Robert Bustos McNeil

Australian consumers increasingly embrace digital banking for simplicity and speed, yet new research from global consulting firm Kearney highlights that physical branches continue to play a vital role in the retail banking landscape, particularly for high-value and complex products.

According to Kearney’s latest APAC Banking Radar, Australia is undergoing a rapid transformation in banking behaviours. Digital channels are now the preferred choice for researching and purchasing simple financial products. Yet even as digital adoption accelerates, the branch remains critical.

Kearney’s analysis shows that while Australia has experienced one of the steepest declines in branch numbers across Asia Pacific, alongside Thailand, it still maintains one of the highest ratios of branches per 10,000 customers in the region. With community and regulator pressure to maintain branches ongoing, this highlights an opportunity for banks to rethink how their existing regional branches can better serve customers, particularly in rural areas, where a branch often acts as a critical community hub.

Digital investment grows, but complexity still needs a human touch

Australia’s major banks are investing heavily to meet growing digital expectations. The Big 4 banks, ANZ, CBA, NAB, and Westpac, are projected to spend nearly $8 billion on enterprise technology by 2025 to improve the digital experience, and remain competitive with each other, against neobanks and fintech challengers and when compared with online experiences from other service industries.

This investment is delivering clear results in simple product categories. According to Kearney’s research, 72 percent of Australians now use online banking platforms to research financial products, with 79 percent completing purchases online. In both Japan and Australia, consumers often use price comparison websites to research products, then transition to online banking to complete transactions.

An untapped opportunity for banks

In Australia’s mortgage market, brokers currently originate around 75 percent of home loans. Kearney’s paper highlights that although the big four banks now offer digital home loans with end-to-end online processing, adoption remains relatively low. This is due to gaps in the digital experience (including limited variations and options available online) and a continued customer preference for face-to-face engagement when completing a home loan.

While more Australians are turning to the use of banks’ digital platforms to research complex products such as loans and mortgages, many still choose brokers at the point of purchase. This creates a significant opportunity for banks to better leverage their digital platforms, capturing mortgage customers who are already engaged during the research phase. Banks’ online channels represent an under-utilised asset, and evolving digital mortgage offerings to better meet customer expectations will be key to unlocking this potential.

“Banks in Australia have a major opportunity to capture a greater share of mortgage origination. To seize it, they must strengthen their digital platforms to better support proprietary channel mortgage sales.  An improved digital experience can support expanded face-to-face and digitally-assisted mortgage origination in the proprietary channel through in-house bankers. Although branch numbers are declining, branches could become important hubs for in branch and mobile lenders, and for providing assistance to customers to move seamlessly between online and physical channels, helping banks win back share from brokers.” said Robert Bustos McNeil, Asia Pacific Lead, Financial Services at Kearney and report author.

Kearney’s research points to a future where success will depend on banks mastering a hybrid model: combining the speed and convenience of digital channels with the personalisation, trust, and expertise that customers still expect for complex financial needs. As banks continue to ramp up investment in enterprise technology, regional branch closures are becoming a growing battleground between policymakers and the industry. Kearney’s findings show that branches are not just a legacy of the past, they remain a vital part of the customer experience and a significant opportunity for banks to strengthen relationships, support more complex transactions, and capture greater customer loyalty.

“Australia’s banking sector is rapidly evolving. While digital adoption is reshaping how customers engage, the demand for trusted advice, particularly for complex financial decisions, remains strong. Banks that who genuinely listen to their customers and balance digital innovation with personalised service, especially in regional communities, will be best positioned to deepen customer relationships and stay competitive in a changing market,” said Robert Bustos-McNeil.

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Anne Graham

Integrated Financial Advice firm Kearney Group, is thrilled to announce that AnneGraham, one of Australia’s foremost financial advisers, has joined the firm and will commence services from Kearney Group’s Fitzroy premises on 9 September 2024.

Anne is an award-winning Certified Financial Planner® (CFP) with over 30 years of professional experience. Her distinguished career in financial planning is built on strong academic and professional foundations that include accreditation as a Certified Practising Accountant (CPA), a Bachelor of Business (Accounting), and a Masters in Applied Finance.

