Technology; a key consideration when considering strategic planning: FSC-DST CEO 2013 Suvery

Nearly all CEOs (96%) in a recent survey believe technology is a key consideration when conducting strategic planning and an overwhelming majority (80%) believe technology plays a major role in innovation and delivering new financial products.

These are the findings of the 13th annual FSC‐DST CEO Survey based on the views of 55 leading CEOs in Australia’s financial services industry. This year’s survey focused on the sentiment of Australia’s leaders towards doing business with Asia.

When looking at the role of technology in exporting to Asia, 55% of CEOs agree that online services and innovation are important in developing financial products for the Asian market. A similar number agree that it is important to continually invest in technology to take advantage of growth in Asia.

“Today’s dynamic marketplace demands that financial services providers place emphasis on technologically advanced feature‐rich solutions that can operate real‐time across jurisdictions and reduce operational risks,” said DST Bluedoor Executive Director, Martin Spedding. “Australian financial services firms can gain efficiencies by exporting technology infrastructure into Asia and the global marketplace to help expand their footprint and leverage a single operating model across markets.”

Among those CEOs currently undertaking strategic‐based IT projects, the survey found that a key focus is on back-end systems technology to support new product development, and customer interface systems, such as mobile app projects, that keep clients informed about investment performance.

Several CEOs noted that the financial services sector needs to match the developments in the banking sector in terms of using mobile technology applications to better communicate and interact with customers. The report found that 56% of CEOs agree that having a mobile‐based customer service strategy is important to capitalise on Asian growth.

“A big driver of change for the industry is the rapid adoption of technology by consumers, including tablets and smart phones,” said Spedding. “This evolution will have a significant impact on the Asian financial services sector as it becomes increasingly focused on selling direct to consumers.”

On a local front, most CEOs expect their IT budgets to increase over the next two years driven by a desire to achieve productivity gains in order to stay competitive and to meet new regulatory demands. The report found that CEOs expect the level of IT investment to increase under FoFA and SuperStream reforms.

“The demand for better risk and compliance management along with the need to be more productive and transparent is placing pressure on systems. Since many industry participants are under‐invested in technology, it’s not surprising that budgets are expected to increase,” Mr Spedding said.

John Brogden, CEO of the Financial Services Council said: “Improved technologies and innovation will help the financial services industry to operate more efficiently and to meet complex regulatory changes encompassed by the Stronger Super and FoFA reforms”.

“The financial services industry has a major opportunity to harness new technology to develop leading services and products that will give it a competitive edge for its next growth phase.”

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The acquisition of Provisio, which is a market leader in the provision of scaled and online wealth advice software in the superannuation fund market, marks another important milestone in Rubik’s evolution.

Provisio has an established client base of large industry superannuation funds such as AustralianSuper, HESTA and LUCRF Super, as well as independent financial advisers.

The acquisition of Provisio expands on Rubik’s current advice offerings, COIN and Visor Desktop financial planning software, and reinforces its important role in the growing wealth market. COIN is an industry leader in financial planning software for the financial institution and the independent financial adviser markets in Australia due to its client base, breadth of product, dedication to support and innovation. With the acquisition of Provisio, Rubik will now hold a market leadership position within the institutional and superannuation fund market for scaled wealth advice software.

Mr Wayne Wilson, Managing Director of Rubik Wealth, said, “Provisio is a high-performing company with an outstanding product that addresses a different wealth advice segment to Rubik’s COIN software. This is a strategic and financially sound acquisition.

“Components in Provisio’s scaled advice software and the COIN software platform complement each other, which can be leveraged by Rubik to enhance the solutions currently available to our customers.”

All Provisio employees have been offered employment contracts going forward.

Mr. Cameron O’Sullivan, current CEO of Provisio Technologies and Mr Jye Tucker, current CTO of Provisio, will join the Rubik Wealth management team and continue to support the customer base with new release delivery.

“The Provisio team is excited about the changes taking place. We are looking forward to working with Rubik to provide an even more comprehensive product to our clients.” Mr O’Sullivan said.

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Ms Hey was previously CEO of Ericsson in the UK and in Australia. She worked with Ericsson for more than 20-years in finance, marketing, sales and leadership roles in Australia, Sweden, the UK and the Middle East.

She said she’s extremely pleased to be joining the Bank’s Board.

