The journey to financial freedom and achieving a desired lifestyle in retirement requires careful planning and commitment to create.

The majority of Australians are taking proactive steps to strengthen their financial situation, but many need more support to realise their financial goals and prepare for retirement, according to the recent Financial Freedom research – from MLC, part of the Insignia Financial Group.

The data found more than two thirds (69%) of Australians spend time thinking about having enough money for retirement and a similar proportion (70%) have a good understanding of how superannuation can help them reach their financial goals. Yet despite this, almost a third (31%) feel only slightly, or not at all, prepared to navigate any unexpected personal finance challenges.

Mark Oliver, Chief Distribution Officer and Head of Superannuation, at Insignia Financial, said: “The Financial Freedom research clearly shows Australians understand the value of superannuation and are motivated to improve their financial situation, but they need more assistance to achieve financial freedom.

“While it is broadly understood that superannuation is not a set and forget strategy, the industry has a role to play to empower members to feel confident in their superannuation and overall financial wellbeing. With five million Australians at or approaching retirement, super fund members need better access to relevant tools, information, education and advice well before retirement age – waiting until members transition to retirement is simply too late.”

According to the data, almost four in five Australians (79%) have a ballpark idea of how much they currently have in their superannuation fund. Additionally, more than one in ten people aged 18-42 (13% for 18-27, and 14% for 28-42), and around one in five people aged 43-76 (20% for 43-57, and 16% for 58-76) make additional personal contributions to their super funds, the data found.

Mr Oliver said: “Expanding the personal advice offer that superannuation funds are able to provide to their members is a great step forward, and will be an important tool to help members plan and prepare for retirement.

“Financial advice needs exist on a continuum and expanding the scope of advice in super will better meet these needs.”

Financial freedom guide

To further support Australians on their financial wellbeing journey, MLC has developed a comprehensive guide to achieving financial independence, which can be accessed on MLC’s Insights page^[1].

The guide offers tips for Australians seeking to enhance their financial wellbeing in a post-pandemic, high inflation environment, exploring personal finance topics like managing debt, investing for retirement and building an emergency fund, and includes practical examples for everyday life.

Mr Oliver said: “The journey to financial freedom and achieving a desired lifestyle in retirement requires careful planning and commitment to create. Australians need assistance to improve their financial literacy, set clear financial goals, and access to a range of advice, tools, and resources to feel secure about those golden years.”

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[1] https://www.mlc.com.au/personal/insights/financial-freedom-guide

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Insignia Financial has announced its Managed Account solutions have exceeded $6 billion in funds under management (FUM).

Insignia Financial offers a range of Managed Account solutions to meet the diverse needs of clients, including Managed Discretionary Accounts (MDAs) and Separately Managed Accounts (SMAs).

Over the past 12 months, the firm’s managed accounts have experienced significant growth of more than 42%. Growth continued throughout the year, with September 2023 experiencing record monthly net flows of $248m into Insignia Financial’s MDA and SMA solutions.

The firm’s Managed Account solutions are offered via Insignia Financial’s proprietary products, Expand Extra and MLC Wrap, along with select external platform providers. To date, Expand Extra, has received more than 55% of total FUM through its various MDA solutions. Growth in the MLC Asset Management managed SMAs available on MLC Wrap continued with FUM exceeding $1.3 billion.

Insignia Financial Chief Distribution Officer, Mark Oliver, said: “We are pleased to see the uptake in our Managed Account solutions, as advisers look for ways to streamline operations and generate improved outcomes for clients. Their continued growth demonstrates the important role managed accounts play for financial advisers and their clients.”

According to analysis from Investment Trends, in 2023, more than half (56%) of financial advisers are utilising managed accounts in their client portfolios, an increase from 26% in 2017^[1]]. A key driver in the uptick in managed accounts can be attributed to how the use of managed accounts can help advisers to generate more consistent outcomes for clients in times of volatility.