Her outstanding service to clients has earned her numerous accolades and prestigious positions on boards and committees, including Securitor Financial Group’s National Advisory Council, Deakin University Department of Accounting Advisory Board, and the Future2 Foundation Board. Anne is also the co-founder and past CEO of Story Wealth.

Reflecting on her new role, Anne Graham stated: “I’m thrilled to join Kearney Group and refocus on what I love most, in the next phase of my career– delivering exceptional financial advice and mentoring the next generation of advisers. This move allows me to concentrate on my clients without the demands of running a business.” Anne says her clients can expect a seamless transition and continued excellence in service as she begins this new chapter with Kearney Group.

“To my long-standing clients, thank you for your unwavering support over the years. I am confident this transition will only enhance your advice experience, with access to Financial Planning, Accounting, Tax, Business Advisory, Bookkeeping, Lending, and Insurance, all under one roof through Kearney Group’s Integrated Advice model.”

Paul Kearney, Founder and CEO of Kearney Group, expressed his enthusiasm: “We are delighted to welcome Anne Graham to Kearney Group. Anne and I have known each other and collaborated closely for over 15 years. I have always admired her dedication, expertise and the high regard in which she’s held within our professional community. This new partnership brings together some of the finest practitioners in the country and I cannot wait to see what we create together.”

Anne’s approach to financial planning is centred around the three pillars of collaboration, education and clarity; a philosophy that aligns seamlessly with Kearney Group’s Integrated Advice Team model. Her appointment to Kearney Group underscores the firm’s commitment to offering top-tier financial advice, provided by the nation’s best advisers.

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Arjun Sethi

Kearney’s Global Business Policy Council has released its 2024 Foreign Direct Investment Confidence Index (FDICI), a survey of investor sentiment regarding  FDI flows in the next three years. This year’s results reflect continued investor optimism for most Asia Pacific (APAC) markets as well as the strength of Southeast Asia (SEA) among emerging markets.

Improving investor optimism in APAC

53 percent of investors are more optimistic about the APAC economy compared to last year, following closely behind the Americas as the region showing the biggest increase in optimism.

Net optimism is particularly high in Australia, as the market leads optimism rankings among economies on this year’s Index alongside Canada and the United Kingdom.

A striking 88 percent of respondents across the region said they were planning to increase their FDI in the next three years – up one percent from last year. Furthermore, 90 percent – down marginally from 91 percent in 2023 – of APAC respondents said FDI would be more important to their corporate profitability and competitiveness in the next three years.

APAC has the second strongest showing in this year’s Index, behind Europe, with eight markets represented in the 25 spots of the world rankings – the same representation as last year. These include Mainland China, Japan, Australia, Singapore, New Zealand, India, South Korea, and Taiwan. A number of markets in the region have seen improved performance, including Mainland China that has jumped four spots to 3^rd position. Taiwan reappears on the main Index at 22^nd after last making the list at 25^th in 2020.

Most APAC markets, however, have not seen improvements in their ranks. Japan falls from 3^rd to 7^th and Australia holds firms at 10^th, while Singapore drops from 9^th to 12^th. New Zealand drops one rank to 16^th, and India drops from 16^th to 18^th. South Korea also drops marginally from 19^th to 20^th.

Southeast Asia continues to show strength in the emerging market rankings within the Index, with Thailand, Malaysia, Indonesia, and the Philippines placing among the top 15. This exclusive emerging market ranking was introduced in last year’s FDI Confidence Index® to give business leaders insights into which emerging markets are most appealing to investors now and over the next three years.

AI proliferates rapidly

The Index this year explores the impact of AI and technology and regulation in general on investor operations. A notable 72 percent of investors in APAC say they are making significant or moderate use of AI in their business operations. They anticipate their businesses will use AI for customer service and chatbots, automation of manual processes, supply chain enhancement and human resources. Notably, firms in APAC were found more likely to use AI for human resources purposes compared with the Americas and Europe.

Further, 67 percent of APAC investors say their organization will make significant or moderate increases in AI usage to guide their investment decisions. They cite cost or efficiency savings and decision-making accuracy as the top benefits they gain when using AI in their investment decision-making.

While 69 percent of APAC investors agree that the benefits of AI outweigh potential risks, concerns remain. Specifically, 33 percent of investors in APAC cite cybersecurity and 21 percent cite the potential risk of misinformation as the top two risks they associate with the use of AI in making investment decisions over the next three years.

