Paul Resnik

Australians are downloading more data on their mobile phones and are accessing the internet at faster speeds, which will benefit all businesses using the internet, according to FinaMetrica, an Australian business selling its online risk-profiling solution globally.

Data released today from the Australian Bureau of Statistics (ABS) reveal mobile wireless is now the most prevalent internet technology in Australia, accounting for half of all internet connections.

Australia’s 20.6 million mobile handset subscribers downloaded 38,734 Terabytes for the three months ended 30 June 2014, a 40% increase from the three months ended 31 December 2013. This equates to 0.6 GB of data downloaded per mobile subscriber per month, the ABS data shows.

The advertised download speed range that recorded the highest number of subscribers at 30 June 2014 was the 8Mbps to less than 24Mbps range, with 6.3 million subscribers, a 26% increase from the end of June 2013, while 2.03 million subscribers accessed the internet at an advertised internet access speed of 24Mbps or greater, the ABS data reveals. The number of subscribers that accessed the internet at an advertised download speed of 1.5Mbps to less than 8Mbps fell 24% to 3.8 million subscribers.

“The improvements we are seeing in both internet speeds and the broader usage of the internet on mobile devices will demand innovation from businesses that must adapt to changing consumer patterns. It is up to businesses to cater to these changing internet usage trends,” said FinaMetrica co-founder Paul Resnik.

“FinaMetrica, for example, provides an online test which enables financial advisors to measure the financial risk tolerance of their clients. Improving internet speeds means our solution can work more quickly and efficiently as browsing, downloading, uploading and other functions become quicker,” Mr Resnik said.

“Our website is mobile device friendly. Users of iPads or Windows tablets can go through the entire process of registering a client on the FinaMetrica website, completing a risk tolerance questionnaire, viewing reports and performing all other functions that they could do on a desktop computer,” he said.

“Moreover, we use the internet and networking websites to build our brand, sell our product and get our messages out there to clients and the financial services community globally about the importance of assessing risk tolerance in giving suitable financial advice.”

Mr Resnik said small businesses in particular needed to boost their internet presence and their use of social media to build their brands.

“Now that social media is so prominent, businesses needed to use websites such as LinkedIn and Twitter and other relevant sites to expand their presence in the marketplace. This is a way of using the internet to level the playing field with bigger companies, using innovations in online communications to spread the word about a company’s products and services.

“This can give small businesses a big competitive advantage over larger businesses because they can respond both more immediately online and through a personal face,” said Mr Resnik.

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Professor Deborah Ralston

The pre-eminent retirement incomes research organisation, the CSIRO-Monash University Superannuation Cluster, has secured another significant private sector backer with the decision by ANZ Wealth to join its ranks.

ANZ Wealth will join five other organisations as the key supporters of the $9 million research project that brings together academics from four universities, Monash, Warwick, Griffith and Western Australia, as well as the CSIRO, to examine the challenges facing the Australia’s retirement system.

The other five organisations are BT, Cbus, Mercer, Vanguard and Challenger, which, together Treasury, the ATO, the ABS, ASFA, National Seniors and AIST, form the Cluster’s Steering Committee with eminent researcher, Professor Hazel Bateman from the University of NSW. The Australian Centre for Financial Studies (ACFS), which promotes thought leadership in the financial services sector, leads the project for Monash University.

Patrick Clarke, Head of Direct Super and Investments at ANZ Wealth, said it was a privilege to be involved with the CSIRO-Monash University Superannuation Cluster.

“Over the past 18 months the work done by CSIRO and Monash in examining the dynamics and inter-relationships between superannuation and the wider economy, as well as the transition and retirement phase of Australians over 60, has been first class.

“We believe it’s critical that this research continues so that both the public and private sectors can base their decision–making on hard data in the vital area of superannuation.”

Dr Sarah Dods, CSIRO’s Research Director, Digital Economy, Digital Productivity and Services Flagship, said it was a tribute to the research done by the Cluster that such a significant player in the wealth management sector had decided to come on-board.

“We believe the research we have been conducting in areas such as ways to improve the participation of older workers is critical if we are to get the superannuation policy settings right, and for an organisation of the reputation of ANZ Wealth to give its support further endorses the value of our work.”

ACFS Executive Director, Professor Deborah Ralston, said the sheer size of the superannuation pool, at $1.8 trillion, posed important policy issues that the Cluster had been addressing.

