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Global trends in financial advice and investment netwealth Educational Series

netwealth Educational Webinar - Global Trends in Financial Advice

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Global trends in financial advice and investment

netwealth Educational Series

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Where the ball is going:What Aussie advisers can learn

from Global Trends in Financial Advice

Santi BurridgeMD and Co-Founder

Implemented Portfolios

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Important information

This information is dated February 2015, has been prepared by Implemented Portfolios ABN 36 141 881 147. AFSL Number 345143 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 your individual objectives, financial situation or needs. The information provided is not intended to be a substitute for professional financial product advice and you should determine its appropriateness having regard to your 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 information (using sources believed to be reliable and accurate at the time of writing), 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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What can Australian advisers learn from global trends in financial advice?

How technology and robo-advice is changing the US market

Understanding the growth in ETFs and Managed Accounts

What successful advisers focus on

What do clients really value?

Focus of todays presentation

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Why?

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HEADING GOES HEREHEADING GOES HEREGlobal Trends in Advice

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Santiago Burridge, 02/06/2015

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Global Trends in Advice

Santiago Burridge, 02/06/2015

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Advice

Significant trend to objectives based FP

Realisation performance based FP very dangerous

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Global Trends in Advice

Santiago Burridge, 02/06/2015

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Platform

One client centric platform

Evolving functionality and service proposition

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Global Trends in Advice

Santiago Burridge, 02/06/2015

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The Age of the Consumer is here

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Global Trends in Advice

Santiago Burridge, 02/06/2015

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Started in 2011

$1.8B in FUA at January 2015

Annual fee 0.25%

Active Asset Allocation

100% ETFs

One of the things that Wealthfront has been able to do with relative ease is create trust among users.

“It takes a long time to establish trust, but once you create this, people don’t leave. Especially with finances, people want to sleep well at night and know their money is being managed well”.

Mike Volpi, Index Ventures

One of the things that Wealthfront has been able to do with relative ease is create trust among users.

“It takes a long time to establish trust, but once you create this, people don’t leave. Especially with finances, people want to sleep well at night and know their money is being managed well”.

Mike Volpi, Index Ventures11

Democratising Investments & Advice

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Schwab ‘Intelligent Portfolios’

“We are fast at work on what we believe will be a ground-breaking and market-leading introduction of an online advisory solution”

Walt W Bettinger

CEO of Charles Schwab

(largest advisor business in the US)

Due to launch in the first quarter of 2015

It’s free

All-ETF portfolios will tap into some 20 global asset classes

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Democratising Investments & Advice

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Look at Vanguard!

Top 4 Insto in Australia building one now (plus a mid tier)

Pershing Advisor Solutions

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Democratising Investments & Advice

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Control and Liquidity

Transparency

Active Asset Allocation not Active Investment

Redefining performance => the investor’s objectives (not a meaningless sector benchmark)

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Key Themes & Trends - USA

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Growth in ETFs• What are they?• ETFs to be the largest market segment this year

Growth of ETF Strategists • 2008 – 25 managers and $5.8bn assets• 2015 - estimated $120bn• 800% growth since 2008

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Key Themes & Trends in ETFs - USA

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Cerulli Associates estimate the US market to be valued at $4 trillion by the close of 2015

Under the Managed Account umbrella:

• IMA – full discretion around portfolio customisation, tax optimisation, implementation and remodelling

• SMA – cut down version of an IMA

• UMA – it’s a platform

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Key Themes & Trends in Managed Accounts- USA

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The Age of the Consumer

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Democratising Client Engagement

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KISS

Engagement• 70% of time on client-facing activities

Asset Gathering – not Asset Managing

Redefining investment value towards Risk Management (beta)

Marketing – finding the niche and executing

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What successful Advisers focus on

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What successful Advisers focus on

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Independent Advice is King

Democratisation allowing a thriving independent market

Fund and stock picking business models losing viability

“Australia’s advice landscape is a shame”

