Bryan Ashenden

The future of superannuation has been in the spotlight in adviser conversations with clients over the past two quarters. The still unlegislated Division 296 for high super balances continues to be a hot topic of discussion, as does the question of what happens to super on death.

The BT Technical team answer around 2,000 queries from advisers each quarter. Topics include legislative, regulatory and taxation issues, and superannuation related issues continue to be the most popular area of concern.1

Bryan Ashenden, BT’s Head of Financial Literacy and Advocacy said: “The potential operation of the Division 296 tax is of interest and concern. While a client may not be above the $3 million threshold today, it is the potential impact of a death benefit pension from a spouse, together with insurance proceeds inside super, that has many considering what options exist.

“We’ve been dealing with high volumes of queries from advisers trying to understand what changes will be made by the Government and when, so advisers can give greater clarity to their clients and implement appropriate plans,” said Mr Ashenden.

The most popular technical topics from the September quarter are outlined below.

1. Tax on super balances above $3 million

“There has been an expectation that legislation to enact Division 296 would happen early in the new parliamentary sittings. However, that has proven not to be the case. With delay comes increased uncertainty, particularly given recent speculation there may be some changes to the previous proposals or a change to the start date,” said Mr Ashenden.

“If the legislation is enacted as previously announced, and with its initially proposed start date 1 July 2025, there would still be time to act as it will be an assessment of whether clients have total super balances exceeding $3 million at 30 June 2026 that will determine if a liability arises.

“However, we would urge caution in withdrawing any excess amounts above $3 million at this time in the absence of the legislation, as clients would not be eligible to recontribute that amount if they changed their mind or if there were changes to the proposal itself,” said Mr Ashenden.

2. Death benefit nominations in the spotlight

With the release earlier this year of ASIC’s2 report into the claims handling processes by superannuation funds around death benefit payments, many advisers have been focussing on the death benefit nominations their clients have in place and the effectiveness of them.

“With the range of death benefit nominations available, it is important for advisers to understand the benefits and limitations of each option, so they can help guide their clients in making appropriate choices as part of their estate plans,” said Mr Ashenden.

“It is necessary for a beneficiary to meet the definition of a superannuation dependant at the time of death that is crucial – not at the time of making the nomination. Regular reviews should be conducted, even for nominations that are non-lapsing, in case circumstances or wishes have changed, or an event has occurred to invalidate an existing nomination.

“Care should also be taken with binding reversionary pension nominations and the interplay with the proposed Division 296 tax as it could result in a higher tax liability under the proposed rules for the surviving spouse,” said Mr Ashenden.

In October, BT Panorama made three-year binding death benefit nominations available on its superannuation platform, to provide more choice for clients. This is in addition to the existing non-lapsing nomination, discretionary nomination, and reversionary pension options.

3. New thresholds, indexation and opportunities

With many superannuation thresholds indexing from 1 July 2025, advisers were assessing the retirement plans of their clients.

“With the general transfer balance cap, and therefore the total super balance threshold, indexing from $1.9 million to $2 million from 1 July 2025, we received queries around the level of non-concessional contributions that could now be included in the current financial year.

“The answer is obviously dependent on each client’s situation, but many advisers weren’t factoring in the potential increased availability of non-concessional contribution from 1 July 2025, following total super balance indexation. This could mean a greater benefit for clients who thought they no longer had the opportunity to contribute.

“Another issue to be considered is the expectation we will see the non-concessional cap index from 1 July 2026, meaning decisions about triggering the bring-forward cap should potentially be delayed until later in the financial year when we have certainty whether the contribution caps will index or not,” said Mr Ashenden.

4. Broader considerations around the increase in super guarantee to 12%

There are broader issues to consider around the increase in the compulsory superannuation guarantee rate to 12% from 1 July 2025.

“If clients have salary sacrifice arrangements in place, then these should be reviewed to ensure compulsory employer contributions together with salary sacrificed amounts don’t inadvertently result in excess concessional contributions,” said Mr Ashenden.

Building in a buffer to ensure an excess is not triggered could be a reasonable approach to take, especially given it is now easier to make a personal deductible contribution closer to year end if any cap space remains available.

For higher income earners, changes to the maximum contribution base (MCB) should also be considered. “The MCB sets a quarterly limit to the amount of super guarantee an employer is required to pay for each employee. From 1 July 2025 with the increased rate of super guarantee, but no increase to the concessional contribution cap, the MCB will fall from $65,070 to $62,500 per quarter for the new financial year. Clients captured by this may have less contributed by their employer as a result, and it may reduce their overall remuneration package,” said Mr Ashenden.

5. Delay to the implementation of the Aged Care reforms until 1 November 2025

The implementation of the new Aged Care Act, originally slated for 1 July 2025, has been delayed by four months and will now begin on 1 November 2025. The delay is due to concerns about the aged care sector’s readiness to implement the new legislation, provide clarity and finalise the new rules and regulations.