“In the past, much of the research focus has been on asset allocation and the accumulation phase. But much less focus has been given to the post retirement phase and Australians over 60; a better retirement system is broader than superannuation, including pensions and private savings.

“What is critically needed for better policy and product development in post-retirement is a research evidence base.

“Funding for better health and welfare, accommodation and transport, they all have a bearing on the quality of the life enjoyed by older Australians and are important issues that demand a policy response, so the fact ANZ Wealth is giving its support to the Cluster is testimony we have the right focus and are adding to the pool of knowledge around retirement incomes policy.”

–END–

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Australian Ethical holds positions on 3 recycling companies.

Would you withdraw money from an ATM and then bin it? Have you bought batteries from the shops and then immediately throw them away? As absurd as this sounds, we as a nation do this every day.

According to the Australian Bureau of Statistics, we send 46% or 24.9 million tonnes of waste to landfills every year. When compared to Sweden which only sends 1% of its waste to landfill (and in fact imports garbage as a profitable industry), we are literally burying money every day.

Urban mining is a popular term used to describe the stripping and reusing of valuable metals, mostly from electronic waste. At its core is the basic principle of recycling and acknowledges that it is cheaper and more efficient to re-use materials than to produce them from virgin sources. As the US Environmental Protection Agency (EPA) has calculated, recycling one ton of paper saves 4,100 kilowatt hours of energy which is enough to power the average American home for six months.

When considered in the context of global markets, recycling in all its forms is a responsible and clearly a more sustainable way to invest in commodities. Many recycled metals like aluminum, gold and zinc are chemically indistinguishable from commodities produced from virgin materials and are an important resource for many major industries. For example, approximately 30% of global aluminum production now comes from the recycling of old scrap.

Australian Ethical holds positions in three companies involved in urban mining and commodity recycling at an industrial scale.

1. Horsehead Holdings Corp (market capitalisation US$1 billion)

The current growing global shortage in zinc as a result of mine depletion has been identified as the principle driver behind the 27% rise in the zinc price over the past 12 months.  Horsehead is the world’s largest producer of zinc from recycled sources. The company collects electric arc furnace (EAF) dust which contains zinc. EAF dust is listed as hazardous waste and is generated by North American steel mini-mills. By collecting and processing EAF dust, Horsehead is amongst the world’s lowest cost producers of zinc and has been in the zinc production business since the mid-1800s. It has recently completed the relocation to its new, state-of-the-art facility in North Carolina which will benefit from lower energy usage, higher labour productivity and reduced maintenance costs. Zinc produced by Horsehead is used in the manufacturing of brass and hot dip galvinising, which is the process of adding rust protection to steel.

2. Covanta Holding Corp (market capitalisation US$2.8 billion)

Covanta is one of the world’s largest owners of Energy-from-Waste (EfW) facilities. The company meets solid waste disposal needs by using waste to generate renewable energy. This is the same methodology the Swedes have utilised to reduce landfill waste by 99%. The EPA has estimated that for every tonne of municipal solid waste processed at an EfW facility, the release of approximately one tonne of carbon dioxide equivalent emissions into the atmosphere is prevented due to the avoidance of methane generation at landfills. In total, Covanta’s net greenhouse gas emissions are a negative 20 million tons annually as they actually reduce the amount of emissions that would otherwise have escaped into the atmosphere.

Assuming we used EfW in Australia on our 24.9 million tonnes of landfill waste, we could cut our aggregate emissions by nearly 25 million tonnes or, said differently, reduce our national emissions by 4.6%. Furthermore, since EfW can provide baseload power, if that energy displaced our dirtiest coal-fired generators, we would further reduce our emissions and accelerate our dependence off coal.

Covanta is in a very strong financial position having just raised its quarterly dividend by 39% to provide an annual yield of 4.8%. It also confirmed its 2014 operating profit guidance of between US$470-500 million.

3. Darling Ingredients (market capitalisation US$3.2 billion)

After a series of large acquisitions, Darling has emerged as a world leader in bio-nutrient transformation. Essentially, Darling collects the inedible and waste products from abattoirs, bakeries and restaurants and converts them into food, feed and fuel. One of Darling’s most notable achievements is its Diamond Green Diesel facility that converts animal fats and used cooking oils oil into renewable diesel. The facility can produce 137 million gallons of diesel a year and is profitable without subsidies.  Output from this one facility equates to about 4% of Australia’s total demand for diesel. Darling also operates facilities in the Netherlands that safely disposes of inedible waste products which are converted into enough renewable energy to power 40,000 Dutch households each year. It also operates another facility in the Netherlands that converts animal fat and manure into renewable energy for its own self consumption and feeds power back onto the grid during off-peak hours. Darling has consistently generated robust cash flows giving it a strong financial core.

