Pat Garrett

Online investment management service Six Park has lowered its minimum investment to $2,000 to help even more Australians access affordable professional investment.

This follows a previous lowering of the minimum investment amount from $10,000 to $5,000 in March 2020.

The move comes at a critical time in the world of investing: the appetite for investing is at an all-time high and so is the need for accessible and affordable investment guidance, says Six Park co-CEO Pat Garrett.

“This is also clear to our growing number of partners, who come from a diverse range of backgrounds, including financial advisers, accountants, and wealth coaches. All of these partners recognise the importance – and indeed the responsibility – of providing people with an alternative to DIY investing, which can be stressful, expensive and incredibly difficult,” Mr Garrett says.

“We expect to see the enthusiasm Australians have for investing to continue – especially with low interest rates and an increasingly inaccessible property market – and as an industry, it’s important we respond to that and recognise that people need affordable help and effective ways to invest their money and navigate the risks involved, no matter how much they have to invest.”

Smaller investors face a range of challenges that robo-advice is well-placed to address, Mr Garrett says.

“Setting up and managing a diversified portfolio – and doing it well – is a lot harder and more expensive than many people realise. It can also be hard to diversify with smaller amounts, and many DIY platforms aren’t easy to use.

“Australians want support to invest, and we’re proud to be providing our partners with affordable solutions for their clients that solve some of the most common problems they’re likely to face.

“Most advisers have highlighted the opportunity of using Six Park’s services for these investors over the unspoken reality of turning low-balance investors away or sending them off with some ad hoc advice on exchange-traded funds without the investor receiving ongoing professional oversight and rebalancing in line with their risk profile.”

A Vanguard report on Australian attitudes and approaches to investing released earlier this year showed that 35% of Australians believed they needed more than $10,000 to start investing.

“This is a concerning misconception because it means many Australians are missing out on the opportunity to make their money work for them.

“By broadening access to our portfolios we’re also maximising opportunities for our partners to engage with more clients and connect with them earlier in the financial journey. With advisers, we’ve seen this play out when considering how to best help the children and grandchildren of clients who want to start their investing journey.”

The lower entry level is also expected to attract younger investors, who currently make up about 1 in 5 of Six Park’s investors according to a recent client survey.

“There’s a clear appetite from young investors to not just start investing, but to invest with professional support,” Mr Garrett says.

“By offering a diversified, affordable option at a lower investment point, we’re already seeing younger investors who are excited about getting started sooner or including professional management as part of their overall investment mix.”

Clients investing between $2000 – $5000 will be invested into four exchange-traded funds (ETFs) – a carefully chosen subset of the globally diversified ETFs used in Six Park’s standard portfolios, designed to optimise diversification and returns while minimising fees at that investment level.

Once clients reach $5,000 the funds are traded into a full portfolio across eight ETFs. Clients with account balances under $5,000 will pay $6.25 in fees per month.

Six Park is also offering three months without management fees to all new clients, including clients of partners, until October 31.

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Pat Garrett

A new white paper (Is it red tape or is it me? Deniers, devotees, and the digital advice revolution) commissioned by online investment manager Six Park has revealed that COVID-19 has increased the pressing need for affordable and accessible financial advice in Australia, but the need can’t be effectively met until perceived red tape is cast aside.

The increasing and changing demand for advice is driven by a range of factors including the royal commission, the diminishing number of financial advisers, changing client demographics and, most recently, the impacts of COVID-19.

The pandemic, subsequent economic downturn and looming opportunities during the recovery phase mean that more Australians need advice than ever before, says Six Park co-CEO Pat Garrett.

“The white paper reinforces that there simply aren’t enough advisers in Australia to meet the current and future anticipated demand for advice,” said Garrett.

“Meanwhile, the pandemic has triggered an increased interest in investing amongst Australians and the lockdown has made digital interaction and service provision the new norm. All of these elements are combining to provide the final push for the industry to transform in a way that meets today’s client needs.”

Who the client is and what sort of advice they need was also a topic explored in the white paper by contributors including Investment Trends Research Director Recep III Peker, Netwealth CEO Matt Heine and FPA Head of Policy, Strategy and Innovation Ben Marshan, with agreement that the definition is changing – and fast.

“The increase in the number of Australians needing financial guidance, the rise in millennial and female investors and the immense generational wealth transfer we’re about to see means the nature and needs of the broad consumer market are becoming much more diverse. This is the opportunity for those advisers ready for this transformation,” said Garrett.

“Many of these Australians don’t have huge budgets for advice, they have no desire for full-scale service, and they don’t want to engage with advisers in the same way their parents did – so ‘best fit’ advice is not what it used to be.

“Anything that allows advisers to better engage with these Australians today is a very attractive proposition and that’s where digital solutions come in. Today’s digital advice client could be tomorrow’s wholesale investor.”