Mr Oliver added: “Insignia Financial is well positioned to support the growth in the use of managed accounts. Advisers are increasingly adopting our Wrap platform solutions to provide more choice and value to clients. Along with increased administration efficiencies and portfolio risk mitigation, the broad range of investment options offered in our Managed Account solutions allow advisers to design unique portfolios tailored to clients’ individual needs.

“We will continue to grow our offering over the next 12 months in response to increasing demand from licensees for tailored services to meet varying client needs. In October, this continues with Expand Extra enabling third-party MDA operators to provide MDA services. The Expand platform is intuitive, contemporary, and agile making it easy for advisers to support their clients and respond to their evolving needs and providing greater access to more managed investments.”

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According to IOOF Chief Distribution Officer Mark Oliver, the migration is a significant milestone for advisers and their clients, taking the total of number of client accounts now on the Evolve platform to over 275,000, with approximately $41bn in funds under administration (FUA).

“This migration sees us complete the consolidation from two platforms to one go-forward ecosystem, providing clients with access to leading edge technology that is intuitive and simple to use, supporting business efficiency for advisers while enabling better outcomes for their clients,” said Mr Oliver.

While the Evolve platform delivers an enhanced client and adviser experience, it also demonstrates how IOOF’s transformation strategy aims to improve value for clients through scale and simplification.

The latest Evolve21 migration will see the transitioned clients gain access to improved features, while 61% of clients transitioned in this migration will receive a reduction in their existing competitive fee arrangements.

This second phase of the Evolve21 migration also sees new features introduced to the platform including enhanced functionality for online advice-fee renewals, company account structures for IDPS accounts, adviser activity dashboard, At Limit trades and the use of DocuSign for non-binding and binding non-lapsing beneficiary nominations.

“We designed Evolve so it could adapt to the changing needs of advisers and their clients. This latest migration and the introduction of new features demonstrates this is something we will continue to deliver on.

“Listening to advisers, understanding their needs and the needs of their clients remains integral to Evolve continuing to reduce complexity, create efficiencies and deliver a high-quality user experience,” said Mr Oliver.

With the successful migration of IOOF’s legacy platforms and products complete, IOOF will continue to develop its product simplification roadmap including consolidating the platforms and products acquired as part of the MLC and ANZ P&I transactions.

IOOF Essential and eXpand^[1]

As clients progress through their life cycles, advisers can transition their accounts seamlessly on the new Evolve platform by accessing the IOOF Essential and eXpand wrap products.

• IOOF Essential: For clients with less complex investment needs – IOOF Essential simplifies investment management by providing a range of multi-manager funds that provide access to diversified and cost-effective portfolio solutions.
• eXpand: For clients with more complex investment requirements – The eXpand solution enables advisers to custom build portfolios via a range of active, passive and direct investment options, and access more than 420 managed funds, a range of term deposits, fixed term annuities and ASX listed securities and ETFs.

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[1] IOOF Essential Super, IOOF Essential Pension, eXpand Super and eXpand Pension are issued by IOOF Investment Management Limited (IIML) ABN 53 006 695 021, AFS Licence No. 230524 as Trustee of the IOOF Portfolio Service Superannuation Fund ABN 70 815 369 818. IOOF Essential Investment and eXpand Investment are issued by IOOF Investment Services Limited (IISL) ABN 80 007 350 405, AFS Licence No. 230703 as the Service Operator of the Investor Directed Portfolio Services. IIML and IISL are part of the IOOF group of companies, consisting of IOOF Holdings Ltd ABN 49 100 103 722 and its related bodies corporate.

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The Evolve platform is a leading-edge yet easy-to-use ecosystem for super and investments, where automation and data can power better outcomes for clients and advisers’ businesses.

Over a single weekend, IOOF successfully migrated 38,827 client accounts and approximately $5 billion funds under administration (FUA) onto Evolve, resulting in a total of over 200,000 client accounts now on the platform and more than $20 billion FUA.