Urban mining is almost an inexhaustible source of raw materials. It closes the loop in terms of production, consumption and disposal because the end just leads back to the beginning. In a world where natural resource grades are falling and becoming more challenging to extract, it just makes sense to make better use of what we have than to further deplete our limited resources.

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• 

  Employment growth surpassed optimistic expectations.

  Jobs gains: Employment rose by a record high 121,000 in August after falling by a revised 4,100 in July (previously reported as a 300 fall in jobs). Full-time jobs rose by 14,300 in August after rising by 15,400 in July. Part-time jobs rose by 106,700 in August after falling by 4,100 in July.

• A total of 236,500 new jobs have been created in the first eight months of 2014 – the best start to a calendar year since 2005.
• Jobless rate slides: The unemployment rate fell from 6.4 per cent to 6.1 per cent in August. The participation rate rose from 64.9 per cent to 65.2 per cent.
• Hours worked was unchanged in August after falling by 1.0 per cent in July. Hours worked are up 0.6 per cent over the year.
• Tame Chinese inflation: Producer prices fell by 1.2 per cent in the year to August (median forecast was for a 1.1 per cent decline). Consumer prices rose by 2.0 per cent over the year (median forecast 2.2 per cent).
• In August, consumer prices rose by 0.2 per cent. Producer prices fell by 0.2 per cent.

What does it all mean?

• Employment growth surpassed even our rather optimistic expectations. Part time jobs growth of over 106,000 jobs or a record total (part time plus full-time) 121,000 jobs in one month? Well it is hard to take this at face value, and no doubt there is some level of statistical discrepancy. But it does resonate with the lift in the employment landscape conditions over the past year. And more importantly rather than focusing on one month’s data the broader trend shows a similar picture.
• Last year employers were working existing staff longer and there had been a lift in productivity, while it is now clear that employers are adding to the workforce – whether it is part time or full-time roles. In fact jobs growth has been solid with almost 127,000 full-time jobs having been created in the first eight months of 2014 – marking the best start to a calendar year in four years.
• The one key positive out of the super-strong result is that it should ease concerns about the labour market. All the noise about the prior result – 12–year high unemployment rate in July- dampened consumer confidence. However this time round despite the lift in the participation rate – which suggests more people are looking for work – the unemployment rate eased back to 6.1 per cent. The latest result should help to ease some of those concerns. An improvement in confidence would certainly bode well for retail activity and broader economic growth.
• Labour market conditions have certainly improved in recent months. Business conditions are healthy, profitability has improved and more importantly forward order books are starting to fill up. No doubt the business sector is feeling more comfortable hiring as can be seen by the ongoing lift in job advertisements. More people are looking for work and more people are finding work as well – a result that should increase household incomes.
• The Reserve Bank would certainly be feeling a bit more comfortable. It’s all running pretty much to plan. Even the recent US dollar strength has resulted in the Aussie dollar falling to a six-month low. Clearly the Reserve Bank has no need to be moving rates in any direction at present. The earliest timing of the first rate hike is February next year, but it requires a further improvement in activity levels and a stronger lift in employment.
• Chinese inflation remains benign and is certainly no threat to the broader Chinese economy. Consumer inflation is healthy without being excessive and business inflation is still contracting. More importantly the data in recent weeks suggests the Chinese economy has found a solid base and has lifted after a lacklustre start to the year. If growth doesn’t rebound Chinese authorities are certainly well placed to provide further stimulus.Focus will shift to the retail sales, industrial production and fixed asset investment figures due out on Saturday.

What do the figures show?

Labour force:

