Mr McGavigan joined Australian Unity on 6 February 2023 from Vanguard where he was the Global Head of Investment Management Solution Delivery.

Mr McGavigan has more than 35 years’ experience leading and developing global teams across the financial services sector, including 13 years at Vanguard (both in Australia and United States) and other senior positions at NAB and Perpetual Limited.

As Executive General Manager—Operations, Mr McGavigan will play a critical role in enhancing investor experience and delivering shared operational capabilities across Wealth & Capital Markets via a centralised function. This includes responsibility for the platform’s information technology, project management and delivery, and operational compliance functions.

Esther Kerr-Smith, Chief Executive Officer—Wealth and Capital Markets, said Mr McGavigan’s extensive product management and service delivery experience across the sector will be an invaluable asset to the platform.

“Michael joins us during an exciting time for Australian Unity and Wealth and Capital Markets as we implement our long-term growth strategy,” said Ms Kerr-Smith.

“His exceptional track record leading large scale transformational business and technology programs will help us embed a culture of innovation across our platform—enabling us to continue improving the delivery of critical services to support our strategic ambitions.”

The appointment of the Executive General Manager—Operations position follows changes to Wealth and Capital Markets announced in September 2022, which included the establishment of a dedicated social infrastructure business and centralisation of the platform’s funds management business.

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Every day the squeezed generation faces a mountain of emotional and financial challenges.

Generation X is the squeezed generation, and it’s not hard to figure out why. Facing unique challenges both day-to-day and financially, they’re experiencing pressure from all sides.

Currently sitting between 40 and 55 years old, many in the cohort are hitting that time in their lives where they’re not only responsible for a growing family, but simultaneously managing the care of ageing parents. Financially, Gen Xers have hit a period of many outgoing expenses, with school fees, extra-curricular activities, mortgages and family expenses often stacking up alongside the costs of supporting parents into retirement homes, home care, or other wellbeing needs.

It’s a tough job, and one I know well as a Gen Xer and parent to three kids aged 10 to 14 myself.

A recent report by the Financial Planning Association of Australia shows that more than 51 per cent of Gen Xers don’t believe they’ll have enough money to retire, while 37 per cent report their top financial dream is to set themselves up financially for retirement.

This, for advisers, should serve as a reminder that technical expertise, market awareness and financial knowhow is only part of the equation. What’s clear is it’s important not only to understand and navigate the financial stressors facing this generation, but the emotional ones too with many in the cohort potentially grappling with the mortality and passing of their parents, while supporting a growing family.

COVID-19 has exacerbated many of these challenges for Gen X. ‘Australian Unity’s Wellbeing Index’ recently found that while generally Australians have maintained a relatively stable sense of wellbeing, dual and single parents with dependents at home reported higher levels of stress and more home life difficulties throughout 2020.

By meeting this generation with empathy and understanding, financial advisers can home in on their specific needs to deliver sound financial advice, relative to each individual. Strong emotional intelligence provides advisers with a solid foundation to build trust and offer support through stressful times, while at the back end, having the right systems and controls in place to support a strong engagement model ensures advisers can provide advice with confidence. 

With many aspects of a Gen Xers life beyond their control, it’s also important for advisers to give them the space to choose how they engage with advice and empower them to feel in charge of their financial future.

It’s integral advisers not only know what’s keeping different clients up at night, but how sound strategies help them, from owning and holding onto assets, to saving for future retirement and navigating investment markets.

Every day the squeezed generation faces a mountain of emotional and financial challenges, but by providing them a kind ear and the right financial strategies, advisers can ensure that each client walks out of their office one step lighter than when they entered.

By Matt Brown

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Yet, in the lead up to this significant transfer, we know that many are unprepared. In fact, research by Roy Morgan revealed that only 7.4 per cent of millennials have used any type of wealth management product obtained from a financial professional.

COVID-19 has perpetuated existing uncertainty, exacerbated mounting market volatility and increased the need for all of us – particularly younger generations who have never experienced such market uncertainty – to seek financial advice.

