Wayne Wilson

With an increasing demand for aged care advice solutions, Louise Biti and Assyat David are pleased to announce the sale of Strategy Steps to knowIT group owned by Wayne Wilson, Wendy Tyberek and Andrew Roberts.

This strategic sale allows Louise and Assyat to fully focus on expanding their Aged Care Steps business and will allow a new direction to be taken with Strategy Steps to support its deeper integration into financial planning processes.

knowIT Group is a software product and services company that specialises in online tools and learning for the financial services industry. The Strategy Steps’ online tool Desk Caddie® will form a central component of this business.

Desk Caddie provides practical support in simple English to help develop financial planning strategies for clients. It is accessed by around 4,000 financial advisers, keeping them up-to-date with the latest legislation and news as well as tips to maximise business opportunities in client reviews.

The sale is effective from 1 October 2016 and the existing Strategy Steps team will maintain the content of Desk Caddie for six months to ensure an easy transition and no disruption to the service.

Ms David said they have developed Strategy Steps to a level of maturity and is excited by the future possibilities for the continued development that can be achieved by knowIT.

“If we are to take Aged Care Steps to a position where it can meet its ever growing potential in supporting aged care advice, it needs our full time attention.

“In selling Strategy Steps to knowIT, we are confident it is in the care of a group that has the experience, knowledge and ability to maintain the high levels of strategic analysis that our clients have come to expect as well as further improve and expand the range of services,” Ms David said.

Wayne Wilson, CEO of knowIT Group, said it had looked at a number of elearning and online management systems for financial planners before deciding on the acquisition of Strategy Steps.

“There is no other product like Desk Caddie in the market, and it has no direct competition. It is used by major financial institutions, with 73 corporate clients. It is already used by 4000 planners in Australia, but there is still opportunity to embed Strategy Steps more deeply into the wealth advice market.”

“knowIT intends to redevelop the technology and reach of Strategy Steps to build deeper penetration into the wealth sector as well as to lead the company into new industry segments,” Mr Wilson said.

knowIT Group is a software product and services company that specializes in online tools and learning in the financial services industry.

Strategy Steps is a financial planning support business. Its Desk Caddie® is an online service for advisers that provides practical support to help develop financial planning strategies for clients, provides up to date news, as well as tips for client reviews.

Aged Care Steps focuses on supporting the financial services and aged care communities in relation to advice to older Australians and their families on options for accessing and funding for aged care, both in the home and in residential services.

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Assyat David

How does an adviser determine the right advice to give the average Australian? And what are the appropriate advice questions and the strategy considerations?

According to the Australian Bureau of Statistics, the average Australian is a 37 year old woman, born in Australia and with both of her parents also born in Australia. She is married, and lives with her husband and two children (a boy and a girl aged nine and six) in a separate house with three bedrooms and two cars in a suburb of one of Australia’s capital cities. They have lived in that house for at least five years, and have a mortgage.

But in reality, very few clients if any will fit into this profile. Each client has a unique set of circumstances so determining the right advice options can be a difficult task.

Strategy Steps has boosted its Desk Caddie® advice tool with the launch of the ‘strategy matrix’ to provide advisers with the steps to identify strategies and advice issues appropriate to a client’s age profile or life event. This helps advisers to develop strategic advice for clients based on their own specific situation including the situation of the average Australian.

Assyat David, Director at Strategy Steps said “The new strategy matrix is a unique advice tool that helps advisers to develop quality strategic advice for clients which is appropriate to their specific situation, adding value to the relationship and demonstrating that they are acting in the client’s best interest”.

She said “The strategy matrix can be used with existing clients at portfolio reviews to ensure key advice issues are addressed and to address client changes. It can also be used with new clients as an advice guide to capture the key advice issues to be addressed.”

The strategy matrix includes references to StepListsTM, client marketing articles and tips relevant for each advice step.

David added “The StepListsTM provide a guide to develop and implement specific strategies and the client marketing articles help advisers communicate opportunities to clients.”

Other benefits of the strategy matrix include:

• Visual guide: assists clients with understanding the advice process and how their goals and objectives may be achieved
• Refresher for advisers: helps new and existing advisers be aware of the advice steps relevant to a client’s age and/or life event
• Compliance record: provides a record of the advice process undertaken with the client
• Additional source of guidance: complements other tools that advisers may use with clients – e.g. fact find, risk profile and budget planning tool

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Ms. Panagis takes up the position of Technical Specialist and adds further strength to the Strategy Steps specialist technical and investment team.