“Our 2024 survey findings reflect investor enthusiasm for AI and technology innovation in the region. The AI capabilities of markets, therefore, are key factors for investors in their decision-making process,” says Arjun Sethi, Regional Head and Chairman, APAC, Kearney. “APAC markets including Singapore, Australia and India are investing heavily in developing their AI offerings to maintain their allure as stand-out destinations for global investors.”

Global uncertainties persist

Despite their overall optimism about the global operating environment, APAC investors were wary about the mounting risks in the world. 87 percent think an increase in geopolitical tensions will affect their investment decisions. Firms, as a result, are making decisions to nearshore and/or friendshore as a reaction to these lingering geopolitical pressures.

Also, investors anticipate that a more restrictive business regulatory environment in both developed and emerging markets is likely to pose risks in the year ahead. The proliferation of industrial policies and trade restrictions, including those related to emerging technologies, suggests more regulatory complexity that investors will need to monitor and comply with across markets.

“We are encouraged by APAC’s continued positive performance on the Index which reflects buoyant investor optimism pervading the region. It remains an engine of global growth, demonstrating high near-term growth prospects, a strong appetite for innovation and unwavering economic resilience,” says Arjun Sethi.

About the 2024 Kearney FDI Confidence Index^®

The Kearney FDI Confidence Index® is an annual survey of global business executives that ranks markets that are likely to attract the most investment in the next three years. In contrast to other backward-looking data on FDI flows, the FDICI provides unique forward-looking analysis of the markets that investors intend to target for FDI in the coming years. Since the FDICI’s inception in 1998, the markets ranked on the Index have tracked closely with the top destinations for actual FDI flows in subsequent years.

The 2024 Kearney FDI Confidence Index® is constructed using primary data from a proprietary survey of senior executives of the world’s leading corporations. The survey was conducted in January 2024. Respondents include C-level executives and regional and business leaders. All participating companies have annual revenues of $500 million or more. The companies are headquartered in 30 countries and span all sectors. Service-sector firms account for 46 percent of respondents, industrial firms for 45 percent, and IT firms for 9 percent.

The Index is calculated as a weighted average of the number of high, medium, and low responses to questions on the likelihood of making a direct investment in a select market over the next three years. Together, the markets presented to respondents in the survey received 95 percent of the world’s inward FDI flows in 2022, according to UNCTAD data.

Index values are based on responses only from companies headquartered in foreign markets. For example, the Index value for the United States was calculated without responses from US-headquartered investors. Higher Index values indicate more attractive investment targets.

All economic growth figures presented in the report are the latest estimates and forecasts available from Oxford Economics unless otherwise noted. Other secondary sources include investment promotion agencies, central banks, ministries of finance and trade, relevant news media, and other major data sources.

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The IMAP Managed Account Awards recognise excellent practice, by both advice firms and investment managers.

The Institute of Managed Account Professions (IMAP) says the Awards are “important for both clients and those working in the industry as the best service providers have proven processes, are well resourced, and have a clear investment philosophy with solid track records.”

The ethos behind Ethos Portfolios

“At Kearney Group, we’ve long believed that good investment is responsible investment,” says CEO, Paul Kearney. “Short-term gains that come at the expense of our community and planet, aren’t really ‘good returns’.”

He explains that Ethos Managed Portfolios are designed to explicitly consider environmental, social and governance (‘ESG’) factors in fund manager selection and investment decision-making processes.

Paul stressed that “ESG factors are considered, not only because they’re ‘nice to have’ but because they’re strong indicators of high performance and long term value.” This is a view supported by research from the RIAA which confirms that “responsible investment funds outperform mainstream funds over most time frames and asset classes.” ^[1]

Quality finalists, expert panel

“IMAP have been industry and thought leaders in the Managed Accounts space for many years,” says Kearney Group COO, Matt Englund. The IMAP Managed Account Awards are judged by an expert panel of investment professionals.

The panelists boast “experience on investment committees, in running managed account and fund portfolios, and through their hands on involvement in the development of managed account portfolios,” says IMAP.

