income system, the need for a wider range of lifetime choices becomes more pressing.”
This is why Generation Life has launched LifeIncome, an investment-linked lifetime an nuity offering 23 different investment options and reversionary and death benefits. Advisers can switch their clients out of and into the dif ferent options at almost any time as their income needs change or their appetite for risk shifts.
The options complement just about any man ner of portfolio, including diversified, core and satellite or single sector portfolios, built with passive or active sector funds. And catering to a growing need, clients can also gain exposure to several ESG funds.
Further, the allocation to growth assets varies across all investment options; gone are the days of lifetime annuities only providing an exposure to fixed interest that can’t be altered.
“Historically the stigma of traditional annui ties has been poor returns because of all-time low interest rates, but there is also the lack of flexibility. Once a traditional annuity is set, there is no ability to influence the investment outcome in the longer term,” Araujo says.
“The new era of lifetime annuities also gives the opportunity to gain exposure to growth as sets, which means the potential for greater long er term growth income.”
LifeIncome has the potential for higher over all returns and therefore higher income pay ments over the life of the annuity, decreasing the likelihood of ‘regret risk’ down the track.
Research also shows that the bulk of retirees’ spending is done in the earlier years of their retirement, so LifeIncome has a LifeBooster feature which enables clients to receive more in come in those days.
“By applying LifeBooster, an investor’s start ing income can increase by as much as 71% when compared to if no LifeBooster rate was applied,” Araujo says.
“This feature allows financial advisers to help their clients more closely align their in come with their spending patterns over their retirement journey and avoid experiencing re gret risk in the later years.”
LifeIncome differs from a traditional lifetime annuity in several ways, but one of the most sig nificant is the flexibility and choice it provides.
With a traditional lifetime annuity, the invest ment outcome is pre-determined at the annu ity’s commencement and can’t be adjusted if markets change or the client’s attitude to risk changes. Where investment choice is provided, a portfolio can be built to match the client’s risk profile and to complement the portfolio that has been built in the client’s account-based pension.
The adviser can take a whole of portfolio view across the account-based pension and the in vestment-linked annuity with respect to invest ment strategy, Araujo notes.
“Historically the adviser had to give up the defensive part of the account-based pension to allocate to a lifetime annuity. Now the adviser can allocate across both income stream prod ucts with complete flexibility,” he says.
Clients can switch between investment options at almost any time and make these switching de cisions with regards to the lifetime annuity and
As more Australians move into the retirement income system, the need for a wider range of lifetime choices becomes more pressing.
the account-based pension, Araujo reinforces.
“Markets change, attitudes to risk change –you should be able to change your investment strategy within your lifetime annuity,” he says.
But while it might seem straightforward, Araujo says the increasing complexity of the retirement income landscape requires an educa tion piece like never before. As the cost of living rises, the likelihood that financial advice will be come even further out of reach is high, and while retirees with a lifetime of accumulated wealth on their side might be best placed to afford profes sional advice, most are looking to maximise their retirement income in any way they can.
However, Araujo points out that it’s likely that over the next decade financial advisers will be come even more important as the issues involved in optimising retirement income are complex and multilayered - very few individuals will be able to manage that process by themselves.
“In the new retirement income landscape, fi nancial advisers will need to teach their clients that sophisticated products such as investmentlinked lifetime annuities can deliver tangible benefits - income they can rely on and income that makes a difference to their lives,” he says.
This will include balancing income, access to capital, risk, social security, and estate planning considerations so that clients benefit from the optimal mix.
“Through the development of LifeIncome, Generation Life aims to help financial advis ers with a very important component of their client’s retirement income plan and provide a unique opportunity for ongoing advice,” Arau jo concludes. fs
Disclaimer Investors can switch between investment options at any time, with the exception of the period between midday on the third last business day of the Financial year and the end of the Financial year. Switches can be made provided that the minimum held in any investment option, determined at the time of the switch, is at least 1% of the value of their Income Units. There is no limit to the number of switches investors can make.
Generation Life Limited AFSL 225408 ABN 68 092 843 902 (Generation Life) is the product issuer. The information is provided for the use of licensed financial advisers and is not intended for any public or general distribution whatsoever. The information is general in nature and does not consider the investment objec tives, financial situation or needs of any individual and is not intended for use as financial or investment advice or a recommendation. While all reasonable care has been taken in preparing the information, Generation Life makes no guarantee, warranty or representation as to its accuracy and you should not rely on it. Generation Life excludes, to the maximum extent permitted by law, any liability (including negligence) that might arise from this information or any reliance on it. Generation Life does not make any guarantee or representation as to any particular level of investment returns or income, pay back periods or age pension entitlements. Past performance is not an indication of future performance. The product’s Product Disclosure Statement and Target Market Determination are available at genlife.com.au and should be considered in deciding whether to acquire, or continue to hold, the product.
Watch the video on www.fsitv.com
BroughtThe US based advisory firm has launched a new fund, investing exclusively in life settlements, as the business sets in motion plans for growth in Australia.
With a minimum investment of US$5 million, the fund targets an 8% net return to investors, is denominated in USD and will be between US$250 million and US$350 million.
According to the firm, the fund’s closed-end structure is ideal for institutional investors wishing to access this unique asset class. The initial close is slated for 1 December 2022.
“Life settlements are life insurance policies, no longer needed by the insureds, which are sold to an investor; the investor pays the premiums and in time collects the death benefits,” Laureola managing director Australia and New Zealand Nathan Wares explained.
“It follows that a well-managed life settlement fund can make money regardless of any turmoil in the financial markets.”
The new fund launch comes after the soft entrance of the firm into the Australian market two years ago. According to Wares, however, we can expect a whole lot more from Laureola.
“We certainly plan on growing our business in Australia,” Wares said.
“We already have a feeder fund for private wealth clients, which we attract business to from direct and private wealth firms. This is now our new launch into the institutional market, and we are probably the only player in this asset class in Australia at present.” fs
The listing for the Dover Heights home that Melissa Caddick disappeared from in November 2020 has gone live, with hopes the sale proceeds will help return money to those she ripped off Listed for sale with Sydney Sotheby’s International Realty, 5 Wallangra Road at Dover Heights features uninterrupted views of Sydney Harbour, five bedrooms, four bathrooms, chef’s kitchen, wine cellar and a pool.
The property is being sold by Jones Partners, the receivers of Caddick and liquidators of Maliver. It was purchased by Caddick in 2014 for $6.2 million. It’s believed it could fetch up to $15 million, however prices are cooling.
Sotheby’s has described the property as “an entertainer’s delight”, with “luxury finishes to inspire an atmosphere of readymade contemporary comfort, with a timeless palette…”
Bruce Gleeson, Jones Partners’ managing director, said some maintenance and minor improvements have been made to the property in recent months to prepare it for sale.
The sale campaign is being conducted via an Expressions of Interest process, scheduled to close October 31. A private auction will occur thereafter if required. According to the Sydney Morning Herald, a $10,000 deposit is required to secure a viewing of the property.
More than $23 million is owed to Caddick’s 74 investors.
David Macri 01 will step down as Austral ian Ethical’s chief investment officer at the end of the year, after more than a decade in the role.
Macri has led the firm’s investment function for the past 11 years. In total, he’s been with Australian Ethical for almost 14 years, having joined in January 2009 as an equities analyst and portfolio manager.
When Macri took over the fund manager had about $600 million in funds under manage ment. It now has more than $6.2 billion.
Macri said he is proud to be leaving the busi ness in an excellent position and is confident the team will be able to continue building on the existing platform.
“While I will greatly miss working alongside an experienced and capable team, after more than a decade as chief investment officer, now feels like a natural juncture to assess my next
challenge and allow others to build on what has been achieved,” he said.
Australian Ethical managing director John Mc Murdo wished Macri every success for the future and thanked him for his significant contribution.
“David was responsible for developing unique investment strategies and processes that enabled out funds to deliver excellent investment per formance over the last decade and has worked tirelessly to demonstrate that you don’t need to compromise on investment performance to in vest ethically,” McMurdo said.
“He has built and led a highly capable invest ment team which we are confident will continue to deliver long-term investment performance for our investors.”
Australian Ethical said a global search for Macri’s replacement is now underway, adding that it expects to see a high-quality pool of can didates given the firm’s reputation for ethical investing. fs
Link Group announced on September 26 that the proposed acquisition by Dye & Durham has officially collapsed.
Following necessary conditions not being satisfied, including the Woodford Matters condition and the UK Financial Conduct Authority condition, the Court declined to make orders approving the deal and dismissed proceedings.
As a result, the proposed acquisition which Link shareholders approved in August won’t proceed.
Albeit harbouring disappointment over the outcome, Link announced it determined to pay a fully franked special dividend of eight cents per Link Group share. This is in addition to the half-year dividend of three cents per Link Group share which was paid in April.
The record date for the special dividend will be September 30 with a payment date of October 14.
Meanwhile, as previously advised, Link announced that it intends to evaluate alternatives for the business, including an in-specie distribution of 80% of Link Group’s shareholding in PEXA, to maximise value for shareholders.
The administrator also reaffirmed its FY23 guidance with revenue projected to increase by a low single digital percentage, operating EBITDA projected to be approximately 8-10% higher than FY22 and operating EBIT projected to be 10-12% higher than FY22.
After making the announcement Link’s share price fell 9.37%, down 46.16% year to date.
On September 23 Dye & Durham chief executive Mathew Proud told the Toronto Stock Exchange: “While we are disappointed with this outcome given the significant time and resources invested in managing this process over the last 10 months, we have a robust pipeline of M&A opportunities before us.”
“We plan to continue to focus on deploying capital on deals with attractive economics, steady cash flow and significant growth potential and optimising them to drive additional shareholder value.”
On September 26, Dye & Durham’s share price rose 4.98%, down 70.59% year to date.
In mid-September, the UK regulator approved the deal but only on the condition that Dye & Durham provision for possible redress resulting from the Woodford Matters, being the Neil Woodford fund that went bust in 2019 due to liquidity issues. Link Fund Solutions managed the fund.
The possible redress is estimated at around $500 million.
Further, on September 21, the FCA issued a draft warning notice fining Link Fund Solutions almost $85 million for its involvement in the debacle.
Link Group has maintained that it should not be fined and also said it has made no commitment to fund or support any financial liabilities of Link Fund Solutions.
In the wake of the redress, Dye & Durham provided an updated offer to Link but the administrator said it could not be recommended to shareholders. fs
The quote
... now feels like a natural juncture to assess my next challenge and allow others to build on what has been achieved.01: David Macri chief investment officer Australian Ethical
The road to a net zero world is challenging to navigate and requires a collective effort. Eve ry individual, company, and government must play its part. There isn’t one single answer or path to solving this challenge, but we at AXA IM want to be one of the leaders on this journey: in our in vestment choices, the products we offer, the way we engage and vote, and manage our business.
We believe investing in green bonds is one of those critical pathways. Green bonds have emerged as a mechanism to drive capital to wards projects or businesses that improve environmental outcomes so it’s important to maintain an in-depth view on this sector and in particular, monitor and quantify the ‘greenium’ (the price premium green-friendly bonds com mand over conventional ones).
Despite a very challenging year for the fixed in come market, green bond issuance managed to keep pace with the 2021 record. As at the end of June, $207 billion1 of green bonds have been issued year-to-date, slightly above 2021 at the same time. To navigate this buoyant market, in vestors need to be aware of the ‘greenium’ effect and how its impact can change depending on the sector and geography.
When Austria issued its debut green bond in May, it raised €4billion and attracted 25 billion orders2. This demand enabled the bond to price at a slightly lower yield - circa 2.5bp -versus the existing Austrian conventional bond. This pre mium, known as ‘greenium’, is a trend that has been progressively materialising for some time, reflecting the imbalance between supply and demand. But it is important to recognise that the size of the greenium can vary and change over time. In particular, in the primary market activity, we’ve observed that when the level of issuance declines, as it is often the case during summertime or end-of-year period, the gree nium increases.
Germany, for example, is expected to issue a new green bond later this year. When Germany issued its debut green bond in September 2020, it uniquely matched the green issue with a con ventional bond with the same maturity. This gave us the first ever direct price comparison. At issue, the green bond priced at one basis point more expensive than its conventional twin. In terestingly, that greenium has grown up to 7bps and is back to less than 2bps today. We see this as the reflection of lower demand for fixed in come overall this year, which has not spared
green bonds, yet in context for sustained supply compared to last year.
Few markets offer such a clean comparison but, by researching every segment of the green bond universe, we have calculated what should be the theoretical price of green bonds versus their conventional counterparts. For instance, focusing on euro green bond issuance, which provides the most comprehensive and less biased picture, we can clearly see that there is indeed a greenium, but it is not structural, and it is not equal everywhere. We estimate that the greenium is currently circa six basis points, with variations within that. For sovereign debt, we find that the greenium is around 10 basis points; for corporate debt it is around seven basis points; and quasisovereign is around three basis points.
Within corporate debt, there is a significant dif ference between sectors depending on the num ber of green bonds and issuers. Again, supply and demand dictate this premium: a sector like real estate, which has been particularly active over the past years and where investors can go elsewhere if the issue is considered expensive, has a greenium of around 2bps. The automo tive sector, on the other hand, is a sector where there are fewer options and here the greenium is around 15 basis points.
It is interesting to note that the greenium can be affected by the regularity of issuance from single issuers in the corporate debt market: a green bond from an issuer that has not been ac tive on that market for some time could prove to be relatively scarce and hard to find in the secondary market, translating into a larger gree nium. Conversely, a recurring green bond issuer is likely to see its greenium come down reflect ing a better supply and demand balance. It is clear that the more issuance from an issuer, the smaller the greenium.
In addition, 2022 market turmoil has brought us some additional insight about the greenium dynamics that we had already hinted at dur ing previous phases of risk aversion. As credit spreads widen, greenium tends to increase, acting as a buffer against the general widen ing. Hence, the average greenium of the euro corporate market has grown from 3bps back in December 2021 to 6bps now. This highlights the long-term approach of green bond investors, holding to their bonds despite volatility, com pared to conventional investors.
Climate activism is not a term often associated with many fund managers - unless you work at AXA IM. The investment giant took a major leap in recent years when it decided to make sustainable investing the driving pulse of the organisation. Given the breadth of competition, its goal is quite ambitious: to be the world’s number one responsible asset manager.
It’s already making headway in fixed income where it has had a dedicated green bond strategy since 2015. With greenwashing one of the pitfalls in the burgeoning sector, the fund manager explains what the green premium or ‘greenium’ really means and how that translates into investor portfolios.
Johann Plé, portfolio manager at AXA IM, talks about new green bond launches, how supply and demand drives greenium in corporate bonds and what investors can expect from green bond products in 2023 and beyond.
Michelle Baltazar Director of Media & PublishingPaying a slight premium for a green bond can concern investors but it is important they re member they should benefit from a better riskadjusted return over the long term. By provid ing potentially lower funding costs for green projects, issuers are investing in the transition to a low carbon economy and should be better fit to address the risks and opportunities that arise in a transitioning world.
Paying a slight premium for a green bond can concern investors but it is important they remember they should benefit from a better risk-adjusted return over the long term.