It also highlights the importance for financial advisers to be prepared to support this cohort with their unique financial needs.

Trusted and tailored advice will be key to supporting the millennial generation through this sudden accumulation of wealth in a time where stability is scarce. But there are key differences in the needs of this cohort when it comes to providing financial advice.

Confidence to clearly define the scope of requirements

Financial advisers need to understand millennial clients and speak clearly to their needs.

Have you ever been to the doctor with a sore throat, and walked away having been assessed for every disease under the sun, resulting in a much higher cost than what you anticipated or were prepared for?

Yes? Well, that’s what could happen if financial advisers aren’t provided with the tools and confidence to clearly define the scope of advice needed for their millennial client. Whereas older clients – accustomed to the advice experience – are comfortable with a full-scale assessment, millennials who are new to advice, are focused on their here and now. While it’s critical to still understand the bigger picture facing each and every client, millennials want a more targeted assessment process.

With a significant onus on the financial adviser to devote large amounts of time conducting detailed due diligence, advisers need to be confident to hone in on the individual, specific needs for each client, without giving them a costly and unbeneficial head to toe examination.

Guiding investment principles

Financial advisers need to understand trends and philosophies guiding millennial investment behaviour.

Responsible investing is on the rise amongst all cohorts, with responsible investments accounting for more than half of all professionally managed assets in Australia up from 16 per cent in 2014, according to Money Management, but millennials are the most likely cohort to consider social issues when investing.

A survey of investors, conducted by Nuveen, also found that 95 per cent of millennials would prefer to invest in ways that will positively impact the environment, in comparison to only 63 per cent of non-millennials who agreed with this statement.

What’s clear, is that when it comes to providing advice for the millennial cohorts, advisers need to not only be attuned to the needs of the client, but also to their beliefs and guiding investment principles in order to serve the cohort well.

Taking advice digital

Financial advisers need to use the tools that millennials use.

Millennials are digital natives. They are essentially the first cohort to come of age at a time of prolific digitisation. Their exposure to the internet, social networks and mobile phones, all at an early age, have made them the first digital generation.

As such, many millennial clients are seeking flexible and online advice tools.

In the US, millennials are twice as likely as young boomers to consider using a robo-adviser, at 51 per cent and 24 per cent respectively, while 36 per cent of Gen Xers reported the same. The same trend is yet to hit Australian shores in full force, with research house Investment Trends finding only seven per cent of active online Australian investors accessing robo-advice tools in some form.

But the cohort is still driving digital change, and in order to cater to this generation, advisers need to become comfortable with electronic mediums such as video conferencing and document sharing infrastructure.

Next steps

The financial advice industry has a job to do. A job to engage with and educate millennials of the benefit of financial advice ahead of the greatest intergenerational wealth transfer in history, in a time of immense volatility. To do this well, will take some moves from all participants to increase accessibility, an understanding of their investment and wealth principles, and embracement of digital and communication technologies.

By Matt Brown, Executive General Manager

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Rohan Mead

Australian Unity has launched the Australian Unity Future of Healthcare Fund to generate long-term capital growth for investors and increase the wellbeing of all Australians by investing in the future healthcare needs of the community.

The first of its kind, the healthcare fund will invest across a range of sectors and asset classes including venture capital and private equity; domestic and international listed equities; and social infrastructure such as medical and health-related real estate.

Rohan Mead, Group Managing Director, Australian Unity, said Australian Unity has a distinguished track record in providing innovative health solutions to its customers and members.

“Australia needs purpose-driven investments that address our ageing population, the rise of chronic and non-communicable disease, disability, mental health, and the shortage of social and medical infrastructure”, he said.

“The Future of Healthcare Fund is a natural progression for Australian Unity. It builds on our past, brings together our unique capability, and will enhance the wellbeing of Australians through investment in preventative and remedial healthcare and health associated businesses and assets”, he said.

Joe Fernandes, Chief Investment Officer, Australian Unity Wealth & Capital Markets, said the Fund will draw on Australian Unity’s breadth of expertise and long established capability in the health sector.