The completion of this first phase of the Evolve platform consolidation is a significant milestone in the modernisation and simplification of IOOF’s platform technology. The second phase of the migration is due to be completed by the end of 2021, when it is estimated that IOOF will have a total of over 260,000 client accounts on Evolve and more than $40 billion in FUA.

IOOF Chief Distribution Officer Mark Oliver said, “We’ve drawn on our extensive experience in the financial advice industry to develop a platform that is future fit, intuitive and simple to use and importantly, progresses IOOF’s transformation strategy, including reducing the cost-to-serve. By way of example, 42% of clients migrated onto the Evolve platform received fee reductions.

“It is pleasing that there was a seamless transition over the course of one weekend, with more than 3,200 advisers up and running with minimal disruption to their business.

“We are committed to better supporting advisers and their clients and delivering an enhanced client and adviser experience.”

Evolve has been designed in close collaboration with advisers to provide the benefits of a modern integrated platform. It offers tools, shortcuts and data views to take the complexity and effort out of administration and reporting. Advisers and clients will gain access to greater functionality and platform capabilities for a market competitive fee.

Mr Oliver commented, “As the technology is developed in-house, we have the flexibility to continue to upgrade Evolve’s functionality, in an efficient and timely manner, to adapt to the changing needs of advisers, their clients, as well as the ongoing transformation of the wealth management industry.”

Designed in partnership with advisers, key features of Evolve are that it:

• is intuitive and easy to use
• offers a clear and simple view of data that matters
• is responsive in supporting users every step of the way
• provides a simple, consistent experience for clients throughout their journey
• is designed to continue to adapt and simplify

Mr Oliver added, “The transformation we are undertaking is creating a better IOOF for advisers and their clients. We are focussed on supporting the development of client end-to-end life stage relationships by investing in new technologies, like Evolve, to reduce complexity, create efficiencies and deliver a high-quality user experience. I am confident that advisers and clients alike will value this innovation.”

IOOF Essential and eXpand*

On the Evolve platform advisers and their clients can access:

• IOOF Essential which simplifies investment management by providing a range of multi-manager funds that provide access to diversified and cost-effective portfolio solutions.
• eXpand which enables advisers to custom build portfolios via a range of active, passive and direct investment options, and access to over 420 managed funds, a range of term deposits, fixed term annuities and ASX listed securities and ETFs.

As clients progress through their life cycles, advisers can transition their accounts seamlessly on the Evolve platform.

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The appointments are a part of the broader reshape of the business, allowing IOOF to be ‘fit for purpose’ both now and in the future, as the company enters a new phase of its transformation.

Key changes made are:

• Mr Frank Lombardo will assume the role of Chief Operating Officer
• Mr Darren Whereat will assume the position of Chief Advice Officer
• Mr Mark Oliver will take the new title of Chief Distribution Officer

On the changes, Mr Renato Mota, IOOF Chief Executive Officer, commented: “These promotions and changes to the Executive Team are designed to better align our teams and reflect the integration of the recent acquisition of ANZ’s Pension and Investments business (P&I). This marks the commencement of an exciting new phase of IOOF’s development.

“We are building solid foundations for IOOF’s future success. Through a purpose-led culture we continue to challenge ourselves to deliver better outcomes for clients and members. The recent increase in our size and scale through the P&I acquisition has improved our ability to invest in and deliver market leading solutions, offering more value to our clients.”

Mr Lombardo’s change in role reflects a focus on the integration of P&I as well as continued ClientFirst transformation. Mr Mota commented, “The operations function will now encompass new areas, including Transformation & Integration, a new Commercial Management capability and supporting ClientFirst thinking adoption across the IOOF enterprise.”

As Chief Advice Officer, Mr Whereat is to continue to have carriage of the Advice business, ensuring consistency and further cementing the central role advice is set to play in the company’s future strategy. Mr Mota commented that, “Mr Whereat assuming the role of Chief Advice Officer reinforces the importance of financial advice to IOOF’s strategy and in particular the transformation of advice delivery.”