The greenium is, however, another argument for investors to take an active and dynamic ap proach. As in any fixed income market, investors want to avoid expensive issues and gain additional performance from those bonds whose value (or greenium) rises after purchase. Green bonds offer a way for investors to contribute to financing the energy and ecology transition, and active manage ment ensures they can do so most effectively and with the highest return on their investment. fs
Notes
1. Source: AXA IM, Bloomberg as at 30/06/2022
2. Source: Reuters as at 24/05/2022
Disclaimer
This article is published by AXA Investment Managers Australia Ltd (ABN 47 107 346 841 AFSL 273320) (“AXA IM Australia”) and is intended only for profes sional investors, sophisticated investors and wholesale clients as defined in the Corporations Act 2001 (Cth).
This publication is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Market commentary has been prepared for general informational purposes by the authors, who are part of AXA Investment Managers. This market commentary reflects the views of the authors, and statements in it may differ from the views of others in AXA Investment Managers.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
All investment involves risk , including the loss of capital. The value of invest ments and the income from them can fluctuate and investors may not get back the amount originally invested.
Brought to you by
Hillcrest Strategic Partners will now distribute the Blue Orbit Asset Management Global Small Cap Systematic Alpha Fund.
According to Blue Orbit, the agreement follows a comprehensive process to expand its distribution capabilities.
“Hillcrest’s boutique, client centric approach is highly aligned to Blue Orbit’s core values and purpose- to manage funds the way they will be managed in the future,” Blue Orbit said.
Hillcrest is a Melbourne-based firm founded by Alistair Dunne and Damian Craven last year. The firm leverages Dunne’s experience in distribution roles with the likes of UBS Global Asset Management and BT Investment Management, as well as Craven’s experience with Macquarie Bank and Magellan Asset Management.
The two previously worked together at Contango Asset Management where Dunne was head of distribution and Craven was head of retail.
“Alistair Dunne and Damian Craven bring a wealth of experience in establishing trusted, longterm relationships with financial advisers, wholesale investors and research houses,” Blue Orbit said.
“This is a significant appointment for Blue Orbit as we look to expand and educate more investors about our investment capabilities.”
The Global Small Cap Systematic Alpha Fund was launched in October 2021 to wholesale investors. fs
Former financial adviser John Wertheimer pleaded guilty to charges surrounding unauthorised client transactions in Perth Magistrates Court.
Wertheimer pleaded guilty to one charge of providing a financial service on behalf of a person who carries on a financial services business while unauthorised to do so. He also pleaded guilty to one charge of engaging in dishonest conduct in relation to a financial service.
Previously, Wertheimer was a financial adviser under his own company, John Wertheimer & Associates Pty Ltd, before appointing Picture Wealth Advisory Pty Ltd to service a group of clients.
ASIC said in May 2020 he made 48 unauthorised transactions on the Netwealth trading accounts belonging to 36 clients of Picture Wealth.
Those transactions were processed without the knowledge or authorisation of either the clients or Picture Wealth.
The regulator added that between May and July 2020, Wertheimer also lodged five investment instruction documents with Netwealth that provided directions to deal with financial products on behalf of Picture Wealth clients.
Those documents contained forged signatures and were prepared and lodged without the knowledge or authorisation of Picture Wealth and four clients.
At the time of offending, Wertheimer was not authorised by Picture Wealth or any other AFSL to provide financial services to clients.
The first charge carries a maximum penalty of five years imprisonment, the second is 15 years. fs
HarbourVest Partners has opened a Sydney office, to be led by a former Challenger and AMP Capital executive.
The private markets specialist firm has been working with institutional and private wealth clients in Australia for more than three dec ades, but this marks its first local office.
ities and client relationships in both Australia and New Zealand.
HarbourVest said it has seen increased ap petite for its investment solutions in Australia, driving the need for the on-the-ground pres ence. To date, HarbourVest has raised close to US$7 billion in Australia and New Zealand.
“The Sydney office is fully integrated into the firm’s global network, providing clients with seamless access to primary funds, sec ondary transactions, direct co-investments, real assets and infrastructure, and private credit,” HarbourVest said.
The office will be led by Warwick Mancini who is currently HarbourVest’s principal, in vestor relations in Hong Kong. Mancini will be responsible for the business development activ
Before joining HarbourVest in 2019, Man cini was a director at Challenger Investment Partners for more than six years. Prior to that he worked in hedge fund strategic services at Credit Suisse and also served as head of in vestment specialists, unlisted assets at AMP Capital.
“We are pleased to announce the expansion of our global network with the opening of our office in Sydney,” HarbourVest managing di rector Peter Wilson 01 said.
“The establishment of a local Australian presence reflects the significant growth of this region as well as the increased interest in the alternative assets classes we observe among in vestors in Australia and New Zealand.”
He added that the firm is at an exciting stage in its evolution, growing its capabilities across Asia Pacific where it already has five other of fices. The Sydney office marks the sixth in the region and 13th globally. fs
Mayfair 101 managing director James Mawhinney has had his 20-year ban overturned and will return to the Federal Court to have his case reheard.
The Full Bench of the Federal Court said ASIC’s case against Mawhinney lacked procedural fairness as the regulator didn’t seek certain findings of contraventions which were later relied on by the presiding judge in handing down the ban. Mawhinney has also been awarded indemnity costs as a result.
A retrial has been ordered and interim injunctions imposed on Mawhinney in August 2020 have been reinstated. These restrain him or any company he is involved in from receiving or soliciting funds in connection with a financial product; advertising or promoting a financial product; and moving any assets received in connection with a product offshore.
The Federal Court said Mawhinney’s case is “very exceptional” and acknowledged that it “involves issues concerning the need for protection of the public from potentially serious harm”, ASIC said. It also said that, in the initial
trial, ASIC was operating under what it now accepts to be a mistaken view of the law.
Commenting, ASIC deputy chair Sarah Court said the regulator will consider the judgment very carefully and evaluate its next steps.
“ASIC took this case to protect the public from the risk of significant financial harm arising from what we believed to be serious misconduct.
Mayfair, under Mr Mawhinney’s direction, marketed high-risk products as low risk. Almost 500 people invested in the Mayfair 101 group and they are still owed a total of approximately $211 million,” she said.
Meanwhile, Mawhinney said he is grateful of the outcome.
“This is a significant step forward for our noteholders who have had their lives turned upside down by ASIC’s misguided enforcement actions,” he said.
Mawhinney said his legal team has commenced work to contest the case in the High Court, rather than have it remitted back to the lower court.
Roberts Gray Lawyers said they are committed to clearing Mawhinney’s name. fs
We are pleased to announce the expansion of our global network with the opening of our office in Sydney.01: Peter Wilson managing director HarbourVest
It’s a relentless job being an essential worker, especially over the last few years with fires, the COVID-19 pandemic and then the recent floods. With no option to work from home, they have been at the coalface, serving our commu nities night and day, going into harm’s way to keep the rest of us safe, leaving themselves, and their households, open to risk.
Well before these reported catastrophic events, a quieter issue was taking hold. Our es sential workers have been steadily pushed to live further away from the communities they serve, unable to crack the housing market. In our great cities, rising prices snatch the Great Australian Dream away from many everyday heroes. This leads to long commutes even by Sydney or Mel bourne standards – which is awful for a shift worker on long and unsociable hours.
Tim Sims AM and I knew we must be do ing more to solve this problem. Compelled by our mission to “deliver home ownership help to everyday heroes”, we heartily believe wholesale investors can contribute to and benefit from providing a solution to the housing affordabil ity problem in Australia. By creating an equity partnership with essential workers, HOPE deliv ers commercial returns that are driven through house price appreciation, as well as creating a substantial social dividend to the homeowners and our broader community.
With a solid track record in investment markets, collectively we both knew the importance of de veloping an investment opportunity with the ca pacity to deliver commercial returns. Although we are a “for purpose” fund manager, we didn’t want HOPE to seek charity – rather to deliver a com mercial diversification opportunity for investors.
HOPE’s investment philosophy is straight forward: the Australian residential property is an investable asset class for instutional investors seeking a long-term positive return with low vola tility. With value enhancement delivered by us ing leverage and the timing of capital calls we are targeting high single, low double-digit returns.
We knew we needed to strike the right balance on the first go between borrowers’ and investors’ needs, so we spoke with the best in the business to find out whether shared equity for essential workers would actually work. We engaged De loitte, Corelogic, BIS Oxford Economics. We studied the state-based shared equity schemes in Western Australia and Victoria as well as schemes around the world.
We also road tested the appetite from super funds to invest in a product like this. We knew if there was no interest from the wholesale market, we’d have little way of scaling the program and getting essential workers into homes closer to their place of work.
After receiving a warm response from super funds, we turned our attention to measuring the social impact of our homeownership solu tion. We partnered with the University of NSW Centre for Social Impact, who conducted an academic study to assess what living closer to work could mean for families, employers, and our community. The outcome was a fully cali brated impact measured to be a 30 cents social return for every $1 invested in helping essential workers to buy homes.
In addressing this social problem, we did not want to contribute to essential worker anxiety by facilitating overleveraged on big mortgages or trapping them in a rental cycle. The whole purpose of HOPE Housing is to reduce stress and increase wellbeing.
We’ve partnered with Police Bank to dis tribute our home ownership solution. They are a like-minded mutual bank who have been helping members achieve their financial goals for over 60 years. The great news is you don’t have to be a police officer to get help from Po lice Bank – they can help all essential workers. Police Bank lenders have been trained and ac credited to identify and assess the applicants that will benefit most with a helping hand from HOPE. Combined with HOPE’s engaging on line journey – that makes it easy for essential workers to buy well – we are ready for success.
We welcome the news that both the NSW and federal governments are coming to market with similar shared equity schemes. With so many locked out of the Great Australian Dream, ad dressing the housing affordability issue in our country demands a multifaceted approach.
I see HOPE’s home ownership solution as being highly complementary to the govern ment-backed initiatives. HOPE is there to help those who fall outside the eligibility criteria of the government schemes.
As a start-up business in an asset class that has not been on the radar for institutional investors, it is important we commence with
To make a real difference over time, it will require institutional investors to choose to deploy their capital in a way that helps the people who have put their lives on the line for their fellow Australians...
deploying $40 million into the market to build a track record of delivery and demonstrate per formance data around returns, liquidity, and the social dividend.
To make a real difference over time, it will re quire institutional investors to choose to deploy their capital in a way that helps the people who have put their lives on the line for their fellow Australians through pandemics and natural disasters, or who play their part in keeping this country moving and growing.
It is welcoming to see the superannuation in dustry exploring the huge potential it has for tru ly creating a better society for everyone, and most of all the members of super funds. We commend treasurer Jim Chalmers’ initiatives in supporting the industry to widen the scope of the superan nuation sector, encouraging it to invest in Aus tralian housing affordability challenge.
As we reach critical mass for essential workers and demonstrate that track record, the model evolves and diversifies where we can help a va riety of groups who are facing challenges buy ing a home, including Indigenous Australians, people moving out of the social housing system, and single parents, among others. The housing affordability problem impacts a broad spectrum of Australians.
We have a duty as a society to solve for hous ing affordability. This is our first step. fs
HOPE Housing is a For Purpose organisation that aims to help essential workers buy into homes close to where they live.
AMG Super is going to roll out a new look as it expands its offering to include an investment portfolio service.
AMG Super’s MySuper product was closed to new members. While it did fail the performance test for the second year running, and a forced closure of the option to new members would have been a consequence of that, AMG Super opted to close the product ahead of the results being publicised.
“AMG Super have made a strategic decision to focus on our core offer of delivering an innovative and market-leading wealth management platform for advisers and their clients. As a result, we are moving away from offering a default MySuper product to new members,” it said, in a move that was effective August 22.
Now, as part of this new focus, AMG Super will rebrand to Acclaim Wealth from September 30; AMG stands for Acclaim Management Group.
“To support our continued growth and demand from our advisers, we are evolving into a full wealth management platform, expanding our product range to include an investment portfolio service,” it said.
“Updating our branding will better reflect our revised product proposition – as a platform featuring both superannuation and investment solutions.”
This involves a new portfolio service called Acclaim Invest. The superannuation fund will retain the AMG Super name and branding.
“Although we are changing our brand, we are not changing what we do best – providing flexible, high-quality superannuation products and great service,” AMG Super said.
According to Rainmaker Information, in the year to July end AMG’s MySuper option ranked 50th, returning -5.1%. The median return for the same period was -2.0%. fs
As its first in-person conference in three years, a ‘Reunite, Resest’ theme will underpin the Financial Planning Association of Australia’s (FPA) Professionals Congress later this year.
Held in Sydney on November 23-24, the Congress will host a range of sessions designed to help financial planners better understand the many changes and current issues facing the profession.
It will also provide practical tools and information enabling them to work more closely with clients and understand their changing needs, particularly in the post-pandemic environment.
Now with a proposal put to members to merge with the Association of Financial Advisers (AFA), the FPA Congress will be the first major industry event held after the result of the vote is known.
FPA chief executive Sarah Abood said since the last in-person Congress, there has been huge change both in the financial planning profession and also in the broader community. fs
01: Anthony Wamsteker chief executive PraemiumWhen it comes to financial planning, a growing number of high-net-worth (HNW) individuals are opting to DIY, ac cording to new research collated by Investment Trends and sponsored by Praemium.
The report states that key areas that HNWs would like better or more advice are in relation to inheritance and estate planning; strategies to reduce tax obligations, retirement planning and investment strategy reviews.
The quote
Advisers and their clients need a platform that can cater for data feeds, custody and noncustody assets to create that total wealth view.
The research, which involved polling 7500 investors, found that 60% of Australian HNWs identify as validators; those that see advice merely as a collaborative relationship for con firming their own investment choices. This number rose from 52% last year.
Top reasons given by HNWs for not seeking advice were that they prefer to seek advice only when they need it (39%) and believe they can manage their own financial affairs.
As well as this, HNWs cited the cost of ad visers (31%, up from 26%), a lack of confidence in advisers’ expertise (30%, up from 26%) and previous poor experience with financial advis ers (28%, up from 22%) as playing a part in their decision.
Of those who did receive advice, the most popular source of advice was a financial adviser (15% down from 18% in 2021), followed by ac countants and full-service stockbrokers.
However, an estimated 53,000 of HNWs are still open to a relationship with a new private wealth adviser (of which 14,000 are current pri vate wealth clients).
HNWs expect to pass down $1,950 billion worth of assets to the next generation, equating to around 69% of their total assets. However, when seeking advice upon receiving an inher itance, less than 10% retained the benefactor’s adviser (if there was one), with 47% preferring to manage the inheritance themselves.
Praemium chief executive Anthony Wam steker01 said that the findings outline some per ception challenges for the advice industry that will take time to overcome.
“There are real opportunities for advisers to deliver an advice service that provides the collaborative relationship these investors are looking for, focusing on meeting the strategic needs of high-net-worth investors, particu larly around the intergenerational transfer of wealth,” he said.
Wamsteker added that a large proportion of Australian HNWs’ wealth does not sit on plat forms, which makes advisers’ jobs harder.
“Advisers and their clients need a platform that can cater for data feeds, custody and noncustody assets to create that total wealth view,” he said. fs
New research has measured the progress made towards achieving recognised professional status within the Australian financial advice sector.
