Arthur Sinodinos

Financial advisers must be increasingly nimble, agile and flexible in the current volatile economic and geopolitical environment, according to the Hon. Arthur Sinodinos AO, Partner and Chair of The Asia Group and former Liberal Minister and Assistant Treasurer.

Speaking at the Hannemann and Brown Wealth Symposium via video link from Washington D.C. this week, Sinodinos, who also served as Australia’s Ambassador to the United States from February 2020 to March 2023, urged advisers to prepare for ongoing disruption and look for potential investment opportunities arising from structural change.

“Disruption is the new constant and we need to be more nimble, agile and flexible in our responses to changing circumstances,” he said.

“We’re facing a conundrum around how long inflation will last and the latest talk is of a rate increase on Melbourne Cup day. In the US, inflation is high, the cost of living is going up, and rates are expected to be higher for longer than anticipated.”

Addressing some of Australia’s leading financial advisers, asset consultants and fund managers, Sinodinos said government intervention in industry policy, particularly in the US, was impacting and influencing businesses, citing the global clean energy transition and the Biden Administration’s CHIPS and Science Act, has underpinned significant investment in US semiconductor manufacturing, research and development.

He also pointed to the range of subsidies and tax incentives for electric vehicles and US investment in the critical minerals supply chain to boost sustainable practices and break America’s dependence on China.

“Governments are investing heavily in clean energy and this sector will continue to get a lot of attention,” Sinodinos said.

“The (US) government is marshalling capital into energy technologies. We’re also seeing a gold rush around critical minerals, which is firmly on the agenda in Washington, as is defence. Defence spending globally will only increase, particularly in areas like cyber, AI and electronic warfare.”

Sinodinos said structural changes would underpin growth in some sectors for decades to come, create opportunities for private companies and investors.

“Private companies are picking up on these trends and seeing an opportunity to invest in key areas, some in partnership with governments,” he said, citing the Australian government’s Redspice project, and the partnership with Microsoft to boost the cyber capabilities of the Australian Signals Directorate, which is responsible for signals intelligence, support to military operations, and information security.

“All this means that some sectors will be strong for some time.”

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Arthur Sinodinos

The SMSF Professionals’ Association of Australia (SPAA) remains steadfastly opposed to any form of compensation scheme for self managed super funds (SMSFs).

SPAA CEO Andrea Slattery was responding to a comment by the Assistant Treasurer, Senator Arthur Sinodinos, who said this superannuation sector needed to be “self-reliant” and trustees/members had to understand this as they had chosen to be responsible for their own decision making.

“On this issue and the issue of raising the standards of advice and competency, SPAA concurs with the Minister.

“The guiding philosophy underpinning self-managed super is that trustees/members take responsibility for their own retirement income outcomes.

“By opting to go down the SMSF path trustees/members have to appreciate that decisions rest with them, although they can get advice, either directly or indirectly, from Specialist SMSF advisors.”

Slattery said any compensation scheme should only be part of a broader financial services scheme where clients have suffered financial losses because of the misconduct or insolvency of a provider of a product or service, and that the compensation should be funded by a levy imposed on that industry sector where the misconduct occurred.

She added that it was a misconception that SMSFs were not entitled to compensation when fraud or theft occurred.

“This is incorrect. Although SMSFs don’t have access to compensation under the Superannuation Industry (Supervision) Act 1993 (SIS) Act that is available, at the Minister’s discretion and only where it is in the public’s best interest to approve compensation for APRA-regulated funds, there are other legal avenues that SMSFs can pursue.

“These include but are not limited to personal Indemnity schemes; actions under the Corporations law; action in the courts to obtain compensation for damages; the Financial Ombudsman; and the banking and credit legislation.

“Although these legal options are not foolproof, they do give trustees/members options when there are instances of fraud or theft; but then again, no current scheme is foolproof.”

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John Brogden

“The government’s announcement on the backlog of unlegislated tax and superannuation measures provides long overdue certainty to the Financial Services industry,” Financial Services Council CEO John Brogden said today.

Mr Brogden’s comments follow a statement released by the Assistant Treasurer, Senator the Hon Arthur Sinodinos AO, yesterday (Saturday) which detailed the status of the remaining 64 of 92 announced but unenacted superannuation and tax measures.

“Within the constraints of the government’s budget conditions these changes provide certainty on a number of important measures.”

“Over the past few years the industry has been 110% focused on red tape and regulation at the expense of innovation and developing Australia as an exporter of financial services,” Mr Brogden said.

“The Assistant Treasurer’s statement has provided certainty and clarification on tax and superannuation announcements from the Howard and Rudd/Gillard governments and will be a boost to confidence within the industry.”

“Australian taxpayers will also gain confidence in knowing that the cost of those measures have been addressed.”

Mr Brogden also said: “The government has been sensible in proceeding with the most critical tax measures for the industry as a priority and in opening others to further consultation.