The white paper explores a number of myths and perceived ‘red tape’ that is hindering some in the industry when it comes to embracing digital, scaled advice. These includes the misguided belief that this type of advice is not compliant with best interest duties, that ASIC doesn’t approve and that digital solutions like robo advice are competing with traditional financial advisers.

“There is no competition there – in fact, when a human element is added to a service like robo- or digital- advice, the conversion rate of customers who actually implement the advice drastically increases – and the paper provides insights from Australian financial planners who are already in the process of successfully transforming their offering and broadening their appeal with digital solution partners.

“It’s both an exciting and challenging time for the industry. There is a lot for advisers to work through – there is no denying that – but there is certainly no red tape that’s blocking their way and some aspects of going digital could actually be much easier than first perceived.

“We all need to work together to create the vibrant, successful and sustainable wealth management industry – to benefit clients and advisers alike, now and into the future.  That’s the driver behind this paper – to generate discussion, collaboration and contribute to the knowledge bank around the digital transformation of wealth management in Australia.”

Commenting on the Financial Services Council’s Future of Advice Report, released earlier this week, Mr Garrett said the report provided some interesting proposals, specifically around recognising more explicitly that consumers’ needs vary in scope and complexity.

“While there is still room for policy improvement in Australia’s financial advice landscape, regulators have already recognised that there are differences in consumers’ advice needs. Their response has been to reiterate that scaled and digital advice should play a prominent role in providing services for the simpler needs of the mass market. Scaled advice services already have regulatory guidelines supported by ASIC and the federal government, and the good news is that scaled advice is working right now. There is no need for advisers to wait for the kinds of changes the FSC is advocating to take a step towards the future of advice.”

Download the whitepaper.

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Pat Garrett

Leading Australian online investment provider, Six Park, says ASIC’s latest report (Financial Advice: What Consumers Really Think) confirms the need for industry change and showcases the great opportunities that lay ahead.

Six Park co-CEO Pat Garrett said the research supported what was already anecdotally known throughout the industry – high fees and low trust are major issues for advisers to combat, and technology can help when it comes to designing a new model for the future.

“It’s clear that many consumers want financial advice, particularly about investment in shares and managed funds, but the cost of this advice and finding an adviser they trust is a huge barrier,” said Mr Garrett.

“This is what we’ve been hearing from clients for some time and why alternative services like robo-advice are experiencing significant growth, especially after the Banking Royal Commission brought all of these issues to the surface.

“When looking at barriers to advice, we can also see that many Australians either think that their financial circumstances are too small to warrant financial advice or like to manage their finances themselves, suggesting there is definitely a middle ground of advice that’s not being catered for effectively in this country.

“If someone with $10,000 or $20,000 to invest is only given two options – a personalised investment strategy costing around $3,000 for a statement of advice or the other extreme of having to make all the investment choices for themselves – then it’s not surprising that so few people are seeking the advice they want and need.

“What’s positive is that technology is helping bridge that gap. The wealth management industry is poised for huge changes in the next few years, and we see this as an exciting and transformative opportunity.”

Mr Garrett said the report also reinforced the need for more financial education for consumers and the necessary move towards simpler solutions.

“The report shows that one of the huge roadblocks for some Australians when it comes to their finances is ‘getting around to it’ – reflecting both our busy lifestyles but also our mind’s tendency to delay these sorts of decisions.

“Lack of interest, feeling that it’s too hard, perceived risk, perceived lack of relevance and not wanting to change lifestyle are all reasons Australians are giving for not seeking financial advice – so as an industry, it’s up to us to make solutions that are simple, relevant, tiered to different consumers, easy to implement and transparent.”

Mr Garrett also noted it was promising that Australians were open to digital advice – of participants who had recently thought about getting financial advice but had not gone ahead, 37% were open to using digital advice.

“It takes time for an industry to change but it’s promising that a high number of Aussies are open-minded regarding the ways financial advice can be delivered.

“In the US, we’re already seeing online investment providers and financial advisers working side by side very effectively. This new direction was very much driven by consumer demand in the wake of the GFC.

“Robo-advice can stand independently for consumers with straightforward investment needs; equally, it can be very complementary to face-to-face human advice when that is needed. What we need to focus on, as an industry, is creating service models for the future that meet clients’ needs at every stage of their lives.”

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Danielle is a former CEO of Equipsuper, former CEO of Myer Family Company (MFCo) and also spent 17 years at UBS Global Asset Management, including as managing director.

Six Park CEO, Patrick Garrett, said the team was thrilled to welcome Danielle as the first female board member.

“Danielle brings a wealth of asset management experience and judgment to Six Park’s digital investment service,” said Mr Garrett.

“Danielle has a very nuanced understanding of how robo-advice complements the wealth management landscape in Australia, and her expertise brings even greater depth to our board of directors.