An academic article authored by financial adviser and researcher Ben Neilson noted that advisers have recently been regulated to reflect their professional status like other conventional professions. However, he also cited literature that suggested the development of recognising professions can be challenging and an ongoing process often reduced by the dubious acts of others.
“It’s imperative that Australian financial advisers, offering professional input, commit to being involved in shaping the professional policies, governance, processes, so that financial planning becomes a true profession run by advisers, like other established professions run theirs,” Neilson said.
To date, little systematic research exists on professional attributes and professional progress within the financial advice sector, but Neilson’s research offers a framework for identifying professional attributes and benchmarks existing positions of progress.
Results derived from a sample size of 1093 responses, indicated that financial advisers are now extremely conscious of their social responsibilities. Moreover, financial advisers were found to accept elevated levels of ethical responsibility.
“Financial advisers now show significant confidence in their ability to navigate ethical areas and can rely on their code of ethics to determine conduct as a basis for navigation and decision making,” Neilson said.
He said that the introduction of mandated ethical codes and legal requirements to act in the client’s best interest had a large impact on the progress towards professional recognition.
Interestingly, the obligation to act in clients’ best interests is one of the things Michelle Levy has proposed be removed under the Quality of Advice Review.
Survey results also indicated that financial advisers are becoming more familiar with the value of accessing their body of theory. All acknowledged the increasing importance of theory, levels of education and continuing professional development reflecting that most believe a systematic body of theory is an imperative ingredient of professionalism, the article outlined.
Meanwhile, advisers acknowledged that they hold professional authority derived from a dependent relationship, industry knowledge and trust due to complexity.
Neilson’s paper argues that financial advice, as it’s practiced in Australia today, has made considerable professional progress. Further, he posits that unified progress towards professional recognition may benefit the financial advice sector for both consumers and advisers alike in the coming years.
Chloe Walker
Evan Metcalf has been appointed chief executive at Global X Australia.
The global asset manager has made several senior hires in the local market, including leads for institutional and wholesale distribution.
Alastair McKibbin will take on the newly created role of head of Australian wholesale business.
McKibbin will relocate to Sydney from New York where he was vice president, global strategic relationships, with a particular focus on Latin America. Previously, McKibbin was head of ETF Managed Portfolio Solutions State Street Global Advisors.
Meanwhile, Michelle Kidd, who has been vice president of American Century’s Institutional Advisory Group since 2018, has been appointed to head of Australian and New Zealand institutional business.
Kidd has 15 years’ experience in the Australian institutional market, joining from Affiliated Managers Group where she worked for seven years in senior distribution roles.
Insignia adds technical services lead Insignia Financial has named a new head of technical services following the retirement of Martin Breckon.
A spokesperson for the company confirmed Jenneke Mills has taken over the role, promoted from the role of national manager, technical services at IOOF TechConnect.
The new role sees Mills leading the combined MLC and IOOF technical teams. She replaces Breckon who retired recently after more than five years in the position.
Before IOOF took over MLC to create Insignia, Mills was manager, MLC Technical Services. She first joined MLC’s technical services team in August 2013. Prior, she was a financial adviser with NAB.
Retail property solutions provider United Property Service (UPS) has appointed Lisa Wood as its first asset management director.
Bringing over 20 years’ experience in specialist property management both in Australia and overseas, Wood joins the UPS team from AXA Investment Management (AXA IM) where she was senior asset manager, real assets.
At AXA IM, Wood spent seven years in asset management, responsible for catering to the diverse and varied requirements of local and international owners.
Commenting on Wood’s appointment, UPS founder and director Patrick Sergi said: “We are pleased to welcome Lisa to the team to lead UPS’ new asset management division.”
“Lisa’s appointment adds additional strength to our already outstanding property team. The expansion into asset management is a key piece in our comprehensive client centric offering for our clients and Lisa’s wealth of experience will offer our clients some of the best thinking from around the globe.” fs
The number of executive appointments published by Financial Standard this fortnight.
In his new role, Metcalf will lead the company as it accelerates its growth in the Australian market following its acquisition of ETF Securities Australia alongside Mirae Global Investments in June.
He steps up from head of product at ETF Securities, a role he held since 2015. He previously spent time at ANZ and Credit Suisse.
Commenting on the appointment, Global X chief executive Luis Berruga said: “We have the utmost confidence that Evan’s previous success and expertise in this market will help to advance our goals here in Australia as we look to create opportunities for our clients and expand our offering, creating an Australian ETF powerhouse.”
The independent non-executive director has flagged her intention to retire from the Magellan board at the conclusion of the company’s annual general meeting on October 20.
Phin joined the Magellan board in 2014 and served as a member of the audit and risk committee and as a member of the remuneration and nominations committee since her appointment.
Prior to Magellan, Phin worked as a managing director, head of capital advisory at Citi as well as managing director, head of capital management at UBS.
Commenting on Phin’s departure, Magellan chair Hamish McLennan said: “Karen has provided invaluable service and capital markets expertise to the board. Karen also played an important in our regulatory engagements and fostering our innovation throughout the years, notably, when we launched our first active ETF.”
After almost 21 years at Queensland Investment Corporation, Susan Buckley has decided to step down as managing director of the liquid markets group.
QIC’s director of fixed income Beverley Morris has been appointed acting head of the liquid markets group.
Chief executive Kylie Rampa thanked Buckley for her long-term commitment to the business and the liquid market group’s clients.
“Susan feels it’s the right time to do something different and transition the leadership of the liquid markets group,” Rampa said.
“She has made a significant contribution to QIC in managing a diverse range of global listed market solutions for our clients.
Edwina Maloney has joined the board of the Association of Superannuation Funds of Australia.
Maloney will represent the retail fund sector, filling a casual vacancy created by the departure of BT’s Melinda Howes earlier this year.
ASFA said Maloney is an experienced executive, board director, consultant, and transformation leader. She has more than 20 years’ experience in super, wealth and investment management.
Currently, Maloney serves as AMP’s director of platforms, having been appointed in 2021. Previously, she held senior roles at AMP Capital, Perpetual Investments and Accenture after beginning her career as a lawyer.
ASFA chair Gary Dransfield said: “We are delighted to welcome Edwina to the ASFA board at this important time for superannuation.”
Self-managed superannuation funds are growing in popularity with Millennials. As the desire to take control of their futures grows, they’re proving a powerful catalyst for change in the sector. Cassandra Baldini reports.
Self-managed superannuation funds (SMSFs) assume 26% of Australia’s super sector and, according to Australian Taxation Office data, on av erage 25,000 new funds are established each year.
The ATO estimates that as of March 2022, there were 605,470 SMSFs holding about $894 billion in assets. The annual average of new ac counts opened has also increased 1.7% since 2020.
Historically, a large percentage of SMSF members have been retirees with accumulated wealth who no longer wish to be bound to one superannuation fund or wish to have greater control of their finances. On the other hand, investors wanting to explore unlisted compa nies or tap into a universe not directly avail able through their retail or industry fund might have also had their interest peaked.
But as mandatory super blew out its 30th birthday candles, a large cohort of Millennials who have reaped its benefits for the entirety of their working life also extinguished their rela tionship with the incumbents.
Once viewed as a majestic offering cordoned off for only the wealthy, the SMSF sector has opened its doors to a new generation and the financial services industry has shifted accord ingly.
Class’ Annual Benchmark 2022 report found that about 30% of new SMSFs are being estab lished by those aged 33-44 years.
It said SMSFs have been a popular choice among Millennials for three years in a row and the average age of new fund establishments has slid from 51 (2006-2014) to 46 (2020-2022).
“The average age was initially quite high which meant from a retirement savings per spective it’s been a short runway from setting up the fund to retiring,” Class general manager growth Jo Hurley01 says.
“Whereas now, it’s much more reasonable to see SMSFs being established by 33 to 44-yearolds. That’s where the biggest growth has been seen.”
Hurley explains the drop in age demon strates a sensible and balanced approach to en gaging with personal finance.
“Paying off your mortgage, raising children, but also having an eye on long-term retirement savings at the same time, opposed to getting one thing out of the way before moving to the next,” she suggests.
“That average age reduction is a very good sign of a maturing SMSF market and that’s very healthy for our sector.”
“If you set up an SMSF at 30 and live until you’re 90, you will probably still have that ac count for the entirety of those 60 years,” Hef fron managing director SMSF solutions Meg Heffron 02 says.
“That’s almost as long as Queen Elizabeth reigned.”
Heffron explains that younger people tak ing up SMSFs is an observable trend across the industry and there are probably a couple of foundational factors at play, including the fact that Millennials are the first age group to have received superannuation contributions for the entirety of their working lives.
“I suspect Millennials are vastly more en gaged with their super than older generations because they’ve got more. They’re also in this weird situation where the contribution rate is now 10.5%, which is quite high,” she says.
“It’s quite a significant amount for a cohort who are probably still trying to pay down a mortgage and, as their super builds, it’s most likely their second biggest asset aside from property. A logical response in that situation is the desire for more control.”
However, the pandemic is likely also a con tributing factor.
“Covid has probably accelerated it, quite like the Global Financial Crisis (GFC) did. You see this foundational shift that prompts the estab lishment of more SMSFs both for the long and short term,” Heffron says.
“It can give people a false understanding of their capability. They think, ‘I could do better if I handled it myself.’
“But when markets go down, they go down for everyone and with that, you will quite pos sibly see a lot of a buyer’s remorse as people start to realise they couldn’t do it any better.”
This new-found but perhaps unearned con fidence is also leading to a shift in the portfolio construction side of things, with the traditional SMSF filled with Aussie bluechip stocks, cash and property slowly losing its sheen.
Verante Financial Planning director Liam Shorte 03 is well aware of how the new genera tion of SMSF investors are shaking up their portfolios.
“The major use of ETFs is the big one,” he points out.
“So, people who once mostly ran Australian portfolios are now adding Vanguard ETFs as an example. Retirees are looking into ETFs for the purpose of income, younger people are in terested in ESG focused ETFs or themes like antivirus and crypto.”
Crowd favourites like Australian direct shares, term deposits and Australian managed funds are not being favoured as much by the new crop of investors.
“The Australian market is still very much banking, insurance and resources. The young er generation has a different product diet than their parents,” Shorte says.
He adds that being raised with Facebook (now Meta), Google, and Microsoft has ulti mately changed investor behaviour.
“They live in an international world and most of them probably don’t bank with the big four in Australia, so they don’t really have any
I suspect Millennials are vastly more engaged with their super than older generations because they’ve got more.
Meg Heffronloyalty or interest in them. They’re looking for the growth stocks of the future,” he says.
Shorte uses the example of Atlassian, an Australian tech giant listed overseas, moving investors towards foreign shores.
“They want to be investing overseas and the easiest way to do that is through ETFs, the only other option is using a broking ac count that allows access to overseas exchanges. Once you do that, you’re bringing in currency and market’s trading hour risks, among other things,” he warns.
This change in appetite isn’t yet reflected in the ATO data though, which shows allocations to equities and property have remained steady since 2013 while cash has declined slightly. Fixed interest allocations have also grown fivefold in recent years in both percentage share and nominal terms.
Stake SMSF product specialist Ciara Con way04 backs this, saying many customers are still prioritising exposure to Aussie equities and locally listed ETFs.
“But foreign equities are becoming increas ingly popular as customers look to diversify,” she says, agreeing with Shorte.
“There’s a minority that choose to invest a small part of their portfolio into cryptocur rency ETFs, but traditional investments are far more common. SMSFs overwhelmingly attract those with strong experience in the market and most are focused on long term returns.”
SMSF Association policy manager Tracey Scotchbrook 05 agrees that for all the hype sur rounding it in recent years and its increasing legitimacy, crypto hasn’t seen much recent growth.
According to the ATO, as at end March 2022, SMSFs had only a combined $226 million in crypto assets. This equates to just 0.03% of total assets, and it’s a ratio that hasn’t changed in several years.
“Crypto across the sector is still a small per centage,” she says.
“Each individual trustee member will have their own risk profile but what the statistics do show us is investments in those unlisted shares or unlisted unit trusts tend to be more promi nent in the larger SMSFs.”
Shorte adds a few reasons why it remains quiet in the DeFi desert.
“Recently I haven’t seen much in the form of NFTs and only a little in crypto. An expla nation might be a lot of people have just come through the first year of audit on crypto and now see how much work they need to do to prove their holdings in the transactions. Sec ondly, the market dive has taken a lot of enthu siasm out of the crypto scene.”
Looking back, he explains Perpetual or Ma gellan managed funds were the done thing but now there is a big shift towards exchange listed funds.
“There is a lot more emphasis on index in vesting nowadays and smart index investing.
01: Jo Hurley general manager, growth Class 02: Meg Heffron managing director Heffron 03: Liam Shorte director Verante Financial Planning
Investors are trying to cut out the fees that can occur with a lot of these funds. They’re mov ing more money to index,” he says.
He adds that some clients simply aren’t hap py with what their retail or industry fund is in vesting in, with APRA-regulated funds under increasing pressure to invest in line with evolv ing social expectations, in addition to an ex pectation that their greater scale should equal lower costs. There are also lingering gripes around transparency.
Conway believes there was no single event that triggered the increase in SMSF adoption, but says there have been stories around hidden superannuation fees and inflated private valua tions associated with traditional funds.
“And this has coincided with increased access to financial information and SMSF tools. Some of those with experience of fi nancial markets feel better in managing their own wealth, and this motivation remains true across gender and age groups,” she notes.
As more people become super savvy, a trend advisers are seeing at large is the pursuit of ethical investing. While the pressure is on the incumbent super funds to ensure their in vestments are ESG compatible, many feel not enough is being done and are taking matters into their own hands.
One financial services professional who knows a thing or two about ESG investing is Kearney Group chief executive Paul Kearney06
“We’re very vocal in this area, for example our core SMA offering is an ESG first portfo lio,” he says.
“We see people’s eyes lighting up when we lead discussions around ethical investing options.
“And there is no doubt SMSFs give you more range to do something with those factors. We’re having more conversations now than we’ve had in the past about whether it’s appro priate for clients to open up their own account. Even if it’s not the right time just yet, there is a lot of interest.”
He adds the surge in younger people moving to SMSFs is likely driven, at least in part, by the fact their morals no longer align with that of retail and industry funds.
“I think that investors, particularly the younger cohort, feel suspicious about major institutions and question whether they should place all of their trust in a public offer fund be cause really you’re buying into the institution in a large way,” he says.
“If you feel discomfort with major institu tions and where your money is being invested then an SMSF becomes a way of organising your affairs without having to engage with what makes you feel a bit icky.”
When you think about it, it’s no surprise that this trend in SMSF member demographics and increased confidence in taking a DIY approach
to superannuation has emerged in recent years. Over the same period, and preceding it to an extent, has been a monumental surge in inter est in personal finance.
Whether it be TikTok or Instagram, Spotify or YouTube, the sheer amount of personal fi nance content now freely available to the every day Aussie is astounding. At the same time, the likes of Reddit and other online forums have documented the highs and lows of investing, giving hope that riches can be made in minutes and placing too little impetus on the risk all in vestors run.
One of the reasons this trend has proved so popular in Australia is the fact that much of the content is being delivered by professional financial advisers or former financial advisers, giving their audience reason to trust them.