“We particularly welcome the changes that provide greater certainty on the tax relief provisions for fund managers,” Mr Brogden said.

He also said retaining proposed legislative changes on functional currency rules were beneficial for the Asia Region Funds Passport.

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Paul Tynan

Reflecting on 2013 Connect Financial Service Brokers (Connect) CEO Paul Tynan has described the marketplace as one that has been filled with shifting dynamics that will be the source of countless conversations during the Festive Season about FoFA; the new Federal government; the spectacular comebacks and flameouts; the unexpected dismissals and the ‘Lazarus’ like re emergence of old faces; business closures, mergers and buy outs; and so on ad infinitum.

As he does each year, Paul Tynan creates a subjective round up for Connect’s clients that summarises the key events that both characterised and had the greatest impact on the financial services sector over the past 12 months and his personal insight into the year ahead.

“There’s no doubt that 2013 will go down in history as ‘the change year’ – but on reflection, has the world really changed”, asks Paul Tynan.

“The global marketplace is constantly shifting with economies facing uncertainty on many fiscal, political and social fronts.  The Australian financial services sector is not immune from these challenges and all participants must confront these trials at a pace never been experienced in past history”.

Together with new FoFA legislation and Federal Government in Canberra, Paul Tynan documented the following Australian changes:

• The latest version of the FoFA legislation has resulted in a halt to the sale of Financial Planning businesses as the interpretations of the new regulations put doubt on the transfer of grandfather revenue.

• The institutions have more orphan clients on their books than ‘real clients’.

• ‘Son of Wallis’ is coming as a result of the Federal government commission of audit.

• Financial Planners are struggling to implement Financial Disclosure Statements.

• Consumers continue to be conservative in their investment focus and still prefer to save.

• ASIC is going to monitor vertical integration and the SMSF market will be the next focus of Government review as property ‘opportunists’ enter the superannuation ‘honey pot’.

• The pressure on technology providers is relentless as the demand grows for IT solutions needed to underpin service / advice delivery for Financial Planners and dealer groups.

• There have been many changes within the financial services and mainstream media with changes of personnel, ownership and new entrants.  Traditional newspapers continue to lose circulation.

• The promised pre Christmas amendments of Assistant Treasurer Arthur Sinodinos have still not eventuated.

Irrespective of Australia’s geographical position, many international factors continue to have an impact on the Australian economy and financial service sector. Paul Tynan listed the following as the most important:

• We are living in the Asian century and China maintains its position of global economic prominence as the world’s leading economic powerhouse.

• Europe is a continent of two distinct halves with northern countries benefiting from economic boom and Southern European countries struggling with the burden of debt.

• The USA’s dysfunctional political system is the source of the country’s escalating nightmare as the gap between the Democrats and Republicans is becoming a chasm due to their inability to agree on a real budget and major economic decisions about job creation.

• The US Federal Reserve persists in buying bonds in an effort to stimulate the local stock market – but how long can his last?

• The quantitative easing (QE) or more appropriately ‘the money-printing policies’ of central banks have been the big driver of world economic markets over the past 12 months.
• Companies have enjoyed the low interest rates and this has been mirrored in increased strong profits.
• The incoming US Federal Reserve Chairperson Ms Janet Yellen has been a big supporter of the QE policy.  The question for the future is when will she turn off the tap?

• The climate change debate goes on between the sceptics and supporters of the science resulting in political impasse.

As he reflected on the year that was and then looked to the future, Paul Tynan identified two key factors that will have the most profound impact on the industry over the coming decade in particular.

The first key factor is the single greatest issue confronting not only the Australian economy – but the economies of most mature developed countries will be the exit of the Baby Boomers into retirement.

In Australia, this is going to place tremendous pressure on the tax system, infrastructure and families in an environment where retirement and wealth transfer has never been more complex or important.

“The need for the services of Financial Planning and Accounting practitioners will be immense as Baby Boomers turn to these professionals for assistance and guidance as they seek to transfer a lifetime of savings, investments and value of businesses into funds required to fulfil retirement aspirations and lifestyles”.

“The need for Financial Planners and Accountants to work collaboratively will be a paramount imperative”.

The second key factor will be the almost certain move away from the institutions by Financial Planners and into the self-licensed environment.  In doing so, Planners will take back the ownership of clients from platforms by utilising new and innovative investments instruments that will be developed to address this demand.

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John Brogden

“The Government is returning certainty and stability to superannuation policy,” John Brogden, CEO of the Financial Services Council said today in response to the announcement by Joe Hockey and Arthur Sinodinos that the proposed 15% tax on superannuation earnings above $100,000 would be abolished.

“The former government’s $100,000 earnings tax on superannuation was rushed, complex and frankly, unworkable,” Mr Brogden said.

“Today’s announcement delivers on the Government’s pre-election commitment of no negative changes to superannuation.”

“It also clears the deck of a series of other unworkable and unnecessary tax measures.”

“Australians must be able to grow their superannuation to provide an adequate retirement and the government has supported this.”