The delay provides an opportunity for aged care providers, and impacted individuals, to better prepare for the changes, understand the new rules and regulations, and ensure a smoother transition. Key aspects of the reforms will include a new Aged Care Act to focus on the rights of older people, aiming to enhance the quality and safety of aged care services.

“Means testing arrangements will change for new participants and likely increase the costs they pay towards any in-home or residential aged care,” said Mr Ashenden.

The rebalancing of the means test will make the asset test harsher and the income test slightly more favourable. Based on scenarios from adviser queries, the changes will result in higher total fees paid by a majority of new participants.

“However, a no worse off principle will apply to individuals already in permanent residential care or already approved for a home care package. Individuals in these circumstances will not be negatively impacted by the new fee arrangements unless they choose to opt into the new system.

There are also changes to accommodation costs for new residential aged care residents entering after 1 November 2025.

“The facility will be able to keep a retention amount from any Refundable Accommodation Deposit paid by a resident calculated at 2% per annum but on a daily basis, meaning clients or their estate will not receive the full balance they paid upon exit from the facility. Daily Accommodation Payments will also be indexed to inflation to maintain the real value of the expense. For clients with an impending need for residential care and depending on their circumstances there may be merit to enter residential aged care prior to 1 November 2025 rather than delay this until after the new rules commence,” concluded Mr Ashenden.

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Notes:
[1] Based on BT’s internal reporting. For the avoidance of doubt the BT Technical team respond to queries from advisers and do not provide legal or taxation advice.
[2] 25-049MR Super industry hit with long list of actions in landmark death benefit claims handling report, ASIC 

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Annabelle Kline

BT has announced its new ‘Focus’ investment menu on BT Panorama, leveraging its managed accounts capability, and partnering with global investment manager, Vanguard Investments Australia Ltd.

Focus is designed to help financial advisers deliver a scalable, cost-effective platform solution for clients with simpler investment needs – including those starting their wealth journey, throughout retirement, or navigating intergenerational wealth transfer.

With a transparent fee structure Focus offers a competitive new menu without compromising on service, flexibility or digital capability.

Fast facts

• 4 x Vanguard passive diversified portfolios with investment management fee of 0.325% p.a.
• 7 x active single sector managed funds from 7 different investment managers providing exposure to Australian Shares, International Shares and Fixed Income
• $60 annual account-based administration fee
• 0.15% annual asset-based administration fee up to balances of $1million (excluding the transaction cash account)
• Competitive with major super funds
• Available on BT Panorama from 1 October 2025

BT’s Chief Product Officer, Annabelle Kline said Focus is another step in our strategy to expand our offer and deliver simpler, cost-effective, scalable solutions that meet the evolving needs of advisers and their clients.

“The new menu is competitive with major industry super funds and other platform offers in market, and complements BT Panorama’s existing Compact and Full menus, giving advisers a broader range of options,” said Ms Kline.

Focus includes a curated selection of managed portfolio and funds, with Vanguard’s Diversified Portfolio at its core. Together, Focus and these portfolios offer broad diversification across asset classes, providing more choice to advisers and their customers to manage their investments and superannuation.

“Our new menu was created in response to strong demand from advisers to support the intergenerational wealth transfer and serve clients with simpler investment needs. It enables advisers to serve a broader range of clients profitably, while reinforcing BT Panorama’s position as a flexible, future-ready platform,” said Ms Kline.

Rachel White, Head of Financial Adviser Services at Vanguard Australia added“We are pleased to be able to make our Diversified Portfolios available to many more Australians through this collaboration with BT.  These investment solutions are designed to deliver simplicity, scale and value, backed by our global investment capability.”

“BT Panorama’s platform strength combined with Vanguard’s investment expertise offers advisers a compelling solution to meet a wide range of client needs. And because our portfolios are also available on BT’s Compact and Full menus, advisers can confidently support clients as their investment needs change.”

BT Panorama: New features coming in the last quarter of 2025

BT is introducing a range of enhancements to its Panorama platform from October 2025, aimed at improving efficiency and security for advisers and their clients.

Advisers will be able to perform multi-account rebalances across adviser portfolios – streamlining workflows and saving time across multiple client accounts.

Security upgrades are also being rolled out, including a more efficient identification process for inbound calls from clients, advisers and support staff.

Electronic Identity Verification (eIDV) will be available on both web and mobile, allowing clients to complete ID verification after onboarding. Advisers will also be able to track reidentification timelines to help manage compliance obligations.

BT also continues to expand its broad managed accounts offer with new investment managers and managed portfolios being added.

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Stuart Cadzow

BT has announced a strategic educational partnership with Preqin, a global leader in alternative assets data, tools, and insights. The partnership will provide advisers with comprehensive resources and up-to-date research to enhance their understanding and expertise in the private markets sector, forming part of BT’s ongoing commitment to support financial advisers with continuing education.

Assets under management (AUM) in private markets tripled in Australia over the past decade, reaching $139bn as of December 2023. Globally, growth has been even stronger, driven by structural shifts in global capital markets, including fewer listed companies, fewer IPOs, and stricter post-GFC regulations, leading to more private lenders entering the market.