However, it can’t be denied that the more likely reason is because it gives everyday Aus sies access to information they would oth erwise have to pay for but cannot afford. In creased compliance and regulatory burden has pushed professional financial advice now much too far out of reach for the majority. There is also fewer advisers to meet the demand that is there, with more than 3000 advisers leaving the industry in each of the last three years, ac cording to analysis of the ASIC Financial Ad viser Register.
“Right now, we’ve got a shrinking pool of fi nancial advisers and many more are needing to focus on high-net-worth individuals because of the cost of providing advice has been driven up by regulatory burden,” Scotchbrook says.
“The Quality of Advice Review (QAR) will certainly need to look at that; its proposal pa per has interesting thoughts and if legislated it could go a long way to help alleviate some of the friction around providing advice.”
She adds particular attention is needed around single or scaled advice that should be available through different life stages.
“There is a push for advice to be provided in bite-sized pieces but in the current environ ment it’s really hard to do because it’s just not cost-effective,” she says.
However, Scotchbrook says changes like the removal of the Statement of Advice document (SOA) can also open the door to technological benefits and lower costs.
“Instead of complex and chunky documents that are full of disclosures and comparisons to products that you’re not even looking at, [we now have] advances like a recording of an ad viser and client meeting that can be watched at a later date,” she says.
“At the moment, a young adult starting their first job wondering what super fund they should use would not be able to get that infor mation from a financial adviser, it would just be too challenging.”
Heffron agrees, saying that financial literacy could do with improvement across the country no matter where your super sits.
Paul Kearney“It doesn’t matter where your super is, it’s just as important and you’ve got to care about it because that will make a huge difference to how well you retire,” she says.
“The very fact that it’s happening in your SMSF means there are bunch more require ments you need to engage with. You need to manage costs like insurance premiums, you’re responsible for compliance with legislation and things like an extra tax return.
“I wonder if that just forces some engagement that’s good for us all.”
She also feels that regulation and trustee obli gations around SMSFs can sometimes be over blown.
“Most people do pretty low-key things with their SMSF,” she says.
“They really just need to know how to invest in mainstream things. Don’t take your money out, lodge your tax returns and know the limits on how much you put in and when you can take money out. That’s kind of it.”
The idea that you need to become some kind of superannuation expert in order to manage your own retirement savings is a myth, she says. So too is the idea that SMSFs are overly com plex, with Heffron saying any perceived com plexity can be explained.
“Often what’s being commented on is some technical article about pensions or contribution limits, or whatever,” she says.
“Now what’s in those articles apply to us all, no matter where our super sits. The fact is peo ple who have an SMSF often also take the time to review that kind of information, engage with their super and assets and optimise it.
“But those same people, if they didn’t have an SMSF, would still be engaging in strategies to positively contribute to their retirement. In fact, we all should.”
Heffron points out that you don’t typically suddenly stop worrying about tax deductions just because you have a tax agent doing your return.
“We all have to engage with our finances, no matter where our super is,” she reinforces.
And while SMSFs generally do attract more experienced investors, Conway says it’s impor tant that participants understand the level of risk when choosing to manage their super and are committed to regularly recalibrating their investment strategy.
“Auditors have found that with SMSFs that hold higher risk investments, such as unlisted companies and crypto, there have been issues around asset recoverability and accurate valua tions,” she notes.
Due diligence is key, as is having a trustwor thy provider, she says.
Ahead of the government’s upcoming federal budget, Partners Wealth Group director of wealth Patrick Barry07 says there will likely be one big change to SMSFs.
We’re having more conversations now than we’ve had in the past about whether it’s appropriate for clients to open up their own account.05: Tracey Scotchbrook policy manager SMSF Association
“One area that I do believe will come under focus, especially with the Labor government is the end of the limited recourse borrowing ar rangement (LRBA),” he says.
“The Labor government did go into the 2019 election saying they would take it away; I don’t think they will change their mind.
“We’re talking to clients and saying, ‘If you wanted to enter that strategy you have four weeks’, because they will grandfather existing customers. I don’t believe they will let anyone new enter it after that.”
He says that LRBA, which has been in place for about 15 years, holds value because it allows for diversification within a fund.
“The good thing about the LRBA arrange ment is that you could buy a property and still have diversification,” Barry says.
He uses the example of a client with a $1 million balance, who wishes to buy a residen tial property. In more cases than not, that full amount would be used for the purchase.
“So, all of your retirement is hinging on that property in that suburb doing really well be cause you’ve used all your money in the fund to buy it,” he says.
“With an LRBA a client could effectively use $300,000 of the money in the fund and then could borrow $700,000. You have that asset there but with the borrowed amount you can still have a diversified portfolio of shares, bonds and so on.”
Hurley adds these kinds of borrowing strate gies have often been tarnished with that brush of risk.
“Or people are not sure whether it’s appropri ate or not. Whereas I have long held the view that borrowing in super does support diversifi cation,” she explains.
Hurley adds the way the legislation has been written is to protect trustees in setting up a spe cific kind of borrowing that would best suit the SMSF structure.
“I’ve always believed that it reduces the risk; it would be a shame if they play with that strat egy,” she says.
The reputation of the humble SMSF took quite a beating around the Royal Commission and ASIC’s view has long been that a certain thresh old balance is required in order for them to be efficient.
“While ever ASIC was very anti-SMSF, it was difficult for licensees and advisers to proac tively recommend that they got set up,” explains Heffron.
She says only “confident advisers” who worked with high-net-worth clients felt assured they could recommend an SMSF setup.
“That’s a real missed opportunity for both clients and advisers,” she says.
While negative press slowly dies away, espe cially from ASIC, and more advisers become self-licensed as opposed to being part of a big
bureaucracy, Heffron believes more advisers will naturally shift towards SMSFs.
“For a lot of people, they’ll say, ‘This client has engaged with advice they are clearly looking long term, willing to spend money to get the best possible outcome’,” she says.
“At some point, an SMSF is going to become right for most of them. There’s still a bit of this hangover of negativity that makes you feel like recommending an SMSF should be the excep tion rather than the rule.
“If you think about it, we control our finances in every other way. We decide where we will take out our mortgage, we decide where we get our credit cards, we decide who we bank with - why would we not decide what our super looks like?”
Breaking into SMSF advice could be seen as a steep learning curve but Heffron says upskilling is only needed in part.
“I don’t think the main area to upskill in is compliance, if the fund is mainstream,” she says.
“There are definitely a lot of rules about things an SMSF can and can’t invest in. But if all you’re going to do is buy managed funds, property trusts, listed shares, term depositswhich is part of most funds - there is no special knowledge required.
“It’s people whose SMSF moves into more complex investments – collectables, investments in private companies, property that’s leased to a family business – that need greater understand ing of the rules specific to SMSFs.”
She explains that an adviser needs that higher level of knowledge of tax planning and pension structure opportunities.
“That’s not so much forced by the fact that their client has an SMSF; it’s made available by the fact that they’ve got an SMSF,” she says.
Where a client in an APRA-regulated fund might not incur the same workload or knowl edge base, an SMSF requires more strategic planning, particularly around the transition to retirement, including looking at money coming in and money going out, multiple pensions and tax planning for the next generation.
“Advisers who advise a lot in SMSFs, upskill themselves in all that opportunity. It’s not really that they suddenly have to become experts in the compliance, it’s that they need to do a better job in advising,” Heffron asserts.
She concludes that good advisers will gravi tate towards SMSFs, “where the benefits of their skills can be more clearly felt by their clients rath er than in a retail fund where they’re constantly having to compromise and do what’s easy.”
“Even if none of those advisers ever gave SMSF advice, that upskilling would be so good for their clients. But what would probably hap pen is that they would bump into the constraints of public offer funds and wish their client was in an SMSF,” she says.
Shorte agrees the opportunity for an adviser is huge.
“You have to remember the number of limit ed licensed accountants has dropped from 2500 to, I think, about 540,” he says.
“I’m closed off to business until July 2023 because there are just so many inquiries on the SMSF side and I’ve got that arrow in my bow.
“It’s a huge opportunity in this space for any adviser who wants to get into it.” fs
It’s a huge opportunity in this space for any adviser who wants to get into it.
Liam Shorte07: Patrick Barry director of wealth Partners Wealth Group 06: Paul Kearney chief executive Kearney Group
A new suite of Financial Standard journals is out now, bringing you the latest news, cover stories and CPD-accredited whitepapers for Australian wealth management professionals.
Celebrating its 100th birthday, Commonwealth Superannuation Corporation’s Damien Hill reflects on the fund’s growth, the challenges it’s weathered in recent years and his plans for the year ahead, including its merger with AvSuper.
fsadvice.com.au
code: AD0722
FINNACLE’s Daniel Thompson shares his innovative approach to advice delivery, proving it’s possible to provide accessible, affordable financial advice.
fssustainability.com.au
code: ST0722
fssuper.com.au Promo code: SU0722
Pollination Group partner Zoe Whitton is helping to accelerate the transition to a net zero, climate resilient future. She explains how financial solutions and natural capital can help bring systems change.
Centuria Capital Group and MA Financial Group have formed another joint venture to secure one of Perth’s best known office towers, Allendale Square.
The 31-storey office building is located within the heart of the capital city at 77 St George’s Terrace, providing 25,908sqm of office accommodation and 2745sqm of retail space below the tower.
Both parties’ investment in Allendale Square will be part of their respective new unlisted singleasset close-ended wholesale property funds.
Centuria will provide property management for the asset, while both entities will be responsible for the asset management of their respective investment funds.
Centuria joint chief executive Jason Huljich said the site provides a great counter-cyclical investment opportunity, being acquired with embedded capital value and within a market that benefits from strong tailwinds.
“Perth has the country’s highest occupancy rate among all capital cities with a 71% occupancy rate and the market is further supported by a strong outlook for tenant demand throughout the medium term,” he said.
“Furthermore, the property benefits from its close proximity to Elizabeth Quay, which is Perth’s answer to Sydney’s Barangaroo. Significant redevelopment is being completed within the quayside area in the short to medium term, which extends across the same period as the fund’s term.”
MA Financial group joint chief executive Julian Biggins said: “The calibre of Allendale Square means it is well positioned to take advantage of the flight-to-quality trend occurring throughout the office market.” fs
In their newly created roles, Lucy Timms and Madeleine Catlin will work with the board to lead the Financial Planning Association of Australia’s charitable foundation in its goal to help disadvantaged young Australians.
With over 14 years’ experience working for not-for-profit (NFP)s across a range of industries, Timms is also currently general manager at Coda.
Catlin is also operations manager at Coda and has previously worked for a number NFPs in Australia and New Zealand.
Commenting on the appointments, Future2 chair Julie Berry said: “Lucy and Maddie bring a wealth of complementary skills and experience in the not-for-profit sector across events, project management, sponsorship, marketing, operations, and strategy.”
“It’s timely to review the structure and resourcing of Future2, and working with Lucy and Maddie provides a dedicated resource to focus on ensuring that Future2 can continue in its work providing support to those in need in our local communities, in the next phase of our growth,” she said.
She added that the last two years have been extraordinary and the association’s charity partners have experienced unprecedented challenges. fs
Liberal senator Andrew Bragg01 has released a draft bill for consultation that introduces licences for digital asset exchanges, custody services, stablecoin issuers, and instigates dis closure requirements for Chinese state-owned banks that facilitate e-Yuan in Australia.
ing that its facilitators which are predominant ly Chinese state-owned banks, disclose data to APRA and the Reserve Bank of Australia (RBA) on its use in Australia.
Bragg cited the government’s inaction on dig ital assets as the reason why Australia has fallen behind on consumer protection and investment promotion. He added that Labor and minister for financial services Stephen Jones had failed Australian consumers by not already releasing a draft bill.
Ensuing these perceived inadequacies, Bragg said: “As a result of the government’s failure to progress and deal with these issues, I have taken it upon myself to develop a Private Members Bill – the Digital Assets (Market Regulation) Bill 2022.”
The draft Bill requires digital asset exchanges to include requirements relating to the mainte nance of a minimum amount of capital and the regulation of its participant’s conduct.
Further, stablecoin issue requirements dictate that the full amount of the face value of the li abilities for the stablecoin on issue from the li censee must be held in reserve, in financial in stitutions licensed by APRA.
The Act also targets the e-Yuan, the first CBDC to be issued by a major economy, requir
In a speech to the Blockchain Association Forum Summit, Bragg explained: “The bill requires that these banks report on the ag gregate quantity of Australian businesses who have accepted e-Yuan payments, the quantity of digital wallets opened by Australian custom ers and the aggregate quantity of e-Yuan held in those wallets.”
“We need to closely analyse the development and expansion of the e-Yuan, in conjunction with wider developments in the CBDC space, if we are to pre-empt the risks of currency sub stitution and privacy breaches. Transparency is part of the solution.”
Responding to the Bill, Labrys founder and chief executive Lachlan Feeny said: “Senator Bragg has been a strong advocate for the indus try and regulatory clarity. Regulatory clarity is important and will be good for the industry.”
“However, we must be careful to not impose licensing restrictions that protect the exist ing exchanges but raise the bar so high that it becomes anti-competitive and deters new en trants. As the industry - and Australia’s posi tion within it - continues to establish itself, we must encourage, not deter, participation and innovation.” fs
Total ethical ETFs listed on ASX and Cboe are more than $8.5 billion, with BetaShares range of ethical ETFs constituting nearly half, according to BetaShares responsible investments director Greg Liddell.
What we’re seeing is more interest in those products and seeing quite significant cashflows,” Liddell said. “We now have nearly $4 billion in our ethical ETFs and by any scorecard, they’re very successful.”
“You have a new generation and demographic coming through who are more conscious of their role as stewards of the planet, and in Australia, we saw a significant change of perception around climate change after the bushfires in 2019,” Liddell said. “People who had not previously thought of climate change became more aware, more concerned, and wanted to do more about it.”
According to Rainmaker Information’s most recent ETP report, total assets in exchange traded products stood at $135.7 billion at the end of March 2022, a reduction of 1.3% or $1.7 billion compared to the end of December 2021. However, total funds under management had increased 32%, or $22 billion in the 12 months to end of March 2022.
As investor demand for sustainable and ethical ETFs has grown, this has led to more thematic-based products for BetaShares. Liddell pointed to the Future of Food ETF (IEAT),
which provides exposure to a portfolio of companies in the areas of sustainable global food production and supply.
“We know electricity and energy is a big challenge related to climate change, transport is next, and the next one after that is agriculture,” Liddell said. “Agriculture has been a very conservative industry for a very long time, and now what you have is a raft of technological changes, one to get chemicals out, and two just to reduce the emissions around production, manufacturing, logistics, all of which is necessary and I suspect the uptake of the technologies will exceed expectations.”
Liddell also pointed to their Solar ETF (TANN), which provides exposure to a portfolio of global companies in the solar energy industry as another thematic product for investors, noting that transparency is a significant attraction to these products.
Beyond being able to expand product offering to meet investor demand, the influx of funds under management means that BetaShares is a more significant holder of shares in listed companies, which augments their stewardship activities.
“The engagement with companies and how we vote our proxies, we take that very seriously,” Liddell said. “When we send an email off to an investor relations department that says we hold x percent of your register, will you take a meeting, you get a meeting.” fs
Regulatory clarity is important and will be good for the industry.01: Andrew Bragg senator
AMP’s wrap platform has added Cboe Australia’s funds to its offering as it continues to grow in popularity with financial advisers.