“The anticipated revenue from the tax would not have been realised due to the flexibility in managing earnings in the SMSF sector.”

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Arthur Sinodinos

Assistant Treasurer, Senator the Hon. Arthur Sinodinos has been confirmed as a plenary speaker at this month’s Association of Financial Advisers (AFA) National Conference (the Conference) on the Gold Coast.

It will be Senator Sinodinos’ first official address to a financial services audience since his appointment to the role of Assistant Treasurer.

“The AFA is pleased to welcome Senator Sinodinos to his portfolio,” said AFA CEO Brad Fox, “He has a genuine understanding of our industry and we are delighted he has accepted our invitation to address delegates at our Conference.”

Senator Sinodinos was introduced to the AFA last year when he spoke at a breakfast outlining the Coalition’s intention to eradicate $1 billion of red tape that is crippling business in Australia.

“We are very pleased to provide the Assistant Treasurer with a platform to outline the Coalition’s strategic plan for improving access to and affordability of financial advice for everyday Australians,” Mr Fox said. “Affordability and access is critical to the financial wellbeing of our members’ clients.”

In 2011, the AFA conducted research which revealed that only two in 10 consumers were in a financial advice relationship. “Our research highlighted that Australians are under-advised, under-insured and under-saved,” Mr Fox said. “We believe the incoming government shares our concerns surrounding these findings and look forward to hearing the Coalition’s vision of the future of financial advice.”

This year’s conference will feature 12 plenary sessions, 39 stream and masterclass sessions and 90 speakers, including Senator Sinodinos, twitter co-creator Dom Sagolla, New York Times best-selling author Ron Kaufman, AFL Premiership Coach, Paul Roos and Executive Chairman of Yellow Brick Road Wealth Management, Mark Bouris.

“At the heart of every AFA Conference is the AFA community,” Mr Fox said. “So many members of our community are willing to share their stories, discuss solutions and offer support and this creates a vibe that we believe is genuinely unique.”

The AFA Conference runs from 12–15 October at the RACV Royal Pines Resort on the Gold Coast. Registrations are available for the entire event, or as day passes from www.afaconference.com.au

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Looking forward to working with the new Government: FPA

With a new Ministerial line-up announced today by the recently elected Abbott federal Government, Australia’s peak financial planning body the Financial Planning Association of Australia (FPA) has welcomed the announced Ministry and reaffirmed its long-running advocacy in support of better financial futures for all Australians.

“The FPA has a proud history dealing sensibly with all sides of politics to achieve equitable and pragmatic policy outcomes designed to support more Australians seeking improved financial outcomes. Our objective is always to continually raise the bar on behalf of all Australians, leading them to a greater number of highly qualified, professional financial planners operating within the construct of a world class CERTIFIED designation, approved code of practice and recognised professional standards” said FPA CEO Mark Rantall.

“We support the inclusion of financial services as part of the Treasurer’s portfolio and welcome new Assistant Treasurer, Senator Arthur Sinodinos and acknowledge the efforts of former shadow Minister Matthias Cormann in the financial services portfolio.

“The new Government, with a fresh mandate and majority numbers in the Lower House, has a window to develop innovative policies to support the greater financial wellbeing of Australians and those entrusted to maximise their discretionary and retirement outcomes.

The FPA will work hard to assist the creation of sensible policy towards this honourable aim.

“We see an opportunity to promote the clear win-win benefit of effective financial planning for all Australians working with the assistance of a CERTIFIED financial planner.  The FPA also believes there is a positive flip side to building a strong and viable financial planning profession including long-term systemic benefits to the economy, a reduction on the public social security purse and a population of Australians better enabled to take control of their financial future.”

This is effectively a double dividend: good for consumers, good for the professionals who serve them.

“The FPA and its members will continue to do its part by working constructively with Government and the Opposition towards this appropriate goal of securing the double dividend benefit of high quality financial advice,” Mr Rantall said. 

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FSC welcomes the new Government’s Treasury team.

The Financial Services Council has welcomed the new appointments to the Treasury portfolio.

John Brogden CEO of the Financial Services Council said: “With Joe Hockey, Arthur Sinodinos and Steven Ciobo we have a strong team in Treasury which will well represent the financial services industry in its next growth phase.”

“As a former Treasury economist and chief of staff to John Howard, Arthur Sinodinos has unparalleled experienced for the role as Assistant Treasurer,” Mr Brogden said.

“We have worked with Mr Sinodinos over the past few yeas and look forward to continuing this in his role as Assistant Treasurer.

“The new Parliamentary Secretary to the Treasurer, Steven Ciobo, represents the next generation of Australian Coalition MPs.”

“Mr Ciobo has been a strong advocate for less regulation and red tape,” Mr Brogden said.

Mr Brogden also said: “While we are disappointed to lose Mathias Cormann after his strong contribution to the financial services industry over the past three years, we understand he is talented and congratulate him on his appointment to Cabinet.”

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