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The Rise of the Independent

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Failed models

Mutual fund and platform revenue sharing

Products/vehicles being sold instead of investment constructed for clients

Investment News / Moss Adams Research 2010 / Envestnet

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What hasn’t worked

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Shift from professional ‘sellers’ to professional ‘buyers’

Massive increase in consumer direct propositions

The whole industry is in a fight to win over the consumer rather than the traditional ‘supply chain’

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Key Themes & Trends - UK

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Recognition that quality is critical to

success from consumer’s perspective

Substantial increase in the use of ETFs

Active managers now under considerable pricing pressure

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Key Themes & Trends - UK

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The rise of the D-C…..Robo Advisor

BNY Mellon – Advisors are substantially underestimating the threat from D-C

Nearly every major is building one and bypassing the adviser

No reason to believe the same will not happen here

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Key Themes & Trends - UK

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Where is an adviser’s expertise?

Where should they focus their time and resources?

What do clients actually value?

The next wave of Financial Planning

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Questioning Value Proposition

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What practice are advisers trying to be best at?

Asset Allocation

Asset Allocation

Portfolio Construction

Portfolio Construction

Trading and Execution

Trading and Execution

Portfolio Rebalancing

Portfolio Rebalancing

Security ResearchSecurity Research

Managed Fund

Research

Managed Fund

Research

EconomistEconomist

Portfolio Administration

Portfolio Administration

Communication & Commentary

Communication & Commentary

Corporate Actions

Corporate Actions

Asset Consultant

Asset Consultant

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Questioning Value Proposition

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What practice are advisers trying to be best at?

Asset Allocation

Asset Allocation

Portfolio Construction

Portfolio Construction

Trading and Execution

Trading and Execution

Portfolio Rebalancing

Portfolio Rebalancing

Security ResearchSecurity Research

Managed Fund

Research

Managed Fund

Research

EconomistEconomist

Portfolio Administration

Portfolio Administration

Communication & Commentary

Communication & Commentary

Corporate Actions

Corporate Actions

Asset Consultant

Asset ConsultantLife Insurance

& Risk Management

Life Insurance & Risk

Management

Estate PlanningEstate

Planning

Tax PlanningTax Planning

Client ReviewsClient

Reviews

Retirement Planning

Retirement Planning

Corporate Advice

Key Person

Corporate Advice

Key Person

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Questioning Value Proposition

HEADING GOES HEREHEADING GOES HERE

What practice are advisers trying to be best at?

Asset Allocation

Asset Allocation

Portfolio Construction

Portfolio Construction

Trading and Execution

Trading and Execution

Portfolio Rebalancing

Portfolio Rebalancing

Security ResearchSecurity Research

Managed Fund

Research

Managed Fund

Research

EconomistEconomist

Portfolio Administration

Portfolio Administration

Communication & Commentary

Communication & Commentary

Corporate Actions

Corporate Actions

Asset Consultant

Asset ConsultantLife Insurance

& Risk Management

Life Insurance & Risk

Management

Estate PlanningEstate

Planning

Tax PlanningTax Planning

Client ReviewsClient

Reviews

Retirement Planning

Retirement Planning

Corporate Advice

Key Person

Corporate Advice

Key Person

Business Owner

Business Owner

Company Director

Company Director

HR ManagerHR Manager

Sales and MarketingSales and Marketing

NetworkingNetworkingSuccession Planning /

Exit Strategy

Succession Planning /

Exit Strategy

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Questioning Value Proposition

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Why Not?

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For OwnersFor Advisers

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Goals-Based Financial Planning Source: SEI

• Move away from things you can’t control

Hone Your Value Proposition• Move beyond your 4 walls and geography

Operationalise FP•Move away from asset management towards ways of tracking goals

and objectives

Assess your fee structure•Differentiate your services and break down how you charge

Get technology to work for you•Capture the mobile moment•CRM at the core

Outsource•Everything except your client relationship and value proposition•Focus exclusively on the human connection to differentiate your

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The next wave of Financial Planning

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Challenge yourself

Embrace the change that is already here

Partner with like-minded firms and services

Strongly consider independence

Call to Action

netwealth Educational Series

Thank you.Please direct any questions to [email protected]