“Six Park’s board and Investment Advisory Committee offer unique oversight to our highly automated investment service. The combination of human expertise with our algorithms and technology mean we offer a smart way to invest at low cost.”

Danielle said she was excited about joining Six Park and sees huge potential in robo-advice as part of Australia’s wealth management landscape, particularly in the climate created by the Banking Royal Commission.

“Robo-advice removes the conflict that exists in many forms of financial advice,” she said.

“Six Park is leading the way in giving Australian investors a trustworthy, professional alternative to that conflicted model, which is coming under increasing pressure.”

As the CEO of MFCo, one of the country’s largest multi-family offices, Danielle led the company’s development across its five business lines: trustee services; tax and accounting; investment management and governance; philanthropy; and family succession.

Prior to joining MFCo, Danielle was the CEO of Equipsuper, a mid-sized profit-for-member superannuation fund. Part of the services delivered to members of Equip was a full service financial planning business offering advice across super, non-super and aged care.

Before joining Equipsuper, Danielle was Managing Director and Deputy Head of the Australia for UBS Global Asset Management. Over her 17 years at UBS, Danielle spent time in Australia, Singapore and Chicago and has had experience in money management, client management, product development, risk and strategic planning.

Danielle is currently a member of the Investment Committee for Deakin University and FARE and also works with her own charity, Loki’s Lodge, a not-for-profit organisation dedicated to the prevention of animal cruelty and re-homing of unwanted farm animals.

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Pat Garrett

A customer insights study by automated investment service Six Park has found that more than half its clients are using the robo-investment service to grow wealth outside of super (36.5%) and for retirement savings (28.6%). These long-term goals ranked higher than the desire to save for property or saving for short-term goals such as holidays and weddings.

The study results were released as Six Park celebrates its second birthday.

The highest percentage of customers using their Six Park investment as a way to generate wealth outside super came from age groups under the age of 45, suggesting that long-term investing is increasingly a focus for younger generations.

“It’s very encouraging to see younger people be more engaged with their long-term savings activities, especially in the 18-24 age bracket,” noted Six Park CEO Pat Garrett.

“It’s no surprise that the younger demographic is embracing technology in financial services, and these results demonstrate that these clients understand that investing is not about getting rich quick or timing the market – it’s about creating wealth over time through intelligent investment diversification and keeping fees low, the main value propositions of Six Park”, he said.

There were several interesting differences between the company’s female and male clients.

Female clients’ top concern about the current investment landscape was not being able to invest in property near-term (25% of respondents) compared with just 10% of men. Half of Six Park’s female clients check their investment portfolios an average of once a month, while more than half of the company’s male clients check their portfolios weekly or even daily.

This is consistent with evidenced that female investors tend to be patient investors who focus on long-term goals.

“An analysis of more than 8 million clients by Fidelity in 2017 suggested that women outperform men when it comes to generating a return on their investment, so this client feedback is not surprising.  We’re very pleased to see more women using robo-advice as a smart way to build their savings,” Mr Garrett said.

Across all respondents, the major concerns about the general investment landscape were, in order: prospective returns (23.3%), market volatility (16.7%), trust/transparency (13.3%) and not being able to invest in property (13.3%).

For those aged over 45, the biggest concerns were the cost of financial advice and not retiring with enough savings.

The survey was conducted before the Royal Commission’s recent findings of problems in the investment management industry in Australia.

“I would expect that client concerns about fees, transparency and long-term returns would be even more heightened given the abuses uncovered in the market,” Mr Garrett noted.

Not surprisingly, the top two reasons for choosing robo-investment were lower fees (18.3%) and investment diversification (16.7%).

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Meg Heffron

Automated investment provider Six Park has announced it has partnered with leading independent self-managed super fund (SMSF) administration provider Heffron to offer a transparent, low-cost, digitally driven, end-to-end SMSF service.

The partnership allows SMSF trustees to establish an SMSF and take advantage of robo-advice for their fund, with Heffron managing the compliance and Six Park managing the investments.

Six Park CEO, Patrick Garrett, said that while there will always be a place for traditional advice, the solution offers a unique value-for-money proposition for trustees and a lower prospective entry point to set up an SMSF.

“Digital technology and automation are disrupting the wealth industry not because they’re new but because they meet a need for investors, reduce barriers to investment and reduce costs,” said Mr Garrett.

The solution also provides a significant level of transparency for investors at a time when this is more important than ever before, said Mr Garrett.

“Both companies are unaligned with any financial institutions and have shared values of trust and transparency. Six Park chooses investments based on what we believe is best for our clients, not any other incentive or commission.  Heffron’s fees are fixed, independent of the size of the portfolio and do not include any commissions.

“We believe we’ll see more and more investors turning to fintech solutions that can provide the level of accessible, transparent and trustworthy asset management that should be standard in this industry.