“As an investment manager, we’re ideally placed to bring together Australian Unity’s experience and insights from its diversified businesses across private health insurance, healthcare, aged care, healthcare property, social infrastructure, funds management and venture capital”, he said.

Victor Windeyer, Portfolio Manager for the Fund said “the Fund will actively contribute to the future capacity of the healthcare sector through its investments which will benefit the wellbeing of Australians. A great example of the Fund’s impact on all Australians is the first investment it has agreed to make in Lumos Diagnostics – a medtech that helps healthcare professionals more accurately diagnose and manage medical conditions.”

“One of Lumos’ most exciting products is a test that tells doctors within 10 minutes if their patient has a viral or bacterial infection which can be used to help triage patients at the point of care and avoid unnecessary use of antibiotics.

“Lumos is an example of a company that could do well not only for investors in the Fund but also for improving community wellbeing and we look forward to investing in many more exciting healthcare initiatives over time”, said Mr Windeyer.

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Dr. Fernandes joins the 180-year-old mutual organisation with more than two decades of experience in senior investment leadership roles, including 17 years with Colonial First State, Colonial First State Global Asset Management and First State Investments, and a proven track record in investment stewardship and responsible investment programs.  Most recently he has held a number of independent advisory roles in superannuation and wealth management.

He will report to Esther Kerr-Smith, who was appointed W&CM CEO in July this year following three years as Group Executive – Finance & Strategy.

Ms Kerr-Smith said that Dr. Fernandes’s leadership experience, which spans global investment, product and customer markets, would augment Australian Unity’s investment capability and serve its members, customers and partners during a period of heightened economic and social uncertainty.

“Joe’s key priority will be the ongoing stewardship and development of Australian Unity’s investment activities.

This will include capturing investment opportunities that align with our strategic agenda as a provider of health, wealth and care products and services that both meet the wellbeing needs of our members and customers, and deliver community and social value.

Joe will also lead and guide Australian Unity’s Investments team which, along with our joint venture and investment partners Platypus Asset Management, Altius Asset Management and Acorn Capital, is responsible for funds under management and advice of more than $8 billion.”

Dr. Fernandes said: “I’m pleased to join a purposeful organisation at a critical time in its development, and I’m looking forward to working with Esther and the Australian Unity team to create value for members and customers.”

The stand-alone CIO position is new to the W&CM business and followed Ms Kerr-Smith’s decision to separate the role from the W&CM CEO’s responsibilities to enhance accountabilities and to create a more clearly delineated investment decision-making function.

Dr. Fernandes will commence with Australian Unity on 7 September 2020.

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Chris Smith

Healthcare property may continue to provide strong returns and defensive characteristics for investors, but finding intrinsic value in the asset class has become more challenging, according to Chris Smith, Head of Healthcare Property at Australian Unity.

Mr Smith was speaking at the Property Funds Association 2019 Conference in Hobart this week. He said healthcare is proven as a strong alternative property asset class for investors including mums and dads superannuation funds and family offices. “Healthcare property provides exposure to favourable demographic drivers including a growing population and an increasing median age in the population.

“Australia continues to depend on a cohesive public and private health system, which provides many opportunities for investment, including hospitals, medical centres, aged care assets and ancillary assets such as pathology labs.

“Demand for all these services are set to increase as Australia’s population grows toward the 43 million mark by 2066 (ABS data).”

Healthcare property had shown strong defensive characteristics for investors, with healthcare continuing to provide positive returns during the GFC. Mr Smith said post-GFC, the ‘Healthcare Property Index’ has regularly outperformed the ‘All Property Index’.

But he said healthcare property was currently in a challenging part of the cycle where it had become harder to find quality assets with good intrinsic value relative to price. “Some recent transactions suggest a blurring of lines between A, B and C-grade properties, which is a concern.

“We are seeing tighter capitalisation rates with newer participants entering the sector and paying well above current market valuations for assets like hospitals and medical centres.”

He said Australian Unity has the luxury of size and can be more selective on deals. “We are happy to wait until the right deals present themselves. We are currently finding some better value in greenfield development, for example our investment in a new private hospital in Kanwal, NSW.”