Just last month, North’s managed portfolio passed $6 billion in assets under management, more than doubling since August last year.
As of today, its investment menu has been further enhanced with the addition of the Cboe trading platform.
Cboe’s exclusive range of investment options, including its range of ETFs are now available through North.
Three key changes have also been made to North’s core functionality, including an investment switch capability, a tax estimator, and a new digital consent process, streamlining the fee approval process with advisers.
AMP platforms director Edwina Maloney said that these additions to North, together with its recent functionality improvements, reflect the group’s commitment to understanding the needs of advisers.
“North’s growing managed portfolio range is part of a wholesale strategic uplift to North’s investment menu in recent years, which has also been further strengthened with access to the Cboe trading platform,” she said.
“North’s managed portfolios have seen exceptional growth – an indication of the quality of the investment managers we partner with, our technology platform, and the service the North team provide advice practices in implementing investment strategies for clients.” fs
Brighter Super is increasing some of its insurance premiums and changing the way they are charged at the same time.
From September 30, the cost of death and total and permanent disability cover through Brighter Super will go up across all occupational risk categories. The cost of death only cover will not change.
Currently, those members categorised as ‘blue collar’ pay $1.52 per unit per week for death and TPD cover. From September 30 this will increase to $1.75.
Those in the ‘white collar’ category will see their premiums rise from $1.17 to $1.35, while ‘professional’ members will see theirs increase to $1.15 from $1.
“While an increase in cost is never ideal, we need to ensure that insurance premiums are sustainable so that you can continue to rely on your insurance in your time of need,” Brighter Super said.
“As a not-for-profit super fund, we work hard to ensure that our members are sufficiently protected and that the premiums charged are competitive and fair. We do not make any profit or receive any commission from the insurance provided to our members.”
For members with fixed cover, the premium rates per $1000 of death and TPD cover will also increase, the super fund said. fs
The super fund introduced Super View, a new online data tool allowing members to see the identity, value and weightings of their investments.
The tool provides members the ability to see how their money is invested across a range of asset classes and derivatives, including unlisted assets.
proprietary online data visualisation platform.
“We asked some of our members what invest ment data they wanted represented in a visually rich manner. Most responded by requesting to see the exposure of global investments and the ability to easily see the industries and compa nies the fund invests in,” he said.
It also allows users to scope out either an asset class or regional level to sector specific indus tries and companies and click through to see the fund’s voting history for each company.
The data tool complements, but is separate to, the fund’s existing portfolio holdings disclosures.
Active Super chief executive Phil Stockwell 01 said that, in addition to providing detailed port folio information and data that is now required under the PHD regulations, the super fund has gone one step further by offering members a
Stockwell added that with the help of invest ment technology company Investment Control Systems’ (ICS) cloud platform ATHENA, Ac tive Super is providing a tool that allows greater scrutiny and transparency so members can see exactly where and how their money is invested.
Active Super chief member experience and growth officer Chantal Walker said: “This tool further enhances our transparency and elevates our multichannel member engagement experi ence.”
“It supports our ambition to be a leading and innovative digital super fund.” fs
Institutional investors, such as super funds, are more likely to recall loaned shares to exercise voting rights in line with proxy voting policies, research has found.
In the decade since the introduction of the “twostrikes rule” in 2011, more institutional investors are recalling shares in the month leading up to AGM voting seasons in May and November, according to a paper from researchers at Deakin Business School.
The two-strikes rule was brought in as an amendment to the Corporations Act. If more than 25% of a company’s shareholders vote down two annual remuneration reports in a row, this triggers a vote on a board spill that could result in the company’s entire board of directors facing re-election. While board spills are rare, it is a powerful tool for active owners such as super funds who engage with boards and executive leadership.
Many institutional investors operate securities lending programs, in which the beneficial owner of a security to lend it for a specified period, with the borrower agreeing to return an equivalent security at the end of the period. Securities lending agreements are indemnified with high quality collateral. Beneficial owners use securities lending programs to generate incremental income to a portfolio, and securities lending can be used as part of various strategies, including shorting, hedging and arbitrage.
When a stock is out for loan, however, the borrower retains the proxy vote. If the beneficial owner wishes to vote at an AGM, the stock must be recalled, sacrificing the income.
The findings of the research debunks a common criticism of institutional investors, that they cared more about earning short-term lending fees than stewarding long-term value of shareholdings, said lead researcher Tze Chuan ‘Chewie’ Ang.
“Our results suggest that institutional lenders are willing to forfeit the fee income from equity lending to exert their influence on the corporate governance in the firms in which they invest,” Ang said.
Recalls are more common for shares in companies where there is lower support for meeting resolutions, including renumeration packages, indicating institutional investors want to exercise their voting rights in these issues, Deakin said.
Recalls are “increasingly common in larger firms, firms with more independent directors, and stocks with higher past returns in recent years. Recalls are associated with less support for resolutions at meetings, especially those related to the remuneration package in firms within the ASX100 and those with existing shareholder dissent,” according to the research.
“These findings lend credibility to institutional investors,” Ang said.
“It shows that the super funds are not the bad guys. They’re recalling shares in time for voting because they see the value in being part of corporate governance.”
Ang noted said it was important institutional investors provided clear disclosure on when votes were being lent, and, when shares were recalled, how the institution intended to vote. fs
It supports our ambition to be a leading and innovative digital super fund.01: Phil Stockwell chief executive Active Super
The Actuaries Institute has named Chris Dolman as the Actuary of the Year for 2022.
Dolman is executive manager, data and algorithmic ethics at IAG and is also a research affiliate at ANU’s Humanising Machine Intelligence group and contributes to the not-for-profit Gradient Institute’s work.
“Chris is considered by his peers as the leading actuary in data ethics, sharing his knowledge widely through submissions, thought leadership, and acting as a sounding board for complex issues,” the Actuaries Institute said.
“His work focuses on the practical application of ethics in automation and artificial intelligence, and the social impact of data availability and automation in insurance.”
Actuaries Institute president Annette King said Dolman has built strong relationships beyond the actuarial community and is highly regarded by policymakers, regulators, academia, and other thought leaders.
“Chris has played a significant role in thought leadership and promotion of the actuarial profession in ethics, data analytics, and discrimination,” King said.
“He is committed to good regulation to ensure that policy keeps pace with technology changes and meets the needs of society.”
In addition, Dolman is a founding member of the Actuaries Institute’s Data Analytics Committee, chair of the Institute Working Group for the collaboration with the Australian Human Rights Commission (AHRC) and a member of the General Insurance Practice Committee. He has also served as chair of the Actuaries Institute’s Anti-Discrimination Working Group. fs
Brian Sherman has passed away at age 79 after a long battle with Parkinson’s disease.
South-African born Sherman was chair and joint managing director of investment house EquitiLink Group. In his memoir, Lives of Brian, he recounted how he came to Australia with just $5000 and started the business at his kitchen table.
After selling EquitiLink in 2000 to Aberdeen Asset Management (now abrdn) for $80 million, Sherman became a prominent philanthropist, focused on the arts, animal rights, and the Jewish community.
He was also director of the Sydney Organising Committee for the Olympic Games and chair of its Finance Committee, chair of ASX-listed Aberdeen Leaders Limited, chair of several listed investment companies in the US and Canada, and a director of Channel Ten.
He was also co-founder and managing director of the animal charity Voiceless, director of the Sherman Centre for Culture and Ideas, president of the Australian Museum Trust, director of Sherman Galleries and the Sherman Contemporary Art Foundation, director of the Australia-Israel & Jewish Affairs Council, and chair of the Rambam Israel Fellowships program.
Sherman was awarded the Order of Australia medal in 2004. fs
Financial advisers continue to be engaged with ETF strategies, with 88% using them to boost client portfolios in Australia this year.
The annual VanEck Australian Smart Beta Survey collected data from 650 Australian finan cial advisers and brokers; the average participant was a financial adviser with 20 years of industry experience.
beta ETFs are likely to account for 18%,” he said.
“Those who use smart beta are overwhelm ingly happy with the product, while 80% see smart beta investments as good value for money, up from 75% in 2021.”
Neiron explained that, despite market volatility, fund managers aren’t taking an active approach.
Those who use smart beta are overwhelmingly happy with the product, while 80% see smart beta investments as good value for money...
It found two in three respondents increased their ETF usage over the past 12 to 18 months with the intention to reduce total portfolio costs.
VanEck also highlighted that 46% of financial professionals currently use smart beta strategies and a further 40% are evaluating or planning to in the next year.
It said 59% of surveyed participants employ two or more smart beta strategies, which is an increase from 56% in 2020.
The leading smart beta approaches in equities are single quality factor and ESG, however ESG smart beta approaches have declined to 31% from 38% in 2021.
Over half (56%) are using smart beta as a re placement or substitute for active management and 99% are satisfied with their investment.
VanEck Asia Pacific chief executive and man aging director Arian Neiron 01 explained this will only expand the market further.
“The expected increase in usage will drive further growth of the ETF market in Australia as it heads towards a market capitalisation of $150 billion by end of 2022, of which portion smart
“By way of example, the June 2022 SPIVA scorecard by S&P Dow Jones revealed 31.8% of Australian equity mid and small cap funds beat their benchmark indices in the six months. Over the longer term, 51% underperformed over 15 years,” he said.
Neiron added that advisers are seeking target ed investment outcomes in their portfolio con struction process, employing smart beta ETFs, with flows into smart beta ETFs accelerating.
“The proportion of net flows going into smart beta strategies rose to 26.6% in August this year from 20.2% in 2021, with that gain outpacing both active and market capitalisation strategies,” Neiron said.
“Smart beta strategies now make up 15.2% of the total ETP industry, up 8% from the prior year, again outpacing growth in active and mar ket capitalisation strategies.”
The report further revealed the reason for not embracing ETF and smart beta strategies was a lack of knowledge.
Around 41% of participants admitted to not knowing enough about ETFs while 71% said it’s a mix between not knowing enough and it not being available on the APL. fs
NexisLexis Risk Solutions has revealed the results of its 2022 Financial Transparency and Inclusion Report, which surveyed banks, insurers and non-bank financial institutions across 13 countries and regions.
According to the report, 69% of respondents said that the unbanked/underbanked are harder to onboard than other types of customers and businesses because of their lack of transparency.
In addition, half to two-thirds of financial institutions pointed to the difficulty of collecting and verifying information on customers as a major hurdle in onboarding customers.
While acknowledging its struggles, financial institutions remain strongly interested in financial transparency and inclusion, with two-thirds of institutions expressing commitment to supporting financial inclusion.
At the regional level, a higher proportion of institutions in Asia Pacific and Latin America expressed support for financial inclusion.
A growing number of institutions also said they are willing to share their data for such purposes, suggesting that the industry is working towards data democratisation.
Nearly half (48%) of respondents said that their compliance and customer service departments would operate more efficiently and benefit from being part of a global consumer due diligence utility or network to share consumer data.
Commenting on the results, LexisNexis Risk Solutions vice president, financial crime compliance Leslie Bailey said that financial institutions have clear responsibilities to verify customer identities and ensure compliance with national and international regulation.
“Rejecting potential customers due to inefficient or manual processes rather than regulatory reasons can be detrimental to genuine individuals trying to access financial services,” she said.
“With robust data and the right technology and processes in place, institutions can help improve global rates of financial inclusion without compromising on compliance.” fs
01: Arian Neiron chief executive and managing director, Asia Pacific VanEck
In opening the Australian Institute of Superannuation Trustees’ Conference of Major Super Funds, chief executive Eva Scheerlinck provided an overview of the association’s key focuses for the 12 months ahead and lamented the glacial pace of change for women when it comes to superannuation.
Touching on why closing the gender super gap is a top priority for AIST this year, Scheerlinck said she is getting sick of talking about all that is not being done.
“We all know, all too well that women have significantly less super than men in retirement, because they earn less and take more time out of the workforce caring for children and other relatives,” she said.
“This is not new. We know of the problem; we know all too well the reasons. And yet not enough is done to fix it.
“Low pay, low super. Time out of the workforce, no super.”
She acknowledged that finding a solution doesn’t sit solely with the superannuation sector but did say that more could be done by the financial services industry to help even the playing field, noting the 27.5% gender pay gap in the industry.
“… as an industry we can lead by example and use our influence to address this egregious inequity. The dial has not shifted very much in the 12 years I have worked in the super - surely no one in this room is comfortable accepting that,” she said.
Continuing to push for superannuation to be paid on Commonwealth Parental Leave payments will also help, she added.
“If we apply the collective intellect of the sector, business, civil society and government to the problems in our experience and expectations of work, caring for others and retirement, we will be able to fix the structural problems,” she said.
Industry stalwart Gary Weaven said he expects the super sector will struggle with the national homelessness crisis and lack of affordability over the coming 30 years.
Speaking on a panel, Weaven said: “I’ve often said over the years that unfinished business for the superannuation industry is its failure so far to address the question of housing supply and affordable housing with affordable government support.”
“It’s not going to be fixed quickly, and as long as it’s not addressed, I think it’s going to be the political Achilles heel for the superannuation sector.”
TelstraSuper chair Marie-Anne O’Loghlin agreed that super funds have a role to play in the affordable housing space.
“[The issue] needs to have the right policy settings and in some cases, some underwriting by the government, that would actually make it easier for funds to be able to go into that space,” she said.
“We have the capital to do it, and we have the
Low pay, low super. Time out of the workforce, no super.
Eva Scheerlinck
will to do it, but we just need to find the way to make that happen.”
“The superannuation system is not perfect and has never been perfect. But one of the greatest things about it is that before compulsory super, we had a campaign that set up industry funds and established funds that had representative trustee boards across the workforce,” Weaven explained.
“Now, it’s self-evident that the design of representative trustee boards was extremely important to make sure that the schemes we run are in the best interest of the members and to garner the best returns. Those funds have actually outperformed over all these years.”
Meanwhile, Slater & Gordon and Telstra nonexecutive director Elana Rubin said that if she were re-designing the superannuation system today, she would address the lower levels of retirement savings for women.
“The system was designed for full-time permanent workers, and we can see now when we look at the retirement balances of men and women, there’s an unacceptable differential of the financial security between them,” Rubin said.
“Going forward, we really need to address the lower levels of retirement savings for women by either changing the super contribution in terms of percentages, paying super on parental leave and extended leave; there are a number of
mechanisms which we are compelled to look at.
“Otherwise, we’ll continue to have a situation in our time where women have significantly less financial security than men.”
Appearing via video link, minister for financial services Stephen Jones discussed his decision to review the Your Future, Your Super laws.
“There was a lot of things within that package of legislation that Labor supported, but there was also a lot in there that was more driven by ideology than good sense. A bunch of that we got knocked out as the laws passed their way through parliament… but when you have any major reform such as this, it just makes good sense that you would conduct a review after a period of implementation,” Jones said.
He added that it is particularly focused on the benchmarking process, saying it’s sensible to look at the operation of the benchmarks.
“I want to make it clear that we support performance measurement. The Labor government is unequivocally on the side of high-performing funds and holding trustees’ feet to the fire to ensure that they deliver on their performance promises,” he said.