Despite the growth of private markets and the resulting product innovation, which has made the sector more accessible to individual investors, comprehensive market research remains scarce. The partnership between BT and Preqin is a response to advisers’ demand for increased transparency and research on a rapidly growing, but traditionally opaque sector.

Stuart Cadzow, Head of Investment Product Solutions, BT, said: “Private markets were once considered the domain of institutional asset owners, but new products are increasingly available to private wealth investors. Once considered ‘alternatives,’ we can see a time – as portfolios evolve – when private debt will be an extension of fixed income, real assets as an extension of listed property and infrastructure, and private equity as an extension of shares.”

“We’re seeing an increasing demand for education from advisers, in line with growing client interest: the opportunities, risks, and product structures are generally not as well understood as with listed assets. It’s crucial that advisers understand the role these sub-asset classes play in their clients’ portfolios, including product features which can impact performance, liquidity, and fees.”

Available on BT Academy, the educational materials and research are among the most up-to-date and comprehensive on private markets which are readily available to the advice profession. Curated by Preqin’s expert analysts and researchers, the materials cover private equity, private debt, infrastructure, property, and natural resources. Each learning module includes an assessment to test users’ knowledge and allow advisers to earn continuing professional development (CPD) points. Advisers who use BT’s platforms will also have access to a select number of Preqin Insights+ reports, including historical performance data, detailed analysis on specific asset classes and macro factors influencing returns, investor sentiment, and industry trends.

Mr. Cadzow added: “As BT has the largest number of adviser relationships in the Australian market, we have the necessary reach to make an impact, and improve access to information that advisers need. We identified a clear education gap in the private markets space, and so have sought to empower advisers with market-leading research and education, so they can help clients make better strategic investment decisions.”

“Our partnership with Preqin is the first step in BT’s commitment to supporting advisers with private market education and product access. BT sees the sector as an increasingly relevant part of clients’ portfolio construction going forward.”

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Sharyn Baker

Australian financial advisers surveyed for BT’s annual Adviser Sentiment Index 2024 have ranked customer service in the top three most important attributes for selecting a platform provider.^[1]

According to the more than 200 advisers who participated in the survey, only safety or security, and trustworthiness are more important than service.

“The Adviser Sentiment Index reflects the feedback we regularly receive from advisers and their clients,” said Sharyn Baker, Head of Service and Operations, BT. “What’s remarkable about this year’s findings is that the attributes that advisers value the most are the less tangible elements of the user experience. Safety, trustworthiness, and customer service rank above other attributes related to products and price. At a time when there are heightened geo-political tensions and market uncertainty, these experiential elements of service are leading advisers’ decision-making.”

BT has recently made a number of tech-enabled customer service enhancements, including a re-engineered pension refresh process.^[2]

“Our service philosophy is based on people taking the lead, with technology enabling improved performance to achieve customer satisfaction,” said Ms Baker. “Financial advice and investing are human activities, and clients’ financial decisions are often driven by emotion and logic. The right advice depends on each client’s circumstances, so human judgment is essential. This goes to the core of the value of advice, the trust that clients place on advisers.”

“As a platform provider, we know that advisers are placing their trust in our people, not just the technology, so we listen to feedback and learn where we can improve to deliver value and maintain a competitive edge,” Ms Baker added.

BT closely monitors adviser sentiment through its annual survey, the BT Adviser Sentiment Index. Survey participants use a range of wealth management platforms, including BT Panorama. The BT Adviser Sentiment Index indicates advisers (over 90% of those surveyed) want to work with wealth management brands that are ‘safe and secure’ and ‘trustworthy and honest’. Customer service ranks third, with the older cohort of advisers (50+ years of age) placing more emphasis on this attribute, relative to younger advisers (under 50 years) (93% vs 85%).

Pension refresh

Based on advisers’ feedback, BT has updated the process for implementing a pension refresh on BT Panorama. Launched in May 2024, the simplified process requires advisers to complete only one form, saving up to 30 minutes per request compared to the previous process. To date, over 1,200 advisers and their support staff have used the new process.

Around $136 billion in Funds Under Administration and 345,500 customer accounts are on BT’s platforms, with 27% of these in pension phase.^[3] A pension refresh strategy is implemented by advisers for clients who are looking to transfer their wealth from superannuation to pension in a tax-effective way, including those who are selling their primary residence and making ‘downsizer’ contributions into super.

Ms Baker said: “We consulted with advisers and their support teams on how we could improve our service delivery on the high volumes of pension refresh requests we receive. Advisers tell us that their service experience is far better than before, since we re-engineered the process.”

In addition, other platform enhancements such as the service request tracker and digital consents are becoming the norm for advisers on BT Panorama, with the majority having used these tools in the 12 months to June 2024. Digital consent data can now be fed into advisers’ connected XPlan software daily. It can also be requested by email or SMS. These changes have been designed to create efficiency for advisers and their support teams.