Australian Unity’s Healthcare Property Trust has delivered 11.81% per annum to investors since inception in February 2002. The Trust has delivered 8.12% for the last year, and 13.76% per annum over three years (all returns to 31 December 2018).

The Property Funds Association 2019 Conference is themed Critical Change: Crisis, Challenge or Catalyst for Property Investment and concludes on 7 May 2019.

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Emma Sakellaris

The increasing influence of social media platforms and crowdfunding globally means traditional philanthropy is evolving, but for many June 30 still remains a key date for tax planning, says Emma Sakellaris, executive general manager, Australian Unity Trustees.

Statistics shows that giving in Australia is on the rise, increasing $1 billion to $121 billion over the past two years and that women in Australia now donate significantly more than men, Ms Sakellaris says.

“In addition, the rise of online platforms and crowdfunding has made philanthropy both more accessible and more attractive for many people.

“As a result, people are more likely to think about charitable giving throughout the year.

“Nonetheless, clients should now commence thinking about 30 June, and whether contributing funds into charitable giving structures may be of benefit – clients should be very careful not to leave this process too late in the financial year.”  she warns.

“For one-off donations, it is important to ensure the charity receives the donation by June 30 – not just that you have made the donation by that time.

“For many, however, the one-off June 30 donation gives rise to philanthropic interest that becomes more structured and focused over time.”

She says that initiatives such as crowdfunding philanthropy – utilising social media and technology platforms – are having a significant impact on the way people give.

“Social media is becoming a key influencer and there is a move towards individuals promoting their charitable giving and motivating others to give, particularly amongst the younger generations.

“It is a time of significant, unprecedented change in the philanthropy sector globally, including an emerging cohort of substantial donors contributing directly to highly impactful community projects.

“This shift has continued to increase donor interest in concepts such as impact investment.  Many charities have been hit hard as a result of this shift and continue to be reliant on consistent grants through charitable foundations, structured giving and bequests.

“While more traditional grant-making via structured giving contributes critical funding to charitable initiatives and remains a key component of tax planning, at the same time significant global events, such as unprecedented natural disasters or mass people displacement have shaped community movements toward fund raising.

Collaborative giving in Australia has grown exponentially and now reflects similar trends evident in countries such as the US.

“Through mediums such as ‘selfies’, status updates, videos and ‘local hero’ style fundraising, charitable giving is becoming commonplace rather than the confidential almost secretive style of giving that has typically been the trend in Australia.  We are becoming more open about our philanthropic passions.

“This type of philanthropy is often locally based and contributes to the further development of community care and support. In many ways it is a social leveller. When people contribute to a shared cause through a medium such as GoFundMe, contributor details, such as level of wealth, are not apparent. Instead, the medium simply connects an often large, potentially global, community who feel compassion and motivation to contribute varying amounts to a particular cause.”

Ms Sakellaris said that despite misconceptions, philanthropy is not the exclusive domain of the extremely wealthy, with middle Australia increasingly becoming involved in the structured giving narrative, for a variety of reasons.

“Middle Australia are appreciating that they are comfortably well off and wish to give back during their lifetime. Whilst most still provide for their children in their Will, many do not intend to leave everything they own to the family, who are often comfortably well off in their own right. Rather structured charitable giving either during their life or as bequest in their Will, becomes a priority.

“A sub-fund in a charitable trust can be established with an initial donation of $20,000. While this may seem a reasonable amount, the tax deduction from the initial donation can be spread over five years, and all subsequent donations made to the trust are tax deductible.

“Unlike ad hoc donations or even recurring donations, charitable trusts are designed to grow capital over time, whilst generating sustainable income for granting.

“The donor, family and friends can all donate to the trust, and claim the tax deduction. This will further grow the capital and therefore increase the income generated to distribute to eligible charities.”

Ms Sakellaris says we are increasingly seeing more focus on sustainability and meaningful philanthropy that leaves a lasting impact or legacy as one of the key reasons why people chose to give.