Turning to the topic of merger activity having accelerated because of Your Future, Your Super, Jones said for the most part this has been a good thing, particularly those driven by underperformance.
“If anything, I’d like to see some of the friction removed from the process so that funds that have decided it’s in the best interests of their members to merge, we can ensure that those processes occur swiftly and with less friction than is currently in the process,” he said.
He concluded by saying that he has included in the consultation paper a question around the implications for market structure, focused on accelerated and excessive mergers and consolidation, but added that he isn’t concerned that increased consolidation may create funds that are “too big to fail.”
“We’re a long way from replicating in the superannuation industry the sort of concentration we see in the banking sector, a long way. As far as funds being too big to fail goes, I think if we get to that point then we’ve really failed at a heap of other areas in the government’s and the prudential stages of fund management,” Jones said.
“I’m not concerned about that.”
More needs to be done to protect the super sector’s most vulnerable members, with the conference being told that doing so would be a breach of the best financial interest duty is a myth.
AIST senior manager, policy David Haynes said super funds could and should be doing more for
vulnerable members, while ASIC commissioner Danielle Press agreed and pointed out that the best financial interests duty actually allows for different members to be treated differently.
“Vulnerability can be intrinsic or as a result of factors that may be temporary or situational, and the threshold question of identifying vulnerable members remains a significant challenge for all concerned,” Haynes said.
“And one myth that we want to bust is that going the extra mile to help vulnerable members is not something that the best financial interest duty prohibits or limits.”
Adding to Haynes’ comments, Australian retirement trust head of technical advice Lyn Melcer said that “respect” and “dignity” are two key words that centralise what super funds should be looking at when talking not just about vulnerable members, but all members.
“What do you really think of when we talk about vulnerable? Maybe you’re thinking the elderly, the very young, people with a disability, people with financial distress, people with low levels of financial literacy, people with non-English speaking backgrounds, homeless people, people in domestic violence situations, people living in remote communities, people with low account balances, the list goes on,” Melcer said.
“I think it’s okay to say that all members are vulnerable when you look at a list like that, and you can say they can be, but it’s not okay to use it as an excuse to do nothing, or worse - to think that you’ve done enough, because it’s pretty clear that there’s a lot to be done.”
Cbus chair Wayne Swan warned the industry has a fight on its hands when it comes to big structural reforms moving forward.
“I was in the parliament when we started the Super Guarantee 30 years ago, and I’ve been a participant looking at it from the outside and now from within,” Swan said.
“I can say what I’ve found now from within is that I fully understand just how important the collaborative model is, the model of employers and unions getting together as trustees on a profitto-member model.”
Now, he said, super funds have got to decide how to reinvigorate the profit-to-member model, the collaborative model of unions and employers, to meet the attacks which are going to continue to come over the next 30 years.
“We need to find the next generation of CFOs, CIOs, and trustees that are going to breathe much more life into that collaborative model, as it continues to be attacked because it’s too commercial,” he said.
Spirit Super independent chair Naomi Edwards shared a slightly different perspective.
“For the last 10 years we’ve been in the valley of
And one myth that we want to bust is that going the extra mile to help vulnerable members is not something that the best financial interest duty prohibits or limits.
David Haynesregulatory terror awaiting what new changes will arise, and I think there’ll be a breather from that,” she said.
Now, she said, the new valley of terror that super funds are entering is not regulatory or political, but competitive.
“I think that the competition is not primarily of industry super funds, retail funds, or other funds, as I think we’re now officially “frenemies”,” she said.
“However, it is nice to have a break from the regulatory terrors of the last five years.”
Insights from the UTS Institute for Sustainable Futures has seen 63% of investment professionals admit their climate skills need developing.
Research director Alison Atherton offered delegates to the Conference of Major Super Funds a sneak peek of work the Institute has been undertaking into sustainable finance skills, with a particular focus on climate skills. The research follows similar studies done in Canada and Ireland that uncovered a gap in the skills that the financial services industry needs, with Atherton saying it was suspected the gap existed in Australia too.
For the purpose of the study, climate skills were defined as “skills, knowledge and competency” including personal skills and skills within an organisation. The skills respondents – members of sustainable finance professional networks and industry bodies like AIST – identified as being most important were reporting and disclosure, followed by climate risk management. Also important were customer and client engagement on climate issues and understanding investment opportunities and scenario analysis.
Despite having agreed these skills were important, the online survey found 63% believe they need to upskill on all of them. About 35% believe they have “all the climate skills required.” The balance was unsure.
Atherton noted there are barriers to upskilling though, including lack of funding and uncertainty around what skills are needed. In total, 71% said there are barriers, while 29% said there is not.
Aware Super board director Roslyn Ramwell won AIST’s 2022 Trustee of the Year Award.
Ramwell joined the super fund’s board in 2019 and is the chair of Aware Super’s audit, risk and compliance committee and a member of its investment committee and direct assets committee.
Accepting the award, Ramwell said she was delighted to receive the award, which she believes reflects the contribution of all directors of Aware Super.
“I’ve been in the industry for a long time, but I am still really passionate about superannuation and know it makes a real difference to people’s retirement,” she said. fs
iPartners has appointed Thom Bentley as its director head of capital markets in New Zealand.
Bentley, who officially joined on September 15, is the first local hire made by the Australian alternatives investor and will be based in Queenstown.
Going forward he is responsible for growing the business across wholesale and institutional investors in New Zealand and will report directly to the head of capital markets Alex Thompson.
Bentley joins from BetaShares where he held the role of country lead, New Zealand and also served as director, adviser and institutional business, New Zealand.
Before that, he worked at Smartshares Limited based in Auckland as a client director for the institutional business.
Commenting on his own appointment, he said: "I am excited by the opportunity for iPartners in the New Zealand market and honoured to be joining a high-quality team with huge capability in private market investment opportunities."
Thompson added: "We're thrilled to welcome Thom to the iPartners team. He brings a wealth of experience and a great network to our New Zealand offering.”
iPartners said the new hire reflects a rise in growth from New Zealand investors who are on the lookout for private market and alternative strategies to complement more traditional asset classes. fs
Ethereum’s long-awaited merge has been finalised, the US$180 billion cryptocurrency’s upgrade to a proof-of-stake mechanism slashing its energy consumption by 99.95%.
Explaining the merge, Labrys founder and chief executive Lachlan Feeney said: “The merge occurred when Ethereum’s existing execution layer ‘merged’ with the new proof-of-stake consensus layer, the Beacon Chain, on September 15.”
“The merging of the two removes the need for energy-intensive ‘mining’ and transfers the responsibility of block production to the validators operating on the Beacon Chain. The Beacon Chain has been operational since December 2020 running in parallel with the existing Ethereum proof-of-work chain.”
Put another way, Ethereum’s developers said to imagine Ethereum as a spaceship that launched before it was ready for an interstellar voyage. After significant testing, it became time to hot-swap a new engine for the old one mid-flight.
“This merged the new, more efficient engine into the existing ship enabling it to take on the universe,” the developers explained.
Feeney continued that ultimately, the merge allows the Ethereum blockchain to achieve the same level of security, scalability and decentralisation whilst consuming 99.95% less energy. Also, as proof-of-stake uses significantly less energy, the cost to secure the network drops significantly.
fs
Guy Opperman 01, who served as minister for pensions and financial inclusion in the UK for the past five years, was removed from his post by new prime minister Liz Truss.
There remains much for my successor to do.
Opperman was the UK’s longest serving pen sions minister but was relieved of his duties on September 8 following Truss taking over. Op perman had backed Rishi Sunak in the Con servative leadership contest over Truss.
“The leadership contest is over, and the new team, and new PM, is entitled to choose their personnel to take matters forward,” Opperman said in a letter posted to his social media.
“My successor and the new government team will have my full support.
“There remains much for my successor to do.”
Opperman highlighted the expansion of auto-enrolment during his tenure, with an
The Securities and Exchange Commission announced charges against Morgan Stanley Smith Barney LLC (MSSB) stemming from the firm’s extensive failures, over a five-year period, to protect the personal identifying information, or PII, of about 15 million customers.
MSSB has not admitted any wrongdoing but agreed to pay a US$35 million penalty to settle the SEC charges.
The SEC found that, as far back as 2015, MSSB failed to properly dispose of devices containing its customers’ PII. On multiple occasions, MSSB hired a moving and storage company with no experience or expertise in data destruction services to decommission thousands of hard drives and servers containing the PII of millions of its customers, the regulator said.
Further, over several years, MSSB failed to properly monitor the moving company’s work. The staff’s investigation found that the moving company sold thousands of the MSSB devices, including servers and hard drives, and some of which contained customer PII, to a third party which then resold them on an internet auction site without removing the PII.
Some devices were recovered by MSSB and found to contain thousands of pieces of unencrypted customer data. Most devices were not recovered.
The SEC’s order also finds that MSSB failed to properly safeguard customer PII and properly dispose of consumer report information when it decommissioned local office and branch servers as part of a broader hardware refresh program. A records reconciliation exercise undertaken by the firm during this decommissioning process revealed that 42 servers, all potentially containing unencrypted customer PII and consumer report information, were missing.
In the process, MSSB found the devices contained the ability to encrypt the data, but the firm had failed to do so.
“MSSB’s failures in this case are astonishing. Customers entrust their personal information to financial professionals with the understanding and expectation that it will be protected, and MSSB fell woefully short in doing so,” said Gurbir S. Grewal, director of the SEC’s Enforcement Division.
nual combined contribution rates rising to 8% and more than 10.5 million savers now autoenrolled into a workplace private pension.
He also claimed that prior to taking over less than 40% of women and young people were in a workplace pension, a number which has now climbed to over 86%. On state pensions, he added that pre-2010 they were £99 per person a week, now over £185 a week.
Alex Burghart has been named as his re placement, one of the first ministerial appoint ments confirmed under King Charles III.
Burghart is a conservative, like Truss. His vot ing record shows he has previously voted against increasing welfare payments, and voted against any measures aimed at combatting climate change.
Opperman had only recently returned to the role after resigning in the final days of former prime minister Boris Johnson’s leadership. fs
“If not properly safeguarded, this sensitive information can end up in the wrong hands and have disastrous consequences for investors. Today’s action sends a clear message to financial institutions that they must take seriously their obligation to safeguard such data.”
Also in September, charges were laid against registered investment advisers Hudson Advisors L.P. and Lone Star Global Acquisitions Ltd. for including Hudson’s owner’s anticipated income tax liability as a component of certain fees charged to 14 private equity funds they managed. Hudson and Lone Star Global have agreed to pay US$11.2 million in civil penalties and have reimbursed the affected funds US$68.5 million, which includes interest on the undisclosed tax liability charges.
According to the SEC’s order, between at least 2005 and 2017, Hudson included US$54.6 million of its owner’s anticipated US tax liability in fees charged to the funds. By law, these tax liabilities were payable by the owner rather than by Hudson. The SEC’s order finds that Hudson and Lone Star Global never disclosed the inclusion of these tax liabilities to their clients.
Further, in August a North Carolina-based investment firm was charged for defrauding client out of more than US$75 million.
According to the SEC’s complaint, from July 2017 through 2018, two executives, through a Malta-based investment adviser Standard Advisory, breached their fiduciary duties to their clients by fraudulently causing them to engage in undisclosed related-party transactions that were not in the best interest of their clients. The SEC’s complaint further alleges that the defendants misappropriated more than US$57 million in client funds and that Standard Advisory collected more than US$21.4 million in advisory fees generated in connection with these schemes. In an attempt to conceal the fraud, Lindberg allegedly orchestrated the schemes through complex investment structures and a web of affiliate companies and allegedly used the proceeds to pay themselves or to divert the funds to Lindberg’s other businesses. fs
01: Guy Opperman former UK pensions ministerThe global financial services provider has been appointed by agriculture fund manager Laguna Bay to provide fund administration services.
As part of the mandate, Apex will assist in the establishment of Laguna Bay’s third investment vehicle and second flagship fund, Laguna Bay Fund 2.
The fund is looking to raise up to $1 billion for investment in a diversified portfolio of high-quality food and agriculture investments in targeted regions across Australia and New Zealand.
Apex Group head of business development Australia David Potter said: “We are pleased to announce our appointment to provide fund administration services to Laguna Bay’s new fund as they build a portfolio of low-risk sustainable food and agricultural assets.”
“Apex Group’s range of scalable fund administration services will enable the Laguna Bay team to focus their time and resources on the active management of their investments and implementation of sustainability initiatives.”
Meanwhile, Laguna Bay’s managing director, funds management Benjamin Trickett said: “The Apex Group team have demonstrated an ability to deliver their services on a local scale and to provide a tailored approach suitable to the unique requirements of an Australian investment vehicle.”
“We look forward to working together to invest Laguna Bay Fund 2 with the highest levels of governance and operational efficiency.” fs
We’re pleased to see continued fundraising momentum across the group...
01: Brendan O'Connor chief executive Regal Partners
Regal Partners’ funds management arm se cured an institutional mandate of more than $420 million for its Australian Long Short Equity Strategy.
The mandate was awarded by “a large do mestic superannuation fund” and follows an extensive investment and operational due dili gence process, with an investment date of Sep tember 16.
A statement explained that the Regal Austral ian Long Short Equity Strategy is an active ex tension that aims to outperform the S&P/ASX 300 Accumulation Index over a rolling five-year period, net of fees.
Since its 2009 inception, the fund has de livered an annualised return of 14.26% per annum, outperforming the S&P/ASX 300 by 5.94% per annum net of fees.
The strategy is led by Regal Funds Manage ment chief investment officer Phil King and Aus tralian equity portfolio manager Jovita Khilnani.
Regal Partners chief executive Brendan O’Connor01 said the firm is delighted with the award of such a significant mandate.
“It represents a strong independent endorse ment of Regal’s investment and risk manage ment capabilities, in addition to the institution al-grade operating infrastructure that Regal employs across all its long, short equity strate gies,” he explained.
The statement concluded Regal Partners funds under management (FUM) end of August sat at $5.0 billion, up from $4.7 billion end of June.
It advised the mandate was not included in the August FUM number and will be incor porated in the next quarterly FUM update in mid-October.
