CANSTAR analysis has found that the average number of ASX companies on financial institutions’ acceptable securities lists has risen quite significantly since the height of the GFC, indicating that institutions are comfortable taking on a higher level of lending risk. “One broad way in which a financial institution can reduce margin lending investment risk is to reduce the number of acceptable securities,” said CANSTAR Research Manager, Mitchell Watson. “CANSTAR analysis has found that just prior to the GFC, the average number of ASX securities on the acceptable securities lists of the financial institutions we rate was 520. This number had plummeted to an average of 390 by December 2009. Even by December 2012 the average number of securities was only 419, but by December last year that number had risen to 446 securities. This perhaps indicates a more optimistic economic outlook.”

While the average number of acceptable securities overall saw a marked decline, the average number of ASX 200 companies on the acceptable securities lists remained resilient throughout the GFC. Page 2 of 3

CANSTAR today released its margin lending star ratings report, awarding five stars to outstanding lenders in two profiles – Share Investor and Managed Fund Investor. CANSTAR margin lending star ratings is a consumer-friendly benchmark that compares both the price, including the interest rate and fees and charges, and features, including the maximum LVR, the number of shares/managed funds offered, repayment options and other account features. Five-star lenders are considered to offer outstanding value for money. There are three five-star products in each of the Share Investor, and the Managed Fund Investor profiles.

Share Investor profile

Within the Share Investor profile, ANZ, CommSec and St George achieved a five-star rating, all maintaining their position from last year.

ANZ’s rating is driven by its acceptable securities score, providing lending on both the highest number of ASX 200 stocks and the highest number of stocks overall. Currently, ANZ provide lending on more than 700 stocks, which is significantly higher than the industry average of 446 stocks.

CommSec maintains superior product features with good direct client services including an unlimited transaction history, “what-if” calculators and weekly newsletters. They notify clients within 24 hours when in buffer. They also offer trading in options and warrants.

St George offers investors a good balance between features and price. On the features front, St. George offers periodic statements, “what-if” calculators and the ability to trade options among many other features to its clients.

Managed Fund Investor profile

Within the Managed Fund Investor profile, CommSec, CommSec Adviser Services and St. George all achieved a five-star rating.

Both CommSec and the advice model, CommSec Adviser Services, maintain superior product features, with the Adviser Services model providing a wider range of acceptable securities than the purely DIY model.

St George achieves the top score for acceptable securities. They have an extensive acceptable securities list with lending offered on 1,811 funds. This is significantly higher than the industry average of 1443 funds. They also offer a buffer margin of 10%.

Consumers can download the full Margin lending star ratings report on www.canstar.com.au

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John Billington, Executive, Wealth said: “This is another great accolade for Bendigo SmartStart Super and the Bendigo Wealth team who developed and built this product.

“A top rating CANSTAR award of 5-stars, by this internationally recognised research provider, puts us in the Top 10% of funds rated in the pre-retiree category and underscores the low cost and popular features that make Bendigo SmartStart Super a smart choice for our customers.

“In a very well contested market, Bendigo SmartStart Super is one of only 15 superannuation funds rated to receive 5 stars in any category, so this result is one of which we can be justifiably proud.

“Bendigo SmartStart Super offers great value and the investment options can be tailored to suit everyone from a school-leaver working part-time to a senior manager or small business owner and their employees.

“We’ve freshened up our website too so that it’s never been easier to open a Bendigo SmartStart Super account.  There is now an easy to follow online application process for direct investors”, Mr Billington concluded.

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Patricia Montague

AMP Flexible Super’s superannuation and retirement accounts have been awarded five star ratings in the recent CANSTAR ratings for the third year in a row.

The five star ratings, the highest available, recognise AMP Flexible Super’s low fee structure, member education and benefits, online and phone access and investment options.  AMP’s access to an extensive financial planning network also contributed to the high rating.

AMP Director Contemporary Wealth Management Products Patricia Montague said the ratings reflected the quality of the product and the accessible and transparent pricing structure which has made it an attractive choice for customers.

“We are thrilled AMP Flexible Super has achieved the highest possible rating for the third year in a row for the superannuation and retirement categories by CANSTAR in its annual ratings.

“The five star rating shows we’re continuing to provide a product that offers customers flexibility, choice and access to expert advice at an affordable price.

“We constantly monitor the superannuation and retirement market so we can continue to enhance the product to ensure it meets the changing needs of our customers,” said Ms Montague.

Since June 2012, AMP Flexible Super has grown its customers by 75 per cent and at AMP’s half year results in August, AMP Flexible Super assets under management increased to $8.8 billion, up from $5.7 billion in HY 12.

