netwealth educational webinar - Better client outcomes and conversations through managed accounts

Managed accounts with Financial StandardNetwealth educational webinar series

Presented by Alex Dunnin, Executive Diretor, Research & Compliance Rainmaker Group

August 2016

Housekeeping

• This webinar is being recordedSlides will be sent to you after the webinar

• Enter your questions in the chatWe will get to them at the end of the webinar

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A questionnaire will be sent after the webinar

Meet today's speaker

Alex DunninExecutive Director, Research & Compliance

Rainmaker Group

Alex DunninDirector of Research & ComplianceRainmaker Information

Managed Accounts.Better client conversationsBetter financial outcomes

www.financialstandard.com.auLevel 7, 55 Clarence Street, Sydney, NSW 2000

Research - 200 adviser responses + market scan

Media review - News reports on how financial advisers use Managed Accounts

Latest news and industry developments on Managed Accounts in the past 12-24 mths

Growth drivers Influence of SMSFsNext big wave

WHAT WE WILL COVER TODAY


WHY MANAGED ACCOUNTS MATTERDo you expect they will become more or less popular over the next 3 years?

Answer: YES

Source: www.rainmaker.com.au


BIGGEST INHIBITOR? ACCESS, AFSLs AND APLsIf you do NOT use Managed Accounts, why not?



THEY ARE MAJOR DISRUPTORSWhat impact do you expect the use of Managed Accounts will have on your clients’ use of regular Platforms and Managed Funds?



NOT JUST MAs, ETFs TOOWhat impact do you think ETFs will have on ...?

2016 ETF survey of advisers conducted by Financial

Standard July 2016



POSITIVE FEE PROPOSITION



ENTRY LEVEL FLEXIBILITYWhat do you consider the appropriate investment entry point for each MA investment product type?



MAs GOOD FOR ADVISERS TOOWhat level of impact do you believe providing a Managed Account offering adds to the commercial value of your practice?



BUT COLD WAR NOT YET OVER

Almost all major wealth management groups offer Managed Accounts which means the majority of advisers have access to them.

But only recently have Managed Accounts transitioned from being defensive ploys to being an actively promoted solution set.

Threshold issue is always to what extent do groups defend their legacy business and at what opportunity cost?


MAs - WHY ADVISERS LIKE THEMWhat do you think are the main benefits of using MAs?



WHICH EXPLAINS THIS SELECTION CRITERIAWhat criteria did you use to select your MA?



SO BEWARE OF NOISEMAs with most managed options


A FB GC H KD I LE J M

Managed Account Platforms


BUT WHAT DO ADVISERS SAY?

Based on a focus group discussion with six financial advisers following the 2015 survey


PUSH OF A BUTTON

“We find there’s a lot less administration running Managed Accounts. A lot less. I now don’t do heaps of client reviews. Clients can log on 24/7, look at everything, look at every stance and look at all the research. And if a client does have an interview, I’ve got all the information there, tax, everything I want, and I just hit the button and scroll up, so as soon as they walk in they’ve got this. Back in the old days when you were trying to work out all the different

managed funds, what the unit prices were, what was in them, what were the tax outcomes – none of that’s required anymore. So we find it’s very good. ”


IN SUMMARY

Managed Accounts are simply the next evolutionary step in

the journey of what a platform is and where

they are going.

Ignoring them is like FTA television stations or even your children’s school trying to ignore smart mobile devices.

Sure they can do it for a while but before too long no one will worry about them too much.


BEHIND THE SCENES

What’s in the news? ‘Managed Accounts’ vs ‘SMSFs’ vs ‘ETFs’

Who’s making it?


NEWS COVERAGE DOUBLESFinancial Standard news articles with the phrase “Managed Accounts”

(Excluding FS Managed Accounts magazine content)



TYPES OF ARTICLES

• Mergers and acquisitions

• Product launches

• White labelling of MA products

• New entrants

• Advisers using MAs

• MA providers broadening their service offerings

• MA case studies


IN THE ARCHIVE

• Major banks move to offer MA solutions

• Listed MA groups post stronger numbers

• More advisers transitioning clients to MAs

• Redefinition of what is a platform

• Technology solution providers versus the wealth brands

• netwealth launching their own MA suite


A NEW MARKET TO RIVAL WRAPS


GROWTH DRIVERS• Demographics: Millenials, Baby Boomers

• Financial advisers (Around 20,000)

• Accountants entering market (Around 400,000)

• #Get80 (80-90% of Australia unadvised)

• Product disruptors – Betterment, Stockspot, Acorns, etc – ETF evolution, SMSFs – A way to package robo-advice

1


GROWTH DRIVERS

• Industry associations now getting on board

• Regulation

• Global investing

• Business valuation and sustainability

2


SMSFs A NATURAL PARTNERSHIPWhat proportion of your clients have a SMSF?