“We’re very excited to be working with Heffron – their team of experts leads the industry, having won awards for SMSF administration, education, documents, actuarial certificates and more. With them, we can offer the best of innovative technology, automation and human expertise across professional investment management, SMSF set-up and ongoing administration.”

Heffron co-founder and Head of Product, Meg Heffron, said of the partnership: “Both Six Park and Heffron have a vision of bringing expertise normally only available at the big end of town to everyone.”

Both firms are also passionate about ‘simplicity on the far side of complexity’.

“By that, we mean taking something that can be complex and making it accessible and simple without dumbing it down – breaking through the complexity to achieve simplicity rather than achieving simplicity by pretending the complexity never existed in the first place. Six Park does this by taking an enormous amount of experience, expertise and skill in investment markets and wrapping it up in a service that appears very simple to its clients. Heffron does the same thing with SMSFs – sure, they can feel complex if you don’t know anything about them but with the right partner it’s surprising how simple they can be.

“If you’ve decided to manage your own superannuation, the Six Park and Heffron partnership provides a great entry point to having your own fund. Over time, it’s inevitable that a client’s needs will change. Some will want to branch out beyond Six Park investments, others might want to take advantage of some of the strategic opportunities available in SMSFs and will need different technical support. Six Park and Heffron can work with people throughout their superannuation life.”

The new offering will be available from this weekend, when it will officially launch registrations of interest at the Self Managed Super Fund Expo being held at the Melbourne Convention & Exhibition Centre, April 27-29.

Prospective trustees should consider whether an SMSF is right for their personal situation and whether an individual or corporate SMSF structure is appropriate. Six Park is not licensed to advise on the suitability of an SMSF for prospective trustees.

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Corporate earnings growth in developed and emerging markets has been strong (above 10%) and continues to strengthen (see Chart 1 below).

We believe that global markets are fairly to generously valued, but the continuation of earnings growth would be sufficient to make the case that markets are not overvalued for the near-term, given the breadth of positive news and ongoing low inflation, particularly in the US.

Capital is also flowing into emerging markets on the heels of improving global conditions and a belief that global interest rate rises will be gradual.

What has been lost in much of the market commentary is the positive and transformative impact of renewable energy in creating jobs and lowering energy bills, and how advances in technology and automation will be drivers of economic growth.

China and the EU

Despite slowing growth in China, President Xi Jinping appears intent to do what it takes to keep the economy and banking sector stable. In the European Union, French President Macron’s intention to implement structural reform and unite the region, gives hope that the EU might navigate its way through the post-Brexit era without significant disruption.

There are no major political elections this coming year, which is in stark contrast to numerous elections over the past year, which brought an element of uncertainty and fear to global markets.

Local growth

A strong June quarter GDP growth suggests that last year’s Q3 (Jan – Mar 2017) weakness was temporary. Our economic outlook remains positive with growth in business investment in non-resource sectors and infrastructure spending. Job growth has been strong, even if wage growth is modest, and interest rates are expected to remain flat, or increase slightly over the next year.

Somewhat unheralded, immigration remains the oil that keeps Australia’s economic engine running. Population growth of 1.6% (in the 12 months to March 2017) is almost twice that of the US.  Much of this growth (0.96%) came from Net Overseas Migration (NOM), much of it skilled labour which helps drive consumer demand that underpins labour markets (source: Australian Bureau of Statistics).

The domestic property market will likely cool off, but is not an imminent valuation bubble about to burst.  This will be a change from previous years, which saw exponential growth. It may also provide some respite for potential buyers.

We will also see domestic political activities mimic the US to some extent; turbulent and possible changes, but nothing that is likely to seriously impact market our economic conditions.

Prospect of a market correction

Central banks have either started, or have announced intentions to raise interest rates.  We expect the unwinding of fiscal stimulus to be gradual; markets seem to have priced the expected increase in rates into asset valuations.

However, with global share markets recently reaching record highs, pessimists have been more boisterous about an imminent share market crash.  Markets will almost certainly move off recent highs, though the timing, catalyst, and magnitude is unknown.

If a pullback occurs, then fear and emotion will come into play, and a very important question arises for investors: is a pullback a healthy correction or a more significant reversal of market trends into bear market territory?  We will make that assessment at the time and review our investment strategy accordingly. The recent run up in markets has been more of a “creep” versus “soar”, and based more on fundamentals versus speculation, so we are hopeful that any near-term correction will be of the “normal market cycle” variety.

Globally, there is a risk that central banks raise rates too quickly, which could prematurely slow down global growth.  Despite the potential passage of a tax reform bill (pro-business) in the U.S., the specter of the Russian inquiry creates a measure of uncertainty for US political stability.  Generally, markets do not like uncertainty, which can be a catalyst for sell-downs.

By Patrick Garrett, CEO

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