Service achievements

The BT Contact Centre receives over 20,000 phone contacts a month with an average speed of answer for each call of less than 30 seconds. BT won a Customer Service Institute of Australia award last year and is a finalist again this year.

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Notes:
[1] BT Adviser Sentiment Index: https://www.bt.com.au/professional/knowledge-centre/business-resources/business-development/bt-adviser-sentiment-index-2024.html
[2] More information on enhancements: https://www.bt.com.au/service.html#:~:text=Pension%20refresh%20made%20easy&text=For%20the%20majority%20of%20pension,to%2030%20minutes%20per%20request
[3] As of 30 June 2024.

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Zac Leman

BT has launched the Drummond Private Markets Separately Managed Account (SMA) – the first managed account on the BT Panorama platform that is dedicated to private markets. Innovatively structured, the SMA gives high-net-worth (HNW) clients easier access to a mix of private equity, private debt and real assets.

Zac Leman, Head of Managed Accounts, BT, said: “Many high-net-worth clients are interested in gaining exposure to private markets, to add to their existing portfolios which are predominantly invested in traditional asset classes. Drummond’s new product caters to that client demand, while also giving advisers the benefits that come from utilising a managed account structure.”

Tom Schubert, Managing Partner of Drummond Capital Partners, said: “Our managed account solution addresses many of the hurdles that advisers and clients tend to face when investing in the private market sector – accessibility, liquidity, complexity and transparency.

“We’re proud to have developed an innovative, differentiated solution that has been the culmination of our investment team’s experience in the managed account sector and strong heritage in the high-net-worth and family office segment. We have chosen to launch this first on BT Panorama because of the mix of investors on the platform – which includes a sizeable high-net-worth segment – and the BT team’s managed account capabilities.”

Private market investments have been traditionally the reserve of the ultra-HNW, with existing private equity or venture capital funds typically setting minimum investment thresholds in the $5m-$10m range.

In comparison, the minimum investment in the Drummond managed account is $100,000, making the product accessible to clients who are classified as sophisticated investors (defined as having minimum net assets of $2.5m or a minimum income of $250,000 per year for the past two years).

Investors also benefit from the product’s managed account structure which offers professional management, diversification and transparency of underlying investments across private markets asset classes.

Drummond selects and manages a portfolio of private markets managers with a focus on liquidity management. The portfolio provides access to funds with the majority allowing monthly redemptions; some have daily or quarterly redemptions. In comparison, some private markets funds typically require a long-term commitment, with investors’ funds “locked up” or inaccessible for around 10 years.

Investor interest in private markets has grown recently, as the number of Australian HNWs has continued to climb, and information about the sector has proliferated due to opportunities arising from technological disruptions and emerging markets. Further, the number of companies delisting from the Australian Stock Exchange and privatising has increased.^[1] Funds allocated to alternative assets have been increasing, and around 17% of HNW investors in Australia are utilising alternative assets.^[2]

Drummond Capital Partners developed their new SMA in collaboration with Ironbark Asset Management.

Alex Donald, CEO, Ironbark Investment Solutions, said: “We are delighted to have been chosen by Drummond as the responsible entity for this new managed portfolio solution. We look forward to collaborating closely with Drummond and BT now, and in the future, on this expanding asset class.”

Managed accounts growth on BT Panorama

BT’s managed accounts offering has grown to a total of over 400 products, with funds under administration increasing by 31% to $16bn in the 12 months to 30 April 2024 (excluding Adviser and Tailored Portfolios).

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Zac Leman

BT’s managed accounts offering has reached a milestone, with the total number of managed portfolios on BT Panorama pushing past 400, and funds under administration in these products reaching $16 billion.^[1]

So far this calendar year, new products that have launched on the platform include those managed by Vanguard, Watershed Funds Management and Quilla Consulting. The range of additions includes diversified options, which are open to all advisers and clients. Managed accounts that are tailored for certain advice practices, as well as new ESG (environmental, social, governance) options, have also been introduced.

Zac Leman, Head of Managed Accounts, BT, said: “We continue to build our offer for advisers on BT Panorama, to meet adviser demand for managed account solutions. The new additions just from this year demonstrate the breadth of products that are available on the platform.

“In particular, the various risk profiles of the diversified options cater to the needs of advisers who are looking for an efficient way to manage the investments of a wide-ranging client base.”

Managed accounts can help advisers introduce greater efficiencies in their business and, according to Investment Trends, 63% of advisers surveyed said that using managed accounts result in substantial time savings.^[2]

In the 12 months to 30 April 2024, BT added 94 managed portfolios on BT Panorama. Further, BT’s managed accounts offering grew to a total of over 400 managed portfolios, with funds under administration increasing by 31% to $16bn during this period (excluding Adviser and Tailored Portfolios). FUA in BT’s managed portfolios now represent 14% of the total $111.3bn FUA on BT Panorama (also as of 30 April 2024).

Vanguard Diversified Managed Account Strategies launching this week

Launching this week is Vanguard’s Diversified Managed Account Strategies, a multi-asset portfolio construction solution, available on BT Panorama’s full menu as well as its low-cost Compact menu.