“To be considered by such an eminent panel for the inaugural ESG award is a credit to the team here at Kearney Group and our partners at Zenith,” Matt concludes. Winners announced in August. Award winners will be announced at the annual IMAP Awards Ceremony on August 24 in Sydney, Australia.

——–

[1] Past performance is not a reliable indicator of future performance.

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Tyson Yunkaporta

Scholar and author of Sand Talk, Tyson Yunkaporta, gets the green light to develop an Indigenous Knowledge Systems Laboratory at Deakin University, with seed funding from a leading financial services firm.

Paul Kearney, the founder and CEO of Melbourne-based financial services firm, Kearney Group, has provided seed funding to catalyse the development of the Indigenous Knowledge Systems Lab at Deakin University’s NIKERI Institute (National Indigenous Knowledges Education and Research Institute).

Development of the IK Systems Lab is being driven by Tyson Yunkaporta, in collaboration with leading thinkers and innovators from across Deakin and the wider community. Yunkaporta is an Indigenous scholar and author of the book “Sand Talk: How Indigenous Thinking can Save the World”, which describes the potential applications of Indigenous Knowledges and the process towards resolving some of our world’s most complex crises. Released in late 2019, “Sand Talk” is deeply resonating with international audiences and its concepts are already being applied in a wide range of settings, from climate science to artificial intelligence.

Building on the success of “Sand Talk”, the IK Systems Lab aims to attract and support a team of Indigenous researchers, Knowledge Keepers and doctoral candidates whose ambition is to weave First People’s thinking, policy and innovations into solutions for some of the most pressing issues of our time.

“For example, in addressing climate change, should we think beyond limiting emissions and address the biological feedback loops that will continue to escalate global warming even at zero carbon output? Indigenous Knowledge Systems that understand the complexities of these loops may be most effective at proposing the right interventions to disrupt them,” Yunkporta writes.

“Or could we gain an understanding of systems interdependencies – such as fish die-offs in the Murray-Darling Basin leading to bushfires on Kangaroo Island,” he adds.

The IK Systems Lab will be “a place where Indigenous thinking can be applied to the issues that complexity scientists and technologists are currently working on across economics, design, cybernetics, governance, evolutionary dynamics, environment, cognition and consciousness,” Yunkaporta tells us.

IK Systems Lab to tackle complex problems, create opportunities.
“This work is both extremely important and urgent,” says Paul Kearney whose philanthropic support has helped kick-start the Lab’s development. “In a world overflowing with seemingly intractable problems, Tyson Yunkaporta’s ‘Sand Talk’ and the Indigenous Knowledges he describes gives hope; maybe, just maybe, this thinking and perspective can be a critical circuit-breaker and help interrupt the trajectory on which we humans find ourselves.”

In addition to addressing complex problems and existential threats to humanity, the IK Systems Lab also aims to create opportunities for Aboriginal and Torres Strait Islander Peoples for research, employment, meaningful public platforms, community recognition and to directly benefit from the commercial applications that could arise from their intellectual property developed within the Lab.

“We hope that the establishment of the IK Systems Lab at Deakin becomes a spark,” says Kearney, “a catalyst for connection and the collision of ideas; a hothouse of wisdom and transformational thinking that allows us to tackle the many urgent and interconnected challenges that lay before us now. We are grateful to be able to play our part in its creation, and wish Tyson and his colleagues all the best for their journey ahead.”

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Paul Kearney

Kearney Group is pleased to officially announce the arrival of Ethos Managed Portfolios – a suite of responsible investment options suited to socially conscious and sustainability-minded investors.

“At Kearney Group, we’ve long believed that good investment is responsible investment,” says CEO, Paul Kearney. “Short-term gains that come at the expense of our community and planet, aren’t really ‘good returns’.”

Ethos, Paul explains, is the outcome of an 18 month redesign and complete reimagination of the firm’s investment management service, including its historically high-performing Kearney Financial Planning Portfolios.

“We’ve deliberately designed a new suite of portfolios that explicitly and systematically consider environmental, social and governance (‘ESG’) factors in our fund manager selection and investment decision-making process,” Paul explains.