• Employment rose by a record high 121,000 in August after falling by a revised 4,100 in July (previously reported as a 300 fall in jobs). Full-time jobs rose by 14,300 in August after rising by 15,400 in July. Part-time jobs rose by 106,700 in August after falling by 4,100 in July.
• The unemployment rate fell from 6.4 per cent to 6.1 per cent in August. The participation rate rose from 64.9 per cent to 65.2 per cent.
• The number of hours worked was unchanged in August after falling by 1.0 per cent in July. Hours worked are up 0.6 per cent over the year.
• The annual employment growth rate rose from 0.9 per cent to 2.2 per cent in August. The working age population grew by 26,100 people in August and by 3441,700 over the year or 1.82 per cent.
• Unemployment across states and territories: NSW 5.7 per cent (July 5.9 per cent); Victoria 6.8 per cent (7.0 per cent); Queensland 6.7 per cent (6.8 per cent); South Australia 5.9 per cent (7.2 per cent); Western Australia 5.0 per cent (5.2 per cent); Tasmania 7.1 per cent (7.6 per cent). Trend unemployment Northern Territory 4.8 per cent (4.6 per cent); ACT 4.6 per cent (4.3 per cent).
• Jobs across states and territories: NSW +45,300; Victoria +26,100; Queensland +26,500; South Australia +16,800; Western Australia +9,600; Tasmania +3,800. Trend employment Northern Territory +200; ACT +700.

Chinese inflation data

• The annual rate of consumer price inflation fell from 2.3 per cent in July to 2.0 per cent in August. The result was below forecasts for annual growth of 2.2 per cent. Over the month consumer prices rose by 0.2 per cent, mildly weaker than forecasts.
• Food prices rose by 0.7 per cent in August after falling by 0.1 per cent in July with non-food prices down 0.1 per cent in August. Pork prices lifted by a much more sedate 0.1 per cent in August. Over the year to August, food prices rose by 3 per cent while non-food prices were up by 1.5 per cent.
• Annual price growth: Clothing prices rose by 2.6 per cent in the year to August; tobacco & liquor prices fell 0.6 per cent annually; transport & communications rose 0.2 per cent annually; household equipment & maintenance prices were up 1.1 per cent annually; healthcare & personal products rose by 1.4 per cent annually; entertainment & educational rose 1.9 per cent annually.
• Producer prices (business inflation) fell by 0.2 per cent in August. Producer prices in August were 1.2 per cent lower than a year ago. Economists had tipped a 1.1 per cent annual decline.
• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.
• China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 16th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10^th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.
• In the past, employment data has been volatile around turning points, but clearly the last eight months of jobs growth suggest an improvement in labour market conditions, despite the likely statistical discrepancies job creation. Hopefully the focus in the latest data will centre on the ongoing lift in employment from a broader perspective than just one month’s data.
• RBA business liaisons have commented on the noticeable lift in business hiring intentions and it suggests labour market conditions are heading in the right direction. Employers are working existing staff harder but as profitability improves, management will feel more comfortable increasing head count.
• Clearly the Reserve Bank has no need to be moving rates in any direction at present.

Why is the data important?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.
• China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 16th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10^th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.

What are the implications?

• In the past, employment data has been volatile around turning points, but clearly the last eight months of jobs growth suggest an improvement in labour market conditions, despite the likely statistical discrepancies job creation. Hopefully the focus in the latest data will centre on the ongoing lift in employment from a broader perspective than just one month’s data.
• RBA business liaisons have commented on the noticeable lift in business hiring intentions and it suggests labour market conditions are heading in the right direction. Employers are working existing staff harder but as profitability improves, management will feel more comfortable increasing head count.
• Clearly the Reserve Bank has no need to be moving rates in any direction at present.

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Paul Resnik

Australian businesses invested a record $3.26 billion in software in the second quarter of 2014, reflecting the rising importance of information technology to the economy overall and to the financial services sector in particular, according Paul Resnik, Co-Founder of FinaMetrica, a software provider for the wealth management industry.

Second-quarter Australian National Accounts data from the Australian Bureau of Statistics (ABS) reveal the seasonally adjusted private software spend rose 2.4% to $3.26 billion in the June 2014 quarter, up from $3.18 billion in the March quarter. Spending jumped 8.3% from a year earlier.

The Australian economy grew 0.5% during the June quarter, to be up 3.1% from June 30, 2013. Productivity, as measured by GDP/hour, grew 2.8% from a year earlier and rose 0.9% over the quarter.

FinaMetrica, a leading global provider of web-based risk tolerance assessment tools for the wealth management industry, said greater regulation of financial advisers through Future of Financial Advice (FoFA) reforms has forced advisory businesses to spend money on compliance projects at the expense of investment in new technologies designed to promote business efficiencies.

“Compared to the US and UK, Australian advisers are using less sophisticated technologies and software. FoFA has been the immediate concerns for financial advisers so investment in technology and software to streamline business processes has suffered as a result. Yet it is this investment that can have the greatest impact on a firm’s profitability and its ability to serve its customers efficiently and transparently,” said Mr Resnik.

