Kelly Power

Key points

• Landmark expansion will give Australians access to integrated, whole of‑life retirement income and wealth management solutions – the most comprehensive offering of its kind in the market.
• Expanded partnership with Challenger with broader integration into CFS’s super and non-super ecosystem, including guaranteed and investment-linked pensions, as well as a complete range of annuities directly available on the FirstChoice and CFS Edge platforms.
• New alliance with Generation Life, powered by BlackRock’s global investment capabilities, to deliver investment-linked annuities, alongside tax-effective investment bonds.
• Introduction of innovative retirement income solutions (IRIS) capabilities on the FirstChoice and CFS Edge platforms, supported by new modelling and digital tools to help advisers deliver more tailored advice with greater efficiency.

Colonial First State (CFS) has announces the largest-ever expansion of its retirement offerings through a multi-partner alliance that will reshape how retirement solutions are delivered in Australia.

Developed with Challenger, Generation Life, and BlackRock, the partnerships move beyond product-led approaches to a whole-of-life retirement model that enables Australians to transition from accumulation to retirement with greater confidence, flexibility and income security.

Kelly Power, Chief Executive Officer of Colonial First State Superannuation, said, “CFS has built its reputation on being a leader in retirement, and this expansion reflects a material capital commitment to supporting Australians across their entire retirement journey by providing the most comprehensive whole-of-life offering in the market.”

“By bringing together best-in-class global investment capability, local market-leading lifetime income expertise and tax‑effective structures, this integrated offering is designed to meet the increasingly complex financial needs of Australians. It recognises that retirement is no longer a single event, but a long-term financial journey that requires different solutions over time,” added Ms Power.

A seamless retirement income experience for advisers

CFS will integrate innovative retirement income solutions (IRIS) and the full suite of annuity capabilities from Challenger directly across all CFS platforms. It will also integrate Generation Life’s investment-linked IRIS onto FirstChoice and investment bonds onto FirstChoice and CFS Edge, providing a tax-efficient alternative as Australia’s investment and retirement tax landscape continues to evolve.

The new whole-of-life offering will bring together a comprehensive range of retirement solutions in a single environment, making it easier for advisers to deliver whole‑of‑portfolio advice across wealth management, income and estate planning.

The adviser experience will also be supported by new integrated retirement modelling capabilities that draw on multiple data sources to enable more tailored retirement outcomes and greater efficiency via straight-through processing.

The rollout of new solutions begins from August with the introduction of the Retirement Income Optimiser on the FirstChoice platform, as well as a Pension Bonus feature for eligible CFS members. Further solutions will be introduced progressively over the next 12 months.

Greater choice and confidence for members

CFS’s expanded partnership with Australia’s largest annuity provider, Challenger, builds on a relationship of more than 30 years, with this next phase fully integrating Challenger’s complete product range – including newly launching IRIS guaranteed and market-linked pensions alongside fixed-term, lifetime income and aged care solutions.

The alliance with Generation Life brings together its retirement expertise with BlackRock’s global investment and retirement capabilities. CFS members will also benefit from BlackRock’s experience delivering LifePath Paycheck in the US – an integrated target date strategy which provides eligible participants the ability to purchase a guaranteed income stream for retirement payable by third-party insurers selected by BlackRock.Together, these alliances will provide CFS members with greater choice and flexibility in how they generate income and transfer wealth over time. Members will have access to lifetime income solutions combining fixed, CPI and investment-linked annuities, with account-based pensions, alongside flexible and tax-effective investment bond structures, and digital tools designed to support more confident decision-making across long-term and intergenerational planning.

Partner perspectives

Nick Hamilton, Managing Director and CEO, Challenger, said, “What’s powerful about this partnership with CFS is how naturally our organisations fit together. But the real significance goes beyond partnership mechanics. Australia has been very successful at helping people accumulate super, yet far less effective at helping them convert those balances into income they can actually depend on. CFS is embedding lifetime income at scale, and this collaboration tackles one of the hardest and least‑solved problems in the retirement system – how to turn savings into income for life.”