He also stresses that ESG factors are considered, not only because they’re ‘nice to have’ but because they’re strong indicators of high performance and long term value – a view supported by recent research from the RIAA which confirms that “responsible investment funds outperform mainstream funds over most time frames and asset classes.”*

In a recent Q&A on all things ESG, Paul takes things one step further with the assertion that considering ESG performance is every financial adviser’s moral obligation to their clients.

In a profession that has been rocked by the recent Royal Commission, and claims of adviser misconduct and failures of duty, Paul is sounding a rallying cry for like-minded professionals to demand more of their portfolio offerings and the funds management industry they rely upon.

“We know ESG has direct financial relevance and is a good indicator of long term value. So failing to consider ESG is failing our clients, our profession and our community. Who are we, if we’re giving advice that encourages extraction or over abundance now, at the expense of our ability to live well into tomorrow? What good is saving for retirement if when you get there, you can’t breathe the air or drink the water, or the society you retire to deteriorates? These aren’t a far-off dystopian fantasy. These are critical questions we need to be asking now,” Paul asserts.

Kearney Group no stranger to ethical investing

Kearney Group is no stranger to ethical and socially responsible investing (SRI). It’s avoided fossil fuels, gambling and live animal food production in its managed fund portfolios for some years and has never actively invested in alcohol, tobacco, weapons or munitions.

With the launch of Ethos Managed Portfolios, the Group has formalised and enshrined their commitment to the environment and social cohesion, and have woven these views into the very fabric of their new service offering.

When reimagining our portfolio service, “we looked at current regulation and what might be expected in the years ahead,” says Paul. “Perhaps most notably, we looked at feedback from our clients and the Australian public. We know the vast majority of us want to know our money is doing good, not just raking in big returns at all costs. People are voting with their feet – and they should. The market is lagging and failing to serve its constituents. Ethos is really our attempt to progress the conversation here in Australia, and drive demand for ESG funds.”

Backed by rigour, research and responsibility

Ethos Managed Portfolios are overseen by the newly expanded Ethos Investment Committee, which monitors market conditions and portfolio performance, undertakes investment research and analysis, and manages changes to the suite of Portfolios, as required.

The Committee is currently chaired by David Wright, founder and CEO of Australia’s second largest research house, Zenith Investment Partners.

The mandate of the Ethos Investment Committee is to:

• Provide data-driven, long-term focused and thematically aware ESG portfolios that get competitive results whilst contributing to a more sustainable future.
• Partner with high-performing investment managers who take a leading approach to ESG.
• Provide agile and actively-managed portfolios that are well diversified to manage downside risk.
• Cater to investors with varying risk tolerances and investment time horizons – with options for a High Growth, Growth, Balanced,
• Conservative or Defensive Portfolios.

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Paul Kearney

Kearney Group CEO, Paul Kearney, is joining well-known business and government leaders in hitting the streets to sell The Big Issue magazine from 6-10 February.

Paul will be joining vendor, Jeff, at Parliament Station on 9 February at 8:30am to sell magazines as part of The Big Issue’s CEO Selling campaign, celebrating International Vendor Week.

“I’m very excited to be working with Jeff and participating in International Vendor Week,” said Kearney. “The Big Issue is an incredibly important part of Australia’s social fabric and I hope I’ll see some familiar faces stopping by to pick up a magazine from us.”

International Vendor Week shines a spotlight on homeless and disadvantaged vendors, like Jeff, who are working hard to improve their lives.

Vendors buy copies of The Big Issue for $3.50 and sell them for $7, earning a meaningful income.

More than 100 business and government leaders across Australia will show their support by donning The Big Issue fluoro vest and selling copies of the magazine alongside vendors.

The initiative is part of International Vendor Week, which recognises the work of 10,000 people selling street papers around the world.

The week is run by the International Network of Street Papers, which supports 110 street publications in 35 countries.

The Big Issue hopes to boost sales to put $100,000 into vendors’ pockets for the edition coinciding with International Vendor Week.

You can get behind the initiative by buying a copy of the magazine from Paul and his mentor, Jeff:

• Time: 8:30 am
• Date: Thursday 9 February 2017
• Location: Parliament Station – Lonsdale Street entrance

The Big Issue CEO Steven Persson said: “Buying a copy of The Big Issue supports a vendor’s efforts to make positive changes in their life: it’s a hand up, not a hand out. We hope selling The Big Issue alongside prominent business and government leaders will help vendors forge new connections in their community and encourage the public to support their local vendor.”