“When I think about Bendigo and Adelaide Bank, I think about its strong and trustworthy brand, its focus on customers, partners and communities and its ability to innovate,” Ms Hey said.

Chairman, Robert Johanson, said Ms Hey’s expertise lies within the technology, telecommunications, sales and marketing spheres – key drivers in the future success of any bank.

“Jacquie complements the existing skills and experiences of our directors and brings with her a very distinctive background,” Mr Johanson said.

Ms Hey added, “Coming from outside the banking and finance industry allows me to bring a different perspective to Board discussions, particularly around technology and how customers interact with it, how the bank can use technology to connect with its customers and how it can help customers in the future.”
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Mr Johanson said Ms Hey’s appointment brings the number of women on the Bank’s board to three. “Gender is one of a number of important criteria we look at to ensure the board has a wide experience in dealing with its business,” he said.
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Ms Hey commented, “I’ve been lucky enough to work with companies and people that have treated me fairly and with respect, and have evaluated me on my merits throughout my career. This is very important to me and I’m happy to have found it in Australia with Bendigo and Adelaide Bank.”
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Ms Hey will join the Bank’s Audit, Risk and Change Framework and Technology Governance Committees. She is the Honorary Consul of Sweden for Victoria and was appointed to the Board of the Special Broadcasting Service (SBS) last week.

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The changes include powerful new tax tools that could mean a better after-tax investment return for clients on particular transactions and new trading enhancements that reduce the time spent on portfolio management, client reviews and rebalances.

Head of BT Wrap, Chris Freeman, said the changes were part of an ongoing drive to increase the efficiency for advisers and deliver even better value to BT Wrap investors.

“These features are game changing. Not only will they make it easier for advisers to trade equities and managed funds, but they’ll also enable them to proactively manage tax outcomes of certain sales when trading. These enhancements have the potential to directly improve clients’ after-tax investment returns and in challenging markets like these, we all know that’s becoming increasingly important.”

BT Wrap will now offer “Minimum Gain” (Min Gain) as the new default sale allocation method for investment and accumulation accounts, meaning the parcel that will be sold first is the one that results in the lowest estimated taxable gain.
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In addition, BT Wrap will provide access to additional information on the trading screen. Advisers will now benefit from access to the estimated taxable gain or loss of the proposed trade to help make smart trading decisions and they’ll be prompted with warnings if a proposed trade may lose specific tax concessions. New daily financial year-to-date reporting for estimated realised and estimated unrealised capital gains will also be introduced to facilitate more meaningful dialogue between advisers and accountants to better manage clients’ CGT outcomes.
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Mr Freeman said early feedback from advisers has been overwhelmingly positive.
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“We have been working closely with advisers on these changes and the feedback we have already had is that this will dramatically improve advisers’ ability to offer better service to clients, and to do so more efficiently,” Mr Freeman said.

Details of the changes

• New default sale allocation method. The new default sale allocation method for investment and accumulation accounts is Min Gain. This increases the potential for clients to obtain a better after-tax investment return on particular transactions. It replaces the traditional ‘First In First Out’ (FIFO) method. Min Gain automatically sells the parcel that results in the lowest estimated taxable gain. For pension accounts the default sale allocation method is ‘Maximum Gain’ (Max Gain) – seeking a tax result which is generally appropriate for that environment. The appropriate default sale allocation method depends on a client’s particular circumstances – advisers can change from the default allocation to ensure the appropriate method is selected.
• Automatic calculations display the estimated taxable gain or loss for each sell order on the trading screen– giving advisers better tax insight to help make the right trading decisions.
• Automatic warnings at the point of trade where the trade could trigger the loss of specific tax concessions. A sophisticated warning system will alert advisers to the potential loss.
• Financial year-to-date Capital Gains Tax reporting on both estimated realised and estimated unrealised gains or losses. The reporting will display the sale (or simulated sale) as it applies to each tax parcel allocated to the sale and, for each tax parcel sold, will provide a separate CGT calculation. In addition, the report will help advisers manage their clients’ tax more effectively on a daily basis, without waiting for the end of the financial year.
• Single-trading screen. Advisers can now place up to 50 listed security and managed fund trades on a single screen. The single-screen trading feature – which brings market and company information, tax simulations, up-to-date cash balances and the trading engine together – makes the process simpler and trading smarter. Previously buy and sell trading was performed across up to five screens.