Assyat David, Director Strategy Steps said “Natasha has been instrumental in developing the new advice tool in Desk Caddie called the “strategy matrix” which is an easy-to-use tool to help advisers develop tailored strategies for clients based on their age profile and/or life event”.

Ms David added “Each matrix will step out an advice process to guide advisers in developing tailored strategies for clients based on a sequence of questions. A customised PDF is generated for each client.”

“Natasha’s appointment would put the group into an even stronger position to cater to the growing needs of its client base, which included small and large dealer groups as well as fund managers. She brings a great depth of skill, knowledge and industry experience to the mix“ said Ms David.

“Strategy Steps is well positioned to provide client and revenue opportunities to financial service businesses which is timely given the changing face of financial planning, lack of in-house expertise within many financial planning groups and the importance now more than ever before of the need for quality advice tools to help advisers meet the challenges of efficiently delivering ‘quality’ advice that satisfies the ‘best interest’ rules” according to David.

Ms Panagis brings more than 11 years’ experience of providing technical and strategy support to financial advisers. During this time, Natasha has trained financial advisers on a broad range of wealth management areas with a focus on the practical implications for their clients. This experience allows advisers to create business opportunities and utilise strategies to enhance their client’s financial wellbeing.

Her most recent role prior to joining the group was as Technical Services Manager at Centric Wealth. Natasha is well qualified with academic qualifications including a Bachelor of Business (Management), a Bachelor of Business (Applied Finance), an Advanced Diploma of Financial Services (Financial Planning). She is also a Certified Financial Planner (CFP) and a SMSF Specialist Advisor (SSA).

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Clients are increasingly adopting a ‘Do-it-with-me’ rather than a ‘Do-it-for-me’ approach and want greater involvement and control of their finances and portfolio. This is best illustrated by the increasing dominance of the SMSF market.

Advisers are missing out on capturing these clients because the focus (perceived or real) on products rather than strategy has meant advisers have largely failed to satisfy the preferences and needs of SMSF clients. Clients have a shifting preference for direct and low cost assets that are transparent and accessible by the retail investor.

Managed funds may be considered expensive and in recent times, their average performance (relative to a benchmark) have not been sufficiently stellar to attract investors attention. Clients’ demand and appetite for advice is firmly grounded in strategic and tailored advice. The selection of product or platform is now three or four rungs down the ladder.

Clients at all levels along the wealth scale are increasingly looking for advice that deals with single issues that are currently at hand rather than holistic advice. Dealer groups that predominantly offer holistic advice risk bucking this trend and marginalising their business and client base.

Industry reforms
The Future of Financial Advice (FoFA) reforms are built on developing a greater level of professionalism and transparency in the advice provided. Advisers will have an obligation to provide appropriate advice and prioritise the interests of the client where there is a conflict with their own interests.

The regulators are stipulating very specifically what they expect from personal advice. ‘Quality advice’ is the new catch phrase and its components are clearly defined by the regulators.

The regulator’s view on what constitutes quality advice is summarised in the diagram below:

The ‘best interest ‘ guidelines place greater accountability on the individual adviser to ensure that the advice provided is tailored to the client’s specific circumstances and needs. This extends to requiring that the adviser research external suppliers like research houses for potential conflicts of interest and benchmark products considered for the client.

Dealer groups have a reduced ability to ‘centralise’ and control key compliance functions relating to recommendations made by their advisers, which can put their AFS License at greater risk. Furthermore, the legislation places greater onus on the dealer group and adviser to understand the limitations of the Approved Product List (APL) and the need to look at products that sit outside the APL to allow advisers to meet the best interests of the client.

Dealer groups need to equip their advisers with tools and processes to enable them to tailor strategy and product recommendations for clients as a means of protecting the dealer group’s license.

For the information pack, click here.