SMSFs: STARTING YOUNGERSMSF age membership : New versus the old, 2015-16


AND WHERE THEY INVESTSMSF asset allocation by fund size 2014


Better client conversations.

Case studies from FS Managed Accounts magazine


CASE STUDY: SPLIT THE ATOM

“We have a strong conviction that advisers, generally, are great at giving advice, but really poor at delivering investment advice.

We really wanted to split the atom so that by taking out all of the investment side of the work, we have more time to create a

more sustainable value proposition to our clients.”


CASE STUDY: SURVIVE THE SQUEEZE

“We’re able to react quickly when circumstances change

and we can implement changes to the whole

portfolio in one day for all our clients if necessary.”

While there’s no industry consensus on what constitutes a fair price for

comprehensive advice, some are charging more than 3%. Clients with between

$500,000 and $1 million under advice should pay no more than 1.4 to 1.6% all up.


CASE STUDY: THE CLIENT WINS

“Out of that $1.9 million she invested with us, to date, she’s drawn out $3.3 million including $500k to buy an investment property. And after drawing $3.3 million, the portfolio is still worth $1.4 million not including the property, so she’s going along pretty well. (now looking for a second property)”


FS MANAGED ACCOUNTS MAGAZINE• More comprehensive

coverage on MAs

• Annual adviser survey and MA report

• A growing collection of adviser case studies, white papers and technical articles on the topic

Adviser case studiesScaling your business

2015 Managed Accounts Survey

MAKING ADVICE COUNT Mark Nagle, executive director,

Treysta Financial Life Management

Volume 02 Issue 01

Behavioural finance and managed accounts

Simon Russell, BFA

Doctors embrace MDAsRavi Agarwal, MEDIQ Financial Services

Published byPublished byRating SMAs

Adviser case studiesFixed income within MAs

TIMe To advice

Paul Crowne, Centric Wealth

Volume 01 Issue 01

Investment selection and

portfolio rebalancingMichael Heine, netwealth

Survive the squeezeKen Bloomfield, Financial Clarity

FS Managed Accounts COVER copy.indd 1 18/08/2014 12:39 pm


THE NEXT BIG WAVE

• From $20bn to $60bn by 2020

• Robo advice and other tech trends

• Future of ETFs and SMSFs

• What’s happening in the US and elsewhere


CONCLUSION

• The technology is coming

• MAs are multi-win for clients AND advisers – enable advisers to address fee issues from position of leadership and innovation (both functional and in terms of investment flexibility) – Investors gain more benefits

• Kodak moment or Uber moment?

We’ve only just begun…



7 September 2016Grand Hyatt, Mayfair Ballroom, 123 Collins Street, Melbourne

8:00am - 4:00pm

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REGISTRATIONS NOW OPENN

Questions.


Thank you.


CONTACTS

Alex DunninExecutive Director, Research & Compliance Phone: +61 2 8234 7508Email: [email protected]

Mark Smith EditorPhone: +61 2 8234 7516Email: [email protected]

Michelle BaltazarDirector of Media & PublishingPhone: +61 2 8234 7530Email: [email protected]


Thank you

DisclaimerThis webinar and information has been prepared and issued by Netwealth Investments Limited (Netwealth), ABN 85 090 569 109, AFSL 230975. It contains factual information and general financial product advice only and has been prepared without taking into account the objectives, financial situation or needs of any individual. The information provided is not intended to be a substitute for professional financial product advice and you should determine its appropriateness having regard to you or your client’s particular circumstances. The relevant disclosure document should be obtained from Netwealth and considered before deciding whether to acquire, dispose of, or to continue to hold, an investment in any Netwealth product.

While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person, including Netwealth, or any other member of the Netwealth group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information.

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netwealth educational webinar - Better client outcomes and conversations through managed accounts