Compared to the BT Panorama full menu, the Compact menu offers a narrower range of products, at a lower price – a fixed dollar fee of $180 and a yearly asset-based administration fee of 0.15%.

With four risk profiles available, Vanguard’s Diversified Managed Account Strategies make multi-asset portfolio construction simple and efficient for advice practices.

The strategies offer low-cost exposure to over 16,000 securities across a range of asset classes. Vanguard Australia was recently awarded Fund Manager of the Year – Multisector at the 2024 Morningstar Awards for Investing Excellence in Australia, in recognition of its quality multi-sector investments that have delivered long-term returns for investors.

“We are excited to make this announcement, as the addition of our Diversified Managed Account Strategies on BT Panorama represents a significant expansion of Vanguard’s managed account offer via new distribution channels,” said Rachel White, Head of Financial Adviser Services, Vanguard Investments Australia.

Ms White added: “Most importantly, it reflects the growing demand from advisers for gaining greater access to our diversified solutions.”

Tailored solutions for advice firms

William Buck Wealth Advisers recently launched a suite of three diversified portfolios on BT Panorama.

Adrian Frinsdorf, Director, Wealth Advisory at William Buck, said: “We’ve dealt with BT for decades. The team has shone, assisting us with the implementation of our portfolios, and working very collaboratively to provide a great solution for us and our clients.”

Meanwhile, investment manager Quilla Consulting has partnered with Cygnet Financial to create three diversified managed portfolios that are tailored for the dealer group.

Watershed Funds Management products open to all advisers

Watershed Funds Management has launched four new portfolios, which are available to all advisers and their clients. The new managed accounts have exposure to Australian shares, international shares, emerging markets and income-focused allocations.

“It’s been a busy start to the year,” Mr Leman said, “and with a strong product pipeline, we expect to see continued growth in managed accounts.”

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Notes:
[1] As of 30 April 2024.
[2] 2 According to Investment Trends, 63% of advisers surveyed said that managed accounts help them save 17.1 hours on average in a typical work week. SPDR/ETFs / Investment Trends Managed Accounts Report 2023.

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Bryan Ashenden

Bearish predictions about the Australian property market in 2023 have turned out to be wrong, with population growth and a short supply of housing pushing prices up, especially in capital cities. To combat the rising cost of living, it seems many Australians are realising the values of their properties wisely, as part of their superannuation and tax strategies.

“Good old real estate and the strategies around property ownership will continue to be topical amongst financial advisers and their clients, going into 2024,” said Bryan Ashenden, Head of Financial Literacy and Advocacy, BT.

“Australians have long had a love affair with property, and so for many who are on the cusp of retirement, the family home is their most valuable asset.”

Clients are discussing with their advisers how downsizing from a large property they no longer need can be integrated into their financial plan, especially if they are looking to self-fund all or part of their retirement. “And as part of this, they’re exploring what’s the most tax-effective strategy in regard to the sale proceeds,” Mr Ashenden said.

Bearish predictions about the Australian property market in 2023 have turned out to be wrong, with population growth and a short supply of housing pushing prices up, especially in capital cities. To combat the rising cost of living, it seems many Australians are realising the values of their properties wisely, as part of their superannuation and tax strategies.

“Good old real estate and the strategies around property ownership will continue to be topical amongst financial advisers and their clients, going into 2024,” said Bryan Ashenden, Head of Financial Literacy and Advocacy, BT.

“Australians have long had a love affair with property, and so for many who are on the cusp of retirement, the family home is their most valuable asset.”

Clients are discussing with their advisers how downsizing from a large property they no longer need can be integrated into their financial plan, especially if they are looking to self-fund all or part of their retirement. “And as part of this, they’re exploring what’s the most tax-effective strategy in regard to the sale proceeds,” Mr Ashenden said.

Bryan Ashenden

Head of Financial Literacy and Advocacy, BT

Based on the more than 8,000 questions that the BT Technical Services team have been asked by financial advisers in 2023, their prediction on the topics that will be top of mind for advisers and clients in the new year are:

• Downsizer contributions
• Owning commercial property in self-managed super funds (SMSFs)
• Imminent tax increase for clients with more than $3m in super
• Income tax cuts commencing in July 2024
• Progress of implementation of Quality of Advice Review

More details on these topics are below.

1. Downsizing the tax-effective way

Clients who are downsizing can make contributions from the sale proceeds of their home into their super, which can be a more tax-effective environment compared to, for example, putting it all in a savings account.

“The BT Technical Services team are consistently fielding high levels of calls on downsizer contributions,” said Mr Ashenden. “It would not be surprising if some of this is driven by the rising cost of living and retirees needing to explore options to boost their savings or increase cash flow. Another potential reason is this strategy has become accessible to more Australians, with the eligibility age reduced down to 55 years at the start of 2023.”^[1]

To be eligible, clients also need to have owned their home for 10 years or more. Downsizer contributions to a maximum of $300,000 per eligible person do not count towards any of the contribution caps, and can still be made even if a person has a total super balance exceeding $1.9 million.