Mr Oliver taking the new role of Chief Distribution Officer reinforces the increased scale and scope of IOOF’s product and client businesses following the completion of the P&I transaction as well as incorporating responsibility for Group Marketing. Mr Mota said, “Mark’s new role reflects the importance of and opportunities from the continued development of efficient and engaging solutions for advisers, investors, members and employers.”

As part of these changes, Mr Mota announced that Candice Spence, Head of Marketing, has chosen to leave the company after 14 years with the organisation. Commenting on Ms Spence’s departure, Mr Mota said, “I would like to sincerely thank Candice for her significant contribution during her time at IOOF. Candice has successfully led the marketing and communications effort for 14 years through numerous acquisitions and integrations.”

The aforementioned appointments are effective immediately.

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MPS is designed specifically to support advisers in efficiently delivering value to their clients with flexible, high quality portfolio construction and implementation capabilities through a seamless, centrally managed solution that is actively monitored and maintained.

Mark Oliver, IOOF General Manager – Distribution, commented “MPS is the first managed account solution that is fully integrated with XPLAN, including advice documentation generation and the management of client accounts with built-in reminders for client reviews”.

“As an experienced managed accounts operator with substantial scale, we are pleased to extend our established managed account solutions to the Pursuit platform” said Mr Oliver. The launch of MPS on Pursuit complements the existing MPS offerings already available on IOOF’s exclusive version of BT Panorama and on Symetry Active, powered by Colonial First State.

MPS through Pursuit is now available to two of IOOF’s licensees, Bridges Financial Services and Consultum Financial Advisers, and will comprise a range of custom-built model portfolios. It is anticipated that IOOF will also offer MPS to the broader market through its range of internal and externally administered platforms.

“IOOF is an advice-led business that recognises the value advisers place on choice, service and flexibility across the products and services they access to deliver value to their clients.  We are uniquely positioned to provide a range of quality solutions through our open architecture model to support a variety of advice propositions and implementation preferences.” commented Mr Oliver.

According to the latest Roy Morgan Superannuation Satisfaction Report^[i], IOOF now has the top ranked retail superannuation fund based on customer satisfaction with their fund’s financial performance. IOOF also ranked in the top four organisations in Australia for adviser satisfaction according to the latest Wealth Insights Service Level Report^[ii].

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[i]   Roy Morgan’s Satisfaction with Financial Performance of Superannuation Reports, November 2017.
[ii]  Wealth Insights – IOOF Pursuit Service Level Report 2018

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Developed in response to adviser feedback the enhancements will result in more efficient client portfolio administration capabilities and streamlined business processes, including:

Key enhancements include:

• Non-lapsing binding nominations are now available on all IOOF Pursuit superannuation and pension products.  Non-lapsing binding nominations do not expire after three years, unlike binding nominations, thereby removing the need to update it unless required.
• Indexed advice fees on all IOOF Pursuit products. Advisers can now choose to automatically index certain fees by the Consumer Price Index (CPI) or a fixed percentage (up to a maximum of 10 per cent) on a specific date each year.
• Additional pension payment date on all IOOF Pursuit pension products.  Clients can now choose to receive their pension payments by the 14th or 28th day of the month, giving them more choice and flexibility.
• Mark Oliver, General Manager of Distribution at IOOF, said “IOOF Pursuit’s new capabilities reinforce our philosophy of delivering simple yet powerful solutions that improve efficiencies for advisers and enhance the value of advice for clients.

“Through empowering advisers and their clients, these enhancements ensure IOOF Pursuit continues to maintain its strong position in the market.”

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IOOF Pursuit was first launched in October 2006, reaching $1 billion in FUA within three years. It has evolved to suit advisers’ needs over time, with a focus on simplicity in an increasingly complex regulatory environment. IOOF Pursuit is a very smart, intuitive and powerful platform that is also very easy to use.