Jason Collins, Head of Australasia, BlackRock, said, “CFS has been a longstanding whole portfolio partner for BlackRock, and we are proud to continue supporting its MySuper LifeStage portfolios. Working alongside Generation Life, we look forward to contributing to the next phase of growth as CFS expands the retirement toolkit for advisers and members, and moves towards more integrated, end-to-end retirement solutions that help more Australians experience financial wellbeing.”

Felipe Araujo, CEO of Generation Life, said, “Generation Life is proud to be selected as a partner of choice by CFS to help co-develop next-generation wealth management and retirement solutions. Australia’s retirement system is entering a new phase, where advice delivery is keeping pace with the increasingly dynamic needs of Australian retirees. This alliance represents one of the first truly integrated retirement ecosystems of its kind in Australia, bringing together income, tax efficiency and intergenerational wealth planning in a more connected way to better support Australians through retirement and across generations”

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Kelly Power

Colonial First State (CFS) has announced new technology available on the FirstChoice platform which reduces set-up time for new and existing accounts by up to 80%^[1].

Developed in collaboration with Elemnta, the new functionality enables advisers to utilise existing client data via seamless integration with Xplan, reducing the risk of implementation errors and the need for the re-keying of data.”

The new technology selects and pre-populates up to 15 supplementary forms including set-up of adviser service fee, external rollovers, AML/KYC and direct debit.

“At CFS we are focused on ensuring advisers have access to market-leading technology.  This major enhancement to the award-winning FirstChoice platform allows advisers to seamlessly and securely access existing data to deliver significant time savings,” said Kelly Power, Chief Executive Officer of Colonial First State Superannuation.

“The new functionality has been developed with advisers, for advisers. Using deep insights from a wide cross-section of practices, we are giving precious time back to advisers to focus on their clients by increasing efficiencies, improving compliance and streamlining day-to-day processes,” Ms Power added.

Market-leading integration with Xplan enables efficient data retrieval, while providing advisers full control over the implementation process from start to finish.  The new user experience allows access extensive data validations via a streamlined process for creating multiple accounts across family groups.

Shaun Green, Founder and Chief Executive Officer of Elemnta, said: “Having served clients directly as advisers ourselves, we understand the challenges that weigh on the advice ecosystem.

“During the pilot stage, we received overwhelmingly positive feedback from advisers who dubbed the new functionality incredibly user-friendly, and a significant time-saver. Beyond its simplicity, advisers reported having increased confidence in information inputs and the ability to streamline staff training. In this sense it’s not just a tool; it’s a key to unlocking the full potential of high-quality data.”

“We are excited to partner with CFS to introduce a solution that not only enhances support for advisers on the front line but also contributes to operational efficiency at the business level,” Mr Green said.

Yvette Peucker, Head of Operations at Direct Wealth, has been using the technology through the pilot phase.

“We had no trouble pulling through the information.  The information it had for the client was perfect. We loved the fact that direct debit is there, we didn’t need to go in and out of everything. There are significant time savings,” Ms Peucker said. 

Financial adviser Belinda Barclay also participated in the pilot phase. 

“The integration takes out so much time, like checking the TFN, checking this, checking that. It cuts out clicking back and forth on different pages in Xplan. Making mistakes by doing it manually can be embarrassing when you need to ask the client to re-sign documents. It holds up the process and is costly. FirstChoice client origination is now so much easier than competitor solutions,” Ms Barclay said.

Supported by thousands of advisers across the industry, FirstChoice continues to set the benchmark for service and value for money. In the 2023 Wealth Insights Service Level Report, advisers rated the FirstChoice platform equal number one for overall satisfaction, and number one for value for money, administrative support, reporting/communication and technical support.

Elemnta, which recently launched as a new brand in the advice and wealth sector, has quickly established itself as a leader in enterprise-level solutions. The new FirstChoice functionality is the result of Elemnta and CFS having signed a master service agreement last quarter.