2. Business clients transferring commercial property into SMSFs

High inflation rates and reduced consumer spending in some sectors are biting into the revenues of small businesses – prompting business owners to ease cash flow for their business by using their SMSFs to buy their commercial properties, often with gearing involved.

“A typical scenario in this arrangement is the SMSF buys the commercial property, sometimes with a limited recourse borrowing arrangement, which can then be leased to the business that one of the trustees owns,” Mr Ashenden said. “The sale contract and lease – and loan, if relevant – have to be formalised and the arrangements must be at market rates, and so it’s advisable to engage lawyers who can prepare the appropriate commercial documents.”

Clients with SMSFs need to be careful of any improvements they make to real estate assets owned via their SMSF, as these can potentially be regarded as a superannuation contribution. Mr Ashenden said: “If the value of that improvement, together with other contributions, is below the client’s caps, it’s not an issue. If their contribution limits have been breached, there may be penalties.”

3. $3m super tax looms

The government has proposed to reduce the superannuation tax concessions for those with total superannuation balances that exceed $3 million. Legislation implementing this change was introduced into Parliament on 30 November 2023. Its passage through Parliament will be delayed through the referral of the Bill to a committee for review and comment.

Under the proposal, from 1 July 2025, affected clients will pay an additional 15% in tax on earnings corresponding to the portion of their superannuation balance above $3 million. “Advisers have plenty of lead time to update impacted clients’ super strategies,” said Mr Ashenden.

4. Tax cuts for many Australians from July 2024

Many clients may not be aware of the impending cuts to income taxes. Mr Ashenden said: “Working Australians will see more in their pay packet from July 2024, with anyone earning an annual income of $45,000 or above benefiting from tax cuts. The reduced tax rates will be a welcome reprieve for clients facing cost of living pressures.”

For those who have the capacity to top up their super with personal deductible contributions, and are considering the best timing for doing so, Mr Ashenden said that at the current marginal tax rates, and bearing in mind the 15% concessional tax rate within superannuation, the tax saving resulting from putting money into super in FY2024 is greater, compared to FY2025 when the reduced marginal tax rates take effect.

5. Quality of Advice reforms – what to expect and when

The Government has recently made some additional announcements on its intended position on the Quality of Advice, including the ability for superannuation funds to provide advice to their members.

Mr Ashenden said that while these latest announcements may provide further clarity, it will be important to wait and see how draft legislation intends to implement these reforms, to gain a full understanding of how the proposed regulations can deliver more affordable and accessible avenues to quality advice.

“There is still a way to go,” said Mr Ashenden. “We saw the release of the first tranche of draft legislation for consultation. And now with the Government’s latest announcement around some of the big ticket items that will impact advisers the most in terms of simplifying advice – changes to the statement of advice and the best interest duty – we are starting to get a fuller picture of how the advice environment might change in the future. Advisers have dealt with a great deal of complexity in recent years and are vested in how these proposed changes might be implemented. Whilst further consultation may take more time, it’s important that collectively we stay invested in the process to gain the best possible outcome from implementation.”

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[1] Effective from 1 January 2023, Treasury Laws Amendment (2022 Measures No. 2) Act 2022 lowered the age (from 60 to 55 years) from which individuals can make downsizer contributions to their super fund from the proceeds of selling their home.

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Jason Brown

Two managed account product suites managed by Evergreen are now available on BT Panorama, tailored to the needs of two separate advice practices who are seeking efficiency to drive further business growth.

Currently there are 372 managed portfolios on BT Panorama, with the addition of 76 products in 2023 so far. Funds under administration in managed accounts comprise 15% of total FUA of $104bn on the platform.1

Jason Brown, Head of Distribution at BT, said: “It’s fantastic to be part of the growth story of our clients. While each advice practice is unique, what they do have in common is they are both thriving and seeking further efficiencies by making the most of product innovations. We aim to be advisers’ platform provider of choice, and are pleased that, together with investment manager Evergreen, we have launched managed accounts that suit the needs of their business and client base.”

Gild Group

Gild Wealth is the financial planning arm of rapidly expanding professional services business, The Gild Group. Originating from Melbourne, the Gild Group has expanded interstate and has offices in NSW and Queensland. The firm takes a multi-disciplinary approach, providing financial advice as well as accounting and legal services, and advice on research and development incentives and grants. Gild Wealth’s revenue has increased by around 20% annually over the last two years.

The new Gild Wealth managed portfolios on BT Panorama include growth and conservative options, and are in addition to the existing managed accounts that Evergreen already manage for the Gild Group.

David Page, Director of the Gild Group, said the business recognised many years ago that the “old-style” model portfolios provided poor outcomes for clients and advisers, due to the time lags in implementation, labour-intensive production of advice documents and processes relating to compliance.