Click to download a copy of the enhanced-trading-quick-reference-guide and tax-quick-reference-guide from BT.

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Leading Queensland local government fund LGsuper has selected Decimal to help drive a technology-based solution in support of fund members requiring single-issue financial advice.
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With the merger of LGsuper and City Super due to officially begin on 1 July, 2011, the fund is targeting an increased need for limited advice services to members. LGsuper currently manages around $4.4 billion in funds on behalf of 75,000 members. City Super has approximately 13,000 members and $1.5 billion in FUM.

David Todd, LGsuper CEO said: “In choosing Decimal we have a technology partner that will deliver end-to-end functionality and help our fund address a number of specific business and technical requirements. These include the ability to scale-up in future. We also anticipate deeper engagement by our fund members via the phone and face to face advice which will of course be underpinned by the Decimal technology.”
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Plans are in play for LGsuper to also adopt Decimal’s innovative SmartCalculator in the near future. The integrated online calculator represents a best of breed compliance, engagement and financial forecasting tool, with focus on the member and adviser at all times.
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Decimal Managing Director Jan Kolbusz said he was pleased to have been chosen by LGsuper to help empower its members with an elegant, simple advice solution. “We appreciate the high standards set by LGsuper and its board for service and technology requirements,” Mr Kolbusz said.
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The appointment of Decimal by LGsuper follows a number of similar organsiations signing on with Decimal. Recent partnerships include superannuation fund administrator Pillar Administration, and leading corporate fund AvSuper, based in Canberra.
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Meanwhile, representatives of the major Melbourne-based industry funds will be hosted by Decimal and leading consulting firm KPMG next week, June 15, for a breakfast presentation called “FOFA so good?: The role of technology in navigating change”.
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Matt O’Keefe, KPMG IT Advisory Partner, will discuss the role of technology for super funds riding the wave of regulatory and consumer behavioural change. Technology will play a crucial role in all aspects of member support including member retention, communication, engagement, literacy and advice.

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The enhancements include simplified share and managed funds trading, significant enhancements to template (model portfolio) functionality and online corporate actions for eWRAP super and pension accounts.

Head of Asgard, Craig Lawrenson, said Asgard had worked closely with advisers to ensure the changes would result in a simpler, more intuitive and user-friendly trading experience for advisers.

“We continue to invest in the eWRAP platform so that it streamlines portfolio administration and continues to deliver the features and functionality that advisers need to reduce the cost of providing advice.

“We have over $6.2 billion of funds under administration currently using templates, and these new enhancements to our templating functionality will mean advisers can now create templates comprising cash, managed funds and equities which they can link to multiple clients.
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In addition they‟ll now have the added ability to set portfolio preferences at an individual client level to tailor the template to the individual needs of the client.
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“They’ll benefit from greater portfolio administration efficiency, be able to keep clients’ portfolios on track with our automatically-generated rebalance instructions and it’ll be easier to customise templated portfolios to ensure they reflect the needs of different clients. The new features mean clients can be advised individually but where appropriate execution can occur collectively.”
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Mr Lawrenson said enhancements to share trading within eWRAP were particularly timely as the inclusion of equities in portfolios continued to see a resurgence. Simplified share and managed funds trading, and online corporate actions have also been introduced for Asgard’s Managed Profiles platform. Both eWRAP and Managed Profiles are accessed through Asgard’modes award-winning AdviserNET which recently won the “Best Navigation and User Interface‟ award in the 2010 Investment Trends Platform Report.

Details of the enhancements

Simplified share trading.

The new-look trading screen will consolidate the existing buy investments and sell investments screens into a single screen allowing advisers to:

• Buy and sell managed investments and shares for a single client, on the one screen
• Take advantage of real-time trading
• Place trades using pre-settlement sale proceeds
• Have access to market and company research.

Smarter portfolio management.

Advisers will be able to create templates for cash and equities investment leading to more effective and efficient portfolio management. Additionally, advisers will be able to create a combination of portfolio templates. Template preferences will be able to be set depending on individual client need. For example, templates can:

• Include or exclude assets
• Substitute one asset for another
• Lock an asset so it can‟t fall below a limit an adviser nominates
• Specify a minimum trade or holding value before a buy or sell can occur.