“Australian advisers, therefore, need to look at cost-saving solutions both for their clients and their businesses. As FoFA becomes less of a pressing concern, we can expect to see more Australian advisers adopt more sophisticated software aimed at achieving greater efficiencies and delivering greater transparency to their clients in the advice process,” Mr Resnik said.

“Our risk profiling system, for example, enables advisers to accurately assess their client’s risk tolerance in as little as 10 minutes. The test, and the automatically generated report, helps advisers better match investments to the needs of their clients. Our software, therefore, helps advisers meet regulatory obligations and, just as importantly, do a better job in delivering suitable financial advice.”

FinaMetrica has recently won several international awards for best ‘Risk Profiling Solution’ at the Wealth Briefing Awards. These awards recognise the best “technology solution to help wealth managers assess and document the risk appetite of clients.” FinaMetrica’s solution is used in 23 countries around the globe, in seven different languages.

“The effectiveness of our risk profiling solution explains its growing global appeal. Wealth managers and advisers are being forced both by market pressures and by regulators to become more transparent and prove their worth to clients. Our tools and materials help advisers to meet these demands and to entrench best practice in the financial advisory process,” said Mr Resnik.

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Know what to do if your client has their identity stolen.

Identity theft is a multi-billion dollar problem – and growing. To the extent that financial advisers help guide their clients in protecting against risks, the topic of identity theft is arguably one that advisers can credibly discuss, and not just because financial product communications are often targeted by those by criminal intent.

Stories like this recent one – from a member of our team – are becoming commonplace:

“A few days ago I received a Facebook friend request from a good friend of mine. It seemed odd – not only have we been friends for years, we’ve been Facebook friends for years. I assumed she’d had a tech disaster and needed to re-establish her Facebook account. Just as my finger hovered over the ‘accept request’ button, I thought better of it, and sent her a message to check. She’d been hacked.

Although my friend had privacy settings in place, the hacker was able to access sufficient information to clone her account. They copied her photo, used her name, her school’s name and her friends list to send out dummy requests. By the time she realised, the clone had access to full Facebook profiles (and friend lists) of 45 of her friends.”

Through such actions, criminals can see photos of your home; see that you’re having a wonderful overseas holiday and that perhaps that home is unattended. Posts bemoaning banks and service providers open the way for targeted phishing scams. People lay their lives open on social media, not expecting to provide intel for criminals to exploit.

And that’s just the tip of the iceberg. There’s no disputing that technology and the internet has made life easy – getting cash from an ATM, using PayPass to ‘tap and go’, going online to pay bills or shop for bicycle parts. It’s hard to imagine life without technology; however it also comes with a downside…increased risk of identity theft.

It’s not just technology that makes us vulnerable. An unsecured letterbox provides access to bills, bank statements, part-filled credit card offers and sometimes the cards themselves. It’s not unknown for criminals to go through bins looking for useful papers – a credit card statement, superannuation fund advice, even a phone bill. Anything with identification can be used by the savvy.

Why should your clients be concerned about identity theft?

People steal identities for a number of reasons, commonly for fraudulent financial gain, but sometimes for more sinister purposes According to the Australian Bureau of Statistics (ABS) Personal Fraud Survey 2010-2011, Australians lost $1.4 billion due to personal fraud.  The same survey estimated that 1.2 million Australians over the age of 15 had suffered at least one incidence of identity theft in the previous 12 months (a 50% increase compared to five years prior).

Once a criminal has the information they need, using your clients’ details they could:

• apply for a credit card, bank account or other financial service
• run up credit card debts or obtain loans
• apply for identification vehicles such as birth certificate, driver’s licence or even a passport
• access superannuation and other savings
• apply for Centrelink benefits.

A quick-acting criminal could quickly run up tens of thousands of dollars worth of debt that takes time and effort to untangle. As well as being extremely stressful, your client’s credit rating can be negatively affected and they could experience a period of financial hardship as a result.

Tap and go technology brings fresh risks

With credit card signatures to be phased out in August this year, most cards issued over the last 18 months or so have included an inbuilt RFID (Radio Frequency Identification) chip, which allows the ‘contactless’ ’payment technology such as ‘tap and go’ to function.

Whilst most appreciate the convenience of being able to simply ‘wave’ your card in front of the special scanners, the downside is that an inexpensive credit card reader can get at the data from a few inches away, even if the card is in a purse or wallet.

How can your clients protect themselves from identity theft?