On the continued growth in FUM, O’Connor added: “We’re pleased to see continued fund raising momentum across the group, supported by increasing investor appetite for alternative investment strategies and the capability of our diversified and scalable corporate platform.” fs
International Equities
Australian Equities
Australian Equities
Active
Australian
Hyperion
State
State
State
Emerging
Equities
Australian Equities
Equities
International Equities
Australian Equities
Emerging Markets Equities
International Equities
Largest equities investment mandate appointments FY22PERIOD ENDING – 31 JULY 2022
Size 1 year 3 years 5 years
Fund name $m % p.a. Rank % p.a. Rank % p.a. Rank
Pendal Active High Growth Fund 21 9.5 1 9.3 1 9.6 1
Ausbil Balanced Fund 97 -2.6 5 6.8 2 8.9 3
First Sentier Wholesale High Growth Fund 400 -6.3 20 6.7 3 9.0 2
IOOF MultiMix Growth Trust 706 -1.5 4 6.6 4 8.8 4
Vanguard Diversified High Growth Index ETF 1,745 -5.4 12 5.9 5
Vanguard High Growth Index Fund 4,829 -5.3 11 5.9 6 8.5 5
MLC Wholesale Horizon 6 Share 356 -5.5 14 5.2 7 7.9 6
Pendal Active Growth Fund 89 -3.0 6 5.2 8 6.5 14
BT Multi-Manager High Growth Fund na -5.6 15 5.1 9 7.8 7
Australian Ethical High Growth Fund - Wholesale 68 -4.8 8 5.1 10 7.3 9
Sector average 400 -4.5 4.7 6.8
Orbis Global Balanced Fund 6 3.1 2 6.3 1 4.8 23
Perpetual Balanced Growth Fund 396 1.9 3 6.2 2 7.0 2
IOOF MultiMix Balanced Growth Trust 1,884 -0.9 6 5.9 3 7.8 1
BlackRock Global Allocation Fund (Aust) 482 -8.8 35 5.6 4 4.9 21
Pendal Sustainable Balanced Fund 806 -2.9 7 5.1 5 6.1 9
Allan Gray Australia Balanced Fund 119 4.4 1 4.9 6 5.8 13
Perpetual Diversified Growth Fund 92 0.6 4 4.5 7 5.6 16
Pendal Active Balanced Fund 346 -3.1 8 4.4 8 5.7 14
Macquarie Balanced Growth Fund 797 -6.5 25 4.3 9 6.4 6
Vanguard Diversified Growth Index ETF 618 -6.2 23 4.3 10
Sector average 966 -4.9 3.5 5.3
Size 1 year 3 years 5 years
Fund name $m % p.a. Rank % p.a. Rank % p.a.
IOOF MultiMix Moderate Trust 583 -1.0 5 4.4 1 6.1 1
Allan Gray Australia Stable Fund 335 3.6 1 3.3 2 4.1 9
IOOF MultiMix Conservative Trust 580 -1.3 6 3.0 3 4.3 5
MLC Index Plus Conservative Growth 397 -4.3 14 2.8 4 4.7 2
Perpetual Conservative Growth Fund 181 -0.9 4 2.8 5 4.2 7
Dimensional World Allocation 50/50 Trust 850 -6.0 25 2.7 6 4.6 3
MLC Horizon 3 Conservative Growth 1,184 -4.1 10 2.7 7 4.4 4
Pendal Active Moderate Fund 133 -4.1 9 2.6 8 4.2 6
AMS Moderately Conservative Fund 227 -4.2 12 2.5 9 3.6 13
Russell Diversified 50 Fund 523 -5.9 24 2.5 10 4.1 8
Sector average 356 -4.9 1.7 3.3
ESG
BetaShares Global Sustainability Leaders ETF 2,057 -8.6 33 15.0 1 17.6 1
Dimensional Global Sustainability Trust 406 -6.1 23 10.7 2 12.8 3
Dimensional Global Sustainability Trust (H) 391 -7.9 31 10.6 3 9.7 12
Candriam Sustainable Global Equity Fund 87 -5.4 17 10.6 4 11.9 8
Australian Ethical Emerging Comp. Fund 214 -17.5 38 10.4 5 12.4 4
Franklin Global Responsible Investment Fund 20 -2.2 10 10.1 6
Robeco Global DM MF Equities Alpha Fund 18 2.9 2 10.0 7
State Street Climate ESG Int. Equity Fund 336 -5.9 20 9.6 8 12.2 5
Vanguard Int. Shares Select Excl. Index Fund 339 -4.5 15 9.5 9 12.2 6
Perennial Better Future Trust 94 -6.2 24 9.1 10 17.5 2
Sector average 225 -7.1 5.0 7.4
Rainmaker Information
Financial advisers and industry super funds have so much in common. As a group, they can’t stop talking about themselves and they’re never happy with how they’re regulated. It’s why they’re always pushing for laws overseeing them to be reformed, yet they complain these laws are always changing.
Which means both groups are perpetually running industry reviews or calling for them.
They have good reason to ask, beg and plead for these, mind you. But for their stakeholders it’s exhausting trying to keep up. As for their fund members and clients, they probably gave up paying too much attention long ago, assum ing they ever much did.
All that said, it’s hard to argue that the Qual ity of Advice Review (QAR) isn’t imperative: to explore if advice regulation can be streamlined, if documents thrust upon consumers can be made clearer and discover any unintended conse quences of previous financial advice law reforms and come up with ways to undo or fix them.
To drive this review, the government ap pointed financial services lawyer and law firm partner Michelle Levy as its leader. The gov ernment is expecting her to lodge her report by December. But showing how delicate is her work, following the release in March of the
QAR’s 50-page issues paper, she now has 134 submissions to wade through.
And if reactions to the paper released in Au gust is any guide, Levy’s review will be as politi cally charged as every review that came before it. So much so that Levy has had to do media rounds to hose down how her proposals paper was misinterpreted.
Regardless what anyone thinks of the detailed QAR’s proposals seen so far, what we can be sure about is that time is running out for a major reset of the financial advice sector. The collaps ing number of advisers tells the story.
In just the past three years between 2019 and 2022 the number of registered financial advisers in Australia crashed almost 10,000 being nearly 40%, from 26,500 to 16,700. If advisers keep exiting the industry this fast, 3300 a year, within five years Australia won’t have any human advisers left. The only advice available will be digital.
This may seem an absurd thing to say, but it highlights how savagely the tsunami of reforms this past decade has smashed the industry, start ing with the Future of Financial Advice reforms in 2012, the launch of ASIC’s Financial Adviser Reg ister in 2015 that culminated in the ill-fated 2017 Financial Adviser Standards and Ethics Authority that lasted just a few years before it imploded.
But the kryptonite was the government-im posed change to adviser business models. Not only did they crush the revenue of these small businesses, the compliance overload they trig gered drove up operating costs so high that per sonally delivered financial advice is now a luxu ry only high income wealthy people can afford.
Which is why the QAR’s initial propos als need to be so radical. Such as the ideas to switch from the obligation for advisers to act in a client’s best interests to instead operate under the requirement to provide ‘good advice’, that only personal advice be regulated, that super fund members should be able to pay for advice from their super account, that the artificial regulatory distinction between human-deliv ered and digital advice be dumped, as should those infamous Statements of Advice.
But the QAR proposals have Achilles' heels, such as the QAR seems to equate advice with advisers, it wants to trash FSGs and it’s unclear what it means by ‘good advice’.
Is advice good only if makes the client lots of money, or is it reasonable advice that was designed using sound procedures? If it’s the former, no one will dare give any to anybody - you’ll be sued into oblivion if an investment recommendation doesn’t work out. Giddyup. fs
HESTA - High Growth -0.2 15 7.2 1 8.7 2 AAA
Christian Super - Ethical High Growth -0.8 17 7.0 2 8.0 14 AAA
Vision Super Saver - Growth -2.6 34 6.9 3 8.3 7 AAA
UniSuper - High Growth -5.6 105 6.8 4 9.2 1 AAA
Aware Super Employer - High Growth -1.8 25 6.7 5 8.4 6 AAA
AustralianSuper - High Growth -1.9 28 6.7 6 8.5 4 AAA
TWUSUPER - High Growth Option -1.5 21 6.7 7 7.6 23 AAA
Active Super Accumulation Scheme - High Growth 0.5 6 6.6 8 8.1 12 AAA
Hostplus - Shares Plus -3.1 42 6.6 9 8.3 8 AAA
Catholic Super - PositiveIMPACT -4.4 86 6.6 10 AAA
Rainmaker Growth Index -2.9 5.2 7.0
Hostplus - SRI - Balanced 3.2 1 7.5 1 8.0 1 AAA
Energy Super - SRI Balanced 2.3 3 6.7 2 7.5 3 AAA
Christian Super - My Ethical Super 1.7 4 6.2 3 6.6 22 AAA
CareSuper - Sustainable Balanced 0.1 16 6.1 4 7.3 5 AAA
Christian Super - Ethical Balanced Growth 2.7 2 6.0 5 AAA
AustralianSuper - Balanced -1.0 28 5.9 6 7.7 2 AAA
Spirit Super - HCC and LCC Defined Benefits 0.6 10 5.9 7 7.3 4 AAA
Lutheran Super - Balanced Growth - MySuper -0.5 24 5.7 8 7.0 11 AAA
Vision Super Saver - Balanced Growth -2.3 49 5.7 9 7.0 10 AAA
ESSSuper Beneficiary Account - Basic Growth -0.8 26 5.6 10 7.3 7 AAA
Rainmaker Balanced Index -2.2 4.2
CAPITAL STABLE INVESTMENT OPTIONS
Vision Super Saver - Balanced
Spirit Super - Sustainable
Christian Super - Ethical Conservative
Spirit Super - Quadrant Defined Benefits
AustralianSuper - Conservative Balanced
Prime Super (Prime Division) -
State
Focused
Telstra Super RetireAccess - Lifestyle Growth 0.6 6 7.8 1 8.8
Vision Income Streams - Growth -2.9 29 7.7 2 9.2 5
TransPension - High Growth Option -1.4 18 7.5 3 8.6 19
Rest Pension - High Growth 0.3 9 7.4 4 8.5 20
AustralianSuper Choice Income - High Growth -2.0 24 7.4 5 9.4 4
Christian Super Pension - Ethical Growth Plus 1.7 4 7.4 6
LGIAsuper Pension - Aggressive 1.8 3 7.4 7 9.1 9 AAA
MyLife MyPension - PositiveIMPACT -5.4 52 7.4 8 AAA
Christian Super Pension - Ethical High Growth -1.3 17 7.4 9 8.7 16 AAA
Cbus Super Income Stream - High Growth -3.6 37 7.3 10 9.4 2 AAA
Rainmaker Growth Index -3.2 5.7 7.7
Hostplus Pension - SRI - Balanced 3.4 1 8.4 1 8.9 1 AAA
Energy Super Income Stream - SRI Balanced 1.9 3 6.9 2 8.0 7 AAA
CareSuper Pension - Sustainable Balanced 0.9 7 6.8 3 8.2 4 AAA
Christian Super Pension - Ethical Balanced Growth 1.7 4 6.5 4 7.3 20 AAA
AustralianSuper Choice Income - Balanced -1.0 23 6.5 5 8.4 3 AAA
ESSSuper Income Streams - Basic Growth -1.0 22 6.4 6 8.4 2 AAA
Rest Pension - Diversified 0.4 10 6.4 7 7.3 21 AAA
Telstra Super RetireAccess - Lifestyle Balanced 0.6 9 6.3 8 7.5 13 AAA
TransPension - Balanced Option -0.8 20 5.8 9 6.8 34 AAA
legalsuper Pension - Balanced 0.6 8 5.8 10 7.4 15 AAA
Rainmaker Balanced Index -2.4 4.6 6.4
Vision Income Streams - Balanced -2.1 41 5.0 1 6.6 1 AAA
Prime Super Income Stream - Income Focused 1.4 2 4.8 2 5.8 5 AAA
Christian Super Pension - Ethical Consv. Balanced 0.9 4 4.8 3 5.5 14
AustralianSuper Choice Income - Consv. Balanced -1.8 38 4.7 4 6.5 2
Australian Catholic Super RC - Conservative 1.4 3 4.5 5 5.7 9
Energy Super Income Stream - Capital Managed -1.6 36 4.4 6 5.3 15
Cbus Super Income Stream - Consv. Growth -2.7 48 4.2 7 6.1 3
Active Super ABP Plan - Consv. Balanced -0.6 19 4.2 8 5.8 8
Aware Super Pension - Balanced Growth -0.8
Spirit Super Pension - Moderate
Rainmaker Capital Stable Index
It’s a cliché, but when capital markets are jit tery investors have few places to hide. But some have nevertheless tried to stay below the radar via gold and crypto.
Starting with the gold price. At face value it increased almost 5% in AUD terms in the 202122 financial year, which compared to most stock market indexes made it a blinder of an invest ment. But whether an investor got the 5% return depends how they accessed it.
Did they buy physical gold, buy stocks associ ated with the gold industry or buy into aligned managed funds, such as ETFs? This matters because of the vastly different returns each tac tical play delivered.
According to ASX data, in contrast to the 5% FY gold price increase, returns from these gold related ETFs ranged from a top of 13% to a low of -15%. Furthermore, ETFs most associ ated with physical gold posted returns ranging from of 1% to 13% but ETFs most associated with gold mining posted returns of -7% to -15%.
The crypto story is just as wild albeit differently. Looking at the ASX data for their solitary crypto ETF, while it hasn’t been around long enough to post a 12-month figure, its month-by-month fig ures paint an intense portrait: returns of -33% in June, +37% in July and +2% in August.
But of the eight available crypto ETFs in Australia, just one is available on the ASX with the other seven accessible through the Cboe exchange, of which one invests into companies
aligned with the sector, three that invest into Bitcoin and three that invest into Ethereum.
So just like the case with gold investing, it’s not simply about the asset class but how you access it. However, while this sets the scene for skilled investment managers to demonstrate their value, it just as easily sets the scene for deep confusion among inexperienced investors.
Little surprise that experienced investors seem to still prefer established sectors, shying away from nouveau themes. This point is ech oed by much of the analysis into such themes that appears to conflate increases in product segment FUM due inflows with notional per formance inflows performance.
Another sector battling the same demons are funds and investment options focusing on sustain ability and ESG. Again, using ASX data for ETFs, 11 funds in this zone delivered an average return during 2021-22 of -9.5%. But six categorised as sus tainable funds delivered an average -12.2% while five that had the more explicit ESG flavour deliv ered a massively better average of -6.3%.
What is more intriguing is they are pre-tax re turns notwithstanding in a negative return year tax doesn’t mean much. In contrast, ESG in vestment options available through super funds delivered a tax-paid yet noticeably better -8.5%.
In a good year the premium delivered by su per funds over ETFs is likely to be much higher, reinforcing the conjecture that super fund trus tees approach ESG investing very differently and more holistically than investment managers. fs
A commodity spot price is the current cost of a particular commodity. When it comes to commodity spot contracts, both payment and delivery is required immediately.
Traders and investors can use spot prices in the same way they would use a stock price when investing in equities.
Similar to most other assets, the spot price is determined by the level of supply and demand in the market.
Commodities can also be traded in futures prices, the difference being the timing of the transaction and the delivery date. While the futures price uses the spot price as a basis, fu tures prices typically also account for expected changes in supply and demand, the risk-free rate of return and costs of transportation or storage until the maturity of the contract. Obvi ously those with longer times to maturity will incur greater storage costs.
Rainmaker Information's Vantage Point Chart Packs contain monthly investment outlooks, cu rated charts and bench mark tables covering investment markets and macroeconomic data. To learn more, visit www.rainmaker.
Consumer confidence has increased to its highest level in nearly four months, according to Roy Morgan.
While still significantly down from the same week a year ago, the ANZ Roy Morgan Index shows consumer confidence rose by 1.8 points to 87.8 at the end of September.
Consumer confidence is now three points below the 2022 weekly average of 90.8.
“The increase in consumer confidence has mainly been driven by improving sentiment in regards to the performance of the Australian economy over the next year and five years,” Roy Morgan said.
“There was no clear trend on a state-by-state basis with NSW, Queensland and Western Australia up for a second straight week by Victoria down for a second straight week.”