Online corporate actions.

Advisers will be able to manage corporate actions online and participate in dividend reinvestment plans.

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The integration delivers a more seamless service to advisers and will increase their productivity.

AdviserNETgain combines client, practice and advice management processes into one easy-to-use system that integrates advisers’ front and back office.

The integration sees:

• Direct movement of data from BT Wrap to AdviserNETgain leading to a more reliable and accurate transfer of data. This eliminates the need for advisers and other personnel to spend time updating data when generating portfolio reviews
• A single log-on meaning users logging on to AdviserNETgain are automatically logged on to BT Wrap
• The ability to move immediately from viewing a client’s details on AdviserNETgain to viewing the same client’s details on BT Wrap – without having to search for the client

Details on fees and transaction summaries from BT Wrap automatically inserted into advice documents generated by AdviserNETgain. National Manager of AdviserNETgain, Darelle Jenkins, said the integration was another significant step in improving advisers’ productivity and enabling advisers to provide timely and accurate service and advice to their clients.
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“AdviserNETgain is an important tool available to BT Financial Group’s aligned dealers. This major integration provides advisers with accurate, up-to-date information and effortless access to BT Wrap. The more up-to-date information AdviserNETgain has access to, the better clients can be served.”Head of BT Wrap, Chris Freeman, said.
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BT Wrap users would be well-served by the improved integration between the systems.
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“Many advisers who are currently using AdviserNETgain have portfolios in BT Wrap. This integration makes providing advice and ongoing service to clients with BT Wrap holdings extremely efficient.”

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Commenting on the repositioned HUB24 IDPS, INQ and HUB24 CEO Mr Darren Pettiona said “HUB24 supports the great majority of FOFA reforms, particularly the intention to improve fee transparency and remove potential conflicts. In anticipation of the implementation of FOFA, HUB24 has for some time planned to reposition its offering and is pleased to announce it aims to restructure its Investment Service into an IDPS. Initially, operating as a full Managed Discretionary Account service (“MDA”), we now view this operating structure as carrying higher regulatory risk, with less consumer protection than that envisaged by ASIC.

“HUB24 already provides a wide range of financial and investment products, particularly separately managed accounts and we continue to broaden the offering with several superannuation and insurance initiatives being finalised.

HUB24 continues to enjoy many marketplace advantages, as it is one of the few multi-purpose wealth management platforms that have been built in Australia from the ground up in the last ten years. In doing so, it provides professional financial services practitioners with state of the art technology and the delivery of higher service standards.

Furthermore, HUB24 stands alone as a competitive market offering, with full fee transparency and is by design not ‘propped-up’ by shelf space remuneration from portfolio managers.

As a result, HUB24 is ideally positioned for ‘scaled advice’ and has the ability to enable financial advisers, brokers or accountants to provide advice in response to an individual’s singular need should it be required for investment, superannuation or insurance protection cover.
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All of these services and products are already catered for within the HUB24Investment Service.

HUB24’s new legal structure will alleviate many issues, including:

• The requirement to include an investment program in an MDA contract, which can be problematic and practically difficult to comply with in terms of business processes for advisers and for HUB24;
• Enhancing retail protection by ensuring a higher level of disclosure to clients on the underlying investments, with both financial advisers and model portfolio managers obligated to provide disclosure documents relating to the investments accessed via the Service;
• Better supporting the business processes of Adviser Groups, which are already set up for Statement of Advice (“SOA”) infrastructure; and
• Relatively expanded flexibility within the legal structure, which accommodates HUB24’s state of the art technology and INQ’s future future strategic objectives.

In outlining HUB24’s FOFA position benefits, Pettiona listed the following key advantages that will be most attractive to dealer groups and financial advisers concerned with issues in relation to volume rebates and conflicted remuneration:

• The HUB24 Investment Service is competitively priced and provides for Adviser Groups to charge a ‘fee for consultation services’ and the cost of the‘accessible investment offerings’ are delivered at a desired, affordable price and thus allow for quality of advice.
• Increased flexibility, in terms of fee structuring design, which in turn is designed to better cater for the advisers-client relationship, particularly benefitting transparency and affordability.
• The Client and Adviser Workbench facilitates communication and on-going service to the client and significantly reduces many of the adviser’s administrative activities – and in doing so, the adviser has more productive time and resources for enhanced client servicing activities and business growth.