Visit The Big Issue’s website for more on International Vendor Week and a list of sellers.

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Paul Kearney

I have the great privilege of calling myself a financial adviser, and it’s a responsibility I take deadly seriously.

Ours is a Profession that is built on trust and integrity. And, like my many peers who live and breathe their fiduciary duty, I believe operating within an ethical framework is not only my moral responsibility but it’s essential to my firm’s (and more importantly, to our Profession’s) long-term viability.

From the GFC and Storm Financial, to the (infuriatingly frequent) fiascos within the banks and big institutions that continue to degrade all of our good work, we’ve seen, time and again, what happens when ethics take a backseat in the world of finance.

As a Profession, financial planning is only in its infancy. And, whilst we’ve got lots to learn, it’s enormously exciting that we are able to help shape what it will look like into the future.

It should go without saying but during these important formative years, we must fiercely protect our Profession. Reputation is hard fought and won – but we can win it. To do so, we have to prove that Advisers are not only doing amazing things for their clients, but as a Profession, we are taking a stand. Leading Advisers and leading practices need to join together and say there is unequivocally no room for cowboys in our Profession.

And then… then we must build robust processes, frameworks and industry guidelines that help us protect our Profession by embedding ethics and the client’s best interests into all aspects of our work.

It’s a continuous journey and we’ll never quite “there” but at Kearney Group, here are a few things we’re doing to get on the front foot.

Rigorous recruitment practices

Building a solid reputation across our Profession begins with how people join our ranks. We need to follow the lead of doctors and lawyers, and make becoming an adviser competitive and sought-after. And when we get to the point of recruitment and hiring decisions, we must be selective and demand rigorous processes sit behind all of our decisions.

• To even apply for a role, we demand high levels of education and training – since 2008 a Bachelor’s degree and CFP® accreditation have been our internal minimum standard for employment as a financial adviser in our practice.
• We carefully and deliberately recruit team members that will act in our clients’ and our practice’s best interests. The first stages of our interview process are entirely cultural and behavioural – we know we can teach technical skills, but we must demand from the outset that our people align with the ethical framework of our business.
• And, before we move to any appointment, we embark on rigorous reference checking, background screening and we obtain police clearances.

TIP:There are many third parties that will do AFP or CrimTrac checks on behalf of employers. Have a think about what you need – Do you need the original AFP Certificate? Do you want to do the administration or get your candidates to manage it themselves? How quickly do you need to get the results back and how many checks will you do per month? All of these things will influence who you might engage.

Policies and procedures

Call me an optimist, but I believe most people want to do the right thing in their work. If people don’t know what your organisation values and expects of them, however, how are they ever to deliver to those standards? Policies, procedures and a practice Code of Conduct are great was to ensure everyone is on the same page. They also provide really crucial mechanisms for dealing with deliberately deceitful or negligent behaviour.

• We maintain a suite of company policies covering topics like privacy, confidentiality, grievance management, professional independence and duty of care to clients.
• We also have internal Professional Standards and a Code of Conduct which clearly outline our expectations for ethical behaviour.
• Our team members are introduced to, and required to acknowledge/sign off on, procedures and policies to ensure ethical behaviour is understood and upheld.
• In addition to our internal standards, our CFP, CPA and CA qualified team members are also beholden to the professional standards laid out by their industry accreditors.

TIP: Writing up a suite of basic policies can be a huge job, but there are many HR and business support services available if you look around. Look for a service provider that can provide you with template policies and then put your time into customising them for your firm. Access to an HR or employment relations hotline is also very handy as you’ll want to ensure any customisation is in line with workplace legislation and the Fair Work Act.