“The advantage of a structured philanthropic legacy is that it allows people to give back to the community, now and into perpetuity, not just through ad hoc donations,” Ms Sakellaris said.

“It allows them to develop long-term charitable approaches that make a real difference to the community.”

“All charities depend on donations and are very appreciative of them.  However it is regular, recurring giving that provides the most benefit.”

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Anna Hacker

The growing trend for people to challenge Wills is set to continue as baby-boomers leave significant wealth behind – but perhaps not in the way that family members expect, says Anna Hacker, Wills & Estates Accredited Specialist at Australian Unity Trustees.

“It’s a sad fact that we are seeing more and more challenges to Wills, as it is a course of action that can irrevocably tear families apart, and often result in hard-earned wealth being spent on legal costs, with little left for the remaining family members.

“To help avoid this kind of unpleasantness, we often recommend to clients, if the circumstances are appropriate, that they take steps before they pass to ensure their family understands why they have made certain decisions or distributed their estate in a certain way in their Will.

“This kind of personal explanation can go a long way towards preventing challenges, and avoiding family disputes and rifts.”

There are a number of options for people to help manage expectations among family members, Ms Hacker says.

“If the family is on good terms and there are no estrangements, a useful first step is to hold a family meeting. This provides an opportunity to explain the bequests that have been made in the Will, and why.

“For instance, people may decide to leave their estate in a trust for their grandchildren, and nothing directly to their children, because they see that their children are in good jobs and well set up financially.

“But if this isn’t explained to the children, it could come as a nasty shock.

“People may also want to leave amounts to charitable causes, which their family might not be expecting. But explaining why a cause is important to them, and why they have chosen to support it, can help overcome any resentment in the family.

“We have seen cases where family members have sought to challenge any gifts made to charities. If a charitable gift had been set up during a client’s lifetime in a structure such as a sub-fund within a pubic ancillary fund or a private ancillary fund, such challenges could have been thwarted,” Ms Hacker says.

Ms Hacker said a letter of wishes is also a good idea.

“We usually recommend to clients that they don’t go into too much detail or explanation in a Will – it should be kept as a legal document that outlines what they want to happen to their assets.

“If clients believe some kind of explanation is necessary, it is better to do this in a letter of wishes, which doesn’t need to be presented as part of the Will in the application for a grant of probate but which can be used, if necessary, in a courtroom.

“For instance, explaining in writing that less money has been left to one child than another, because the first had received more money during the parents’ lifetime to, say, set up a business, may be useful – but these explanations must be given careful consideration. Any statements that are untrue or may change over time can actually assist in strengthening a case when a person later challenges a Will.

“Another situation we have come across is where a family member is appointed executor but takes their responsibilities a bit too seriously.

“If a person is unaware that they are an executor but find out in their time of grief, there are instances of them taking actions that are unnecessary and counter-productive to their role, perhaps because they are feeling so emotional.

“This, in turn, can affect their relationships with the family members of the deceased. For example, if an executor closes down utility services – which we have seen happen – when the surviving partner and their children still require access, this can cause huge strain on their relationship and make a stressful time even more burdensome for the surviving family.

“Unfortunately, such actions can cause rifts with family members and trigger estrangement between them. There may then also be a trickle-down effect with nieces, nephews and grandchildren with contact restricted due to these estrangements.

“If an executor is aware of their duties and understands what their responsibilities are, this generally leads to a more favourable outcome for all.

“Avoiding family problems is one of the main benefits of having a properly thought-through Will and estate plan. It’s not just about the financial considerations but also the emotional and personal ones,” Ms Hacker said.

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Emma Sakellaris

Raising the idea of philanthropy with clients can result in stronger client relationships for financial advisers, and can provide better outcomes for charities as well, says Emma Sakellaris, executive general manager of Australian Unity Trustees.

“Particularly at this time of year, the thoughts of many turn to those less fortunate. While one-off gifts certainly help provide for those in need, what they don’t do is provide a sustainable solution to the hardships your clients are seeking to relieve.