An important part of safeguarding your clients’ financial future is to ensure they’re aware of potential vulnerabilities and take action to protect them. Older clients in particular should be warned about email scams; not the amateurish requests to transfer money for an African prince, but the alarmingly sophisticated requests to verify bank data, or print off delivery labels for bogus parcels. The scary thing is that these techniques can be like a Trojan horse, silently running in the background of a computer, recording every keystroke and relaying them back to the scammer.

Tips to share with your clients include:

• put a lock on your letterbox and clear it regularly
• keep personal and financial papers secure, shred when no longer required
• ensure that virus and security software on your computers and mobile devices is up-to-date – new threats emerge daily, so currency is important
• don’t use the same PIN and password across cards and websites
• don’t use unsecured wifi for internet banking or financial transactions
• never respond to scam or phishing emails promising huge rewards for information or punitive actions for non-response
• regularly review financial statements and report unauthorised transactions immediately
• always use the most secure settings on social media sites and never accept unsolicited ‘friend’ requests
• if starting a new job, only provide your TFN to the new employer once you have commenced – the ATO warns of employment scams that seek to access TFNs.
• If you are travelling, or just extra conscious of the risks around RFID data theft, you can protect your cards in special wallets, usually made of aluminium or some other material that blocks signals.

Steps to take if a client’s identity is stolen

If a client does become a victim of identity theft, it’s important to act swiftly. While the extent and nature of the theft will dictate specific action, it’s important that these first steps are taken and documented for future reference:

• contact all financial institutions – highlight disputed transactions, change PINs and passwords and discuss whether other account changes are required
• report the matter to the police with as much documented evidence as possible
• contact the Credit Reporting Agency and explain the situation; regular checks on credit status should be made in the following months
• contact any other agencies such as the ATO, Centrelink or the Australian Passport Office.

If your clients aren’t sure that their online security practices are adequate, you can get them to take the ATO’s self assessment. It covers business and personal security practices.

Discuss this issue with your clients

It may be tempting – and legitimate – to decide this issue is not really an adviser’s responsibility. But this is undeniably an area where your clients can be exposed to financial risk, and those advisers who get on the front foot and discuss this issue with clients are likely to be rewarded with increased trust and loyalty.

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Important information: The information in this article has been prepared by Zurich Australia Limited and is intended for Advisers use only. It is not intended for use by any retail client. The information is current as at 23 June 2014 and is derived from sources believed to be accurate as at this date. The information in this document may be subject to change. While all reasonable care has been taken in preparing this document and the consents of this document are presented in good faith, no warranty (express or implied) is given by Zurich as to the completeness or accuracy of the information in this document, and Zurich will not be liable (in contract or tort, including negligence, or otherwise) to any party or person if, and to the extent that, they rely on any information provided.

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Paul Resnik

Australian businesses earned a record $246.4 billion from internet sales in 2012-13, up from $237.1 billion in 2011-12, reflecting the rising importance of  e-commerce to economic activity, according to Paul Resnik, co-founder of FinaMetrica, an Australian software business which draws all its revenue from internet sales.

The report from the Australian Bureau of Statistics (ABS), Summary of IT Use and Innovation in Australian Business 2012-13, reveals almost one in two Australian businesses, or 47.2%, had a web presence that year. Moreover, the proportion of businesses receiving orders via the internet rose to 30.2%, up from 27.8% in 2011-12. However, the proportion of Australian businesses placing orders online slipped to 53.4% from 55.3% in 2011-12.

Overall, more than a quarter of all businesses had a social media presence (26.1%) as at 30 June 2013, a big jump from 18.1% a year earlier.

Mr Resnik said the ABS data reveals that bigger businesses are more likely to conduct e-commerce activities, have a web presence and be on social media.

“Whereas almost 100% of all big businesses, or those with 200 or more employees, had a web presence, 60.3% of those with 5 to 19 employees were online in 2012-13 and 35.9% of businesses with 0 to 4 employees. With a website costing as little as $1 a month to build and host, there is no excuse for any business not being online today,” said Mr Resnik.

“Beyond that, it doesn’t cost much more to have e-commerce capabilities, which cut out the need for sales teams and physical transactions, which can be costly and unproductive. Any small or medium-sized business serious about competing with big companies needs to maximise their online offer in order to build market share,” said Mr Resnik.

“Indeed, FinaMetrica conducts all its transactions through the internet. We are a small Australian-based financial services business exporting our services globally through internet sales. We provide an online test which enables financial advisors to measure the financial risk tolerance of their clients and better match investments to investors’ needs.