Mr Page said: “Over the last couple of years we have managed to grow Gild Wealth significantly without adding staff. This can only be achieved through efficiency gains, and managed accounts have been a key driver of that. In addition, our reporting to clients is more accurate and meaningful. We are able to manage risk and make strategic tilts quickly and efficiently.”

Thornton

Across two decades, South Australian advice practice, Thornton, has grown to manage $1bn in funds for over 1,500 clients.

The True managed portfolio options, developed for Thornton, include growth, balanced and low growth diversified portfolios.

Rowan Fielke, Managing Director and Co-Founder of Thornton, believes the firm’s transition to managed account solutions is boosting operational efficiencies and business growth, and building stronger client relationships by giving them the best of breed solutions in wealth management.

Mr Fielke added that the enhanced efficiencies of these portfolio options allow Thornton to continually meet the evolving needs of clients by providing dynamic portfolio management to improve transparency, relationships and overall experience with the firm and the platform.

He said: “Our tailored managed account solutions with BT Panorama have been strategically designed to enhance our operational efficiencies, foster innovation and create sustainable business growth, and we look forward to continuing to run our successful client portfolios on this platform.”

Evergreen

Evergreen partnered with both advice practices to build their product suites, employing their deep in-house qualitative and quantitative expertise, which includes exclusive tools such as stress and scenario testing to assist advice practices with their decisions.

Founder and Director, Angela Ashton, said: “We work closely with financial advisers to ensure the tailored investment solutions deliver flexibility, efficiency and an enhanced client experience.”

Ms Ashton continued: “Evergreen prides itself on the depth and quality of its resources, and all of these are targeted at just one thing: helping advisory firms build resilient portfolios.”

With an experienced investment team and asset allocation committee, the investment manager has developed a strong approach to dynamic asset allocation. In addition, the firm has developed sophisticated in-house tools in areas such as style analysis, stress and scenario testing, as well as attribution analysis.

“We’re proud to be partnering with two high quality financial advice practices in Gild Group and Thornton, as well as BT Panorama, to deliver investment solutions we know will make a difference to both the end client and those businesses,” Ms Ashton said.

Evergreen has total funds under management exceeding $1.5bn.

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[1] As of 31 October 2023. Managed accounts FUA excludes Adviser Portfolios.

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Tim Howard

When clients separate, advisers face an ethics-related question: can they advise one or both? How can advisers manage a conflict of interest?

Since the COVID pandemic, BT’s Technical Services team have been fielding more queries around client separation. The most recent available national statistics on divorce are from 2021; in that year, the total number of divorces was 56,244, the highest number recorded since 1976.^[1]

Questions on client separation were among the most frequently asked by advisers via the BT technical hotline during the July to September 2023 quarter. Also popular were questions on superannuation and the indexation of pension thresholds. More information on the topics that have been top of mind for advisers is below.

The BT Technical Services team field around 2,000 questions from advisers every quarter.

1. The ethics around client separation

“The pandemic and ensuing lockdowns may have unfortunately led to more relationship breakdowns,” said Mr Howard, Technical Consultant, BT.^[2] “Since the pandemic, we’ve also seen higher inflation – with the accompanying rise in cost of living and then interest rates – placing financial pressure on families, and changing the financial circumstances of many clients.”3^[3]

The breakdown of a relationship can have wide-ranging impacts on all the members of a family. In some cases, the parties’ interests align. For example, the living arrangements and education costs of young children are the agreed priorities and other financial issues fall into place around these – and a financial adviser can advise both parties. In other situations, there may be conflicting interests.

While advice practices may have specific policies that apply to client separation, advisers must always be guided by ethical principles, and their obligations under the The Financial Planners and Advisers Code of Ethics 2019, when faced with a potential conflict of interest. “Similar to legal advice, in some cases it is more appropriate or even necessary for each individual to seek their own independent financial advice,” said Mr Howard. “The next challenge for the adviser is deciding who, if any, to keep as a client, and approaching how they end a client relationship with empathy and sensitivity.”

2. Carry-forward concessional contributions

From July 2023, clients can look back and carry-forward their unused concessional contributions for the previous five financial years. “As the measure started from 1 July 2018, an individual could only look back to the ‘start’ and carry-forward one previous year from FY2020, then two years from FY2021 and so on,” said Mr Howard.

Clients are eligible to carry forward unused concessional cap amounts from previous years, and effectively increase their contribution caps in later years, if they have a total super balance of less than $500,000 at 30 June of the previous financial year, and have unused concessional contributions cap amounts from up to five previous years.

Advisers may wish to remind their clients that unused cap amounts are available for five years and expire after this time. If a client has an unused cap amount from the financial year ending 2019, and does not use that amount by the end of June 2024, it will expire.

3. Total super balance and bringing forward a non-concessional contribution

The BT Technical Services team are seeing a high demand for BT’s non-concessional contribution (NCC) calculator, which helps advisers cross-check clients’ eligibility to bring forward an NCC.