Over the past year, IOOF has made several enhancements to IOOF Pursuit including: a redesigned online trading portal to allow the placement of buy and sell orders for shares, managed funds and term deposits in one place; an automatic re-weighting function; online same day withdrawals; improvements to the platform’s functionality around corporate actions; and a new portal to manage maturing investments.

IOOF Pursuit’s recent enhancements have concentrated on the development of functionality that has helped advisers administer their clients’ portfolios more efficiently, streamline their business processes and reduce the amount of time clients are out of the market.

Chris Weldon, IOOF Head of Product, said “Many wrap platforms have become quite complex to operate, but our focus has been on honing the usability of our platform features that really matter to advisers rather than providing all the bells and whistles available.”

“We want to empower advisers by simplifying their delivery of advice and making the client portfolio management process more efficient, ensuring that their clients receive the full benefits.”

“A wrap platform’s role is to support the advice process by making the associated investment and administrative tasks as efficient as possible, so advisers can focus on the things that add real value for their clients.”

Mark Oliver, IOOF General Manager, Distribution, said: “We are proud of IOOF Pursuit’s ten-year track record of delivering simple yet powerful tools to improve the value and quality of the advice that advisers offer their clients.”

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“As investors and advisers focus on building portfolios that are optimized for risk, return and cost, the strategy is shifting to one that blends both active and index funds, rather than  one that focuses exclusively on one investment style,” Mr Oliver says.

“For example, active funds are best considered for asset classes that are difficult to represent with an index, such as some emerging and debt markets. An active management approach has the potential to take advantage of the many illiquid issues that are often part of such asset classes.

“Other asset classes, for example domestic equities, may lend themselves to indexing, as they can be more readily replicated and implemented. Indexing can also be utilised for asset allocation strategies.

“By blending both approaches, investors can harness the advantages of each and create a more flexible and diversified portfolio.”

Mr Oliver said that BlackRock is often asked by investors if there are certain economic or market conditions that favour one style over the other.

“Our research suggests that adopting a long-term, strategic framework governing the blending of active and passive, regardless of the economic cycle, is more productive than trying to flip from style to style,” he says.

“Each investment strategy offers its own advantages, suggesting that the most robust portfolio may result from a combination of both.”

Mr Oliver described this blending as similar to an ‘hourglass’ approach to portfolio construction, with greater use of unconstrained, higher return-seeking funds combined with  side low-cost passive exposures.

“Investors increasingly realise that attempting to time markets, and trying to trade in and out of stocks or bonds to minimise losses is difficult. Equally, trying to time an active managers’ performance is also difficult.

“Having identified skilled active fund managers, investors should be prepared to remain invested long enough, at least through one economic cycle, to give the manager enough time to generate the positive returns sought.”

Mr Oliver suggests investors should also look for active funds with broad mandates.

“One of the most useful formulas in finance is The Fundamental Law of Active Management, which basically states that an active manager’s ability to add value is a function of his or her skill and the “breadth” of the mandate.

“What this implies is that multi asset strategies – defined as those with a wide range of securities, countries, sectors or asset classes – provide more fertile ground for active managers.”

He noted that on the other hand, there are good reasons to use index funds at the same time.

“The main reasons to use passive funds are cost, precision and flexibility in implementing tactical exposures,” he says.

“For instance, investors may consider passive funds when they are aiming to achieve precise exposure to certain asset classes in a cost effective and tax efficient manner.

“Some narrow index benchmarks – such as large-cap value stocks or medium-cap growth stocks, as well as many fixed income markets – are generally easy to replicate with a passive fund.

“Additionally, exchange traded funds (ETFs) and other index products typically offer a low cost, transparent and tax efficient mechanism to gain exposure to such core asset classes.

“For investors looking for a tactical approach, such as adjusting their exposures to certain markets and asset classes, ETFs are also an excellent vehicle.