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[1] Percentage estimate calculated based on pilot phase feedback from advisers using the new FirstChoice functionality.

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Kelly Power

Colonial First State (CFS) has announced the launch of CFS Edge, the most contemporary wealth management platform in the market, bringing world-class technology and capability to the Australian financial advice sector and their clients.

Developed in collaboration with FNZ, a global leader in wealth management platforms, CFS Edge will transform the way advisers can service their clients through features not before seen in the Australian market.  CFS Edge will enable digital adviser workflows, advanced data analytics, an integrated app store and analysis tools for licensees, advisers and members.

“CFS Edge is the first major new platform in the Australian wealth management sector in almost a decade.  It utilises the best global wealth management technology and has been uniquely co-developed with financial advisers from the very start,” said Kelly Power, Chief Executive Officer of Colonial First State Superannuation.

Seamless two-way integration with financial planning software

With CFS Edge advisers can seamlessly integrate with their preferred technology partners thanks to open APIs and real-time two-way data integration.

“At CFS we’re thinking differently about how we make sure advisers have access to the best capability available anywhere in the world.  Our approach is to have an open platform that allows for seamless, secure integration with leading advice technology providers. This enables advisers to set up new clients in seconds, eliminates the risk of errors and significantly improves the user experience to give advisers more time to focus on their clients,” said Ms Power.

CFS Edge has real-time two-way integration with financial planning software including Iress Xplan and Adviser Logic, with plans to rapidly expand integration with other technology providers by giving fintech providers the ability to access a developer portal to build their own connections on the platform.

Flexibility and personalisation

Many financial advisers are seeking greater flexibility to run their businesses more efficiently and to be able to better service their clients. Benefiting from co-development with advisers, CFS Edge uses a modular approach, which is highly configurable to suit individual preferences and business requirements.

By partnering with FNZ, CFS Edge will enable advisers to deliver even more personalised investment solutions to their clients, through accessing an even wider range of investment capability and reporting functionality to support their recommendations and engagement with clients.

“Flexibility and configuration are at the core of CFS Edge. The platform gives advisers extensive control and allows for a level of personalisation not seen in the Australian market,” added Ms Power.

Managed accounts and continuous enhancement

CFS Edge is the first major wealth management platform with managed accounts at its core. The platform offers advanced modelling tools designed to support deeper analysis through greater customisation and granularity in the comparisons and portfolio analysis that can be undertaken.

“CFS Edge is a full-service wrap platform from day one, offering market leading super, pension and investments capability with advanced managed accounts at the core. The quality of the platform and our service experience is paramount.  We have undertaken extensive market testing at every stage and are delighted to now launch CFS Edge to the whole market,” said Ms Power.

In the coming weeks, additional features such as ESG preferences will be released alongside capabilities that will further expand the range of available investment options and provide even greater functionality for advisers.

Global insights and intelligence

CFS Edge has been designed to give advisers predictive insights and alerts, enabling them to see new advice and growth opportunities, highlight areas of inefficiency and pre-empt potential issues for their clients. These insights are benchmarked against peers in Australia and globally and can be tailored to different roles including licensee, business owner, adviser, or support staff.

Developed with a global leader in wealth management technology

FNZ is a global leader in wealth management platform technology, administering over $2.2 trillion in client assets and partnering with over 650 of the world’s leading financial institutions and over 8,000 wealth management firms.

Tim Neville, CEO, FNZ APAC, said: “FNZ is delighted to have delivered the Edge platform in partnership with CFS. Our partnership with CFS is truly exciting, leveraging their market leading service, expertise, and reach.

We are proud to deliver a unique combination of our local and global capabilities. Together, we aim to revolutionise the industry and deliver unparalleled value and capability to the Australian market.”

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Kelly Power

Colonial First State has announced an insurance premium reduction for customers of its FirstChoice Employer Super, Essential Super, FirstChoice Personal and FirstChoice Wholesale Personal products. The changes follow the reappointment of AIA as Colonial First State’s insurer and will benefit almost 220,000 customers, saving them a combined $40 million a year, effective from the first quarter of 2022.