“All charities depend on donations and are very appreciative of them.  However it is regular, recurring giving that provides the most benefit.

“Charities can confidently implement longer term projects if they know that they are going to receive regular funds. Additionally they don’t need to use precious funds and resources for fundraising projects and activities, so a much greater portion of funds can be directed to community members in need.

“The simplest and most effective way to undertake recurring giving is through ‘structured giving’, via the establishment of a charitable trust.

“Unlike ad hoc donations or even recurring donations, charitable trusts are designed to grow capital over time, whilst generating sustainable income for granting.

Ms Sakellaris says despite common misconceptions, charitable trusts are not only for wealthy Australians.

“A trust can be established with an initial donation of $20,000. While this may seem a reasonable amount, deductions from the initial donation can be spread over five years, and all subsequent donations made to the trust are tax deductible.

“The donor, family and friends can donate to the trust, which will further grow the capital and therefore further grow the income generated for distribution to eligible charities.

“For financial planners, Christmas is an ideal time to raise the topic of charitable giving with your clients. You may be surprised by how many have charitable intentions and you can assist them to establish a structured trust, which will directly support causes and projects which are meaningful to them.

“The festive season also offers the opportunity for your clients to come together with family members and perhaps discuss the potential to further connect with their communities and to those needing assistance and support.”

She says many philanthropists like to involve family members, often across multiple generations, in their charitable giving and find this deeply rewarding.

“Additionally, instilling the idea of helping those less fortunate with grandchildren at an early age can be an enjoyable and fulfilling family endeavour.

“Our experience is that advisers who raise philanthropy with their clients during this period, find that strengthened client relationships ensue.

“What better way for you to better understand a client’s philanthropic intentions, further strengthen your trusted relationship, and establish long-lasting relationships across multiple generations, many of whom may choose to maintain and grow the charitable trust well after the original donor passes,” she said.

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Anna Hacker

Social media accounts live on after their creators die, and their existence can create uncertainty for estate executors as well as distress for family members, says Anna Hacker, national manager, Estate Planning at Australian Unity Trustees.

“Digital footprints on death are an issue of growing importance as social media usage steadily proliferates – not just with generation Z and millennials but increasingly with older generations as well,” Ms Hacker says.

“Taking stock of and itemising the social media accounts of the deceased is difficult enough. Add to the mix the fact that these platforms tend to operate in offshore jurisdictions means there is no uniform treatment, and not a lot of local legislative guidance, on how to gain control of content and close down accounts.”

Ms Hacker says the finding last month in a Massachusetts Court in the United States is a good example.

“In the case Ajemian vs Yahoo! Inc. the Court found that legal representatives of a deceased email account holder were able to access email messages of the deceased, despite there being no Will or direct instructions allowing this to occur.

“People rarely give any thought to their digital footprint when making a Will, but with social media activity on the rise, the treatment of social media accounts and content is an issue that should be incorporated into all estate planning considerations.

“For close relatives and friends the real meaning of many of these social media platforms is the access to the photographs and images that are saved there. It is often the case that the social media platform is the only place these images are stored, and once the account is closed, they can be lost forever.”

The different social media platforms have different procedures and actions that occur on a user’s death, and it is worthwhile being across the different treatments, Ms Hacker says.
Depending on the platform, the options for family members are to have the account memorialised, or to have the account closed down

“Facebook, the most popular platform, allows users to nominate a legacy contact who can control what happens on the account on the user’s death. This takes in a simple account closure, to downloading content, to establishing a memorial site with pinned content.

“Instagram, similarly, will memorialise an account on the death of the user if a family member requests it. It will also remove an account on a family member’s request.

“Despite being one of the most popular platforms, Twitter doesn’t offer any legacy contingencies, although family members can request an account of a deceased person to be deactivated.

“For many professionals, LinkedIn is an essential communication and networking tool. While LinkedIn doesn’t provide any memoralisation options on the death of an account holder, it does provide functionality to request the removal of a user’s account.

“Consideration of your social media accounts, and the ownership of your digital footprint content in them, should not be ignored when making a Will,” Ms Hacker says.

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