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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Paul Resnik

Self-managed superannuation funds’ (SMSFs) investment exposures at the end of the June quarter reveal high equity concentration risks, which leave many retirees vulnerable to an Australian share market downturn, according to Paul Resnik, Co-Founder of FinaMetrica, which specialises in the risk profiling of investors.

Data from the Australian Taxation Office (ATO) reveals SMSFs invested $177.6 billion in listed Australian shares at the end of the June quarter, up from $174.8 billion in the March quarter. Listed Australian shares accounted for around one third or 32% of all SMSF assets in the June quarter, which hit $557.1 billion in the June quarter, up 1.6% from $548.1 billion in the March quarter of this year.

SMSFs cash investments rose to a record $157.9 billion during the June 2014 quarter, up 1.7% from $155.3 billion in the March 2014 quarter. Those cash holdings represented 28% of all SMSF assets.They devoted $65 billion to non-residential property and another $19.5 billion to residential real estate.

SMSFs invested just $2.3 billion in international shares, with another $437 million in overseas managed investments. Another $20.1 billion was invested in listed trusts in the June quarter and $48.9 billion in unlisted trusts, which includes managed funds.

“There are three areas that SMSF trustees, advisers and members need to think carefully about: their over exposure to Australian assets which could be much higher than 90% of total assets; their under exposure to professional investment management, which might be as low as 20%; and their overall exposure to risky growth assets, typically at around 70%, which is likely to be more than they need to take to meet their financial goals.

“By being so heavily exposed to Australian asset classes, SMSFs leave themselves vulnerable to our local market collapse when that happens – and it will,” Mr Resnik said.

“Many SMSFs don’t understand, can’t easily access or accept the importance of international diversification and so they don’t invest meaningfully offshore. Many SMSF investors don’t understand ETFs and hold managed funds in low esteem so they stick to what they know, and what they think they can control, and so they invest mainly directly in Australia.

“In addition, SMSF investors seem to be taking on more investment risk than they might naturally accept if they invested consistently with their risk tolerances. Taking into account the Australian tax and social security systems, and often large SMSF account balances, they may also be taking on more risk than needed to achieve their goals,” Mr Resnik said.

“With SMSFs moving toward de-accumulation there’s a growing need to understand and manage ‘sequence risk’. When investments have been set aside to provide regular retirement income for members, it’s important that there is a plan to work through potential deep and sustained asset value declines which, unless managed carefully, are likely to dramatically diminish their members’ retirement plans.”

FinaMetrica’s widely acclaimed Risk and Return Guide presents a comprehensive analysis of historical portfolio performance across the risk/return spectrum in a manner that is meaningful to clients in the context of their risk tolerance. By using the Guide, financial advisers can show their clients the impact of market downturns on their portfolios.

“Many SMSFs look to be in need of good investment advice.  By better understanding how financial markets work, and the impact of asset allocation on portfolio behaviour, SMSFs can be better prepared for market downturns when they happen,” Mr Resnik said.

“No member of an SMSF should be surprised by portfolio behavior. At worst they should just be disappointed that their portfolio didn’t do better. And if they care about their families they shouldn’t be taking on more risk than they can afford.”

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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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Paul Resnik

Australian investors have inferior protection from poor investment advice compared to their peers around the world. That situation won’t change any time soon, despite the findings of a Senate report into the performance of the ASIC, according to Paul Resnik, co-founder of FinaMetrica.

“Of the 61 recommendations made by the Senate Economic References Committee, not one goes to quality of advice and the suitability of recommendations to the needs and circumstances of clients,” Mr Resnik said.

“While there are several references to work undertaken by the Financial Conduct Authority (FCA) in the UK, none were related to investment suitability. The UK regulator has very clear suitability guidelines, virtually none of which can be found in Australian regulations,” said Mr Resnik.

“Investment suitability involves the matching of products and services to meet the specific needs of clients.  This requires advisers to thoroughly understand the needs of investors, their risk tolerance, circumstances, capacity for loss and the investment products available.

“The application of FinaMetrica’s Five Suitability Proofs, which is the generic summary of world’s best practice, would have diminished the likelihood of Commonwealth Financial Planning (CFP) malpractices considerably,” said Mr Resnik.

The Five Proofs are steps advisers should go through to produce good financial advice. They are:

1.   Prove you know the clients’ circumstances, needs and aspirations

2.   Prove you have explored alternative financial behaviours and strategies

3.   Prove you know the products and services being recommended to clients

4.   Prove you have explained to the client the risks in the plan and the products through which the plan will be implemented

5.   Prove you have received the client’s informed consent to the risks in the plan.

“The Australian regulator has an important role in protecting consumers against bad financial advice and taking action against advisers where unsuitable advice is given. ASIC’s attitude to date has been too hands-off, as the Senate enquiry noted. Only as recently as last week, the ASIC Chairman Greg Medcraft said ‘being a free enterprise person, I would rather people sort out the issues between themselves rather than involving ASIC,’ referring to disputes between advisers and consumers.

“He also indicated he was happy for the private sector to take actions against dodgy advisers via litigation funds or class actions, rather than ASIC itself. Such a laissez-faire attitude does little to instill consumers’ confidence that their interests will be protected by the regulator,” said Mr Resnik.

“Nor does it reflect an appreciation of the power imbalance between advisory businesses, which are now largely owned by the big banks, and consumers, many of whom are retirees and more often than not, financially illiterate. Many of these consumers have sustained substantial losses in recent times, as highlighted by the CFP scandal, Storm Financial and others.”

Mr Resnik said what we are seeing today is the result of poor decisions made by successive governments.

“Initially, when the Federal Government began shifting responsibility for retirement from themselves to the community, they created a demand for advice but left it to industry to satisfy that advice. In the early 1990s, ASIC chose to go down a disclosure path rather than a quality of advice route. Hence, amongst other things, the very low entry standards required for financial advisors.

“The Government is ultimately responsible for the legislative and regulatory framework. What we have seen from the industry and the regulator over the last 20 years is only what could have been expected given the framework set,” said Mr Resnik.

Much of FinaMetrica’s business activity is offshore given the push by global regulators to raise the standard of financial advice since the 2007-08 global financial crisis. “We provide an online risk tolerance test which enables financial advisors to measure the financial risk tolerance of their clients and better match investments to investors’ needs. Risk tolerance can be quickly and accurately measured by psychometric questionnaires in as little as 10 to 15 minutes. Such tests are important as financial advisers can often overstate a client’s risk appetite, which is what happened with many CFP planners who put clients into riskier investments than they wanted.

“We hope to attract greater interest in our product from Australian advisory firms given the media focus on CFP and the prevalence of unsuitable financial advice. Our product, and the Five Proofs, are a safeguard for consumers. Our solution is now used by 5,500 advisers in 23 countries and is in seven languages. To date, 700,000 tests have been completed, which is a testament to its utility in the advice process and ensuring best practice,” said Mr Resnik.

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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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