AIA has been reappointed following a thorough and strongly contested process. Proposals were independently assessed by an external consultant, who evaluated the insurers on their strength and stability, terms and conditions, services and technology, claims management, and premiums proposal.

Customers will benefit from an average 18 per cent reduction in insurance premiums across all Colonial First State products.

Kelly Power, CEO of CFS Superannuation, said: “We’re delighted to reappoint AIA as our provider of insurance following a highly competitive tender process. AIA demonstrated significant uplifts in proposed service, technology, underwriting and claims management capabilities when compared with the other proposals we received.

“The reduction in insurance premium for almost 220,000 customers is another example of how CFS continues to share the benefits of our scale with customers. We will continue to review our products and services to ensure our customers receive the best possible benefits at the lowest possible price.”

Colonial First State has been consistently reducing its fees over the past two years with more than 770,000 customers benefiting from aggregate savings of more than $215 million per year during that time.

Colonial First State is in the process of establishing itself as a standalone superannuation and investments business following the sale of a 55 per cent stake to KKR, which is expected to be completed in the coming months. Following completion of the transaction, Colonial First State will be owned by CBA and KKR in partnership.

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Peter Chun

Colonial First State has been awarded Best Fund: Longevity Fund for its FirstChoice Wholesale platform at the prestigious Chant West awards.

The Chant West awards recognise Australia’s best funds with awards across 12 categories.

The Longevity Award considers those that invest in retirement, as opposed to investing for retirement, something that Chant West believes is one of the key issues in the superannuation industry.

Peter Chun, General Manager Distribution at Colonial First State, said the awards were recognition of the focus the business continues to place on helping members achieve better outcomes in retirement.

“This is a significant milestone for Colonial First State because our goal is to provide better retirement outcomes for all Australians,” Mr Chun said.

Colonial First State was first to introduce annuities onto its FirstChoice and FirstWrap platforms in 2015. Since inception, its annuity assets under management have grown to $1.8 billion.

“Annuities can play an important role in retirement planning for many people, especially through a sustained period of low interest rates where certainty of income can be a concern,” Mr Chun said.

“As part of a retirement portfolio, a guaranteed annuity can provide a reliable, steady source of income that isn’t vulnerable to fluctuations in financial markets or interest rates. Knowing exactly how much income will be received, and how long it will last, can be a great comfort.”

With new means testing rules due to come into effect from 1 July 2019, there is greater potential for deferred lifetime annuities to support more members in their retirement.

“We believe that by having annuities available on our platforms, CFS makes it easy for advisers and members to setup, manage and monitor a retirement plan in one place,” Mr Chun added.

Colonial First State manages over $40 billion in account-based pensions for more than 160,000 pensioners, paying more than $2.5 billion in pension payments each year. It is the largest payer of pensions after the Australian Government.

FirstChoice Wholesale was also a finalist in two other awards categories in last night’s Chant West Awards, including Advised Product of the Year and Pension Fund of the Year.

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Kelly Power

Colonial First State has announced significant fee reductions across its superannuation and investment platforms, reducing the cost of investing for over 500,000 members.

Colonial First State fee reductions will lower costs for members across its FirstChoice Wholesale platform, FirstChoice Employer Super and its FirstWrap Plus platform and will come into effect from early June 2019 in line with updates to the relevant product disclosure statements. The changes announced today are projected to result in a total benefit to members of approximately $68 million per year ^[1].

The FY20 impact on net profit after tax is expected to be approximately $45 million.

“The changes we’re making will see over 500,000 existing members benefit from lower fees,” said Kelly Power, Acting Executive General Manager, Colonial First State.

“We know lowering fees will benefit member retirement saving outcomes and we’re aiming to make our platform and investments as cost effective as possible for them,” Ms Power said.

Three new index funds cater for rising demand

As well as reducing fees, three new low-cost Colonial First State Index options (Conservative, Diversified and Growth) will be added to both FirstChoice Wholesale and FirstWrap Plus. Investment fees on existing Colonial First State Index options will also be reduced.