Two new dealer groups added

HUB24 is also pleased to confirm the addition of Premium Accounting Group and Spectrum Wealth Advisers to HUB24’s rapidly growing list of dealer groups.

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Brenton Tong, Head of Strategy for Spectrum Wealth Advisers said, “Spectrum has grown to nearly 100 advisers on a foundation of understanding that each individual practice is unique and off the shelf generic support is inappropriate to their needs in the rapidly evolving financial services marketplace.”
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“Spectrum required a platform that is capable of facilitating Spectrum Wealth’s growth objectives whilst providing our advisers the freedom to operate their practices in line with their individual operations and HUB24 filled the mandate better than any other – and by a long way!”
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Pettiona concluded, “HUB24 is one of the only platforms that doesn’t charge ‘shelf space fees’ to fund managers or offer rebates to dealer groups and in doing so, is perfectly positioned to assist our clients to address pending changes forecast in FOFA.
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“HUB24’s unique structure is enabling dealer group clients to build sustainable revenue streams and participate within the manufacturing process with no legacy constraints. Moreover, HUB24’s technology lead, empowers advisers to utilise the latest in mobile technologies, such as an iPhone app.”

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Specialised smart phone and iPad applications (“apps”) are the next big thing in the financial services industry, according to Rice Warner Actuaries, an actuarial and research company that also creates online and other tools and calculators for use by the financial services industry and its customers.

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The company has seen dramatically increased interest from clients for branded apps that they can offer to members and staff. Rice Warner Senior Consultant Greg Wilkinson said this was particularly the case among clients in the super sector, but he has also been receiving enquiries from the wealth management and financial advice industries.

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“Super funds have seen how online tools and calculators can be a great platform for member engagement and now want to take the next logical step, which is to provide their members with a range of apps that they can use on their mobile phones or iPads, helping them to become better informed about their super quickly and conveniently,” Mr Wilkinson said.

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Rice Warner is also receiving enquiries from financial planning groups for apps that their advisers can use on iPads when consulting with their clients and from wealth managers interested in providing their sales people with tools they can use on the move and in remote locations where internet access cannot be guaranteed.

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“We believe the popularity of apps in the financial services sector will grow very quickly. When we launched our online calculators a couple of years ago, we observed that the rest of the industry had seen the benefits enjoyed by the first adopters and quickly followed suit. We expect that this will also be the case with apps.

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“Our clients also want to show their customers that they are at the forefront of technological developments and feel that they really need to get into this space to remain relevant.”

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Rice Warner recently launched a suite of what they believe are Australia’s first genuine superannuation apps.  These can be customised to align with any organisation’s branding and fund design features.  The range currently includes retirement, salary sacrifice, insurance needs and home loan calculators and other apps can be provided according to clients’ requirements.

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The retirement and home loan calculators are currently available for free trial on the iTunes store or through the Rice Warner website.

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AustralianSuper today announced its support for ASIC’s new personal finance website MoneySmart, launched this afternoon by the Prime Minister, Julia Gillard.

MoneySmart aims to help people make good financial decisions by providing free, independent and unbiased information, tools and motivation and is a key part of the National Financial Literacy Strategy, also launched today.

Ian Silk, Chief Executive of AustralianSuper and a member of the Australian Government  Financial Literacy Board, said that he was fully supportive of any initiative that could improve the financial wellbeing of Australians.

“AustralianSuper is strongly committed to helping both our members and the wider community make better decisions about their financial future, and particularly their super.

“We feel that the simple and straightforward information and tools available on MoneySmart will help consumers to get better educated about their finances and help them to maximise their financial and retirement outcomes.”

Mr. Silk added that AustralianSuper has seen from experience that there is demand from consumers for tools and resources that can help them make the most of their financial situations.

“We know from the popularity of the tools on our own website, such as the Retirement Income Calculator (RiC), that consumers are looking for this sort of accessible, easy-to-use information online.

“We think MoneySmart will be a great complement to steps already taken by organisations such as AustralianSuper in the superannuation space, and will help to educate and empower the community on wider financial matters.

“We would like to encourage others in the industry to follow this lead and focus on providing clear and accessible resources, in plain language, to their customers and to the wider community.”

www.moneysmart.gov.au

www.australiansuper.com/calculators

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