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To achieve economies of scale dealer groups are rapidly expanding via acquisition

ASIC is targeting aggregator licensees to ensure they maintain advice quality

Strategy Steps is meeting growing demand for scalable solutions such as outsourcing

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A regulator focus on rapidly growing financial planning aggregators and on new training and assessment standards for financial advisers has led to a call for financial planning groups to consider quality outsourced technical and financial planning strategy solutions.
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Assyat David, Director of Strategy Steps, said that financial planning aggregators are looking to grow via rapid acquisition of advisory businesses, a trend that has attracted the attention of regulator, the Australian Securities and Investments Commission (ASIC), which has said it will target these groups to ensure advice quality is maintained.
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“There’s a justifiable fear that rapid acquisition activity may distract financial planning groups from their core business of servicing clients due to the difficulties of ensuring that support services keep up with the size of the group and in turn compliance obligations may be breached, putting licence conditions at risk,” Ms David said.
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“The increasing compliance burden is a challenge for advisory groups but also means individual advisers may need assistance to offer clients the most up-to-date information on legislative changes and relevant financial planning and technical strategies,” she said.
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The regulator has also announced proposals for a new training and assessment framework for financial advisers which, if implemented, would mean all advisers may have to pass a financial services competency certification exam and undertake a Knowledge Update Review every three years on changes to laws, market issues, new products and professional development requirements.
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“New training and assessment standards will raise the bar for financial advice, but will also place added pressure on advisory groups,” Ms David said.
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Ms David says regulatory and compliance pressures and a move to fee for service are prompting advisory groups to consider an external outsourcing solution to ensure support services keep up with the needs of the group and to offer timely, client-focused financial planning strategies.
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Strategy Steps’ own Desk Caddie package offers timely legislative and technical updates; as well as practical step-by-step financial planning strategies. Importantly, the package also contains ideas on how financial planners can use current strategies to generate new business and marketing opportunities.
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“Top quality outsourcing solutions empower financial planning groups to grow, while assisting advisers to remain productive and client focused in the face of constant market and legislative changes,” Ms David said.

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Leading technical strategist Strategy Steps is urging financial planners to help clients avoid breaching superannuation contribution caps but still save for their retirement. Self Managed Super Fund (SMSF) clients at risk of breaching the caps could get extra money into super using a new borrowing strategy called ‘member as lender’ which, if set up properly, does not risk cap breaches or the resultant ATO penalties.

“A ‘member as lender’ strategy allows SMSF investors to lend personal (non-superannuation) money to their SMSF which can be invested in assets where investment earnings are taxed at the 15% superannuation investment earnings rate, not the member’s own marginal tax rate,” said Louise Biti, Director of Strategy Steps.

“The strategy will work best for SMSF investors who are already contributing up to the level of the superannuation caps but who have other money that they would like invested in the superannuation environment or who want the flexibility to take their money back out of super should their circumstances change,” she said.

Ms Biti said the 50% cuts to concessional super caps in the 2009 Federal Budget had made it more difficult for people in the over 50 age group to make meaningful contributions at a time when many have the desire and means to do so. “Means testing is proposed to be imposed on the over 50s cap from July 2012 which will make it even more difficult to save tax effectively for a comfortable retirement,” Ms Biti said.

The concessional caps are $25,000 a year for those aged under 50 and $50,000 a year for those over 50. The $50,000 cap is set to drop to $25,000 on 1 July 2012, except for those with less than $500,000 in super. The non-concessional cap allows a further $150,000 per year in after-tax contributions.

In using the member as lender strategy, the SMSF will have to pay a market interest rate on the loan being advanced to it by the SMSF investor.  This means some investor earnings will still be derived outside super and taxed at marginal tax rates, but the difference between the net investment earnings in the SMSF and the loan interest rate can be significant when market returns are positive and will compound due to the tax effective environment of super.

Consider the simplified example of Rex who invests $100,000 outside super. If this money earns a 15% per annum return, it is taxed at marginal rates. Alternatively, Rex lends $100,000 to his SMSF, his fund invests it and earns the same 15% per annum. The SMSF pays 8% per annum interest (market rates) on the loan to Rex who pays tax at marginal rates of up to 46.5%, but the remaining 7% earnings is taxable income in the SMSF at a maximum tax rate of 15%. Over a 10-year period this could amount to an additional $13,000 net earnings, and even more depending on how capital gains tax is managed.

“A member as lender strategy is also useful for SMSF investors who want the option of retrieving their money from their SMSF if their circumstances change without having to wait for a condition of release (like retirement). In that instance, the loan can be repaid and the money returned to the member,” said Ms Biti. Only accumulated earnings would remain in the SMSF.

Ms Biti said savvy financial planners should note that this strategy will become even more attractive as they prepare their clients for a post 1 July 2012 world when the super caps drop to $25,000 for the over 50s who don’t meet the means test, and, as the understanding of the rules for borrowing in SMSFs become better understood.

However, she cautioned that financial planners should compare the benefits to individual SMSF investors of the strategy against the cost of the loan arrangement. Careful documentation is also essential to ensure all relevant rules for limited recourse loans are met.

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