Observing current financial conditions, 24% of Australians say their families are “better off” financially than this time last year, compared to 42% that say their families are “worse off” financially.
Looking forward, around a third of Australians expect their family to be “better off” financially this time next year while 31% (up two points) expect to be “worse off.”
Regarding economic conditions, presently an increasing 9% of Australians expect “good times” for the Australian economy over the next 12 months compared to a third that expect “bad times.”
Meanwhile future sentiment regarding the Australian economy has seen a marked improvement. One-in-six Australians are expecting “good times” for the economy over the next five years (the highest figure for this indicator for over five months).
In contrast, 16% expect “bad times” (the lowest figure for this indicator for over seven months). fs
Corporate forecast profits remain stable after a resilient reporting season but there is some evidence of cracks forming, according to ECP Asset Management.
ECP partner Damon Callaghan said that the qualitative outlook is becoming increasingly cautious.
“Although national retail sales data points to robust consumer sentiment and recent reports have showed record high sales volumes, consumer confidence has been deteriorating since earlier this year and corporates are preparing for a recession by reining in budgets,” he said.
He added that there is more to come in just about all industries.
“Many companies have expressed concern that there is only so much cost increases that can be passed through to the customer. The rest will need to be absorbed by companies taking a lower margin,” he said.
As a result of increasing inflationary pressures, corporations have begun announcing pull backs on labour hiring plans with some companies already announcing job cuts, for example in the technology space. fs
The Federal Reserve has raised bench mark interest rates by another 0.75% and warned of further significant hikes to come.
aggressively hiking rates to further clamp down on inflationary pressures,” VanEck portfolio manager Cameron McCormack said.
The US economy is still travelling above its speed limit.
The Fed’s funds rate is now in the range of 3%-3.25%, which is the highest it’s been since before the Global Financial Crisis.
The Fed said it is highly attentive to inflation risks and is strongly committed to returning in flation to its 2% objective. Factors cited as hav ing influenced the decision include Russia’s war against Ukraine, higher food and energy prices and broader price pressures.
The central bank also now anticipates a further 125bps of hikes this year, pushing the funds rate to 4.4% by December end.
“The US economy is still travelling above its speed limit. As long as the economic data contin ues to be solid, and core inflation remains high, the Fed will face continued pressure to carry on
“We expect the funds rate to reach 4% by the end of 2022 and a terminal rate of 5% in Q2 2023 and, most likely remain at 5% until the end of 2023.”
PGIM Fixed Income said it believes the Fed will raise the funds rate to 4.25%-4.5% by early next year before taking a U-turn in policy.
Meanwhile, Barclays Research said: “With [Federal Reserve chair Jerome] Powell 01 sug gesting a high bar for slowing the pace of hikes, we now expect another 150bp on top of Sep tember's 75bp hike, with the target range peak ing at 4.50-4.75% in Q1 23.”
Providing an outlook for Australia, McCor mack added that VanEck anticipates the Re serve Bank of Australia will raise rates by 0.25% at each of its next three meetings, expecting a cash rate of 3.10% in December. fs
The Digital Finance Cooperative Research Centre (DFCRC) and the Reserve Bank of Australia (RBA) have released joint research report, providing an update on the possible central bank digital currency (CBDC) the two are exploring.
The report titled Australian CBDC Pilot for Digital Finance Innovation said: “Over the past few years, the RBA has been exploring whether there is a role for a CBDC in Australia in the context of the RBA’s responsibilities for issuing the currency and overseeing the development of the payments system.”
The pilot program which commenced in July and is expected to be completed in the middle of 2023 uses cases and business models that could support the issuance of CBDC.
The project intends to test a general-purpose pilot CBDC issued as a liability of the RBA for use in real world, pilot implementations of services offered by Australian industry participants.
The report said the pilot CBDC will be called the eAUD, it will be a liability of the RBA and denominated in Australian dollars. The amount of eAUD issued will be capped at an amount to be determined by the RBA considering the requirements of selected use case providers.
No interest will be paid by the RBA on any holdings of eAUD and only Australian-registered entities and Australian resident individuals may hold it.
All holders of eAUD will need to be invited to participate in the project and will need to be identity-validated by their use case provider or an approved know your customer (KYC) service provider.
eAUD will be able to be held in both a custodial wallet and a noncustodial wallet directly by the end user.
DFCRC will develop and install the eAUD platform as a private, permissioned Ethereum (Quorum) implementation.
The eAUD ledger will operate as a centralised platform, under the management and oversight of the RBA.
The report said approved use case providers will be able to access and interact with the eAUD platform via specified application programming interfaces (APIs) and ERC-20 smart contract interface functions.
"These interface specifications, as well as a platform for testing, will be provided separately, only to selected use case providers."
Finder commented that in its submission to Parliament on Australia as a Tech & Financial Centre in June 2021 it encouraged the RBA to introduce a transparent, Australianbased stablecoin.
Finder’s co-founder Fred Schebesta explained that the RBA has indicated its confidence in the Ethereum platform by looking to run its token on a private version.
“It will be interesting to see if the RBA then progresses to delivering it technology agnostic, and genuinely puts it out as a decentralised coin,” he said.
“An RBA-backed stablecoin could provide tax revenue to the Australian Government in a DeFi sector that is growing rapidly.”
But he argued only having Australian entities involved will limit cases and customer value.
"International settlement is probably one of the best use cases,” he noted.
The US Federal Reserve is also currently examining the pros and cons of a CBDC to improve its domestic payments system. Its project launch came shortly after a report from J.P. Morgan on CBDCs and the likelihood they'll be introduced in coming years.
"Such a transition should be achievable, if done correctly, without significant financial disruption," the report said.
"... a digital USD might be necessary just to maintain the global dominance of the dollar in the face of international competition; this reality could fast-track the development of a digital currency, already set in motion by the arrival of cryptocurrencies." fs
01: Jerome Powell chair Federal ReserveA s of midway through September and the S&P ASX 200 had dropped 3.85% from its high value at the end of August. What set into flow this tricky couple of weeks? Little sur prise that the answer begins with interest rates and inflation.
The slide began after Jerome Powell, chair of the US Federal Reserve, doubled-down in his commit ment to combat inflation with interest rate rises.
September then saw the Reserve Bank of Australia announcing a further 50 basis point rate hike, pushing the cash rate target to 2.35%, the fifth consecutive monthly rise in rates. Next day the ASX 200 dipped 1.4%.
More turbulent news was to come the fol lowing week.
The US released their August figures for infla tion, indicating a 0.1% jump in headline inflation to an overall 8.3%. This was a surprise as most experts were expecting a 0.1% decrease in infla tion on the back of falling oil prices. But the story here is core inflation that omits the more volatile aspects of CPI calculations such as energy and consumer staples, it hadn’t read the script and came in 0.2% higher than forecast as well.
This news alone saw major selloffs across all significant markets. The ASX tumbled another 2.6% the following day. However, there was more to come with the Australia’s latest em ployment statistics showing unemployment had risen marginally to 3.5%.
While this might be considered a harbinger for the RBA to ease off the interest rates throttle, the reaction to this news pushed the ASX 200 down a further 1.5%.
These negative returns have only managed to cancel out positive returns from August not ing the strong showing by Australian equities in July has resulted in the ASX 200 still being up 4.9% since the start of the new financial year.
Diving into the performance of the sub-sector indices of the ASX for the financial year so far (data as at September 16), real estate had felt the effects of the market returning just 0.5% over the period. But two sub-sectors had fared worse though: household and personal products that delivered -0.9% and utilities that delivered -4.9%.
The strongest performers were energy, con sumer durables, and food beverage and to bacco indices, each having strong returns of 14.1%, 13.3%, and 11.6% respectively. fs
A ustralian investors don’t talk enough about ASEAN, the Association of South East Asian Nations. ASEAN’s member states are Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
ASEAN is home to 670 million people, its combined GDP in 2021 was $4.7 trillion and its combined stock market held $6.2 trillion. In relative terms it has 17 times more people than Australia, about twice Australia’s GDP and its stock market is three times bigger.
Which is why in August this year, assistant treasurer Stephen Jones led an investment del egation that visited ASEAN’s central power houses of Indonesia and Singapore. Participants included some of our largest super funds.
Singapore holds half ASEAN’s stock market capitalisation but Indonesia holds 41% of ASE AN’s combined population and 35% of its GDP.
Australia is not alone in trying to develop its investment relationships with ASEAN. Cana dian and Dutch pension funds are already in vesting heavily into the region. Australia’s gov
ernment leaders don’t want us to be left behind.
Attracting this interest is no doubt the multiple forecasts for Indonesia’s economy, now ranked as the 16th largest in the world, a few rungs below Australia now but which is expected to explode through the league tables to by 2050 be the world fourth biggest. Ahead of them will be only the United States, India and China.
As Indonesia’s economy surges ahead in the global rankings, Australia global ranking is expect ed to plummet to 28th. But for all this interest in ASEAN, how have its investment markets fared?
Through 2021-22, all in local currency terms, the FTSE Indonesian total returns index deliv ered a whopping 20%, four-times the 4.7% and 4.6% delivered by FTSE Singapore and FTSE Thailand indexes. The Malaysia index delivered -1.5% and the Philippines index delivered -7%.
Over five years, both the Indonesian and Sin gapore indexes showed their strength delivering nearly 4% pa, almost matching the European equities index. However, Australia’s S&P ASX 200 delivered almost 7% pa and the US S&P 500 delivered 11% pa. fs
It was while working in hospitality halfway around the world that BlackRock managing director and head of wealth, Australasia Chantal Giles all but secured her future at the investment giant. Now, almost 20 years later, the hospitality remains and in more ways than one. Chloe Walker writes.
If you’re a Sydneysider, chances are you’ve heard about the award-winning restaurant Clove Lane, located on Clovelly Road in North Rand wick. Voted #1 in the Delicious 100 Australia Peo ple's Choice Awards this year, Clove Lane offers a Lebanese-inspired seasonal menu in its warm and friendly, family owned and operated bistro.
What you might not know about this gem, however, is that it belongs to BlackRock vet eran Chantal Giles and her husband, head chef Emile Avramides.
But, with a notable career in financial services spanning over 20 years, that all takes a backseat to her role as managing director, head of wealth, Australasia at the investment giant. Interesting ly, neither financial services nor hospitality were among Giles’ top career choices when she was growing up in Melbourne’s bayside
“I had a very happy childhood,” Giles reflects with a smile.
“My parents didn't have a lot of money, but my siblings and I were taught that money didn't equal happiness. Still to this day, my parents are probably the happiest people I know.”
With a father playing in the Victoria Football League (before it became the AFL), Giles says she was also taught the values of team sport and loyalty from a young age.
“I was really brought up by a village as we spent a lot of time at the football club,” she explains.
“My dad stayed at the club for many, many years. He was a man of loyalty, which I think comes through in a lot of my life too.”
As a teen, Giles worked alongside her mother and aunties as a waitress at local cafes and restaurants.
“I started working at age 12 or 13 in the school holidays, and by the time I was 14, I was working pretty much every weekend and saving,” Giles says.
“When I'd come back from my shift, I’d hand 80% of my money over to my grandmother. She instilled in us that we had to work to earn things.”
When it came time for university, Giles’ urge to help others saw her opt for a degree in psychology.
“Working in communities and seeing how people came together, I always wanted to help people. So I thought, in the first instance, psy chology and helping people get through difficult periods was what I wanted to do,” she explains.
After finishing her degree, however, the ever-curious Giles began sitting in on some of her boyfriend, now husband’s, economics classes, and found herself enjoying it so much she studied it herself.
It was the first year that there was a financial planning course at RMIT Melbourne Universi ty, Giles says; “I just thought, ‘Oh my gosh, what better thing than to be a financial planner to help people experience financial wellbeing and help them achieve their goals and aspirations?’”
Financial planning came easily to Giles, and she spent five years at a Financial Wisdom practice in Melbourne. Soon after, her husband proposed.
“I’d been working all my life, we had a mort gage we were paying off and also had a dog, so I said to him, ‘I just want to do one overseas trip before we get married and settle down’. And so, I left financial planning and we went traveling around Europe,” she says.
While spending time in Scotland’s capital, Giles picked up a job waitressing at a pub and function centre. As fate would have it, a night shift would see her running a party celebrating the Merrill Lynch and BlackRock’s merger.
“I ask lots of questions and I build relation ships quite quickly, so I got a sense of the people in the room and was very curious around the two firms coming together,” Giles says.
The attendees were surprised that an Aus tralian in Edinburgh knew so much about the two organisations and, at the end of the night, they asked Giles to reach out to them.
“I went in for a couple of interviews, and then I got a job in the project management office working on the integration of the two firms in London,” Giles says.
Fast forward 15 years, and Giles boasts an impressive tenure at BlackRock, holding a wide variety of roles.
“I've always had my eyes open for oppor tunities and got to know everyone across the firm,” Giles says.
“I’ve worked across the project management office on the Merrill Lynch and BlackRock in tegration. Then I moved back to Melbourne and worked in operations.setting up our first onboarding team in Asia, and that team still exists today.”
After that, Giles transferred over to the institutional business where she looked after many of its superannuation fund relation ships in Melbourne, before moving to Syd ney to take on a business management role.
“I was working on the strategy with the then head of client business on how we can better structure ourselves to align to client needs so that we become client experts rather than product experts,” she explains.
Shortly after, Giles was asked to take over responsibility for BlackRock’s New Zealand client relationships. That role is still a part of Giles’ job today, alongside her official title of head of wealth, Australasia.
As a leader, Giles holds loyalty in high regard.
“I think because of my upbring ing, loyalty is so important to me,” Giles says.
“What makes a good leader is building trust with your team, your stakeholders and your organisation, and in spiring people around you to come on the jour ney with you. When people have that trust and loyalty, there is purpose in an or ganisation and in a team.”
Chantal GilesGiles says she is blessed to be surrounded by a team who share the same values.
“We've got such a deep talent pool and we run a flat structure, so you really have an opportunity to meet all of the leaders across the firm,” she says.
“I think the people that I work with both lo cally and globally are incredible. It's a curious or ganisation, and we promote a team sport ethos.”
However, she says her greatest joy is working with clients, helping them find solutions and taking them on a journey.
“We have a strong partnership model with our clients, so we really get to understand the individuals there and the purposes of their or ganisations, because partnerships really need that alignment. Therefore, it’s not just the peo ple within BlackRock, but the relationship we have with our clients that make me feel like I never work a day in my life,” she says.
It’s important to Giles to keep delivering for clients with a fiduciary mindset.
“I think we're a steady pair of hands and re ally spend a lot of time understanding our cli ent's needs,” she says.
“So, my hope is that we can continue to do that for more and more clients and ensure more peoples’ financial wellbeing.”
And it all feeds back into the way she ap
When people have trust and loyalty, there is purpose in an organisation and in a team.
Available for individual and corporate subscribers
Administrators can upload exams and build training plans
Access to hundreds of hours of accredited content
Content from Australian and international thought leaders
Claim CPD from events and other external activities
Track your progress via the live dashboard
Device-friendly user interface, with mobile compatibility
Access to whitepapers, video, audio and event material
Access to FS TechZone, your technical resource library
Ongoing support from our dedicated client success team
To request a demonstration call +61 2 8234 7500 or visit aspirecpd.com.au