“Budgeted international sales for next year will be in excess of 80% of our total revenue, reflecting strong interest in FinaMetrica’s solution to investment suitability problems revealed by the 2007-08 global financial crisis.”

FinaMetrica’s activities in the next year are primarily focused on Germany, India, United States and the United Kingdom.  Recent enquiries have also come from Malaysia, Sweden and Bulgaria.

“Our software is now used by 5,500 advisers in 23 countries in seven languages. To date, 700,000 tests have been completed. We have recently won several high-profile international awards for our risk profiling solution. All this highlights just how much can be done with the internet to sell your products and services both in Australia and abroad.”

The financial and insurance services industry compares well in its use of IT, with 59.2% of businesses having a web presence compared to 47.2% of all businesses overall.  In addition, 57.2% of businesses in the financial services sector placed orders over the internet in 2012-13, compared to 53.4% nationwide. However, the sector lags in other areas, with just 19.1% of businesses having received orders online, compared to the average of 30.2%.

The ABS report presents key indicators on the incidence of use of IT and innovation in Australian business, as collected by the 2012-13 Business Characteristics Survey (BCS). The ABS estimate of internet sales comes from internet orders which are received from Australian households, businesses and government, as well as orders received from overseas customers.

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Paul Resnik

Australian businesses invested a record $3.19 billion in software in the first quarter of 2014 as they sought efficiency gains, while productivity inched ahead, according to gross domestic product statistics released yesterday by the Australian Bureau of Statistics.  

Reflecting the rising importance of technology within the economy, the seasonally adjusted private computer software spend rose 1.9% in the first quarter, to be up 8.1% from a year earlier. The report also indicated that the IT spend has hit record levels for several quarters.

The ABS data shows national productivity, as measured by GDP/hour, grew 2.2% from a year earlier and rose just 0.2% over the quarter. The Australian economy grew 1.1% during the March quarter, to be up 3.5% from the March quarter in 2013.

FinaMetrica, a leading global provider of web-based individual risk tolerance assessment tools for the wealth management industry, said regulation and the rapid growth in funds under management in Australia have encouraged the finance industry to seek efficiencies by using software to automate older and often flawed manual processes.

“Greater regulation of financial advisers through FoFA reforms, including the banning of commissions, is only adding to the pressure on advisers to upgrade their technology to streamline their processes and become more efficient,” said FinaMetrica Co-Founder Paul Resnik.

“A new breed of financial advisers is entering the market that are way faster in adopting new technology than the older generation. They see being technologically savvy as an important competitive advantage,” said Mr Resnik.

“Our risk profiling system, for example, enables advisers to accurately assess their client’s risk tolerance in as little as 10 minutes. The test, and the automatically generated report, helps advisers better match investments to the needs of their clients. Our software therefore enables advisers to meet regulatory obligations and, just as importantly, to do a better job,” he said.

“Our subscribers around the world almost invariably run profitable and efficient businesses. They tell us that the combination of our practical industry knowledge and up-to-date technology adds real value to their day-to-day activities,” Mr Resnik said. “Moreover, advisers’ clients like doing the test, it helps them better understand themselves in relation to financial risk matters. Furthermore, it makes the advice process more transparent. This invariably leads to a richer relationship with clients,” Mr Resnik said.

FinaMetrica has recently won several international awards for its risk profiling solution, which is used in 23 countries around the globe, in seven different languages.

“The effectiveness of our solution explains its growing global appeal. Following the global financial crisis, wealth managers and advisers are being forced both by market pressures and by regulators worldwide to assess the risk appetite of investors properly. Our tools and materials help to entrench best practice in their financial advisory process, said Mr Resnik.

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Australian downloading at ever-increasing speeds.

Australians are accessing the internet at higher speeds, helping to improve the efficiency of online financial services businesses, according to FinaMetrica, an  Australian business that has won a high profile international award for its online solution which assesses the risk tolerance of investors.

Data released this week from the Australian Bureau of Statistics (ABS) reveal there were 2.09 million Australian households and businesses accessing download speeds of 24 Mbps or greater as at December 31, 2013. That number is up 443,000 or 27% compared to a year earlier.

The total volume of data downloaded (excluding mobile handsets) reached 861,000TB for the three months to December 31, a 33% increase from the volume downloaded in the June quarter of 2013.

Many businesses in the financial services have a web presence and conduct business online, with 57% having a website and 65% placing orders over the internet. However, just 22% received orders over the internet, according to the most recent data from the ABS.