AMP Flexible Super has also unveiled a number of enhancements to its online portal improving the way financial advisers write new business, which will result in greater efficiencies for customers.

AMP Flexible Super business can now be written entirely online, eliminating paper based transactions.  Following an extensive pilot process, adviser feedback has shown the improved technology has made it quicker and easier to lodge customer applications.

“The improvements mean advisers will be able to more effectively write new business for AMP Flexible Super, reducing lodgement times by over 50 per cent.  The reduced application and approval times will result in much greater practice efficiency and an improved experience for the end customer,” said Ms Montague.

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CANSTAR issue advice to shop around ahead of RBA rates review.

Commenting ahead of the RBA announcement, Mitchell Watson, Research Manager for CANSTAR said:

“Last week Reserve Bank Governor Glenn Stevens gave a speech in which he called the end to the investment growth phase of the mining boom. He stated that there is no natural successor to that growth at the moment and monetary policy may need to encourage non-mining investment. He also stated that the current inflation outlook provides scope to ease further. Markets do seem to have interpreted those comments as a likely call to action this month.

It is interesting to note, though, that over the past twenty years interest rates have been lowered during only one election campaign period; in 2001 when rates were lowered by 0.25% two months in succession. In other words, only one of the past seven election campaigns has seen an RBA movement downwards on rates.

The recent fall in the value of the Australian dollar against the greenback has taken some pressure off the RBA, however Glenn Stevens did note last week that we need to raise business confidence and raise household confidence from their current levels in order to find that mining boom successor.

Irrespective of the RBA decision, consumers should still question whether they are getting the best deal available for their borrowing needs. On our database for example, the average standard variable rate is currently 5.71%, but the lowest variable rate on our database currently is 4.74%. Now, a mortgage holder with a $300,000 mortgage over 25 years who did their own research and switched from an average rate to the lowest rate could potentially save themselves more than $170 per month and more than $50,000 over the life of their loan.

So the message for all borrowers is to know your rate, the features and benefits of your loan and shop around.”

The post CANSTAR issues rate movements and commentary ahead of Tuesday’s RBA announcement appeared first on AdviserVoice.

“This is the first financial year in which the Government’s private health insurance rebate has been means tested,” says CANSTAR Research Manager, Mitchell Watson.

“While some consumers claim their 30% rebate when they submit their tax return, many people claim the rebate in the form of reduced monthly premiums. If they haven’t realized that they will be caught by the new means testing – and haven’t reduced the amount of rebate they are receiving – they could be in for a tax bill.”
 

Means testing 
The income test threshold kicks in for families at $168,001 and is applied at progressive rates up to $260,001. The amount of rebate a family is entitled to depends on age as follows:

Based on CANSTAR’s research of average annual premiums for a family package (hospital plus extras) policy on a state-by-state basis, CANSTAR calculates that high earning families who were previously receiving a 30% rebate and have not manually reduced this amount could be in for the following liability at tax time:
Traps
Mr Watson observes that the income test for the private health insurance rebate involves more than just taxable income.

“Some families could get caught out, assuming that they won’t trigger the reduction in rebate because their combined taxable incomes are less than $168,000,” he says.

“The income test that applies for this rebate is more comprehensive though – it also includes reportable fringe benefits, net investment losses and reportable superannuation contributions. When those items are all added in, families might discover thattheir total earnings are higher than they thought!”

Tips
CANSTAR urges consumers to check their likely income levels. “The tax office has some excellent information on their website to help taxpayers calculate their income in relation to the rebate,” says Mr Watson.

“It’s worth checking this out because the rebate is a sudden death thing: one dollar of income over the threshold and you could suddenly be looking at several hundred dollars-worth of tax liability.”

Mr Watson also encourages consumers not to drop their cover. “The median waiting times for elective surgery in public hospitals can significantly impact on patients’ quality of life,” he says.

“There are several thousand unfortunate people who stay on the waiting list for over a year. Our public system is great if you have a life threatening emergency – but you do not want to be uninsured when it comes to elective procedures.”

For savvy shoppers there is money to be saved.

“Each year we undertake an annual comparison of health insurers around the country; our most recent analysis compared over 10,000 quotes from 1,200 products and compared them against 11 profiles across seven states and territories,” says Mr Watson.

“There is no one-size-fits-all policy and consumers will all have different insurance needs. Premiums for the same level of cover do vary between providers though – it is worth doing some research.” 

Consumers can download the CANSTAR health insurance star ratings report on www.canstar.com.au. The report is an immensely valuable resource for those who are serious about comparing health funds and products to determine the best value for their health insurance dollar.

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