Rethinking reward structures & traditional KPIs

Changes to remuneration, commissions and incentive structures in financial services are certainly on the move – however, there’s a long way to go yet. Here’s what we’re doing at Kearney Group:

• Our advisory teams are salaried employees and we offer market-competitive remuneration to our people. We’ve maintained a strict ‘no-bonus/kickbacks culture’ in our firm over the years and whilst that makes it tough at times to compete with the banks for talent, we believe the ethical bullets we dodge by removing such incentives are profound. How can we put our hand on our hearts and know our advice is independent as long as we’re receiving payment for giving that exact advice? The funny thing about ethics is perception is as important as reality. In our eyes, a perceived conflict of interest is as troubling and damaging to the profession as a true conflict.
• Our challenging KPIs and targets are set at a divisional level, not on individual levels. Whilst we each notionally have an idea of what we need to achieve in order for our team reach its overarching objectives, in the spirit of collaboration and teamwork, our primary focus is on the division’s collective success.
• Likewise, when targets are met, the entire division will be rewarded. We celebrate with team holidays, special events and experiential/non-monetary rewards in an effort to build strong colligate bonds, whilst simultaneously recognising outstanding performance.

TIP: Advertising your “no-bonus” culture when recruiting staff is a good way to get like-minded people in the door. It’s also a way to avoid tough conversations in the future. Talk about the “why” and most people will understand and respect the business decision. Plus – it doesn’t hurt that their fixed (guaranteed) income is a lot higher than in places where commissions and big performance bonuses are paid.

Collaborative relationships in a multi-disciplinary firm

At Kearney Group, collaboration is at the core of everything we do. It just so happens to also be a really great mechanism for protecting process and ensuring high quality advice goes to our clients. Here’s how it works around Kearney Group:

• Our people work in Dedicated Advisory Teams and at least two, many times more, advisers will be in attendance at client meetings. Not only does this present amazing opportunities for learning and professional development for our team, it ensures our clients are truly known and deeply understood by the various professionals who work in their service.
• As a multi-disciplinary practice, our advisers are also required to work collaboratively, across departmental lines in the service of their clients. It’s not unusual to see client meetings held with both an accountant and financial planner in the room.
• The relationships we seek to develop are ones between the client and the practice; rather than between the client and a single adviser.
• Developing this culture of collaboration and embedding deep client understanding within the entire firm, has many benefits:
  • Innovation & Improved Outcomes – as the saying goes: “two brains are better than one,” and by drawing on the experience and knowledge of multiple advisers, we frequently come up with dramatically bigger and better ideas. Our clients love that they’re able to draw on expertise of a range of specialists in a single location.
  • Improved Accessibility & Sense of Client Service – Because clients are known to a team of advisers, when they call or drop by, they’re able to speak to someone who knows them and understands what’s going on in their financial world. It also means that if their lead adviser is ill or on leave or permanently departs the firm, there’s no gap in their level of service.
  • Quality – From a QA and governance perspective, our Dedicated Advisory Team structure also helps to embed the expectation that each of us will receive constructive feedback and rigorous peer review on all work that goes out the door. Feedback and Peer Reviews are both extremely important for personal and professional growth, but also a major tool we use to ensure our advice meets our quality, accountability and ethical standards.

TIP: Build tests for oversights in quality, independence and conflict of interest into a Peer Review Checklist. Distribute your checklist to all members of your team and encourage your people to stress-test any job or piece of advice that they encounter. Make providing feedback or reporting a potential issue an easy and open process, that starts from a place of care for your client. The work from the most junior to most senior employees in your practice should be subject to the same level of scrutiny and review.

So there it is – for what it’s worth. A couple of tips and ideas to embed ethics in our work, in our practices and in our budding profession.

The future is bright… it’s an exciting time to be in financial services and with some focus and effort, we can build toward best practice and shine a light on the good people, leading advisers and top firms that surround us. Then replicate, replicate, replicate and legislate… and eventually the tide will turn and one day, we’ll wake up and our ‘industry’ will have blossomed into a true Profession.

By Paul Kearney, Founder & CEO, Kearney Group Financial Services

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Amina Ali

Are your clients looking to kick start the 2013/14 financial year? In the lead up to the new tax season, we’ve pulled together a tax strategy checklist that will help you ensure your clients are paying the correct amount of tax, whilst getting positive tax outcomes and staying in the good books of the Australian Taxation Office.

Whether you’re dealing with individual or business clients, this handy checklist will help you ensure your clients’ money is working as hard for them, as they do for it.