“We are always pleased to see improvements in both the speed and consistency of web connections. As internet speeds improve, the efficiency of doing business online is improving, which boosts the productivity of online businesses like ours,” said FinaMetrica co-founder Paul Resnik.

“We are a small Australian web-based financial services business, where all of our business is conducted over the internet. We provide an online test which enables financial advisors to measure the financial risk tolerance of their clients. Improving internet speeds means our solution can work more quickly as browsing, downloading, uploading and other functions become quicker,” Mr Resnik said.

“Our software is winning awards for the world’s best and it highlights just how much can be done with the internet to sell our services here and abroad.”

FinaMetrica last week won an award for best ‘Risk Profiling Solution’ at the Wealth Briefing Awards for Liechtenstein and Switzerland. The award recognises the best “technology solution to help wealth managers assess and document the risk appetite of clients.”

This award follows a recent win in the US and Canada where FinaMetrica won in the same category.  FinaMetrica expects to win more accolades forits software, which has been short-listed as a Risk Profiling Solution finalist in separate European, Hong Kong and Singapore WealthBriefing Awardsrun by UK-based ClearView Financial Media.

“We are confident of winning more awards as our risk profiling solution is the world’s best and is now being used by 5,500 advisers in 23 countries across seven languages. This highlights the broad global appeal of our product to advisers and wealth managers, who are being forced by regulators worldwide to become more adept at assessing the risk appetite of investors following the global financial crisis.

“Our solutions aims to entrench best practice in the financial advisory process and for this reason, it is growing in popularity,” said Mr Resnik.

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SGC inputs up due to the recent increase to 9.25%.

Employers paid a record $15.57 billion into employees’ superannuation accounts in the third quarter of 2013, reflecting the rise in the Superannuation Guarantee to 9.25%, according to gross domestic product (GDP) statistics released today by the Australian Bureau of Statistics (ABS).

The data also showed record amounts poured into technology as Australian businesses sought efficiency gains.

DST Bluedoor, a leading global provider of IT solutions for the wealth management industry, said rapid growth in the nation’s retirement savings pool is forcing greater investment in technology by superannuation funds to drive product innovation and productivity gains.

ABS data reveal superannuation contributions made by Australian employers rose 1.2% during the September quarter to a record $15.57 billion from $15.38 billion in the second quarter of 2013. Contributions were up 4.6% from $14.88 billion a year earlier. Employer contributions include Superannuation Guarantee (SG), salary sacrifice and voluntary employer contributions.

Reflecting the rising importance of technology within the economy overall, the seasonally adjusted private software spend rose 1.6% to $3.07 billion in the third quarter of 2013 from $3.02 billion in the second quarter, and jumped 8.1% from a year earlier. The report also indicated that the IT spend has hit record levels for several quarters.

The ABS data has revealed national productivity, as measured by GDP/hour worked in seasonally adjusted terms, did not grow during the third quarter and was up just 0.9% from a year earlier, highlighting a lacklustre performance. The Australian economy grew 0.6% during the September quarter, to be up 2.3% from the September quarter in 2012.

Martin Spedding, Executive Director with DST Bluedoor, said the growth in superannuation savings would force wealth and asset managers to become more efficient, as they seek to keep up with greater regulation and rapid technological changes.

“The nation’s superannuation savings pool is rapidly rising in value, and we can expect it to reach $2 trillion in 2014, from $1.75 billion in the September quarter this year, driven by growing compulsory superannuation contributions and rising asset values. This is forcing superannuation funds, wealth managers and administrators to upgrade their technology solutions to seek efficiencies and automate manual processes,” said Mr Spedding.

“Over the past year, we’ve seen a rise in technology spend by superannuation funds and other financial service organisations and we expect this trend to continue. Indeed, financial service organisations are making solid productivity gains, unlike many other sectors of the Australian economy where productivity has fallen.

“Greater regulation of the superannuation sector through SuperStream regulation and APRA data reporting is only adding to the pressure on superannuation funds to upgrade their technology systems and become more efficient,” Mr Spedding said.

“The superannuation industry, like the banking sector, must improve the consumer experience. Investors are demanding more efficient delivery of financial information, real-time transacting and are using mobile devices more and more. Superannuation funds must meet these challenges in 2014 in order to stay competitive,” he said.

Mr Spedding said DST Bluedoor’s aim is to continue to deliver innovative software solutions for the financial services industry that helps clients grow revenues and significantly cut costs.

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