High-net-worth clients want control

High-net-worth clients want control

Mike Taylor

Australian high-net-worth clients want to retain a fair degree of control over both their wealth and the manner in which it is invested, according to new research released this week by Brisbane-based firm Goodman Private Wealth Advisers.

The research, undertaken by the Australian Centre for Philanthropy and Non-profit Studies (CPNS) at Queensland University of Technology (QUT), found that while high-net-worth investors were prepared to obtain the advice of specialists such as financial advisers, they nonetheless wanted to remain in control.

The study found that the personal and financial needs of high-net-worth individuals were complex and therefore needed to be met by a range of financial advisers and planners, private bankers, investment advisers, stockbrokers and tax and estate lawyers.

It found that while clients expected advisers’ financial and investment knowledge to be greater than their own, they also sought advisers who were genuinely interested in helping them and expressed a need for education to increase their own understanding and knowledge.

The broad findings of the research were that:

1. high-net-worth individuals like to take responsibility for their financial affairs and like to maintain control, although their level of involvement may drop as they age;

2. they do not want to be told what to do, preferring to obtain expert input and guidance for their own decision making;

3. high-net-worth individuals are looking for advisory services that:

* offer what they don’t know or can’t access quickly or cost-effectively;

* put client needs and circumstances first. Active listening, responsiveness, and taking the time necessary to build a strong relationship are all critical components;

* deliver value for money. They did not mind so much paying for great service, but the real value to them had to be very clear.

4. few were organised in their approach to charitable giving despite making donations and awareness of philanthropic options and benefits was low;

5. there was a need for wealth management advice and services from a family perspective, including intergenerational wealth preservation, ageing and aged care and philanthropy while maintaining family values and connections despite geographic spread; and

6. there was interest in the benefits of philanthropy to wealthy families as well as to the charities that needed funds.

Advisers Shy Away From Platforms

Advisers shy away from main platforms

Fees, poor support to blame

By Kate Kachor Mon 08 Sep 2008

A large number of financial advisers have stopped using one main platform in favour of many, new industry data has found.

A large proportion of financial planners have admitted to dropping given retail platforms in the last 12 months, new data from researcher Investment Trends has found.

Thirty per cent of advisers have stopped using a platform in the last year, according to the 2008 Planner Technology survey.

"There has been an increase, and fairly dramatic numbers of advisers, saying they have stopped using platform x. So 30 per cent have actually ceased using a platform in the last 12 months," Investment Trends principal Mark Johnston told delegates at the Wraps, Platforms and Masterfunds conference last week.

"There is also a bit of an increase in the number of planners saying they want to change their main platform, which is a pretty dramatic step."

The main reasons advisers cited for leaving platforms are poor service and support, slow turnaround time on transactions and fees, he said.

As well as exiting selected platforms, there has also been a substantial rebound of advisers who admitted to using a number of other platforms alongside one main platform, according to Johnston.

In terms of potential threats, a number of advisers believe financial planning software will start to displace platforms in the near future.

"Advisers can definitely envisage a world where the planning software becomes the dominant tool." Johnston said.

Meanwhile, the number of advisers wanting to change their planning application has not really changed in the last 12 months, the survey found.

SMAs are Not Enough

Interesting article highlighting the lack of clarity between SMAs / Platforms etc. It would appear that this has begun to be a war of words rather than of service levels to clients.

Limited investment choice

By Vishal Teckchandani
Mon 08 Sep 2008

Using SMAs alone to build client portfolios does not provide enough asset class diversification.

Using only separately managed accounts (SMAs) to build clients' portfolios does not provide enough asset class diversification, according to BT Financial Group (BT) head of product and wrap solutions Craig Lawrenson.

"One aspect that a platform has, that I believe SMAs do not currently have, is investment choice," Lawrenson said at the Wraps, Platforms and Masterfunds conference last week.

"I do not think at this stage, advisers are able to establish a well-diversified client portfolio entirely using SMAs."

While SMAs provide clients with superior tax solutions to managed funds due to the direct ownership of stocks, platforms could be useful for accessing other products including term deposits, alternative assets and structured products.

Lawrenson said platforms should house SMAs, and they can benefit customers together.

"I do not see the SMA... being an alternative to the platform, and being able to manage and adminster those assets," he said.

Lawrenson's comments came after the year-long credit crunch sent global stock markets into bear territory, sparking high demand for term deposits, capital protected instruments and other cash products.

The catalyst for takeovers of SMAs will come when platforms seek to become full-service providers, Lawrenson said.

Historic Announcement of a Mutual Recognition of Securities Regulation Arrangement with the US Securities And Exchange Commission

WASHINGTON, U.S. – The Rudd Government today signed a world-leading arrangement between Australia and the U.S. that will pave the way for easier access by investors and financial markets to each other’s financial systems.

The mutual recognition arrangement between Australia and the United States was signed today by Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, Mr Tony D’Aloisio, Chairman of the Australian Securities and Investments Commission (ASIC), and Mr Christopher Cox, Chairman of the U.S. Securities and Exchange Commission (SEC), at a signing ceremony at the SEC’s head office in Washington D.C.

One of the most critical ways in which the Government can act to build Australia as a financial services hub is to enable greater access to overseas markets.

Today’s event follows an agreement by Prime Minister, the Hon Kevin Rudd and Chairman Cox in March to begin negotiations on a mutual recognition arrangement.

The arrangement will provide greater access to U.S. markets for Australian investors, while maintaining strong investor protection and ensuring market integrity. It will also make Australian markets more attractive and accessible to investment from the United States.

This will mean that retail investors in Australia will be able to access the U.S. market directly through Australian brokers and enjoy Australian regulatory protection.

The arrangement will also help reduce red tape and compliance costs as brokers and markets will primarily only have to comply with one substantive set of regulations – namely in their home jurisdiction.

Australia is the first jurisdiction with which the U.S. has sought such an arrangement. Australia was selected by the U.S. on the basis of the quality of our regulation and the effectiveness of both ASIC-SEC and Australian Treasury-U.S. Treasury relations.

The SEC and ASIC have entered into new, strengthened enforcement and supervision arrangements to enable them to better cooperate and coordinate efforts to secure investor protection and market integrity under the Arrangement.

At the signing ceremony, Minister Sherry thanked Chairman Cox on behalf of the Australian Government for the personal leadership he has shown on this deal. Minster Sherry was joined at the signing by the CEO of the Australian Investment and Financial Services Association (IFSA), Mr Richard Gilbert.

Today’s agreement is another example of the Rudd Government’s commitment to developing Australia as financial services hub.

This is Australia’s third mutual recognition arrangement. The first was with New Zealand and covers securities offer documents. The second arrangement was with Hong Kong and covers the sale of retail funds to investors in each other’s market.

These arrangements build upon the Government’s success in gaining approval under the Chinese Qualified Domestic Institutional Investor Scheme and domestic initiatives such as cutting withholding tax rates for established real estate investment trusts to a final rate of 7.5 per cent by 2010-11 from 30 per cent.

Quote from Graham Bradley, Chairman of HSBC Bank Australia

"It seems to me there is a need for the financial services industry to ensure their interests are realigned with investors. A priority is to ensure genuine transparency, not boilerplate disclosure, particularly about risk and risk management," said Graham Bradley, chairman of HSBC Bank Australia.