S&P Dow Jones Indices for financial advisor

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Jade Carroll
8 years ago
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1 S&P Dow Jones Indices for financial advisor

2 EVOLUTION OF THE ADVICE INDUSTRY IN AUSTRALIA By Russell Medcraft CFP Chief Executive Officer Financial Choice Pty Ltd Corporate authorised representative of Self Managed Super Institute P/L AFSL

4 I STARTED IN JUNE THE NUMBER ONE SONG IN THE WORLD WAS PHYSICAL BY OLIVIA NEWTON JOHN AND THE BIGGEST LIFE COMPANY IN AUSTRALIA WAS AMP.

5 1982- ALL WE HAD TO SELL WAS WHOLE OF LIFE AND ENDOWMENT SAVINGS AND PROTECTION PLANS Sell 3 per week at $100 per month and earn $60,000 per year. Go on a fully paid conference every two years Only 5% retention of adviser recruits stay in the industry after 5 years. Our target market was young to middle age working men and women The Retirement/Investment market was almost non existent because when people retired they put their money in the bank or bought a property.

6 1985-ADVICE INDUSTRY GREW UP ON THE BACK OF SUPERANNUATION GROWTH OF SUPER THE ADVICE INDUSTRY

7 1985- THE BIRTH OF THE ROLL OVER MARKET IN SUPERANNUATION. The changes to superannuation gave rise to the Financial Planning profession. We started to break termination payments into Pre and Post which gave the incentive for people to preserve their Superannuation to age 55 at least. Up front commissions of up to 10% on property trusts Approved deposit funds (ADF s) versus Deferred Annuities and Variable Annuities. Commutations of pensions encouraged Public servants to cash in the lump sums and double dip The end of Whole of life and endowment policies. Remember the 1987 crash?

8 IN 1986 WE HAD THE START OF THE INSURANCE REVOLUTION- BUY TERM INSURANCE INSTEAD OF WHOLE OF LIFE AND INVEST THE REST. IT WAS A PRODUCT DRIVEN WORLD. PEOPLE GET SOLD INSURANCE THEY DON T BUY IT. The Life office model was dominated by the Mutuals. To compete you either needed scale in distribution or you had to innovate with product changes - the introduction of term insurance. Term insurance stripped out the cash component of policies and provided a lot more cover for the same price. We also saw the start of the unitisation of managed funds in savings plans.

9 Then we had the 1987 Stock Market Crashinvestors panic Australia crashes 41.8% United Kingdom 26.45% United States 22.68% NZ 60.0%

10 1988-BT PERFORMED BEST OUT OF THE CRASH WAS IT GOOD LUCK OR GOOD TIMING? BE CAREFUL WHAT YOU WISH FOR!

11 1988 THE GREAT DISTRIBUTION WAR

12 AMP V NATIONAL MUTUAL V COLONIAL MUTUAL -CONFERENCE IN THE GREEK ISLANDS.

13 THE SCALE WAR WAS ON. TO SELL A PRODUCT YOU NEEDED DISTRIBUTION. TO GET DISTRIBUTION YOU NEEDED A

14 1992.The start of compulsory superannuation and the demise of the personal tax deduction on superannuation. The adviser market almost halved overnight because without upfront commission fuelled by tax deductions many advisers believed they couldn t make a living. Trail commission was the value driver not upfront commission. Between 1992 and 1997 advisers focused on advice and would search for outperformance by moving fund managers and central sourcing of services. Investment money was not sticky. Insurance came into the picture and under pinned advisers income. If you didn t perform you were out. BT started having massive outflow of funds Dealer groups grew consolidating distribution.

15 1997 THE DOMINATION OF THE WRAP ACCOUNT.

16 FUND MANAGERS COULD SEE THAT FUNDS UNDER MANAGEMENT WAS NOT THE ONLY WAY TO MAKE MONEY. Others soon followed. The Fund Manager could perform badly but offer other products and clip the ticket as long as you had scale!

17 WRAP WAS WHERE IT WAS AT

18 2007 THE GLOBAL FINANCIAL CRISIS Clients battle with below par returns and frozen funds Advisers question their value proposition Dealer groups realise that conflicted remuneration is the only thing keeping them alive, makes up 30% of their revenue.

19 THE DAWN OF FEE FOR SERVICE. MOVING FROM ADVICE TO JUST THE HIGH NET WORTH ADVICE TO ALL AUSTRALIANS. The Adviser has to deal with FOFA and the abolition of trail commission on superannuation and the further abolition of commission on insurance under the My Super framework. Scaled advice responsibility will apply to the advice provider rather than the dealer Best interest test requires you to verify the veracity of the clients information Safe Harbour provision Section 961 B(2) will require a lot more accurate data collection from the client.

20 2012 HOW WILL ADVISERS SURVIVE? Average age of advisers 57 Clients moving from managed funds to direct investing in term deposits Funds outflow from Retail funds into Self managed super funds market

21 THE FUTURE IS HERE NOW SOCIAL CONNECTIVITY We're at an inflection point where work and value creation can reach "scale" without having to be done by a large, single firm. We can see today that Social is more than tools, information-enabled efficiency, products, services, or processes. It is not that we have more ways to be social. It is that the cumulative difference of all these ways of being social allows for an entirely new way to scale through and with connected individuals. The improvement in what is possible creates new economic effects that add up to a new way of doing business. Organizations that get this are in essence, creating entirely new business models. Today, value creation can now happen through the organizing and connecting of individuals together.

22 CONNECT WITH YOUR CLIENTS AND STAY IN TOUCH IN THE MOBILE DEVICE WORLD. There are 5 billion mobile devices in the world. Total population of 7 billion people. In the near future you will be able to video a client interview on Skype and save the file to the cloud that will become a record of advice and be fully compliant.

23 2013 WILL BE THE BIGGEST YEAR FOR FINANCIAL PLANNERS. Regulatory Changes will come into force in July 2013 Investment returns will be low so fees will be under pressure Conflicted remuneration Election

24 BECOME AN INDEPENDENT FINANCIAL ADVISER TO PROTECT YOUR BUSINESS- Change your Business Valuation from 2.5 times trail fees To 8 times net profit before interest and tax

25 CLIENTS NEED OUR HELP MORE THAN EVER- PLENTY OF REASONS TO BE POSITIVE Their financial world is in a mess $21 billion in unclaimed and inactive superannuation to be auto consolidated 1,400,000 million dormant life insurance policy holders 33 million superannuation accounts for 9 million workers More people than ever before are in financial stress Divorce rate all time high-the number one reason is financial stress Living longer and running out of money sooner and working longer Underinsurance in Australia. Thank you and questions please.

Your Guide. to the Meridian. Personal. Super Plan. Product Disclosure Statement. Issued 1 January 2004 MPS 4

Your Guide. to the Meridian. Personal. Super Plan. Product Disclosure Statement. Issued 1 January 2004 MPS 4 Your Guide to the Meridian Product Disclosure Statement Issued 1 January 2004 Personal Super Plan MPS 4 What this Guide is about MPSuper Product Disclosure Statement This Guide was prepared and issued