The Conservative, Diversified and Growth investment options will give members access to a diverse range of assets with low fees of around 0.34% p.a.^[2]. The existing range of Colonial First State single sector index options will be similarly priced.

“We’ve seen a significant increase in demand for index funds over recent years, with 80%^[3] of advisers now using index investments due to the benefits they provide members, including lower cost, diversification and simplicity,” Ms Power said.

Summary of fee reductions

• FirstWrap Plus – tiered administration fees will be reduced by 30% – reducing fees for a super and pension member with an average balance of $400,000 by $782 p.a.⁴
• FirstChoice Wholesale – will introduce improved fee rebates for members with a starting balance of $100,000.
  • Previously only available to members who have balances over $800,000, the rebate will see fees reduced by 0.05% p.a. for the portion of their balance between $100,000 to $500,000; 0.10% p.a. for the portion of their balance between $500,000 and $1 million; and 0.20% p.a. for the portion of their balance over $1 million.
  • More than 60% of FirstChoice Wholesale members will see a reduction in fees due to the improved fee rebates. Fees for a super or pension member with a balance of $200,000 will reduce by $90 p.a.^[5]
• FirstChoice Employer Super
  • FirstChoice Lifestage (MySuper) investment fees will be reduced.
  • This, in addition to other changes, will result in lower fees for more than 65% of FirstChoice Employer Super members. Fees for members with a balance of $50,000 in MySuper options and no current discounts will reduce by $100 p.a.^[6]
• Removal of Regulatory Reform Fee across all products.
• Investment fees on existing Colonial First State Index options will be reduced.

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[1] Based on customer account information, including asset holdings and balance, as at November 2018.
[2] 0.33% p.a. to 0.35% p.a. (inclusive of investment fee, administration fee and indirect cost ratio on FirstChoice Wholesale Personal Super and Pension), 0.21% p.a. investment fee on FirstWrap Plus
[3] Wealth Insights Adviser Market Trends Report September 2018
[4] As a result of reduction in tiered administration fee and the removal of the Regulatory Reform Fee
[5] As a result of the improved fee rebates and the removal of the Regulatory Reform Fee
[6] As a result of reduction in administration fee, MySuper investment fee and the removal of the Regulatory Reform Fee

Note: Fee reductions for members are quoted gross of tax.

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Colonial First State taking steps to support global action on responsible investment issues.

Colonial First State has confirmed its support for an open letter from institutional investors calling on index providers to remove controversial weapons from global indices.

Colonial First State is one of the first Australian companies to join 142 other institutional investors, representing US$6.9 trillion in assets, who are calling for the exclusion of controversial weapons from global investment indices. These weapons include anti-personnel mines, cluster munitions, biological and chemical weapons, and nuclear weapons.

Colonial First State’s Head of Investments, Scott Tully said: “Becoming a signatory to the open letter is yet another step we are taking to support global action on responsible investment issues.

“Together with other asset owners, we are in a position to make a huge difference to responsible investing, which we know is something many of our members value. We believe that active and passive investments should, by default, exclude controversial weapons.”

Signatories to the open letter believe that the exclusion of controversial weapons will better align their clients’ investments with what has become standard practice and expectation among investors. While companies involved in the manufacturing of controversial weapons account for a marginal weight of global equity and fixed income indices, the growing interest in passive investing means many investors are inadvertently investing in that industry by following the composition of the standard indices.

“Responsible investment is a matter of stewardship and we continue to collaborate with external parties to deliver meaningful change throughout the investment value chain,” added Mr Tully.

The letter, released on 12 February Sydney time (11 February Zurich time), will be sent to the CEOs and Chairpersons of all major index providers as well as the Index Industry Association.

Colonial First State remains on track to complete its own divestment from controversial weapons manufacturers by the end of this year. Colonial First State is a signatory to the Principles for Responsible and recently became a signatory to the United Nations endorsed Tobacco-Free Finance Pledge.

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