James Wright

JBWere has become a full member of the Responsible Investment Association Australasia (RIAA), the peak industry body representing responsible, ethical and impact investors across Australia and New Zealand.

RIAA focuses on encouraging investment in sustainable assets and shaping responsible financial markets underpinned by strong returns.

RIAA has over 220 members, including superannuation funds, fund managers, consultants, researchers and community trusts that manage more than $9 trillion in assets.

“Responsible investments already account for more than half of all professionally managed assets in Australia, up from 16% in 20141 and this will only continue to grow,” said Chief Investment Officer (JBWere) James Wright.

“Over the long-term, we believe that integrating environmental, social and governance (ESG) factors into the investment research, analysis, selection and monitoring process will deliver better portfolio outcomes for our clients.

JBWere already has extensive socially responsible investing (SRI) capability through its partnership with MSCI2, one of the leading providers of environmental, social and governance (ESG) research globally.

“Integration of ESG factors into the investment process is often perceived as best practice investment management.

“ESG integration is about how effectively a company is being managed in the broadest sense – it is not a ‘values-based’ judgement on the nature of the activities the company undertakes. And it’s something more and more of our clients are interested in – they have a deep social conscience and want the right fit for their investments,” Mr Wright said.

The post JBWere full member of RIAA appeared first on AdviserVoice.

A white paper released yesterday by JBWere – The evolution of SMAs: what do planners and investors really want? – reveals that investor use of SMAs has rapidly increased to the highest level on record, with 20% of financial planners now using SMAs as part of a client investment portfolio[1].

The prime drivers of this growth have been increasing investor education on financial products, combined with substantial administrative pressures faced by advisers, said JBWere Chief Investment Officer James Wright.

“Investors are increasingly choosing full control and transparency when it comes to their retirement portfolios in particular – with assets in the SMSF segment expected to more than triple to over $2 trillion by 2033, the funds involved are huge and growing rapidly,” said Mr Wright.

“Financial advisers are feeling the effect of this trend by spending more time monitoring and administering direct investments for clients, which combined with a new wave of regulation, is creating major commercial pressures on their businesses,” he said.

Despite increasing investor preferences for direct investments over managed funds, just under half (48%) of advisers were not interested in investing further in direct shares for their clients because of the administrative work involved in monitoring individual stocks[2]. For these advisers, SMAs presented a way for their clients to be invested in a transparent portfolio of equities, while outsourcing the management function to a professional, said Mr Wright.

“Stock selection, portfolio rebalancing, administration and after-market support are outsourced to the manager of the SMA, as well as responsibility for handling of corporate actions,” he said. “This means there is no need to provide clients with individual Statements of Advice (SoAs) every time the composition of the portfolio changes.”

While the SMSF sector currently holds just under a third ($193 billion) of its total assets in direct equities, a majority of planners actually believe these clients would be better off in SMAs. Given the tax efficiencies and convenience of outsourcing the management function, combined with a low overall management cost, SMAs were an ideal vehicle for investors holding equities through an SMSF, said Mr Wright.

“SMAs make a huge amount of sense for SMSF investors – they allow full transparency and ownership of stocks, without the investor buying into tax events and crystallising capital gains, and eliminating the hassle of having to monitor individual stocks on a daily basis,” said Mr Wright. “For those who may have opted out of managed funds in previous years due to cost considerations, the lower management fees should also appeal.”

Looking ahead, JBWere sees that the two key barriers to further growth in the SMA market would be education and availability. Despite a growing interest in the benefits SMAs offer, many advisers still felt they didn’t know enough about issues like the risks and tax advantages of SMAs to be able to answer more complex client questions.

“Both SMA providers and dealer groups must lead the charge in providing advisers a more comprehensive range of educational materials around the features and uses of SMAs in order for the market to achieve further growth,” said Mr Wright. “While the potential is there, supporting advisers to confidently explain SMAs to their clients will allow SMA inflows to be less inhibited than in previous years.”

“The addition of SMAs to more of the major dealer group platforms should also drive a surge in investor take-up,” Mr Wright concluded.

———–

[1] JBWere/Investment Trends 2015 SMA Report

[2] JBWere/Investment Trends 2015 SMA Report

The post SMAs provide ‘best of both worlds’ for planners and investors – JBWere appeared first on AdviserVoice.