A client’s total superannuation balance (TSB) can impact eligibility; for example, a client’s NCCs across three years can total $330,000 if their TSB is below $1.68 million; or two years, $220,000, if below $1.79 million as at 30 June of the previous financial year. Advisers also need to consider the trigger age (less than 75 years on 1 July), timing of the acceptance by the trustee (must be before the 28th day of the month following the client’s 75th birthday), and using the client’s remaining cap space in following years.

“The calculation can be complicated,” said Mr Howard. “Advisers are asking questions on calculations more frequently, especially since the work test no longer applies for these types of contributions. They are confirming the ins and outs, and using tools such as our handy NCC calculator.”

4. Indexation of pension thresholds on 20 September

As the cost of living has continued to rise in the first six months of the calendar year,^[4] indexation offers some respite to those who are impacted – with the rates of social security payments such as the maximum basic rates of age pension, disability support pension and carer payment increasing on 20 March and 20 September each year.

Also notable is the means testing thresholds for these payments have changed from 1 July 2023 due to the high rates of inflation, increasing since the previous financial year by almost 8%.^[5] The increases may lead to clients receiving a higher rate of payment, given the same level of means before 1 July; or for those holding means above disqualifying limits prior to 1 July, they may suddenly be eligible.

“Receiving social security income support such as the age pension – even if it’s a small rate of payment – may give a client several ancillary medical and pharmaceutical benefits via the pensioner concession card, helping to ease cost of living pressures,” said Mr Howard. “Clients may also be able to receive a range of state government rebates.” For example, in NSW these include an electricity rebate of up to $285; plus there is a National Energy Bill Relief Household Payment of $500 for FY2024.^[6]

5. Winding up self-managed super funds (SMSFs)

Advisers with SMSF clients have been asking questions on the implications of winding up SMSFs, such as on transferring SMSF assets to public offer funds or to a member. Most listed assets can often be transferred in-specie to a public offer fund. Other investments can be purchased from the fund by the fund’s members.

“SMSFs may need to be would up for many reasons, such as a relationship breakdown, and it’s good for trustees to be across the exit strategy and potential costs involved as their circumstances change,” said Mr Howard.

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Notes:
[1] Australian Institute of Family Studies: https://aifs.gov.au/research/facts-and-figures/divorces-australia- 2023#:~:text=The%20crude%20divorce%20rate%20(divorces,of%20divorces%20recorded%20since%201976
[2] See note 1 above. Also comments from counselling services, for example, The Guardian, 30/7/2023: https://www.theguardian.com/lifeandstyle/2023/jul/30/while-life-has-largely-returned-to-normal-since-the-pandemic-many-relationships-have-not
[3] Selected Living Cost Indexes, Australian Bureau of Statistics: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/jun-2023
[4] See note 3.
[5] Department of Social Services, Indexation Rates July 2023 (1 July 2023).
[6] NSW Government, ‘Apply for the NSW Low Income Household Rebate (retail customers): https://www.service.nsw.gov.au/transaction/apply-for-the-low-income-household-rebate-retail-customers

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Jason Brown

BT has announced the launch of the Activam Group managed account on BT Panorama – adding to the 300-plus managed portfolios on BT Panorama.^[1]

The launch of the new product continues the unabated growth of separately managed accounts (SMAs) on BT Panorama, with advisers showing a strong preference for investing in diversified portfolios in recent years. In 2018, the proportion of funds under administration (FUA) in managed portfolios on BT Panorama which were invested in diversified portfolios was 51%; since then, this proportion has steadily grown to 90%.3 Over 30 managed portfolios have been added to BT Panorama in calendar year 2023, all of which are diversified.

FUA in BT’s managed portfolios increased by 18%^[2] in the year to 31 August 2023; and managed portfolios comprise 13% of BT Panorama’s total FUA (excluding Tailored Portfolios and Adviser Portfolios).

Activam Group is an investment firm with total funds under management and advice exceeding $5bn.

The new SMA will initially be made available for the client base of Right Advice Wealth Management, and is a continuation of the two-year relationship between the investment manager and financial planning firm.

Right Advice’s objective was to find a wealth management solution that provided investment opportunities in diversified asset classes, at a more competitive cost for their clients.

Jason Brown, Head of Distribution, BT, said: “BT aims to be the platform partner of choice and, as part of that, we assist with building the right product for advisers, alongside their investment partner.

It’s been great to work together with Activam Group on a solution that suits the specific needs of Right Advice’s clients – including transparent portfolios, efficient rebalancing, and faster execution of changes.”

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Notes:
[1] The total number of managed portfolios on BT Panorama as of 31 August 2023 was 348. The growth of BT’s managed accounts reflects industry trends. One in two advisers (56%) are using managed accounts in their client portfolios. Among those who use managed accounts, 61% of them are allocating the majority (over 80%) of their typical client portfolio in a managed accounts structure (Investment Trends 2023 Managed Accounts Report).
[2] Funds under administration (FUA) in managed portfolios on BT Panorama increased by 18% in the year to 31 August 2023 ($11.31bn to $13.34bn).
[3] Data on diversified portfolios is based on BT Panorama statistics.

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