Checklist for Businesses

• Remind your clients about the importance of keeping their business records in good order. Not only will this simplify your job as their adviser and reduce their accounting compliance fees, it will help your clients ensure they are able to act on reliable performance data. If your client has elected to manage his or her own bookkeeping in-house, there’s no beating cloud-based accounting software giant Xero. Their flexible, flat-rate packages will help your clients maintain their books, produce real-time reporting, ensure timely and accurate decision making and help them pre-empt any issues that may arise with ATO data-matching enquiries.
• Revisit your client’s business structure. Is it still appropriate and producing the best results? Have structural considerations continued to guide ongoing business decisions? Take a moment to reflect on alternate structural arrangements. A little bit of time can produce profound results and small adjustments could save your client thousands and may affect his or her access to certain tax concessions.
• Consider, for example, the differences in the Capital Gains Tax (CGT) rollover relief provisions for companies and trusts. A sole trader who wishes to incorporate and transfer their business assets to a company faces no capital gains tax on the transaction. Conversely, no such relief from CGT would be possible if the same sole trader were to transfer his or her assets to a trust structure.
• Consider if leveraging the tax free thresholds of low-income earning family members over the age of 18 will be of benefit to your client. Trust structures are ideal for distributing income in a tax-effective way, but be aware, not all businesses should operate through a trust and compliance risk has increased significantly for trustees.
• Remind business owners with depreciable assets that, from the 2012/2013 year onwards, they can claim an immediate 100% deduction for capital assets that cost less than $6,500. For motor vehicles, the immediate deduction is $5,000 plus 15% of the balance in the first year.

Checklist for Individuals & Employees

• Remind your clients that purchasing private health insurance will help them avoid the 1% Medicare levy surcharge in 2013/14. This applies to individuals whose taxable income is > $84,000 or families with a combined taxable income > $168,000.
• Revisit your client’s investments and debt facilities. Are they in the correct name? Could they be structured differently to produce better tax outcomes? High quality financial planners will regularly review investment and debt structure, but there’s no harm in a second look, a fresh pair of eyes or another professional opinion.
• If your client has high assessable income and otherwise minimal deductions, the possibility of investing in negatively geared assets may be an attractive option. This is an excellent way to reduce taxable income, allowing your clients to claim back some of that Pay As You Go Withholding Tax. The key is to pick the right underlying asset, one whose return on investment and capital growth exceeds the cost of the tax-deductible debt, thereby enhancing your client’s overall wealth.
• If your client owns a rental property, encourage him or her to invest in a professional depreciation report. The report costs around $700 and is fully tax deductible. It almost always pays for itself in the first year with the deductions it generates and will be a source of added value year after year.

Checklist for Your Client’s Super

There are a wide range of tax incentives when it comes to contributing to superannuation. So, if your client can spare the cash in the short term, or he/she is at or approaching retirement, the following options may provide some benefit:

• Discuss the possibility of making a personal superannuation contribution if your client is a high-earning, primarily self-employed individual. As long as 90% or more of his or her income is from self-employment, your client will be able to deduct personal super contributions against other assessable income. The contribution they make will be taxed in the superfund at 15%. Note: This strategy will only be successful if your client’s marginal tax rate is greater than the superannuation tax rate on concessional contributions, currently a flat 15%.
• If your client is an employee in a high tax bracket, salary sacrificing into super is another attractive tax strategy. As with the previous point, this is one way to reduce your client’s effective tax rate while increasing his/her retirement savings. To avoid being hit with excess concessional contributions tax, remind your client to ensure their Superannuation Guarantee (SG) payments do not exceed the $25,000 cap. And keep an eye out – at the last federal budget, this threshold was lifted to $35,000 for people over 60, to be confirmed once the election is held in September.
• If your client is 55-60 years old and still working, he or she may consider setting up a Transition to Retirement Income Stream (TRIS) pension. This will reduce the proportion of earnings in your client’s superfund that are subject to tax, and, depending on their pension composition, they may be able to withdraw some tax free amounts from superannuation to supplement their pre-retirement lifestyle.

Articulating the Value of High Quality Advice

In addition to helping clients identify the options that are best suited to their unique needs, a skilled accountant will also stay abreast of legislative changes, be on the lookout for new ways to improve a client’s overarching financial situation and can provide access to an extended network of likeminded professionals. We always recommend speaking with your clients about the value of advice and the importance of working with a trusted financial adviser.

By Amina Ali, Kearney Group Financial Services

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