“They are liquid and cost effective, meaning it is easy to adjust portfolio exposures based on short-term market conditions.

“Of course, the right blend of index and active investments for each individual investor will depend on their particular risk tolerance and investing goals, but the criteria outlined here identify a worthwhile starting approach,” Mr Oliver concludes.

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Financial advice highly valued but Australians are still reluctant to seek professional advice: BlackRock

Australians rank the state of the economy as their number one concern, and only half of all Australians feel confident about their financial future.

These were some of the key findings from BlackRock’s inaugural Global Investor Pulse Survey released yesterday.

The survey of 17,600 respondents, including 1,000 Australians, was commissioned by the world’s largest investment manager, BlackRock, to test consumer attitudes and opinions about savings, investments and superannuation.

Key findings, outlined below, shed light on Australia’s retirement hopes, use of financial advice and approach to property.

Financial advice conducive to good financial health

Despite the fact that financial advice is highly valued when it is used, many Australians are still reluctant to seek professional advice, and only 15% of Australians use a financial adviser.

Of those that do, two thirds feel positive about their financial future, compared with only half of Australians in general.

So why do so few Australians seek financial advice when the benefits are so clear?

Not surprisingly, income plays a key role. Twenty-five percent of those who earn in excess of $150,000 (or with household income in excess of $160,000) use a financial adviser, compared with only 10% of those on lower incomes.

Mark Oliver, BlackRock Managing Director, commented: “As the survey shows, financial advice is still the preserve of a small minority, but those who use it value it highly. For instance, in Australia, 89% of advised investors said that professional financial advice was good value for money (compared to 84% globally), while 93% said that it helped them to select the right investment products for their needs (compared to 87% globally).”

“However, the survey also highlighted that the use of financial advice was highest among the 55-64 age bracket, or those approaching retirement. It is well known that the earlier we start planning for retirement, the better the outcome, so we would encourage young Australians as well as those approaching retirement to engage with a financial adviser.”

When asked what concerns Australian investors when it comes to the security of their financial futures the state of the Australian economy ranked as the top reason, followed closely by job security, having to spend more than they earned and healthcare costs. Drilling down it was clear that those on lower incomes were most concerned with spending more than they earn. Unlike those who were more affluent they were very concerned with changes to government pensions and social security as well as housing costs. In contrast, those who were more affluent were preoccupied with the state of the Australian and global economies and also were more interested in tax policies, changes to interest rates and stockmarket volatility.

Property is a priority

Australia’s love for property was evident in the survey, with a clear difference between Australia’s attitude towards buying and saving for property compared with the rest of the world.

We spend more of our planning time on purchasing a new home (20% of time in Australia compared to 17% globally), and are more interested in paying off the mortgage on our homes (28% compared to 23% globally). We are also more interested in saving for a deposit for a new home (17% compared to 13% globally).

Investment property ownership in Australia sits at 15% of those surveyed, which is well above the European and North American averages, where rates of ownership were 10%.For more affluent Australians the rate of ownership increased to 35%.

Mr Oliver said that it was no secret that Australians have always had a love affair with property.

“However, investors need to be mindful that while property has its place in the asset class mix, they should ensure they have a well-diversified portfolio.”

Planning for retirement

According to the survey, Australians are more enthusiastic about their need to plan for a comfortable retirement than their global counterparts, with 76% of retired Australians believing in saving for retirement as early as possible, compared with 65% globally. Seventy-two percent encouraged a long-term approach to retirement saving, compared with only 55% globally.

“While Australia has made great progress towards self sufficiency with the superannuation guarantee, it is widely recognised that more needs to be done to fund a comfortable retirement. It’s not surprising to see that the majority of retirees recommend that we should start saving earlier and take a long-term view when it comes to retirement planning, Mr Oliver said.

“At BlackRock we echo those thoughts and encourage Australians to be positive about our increased longevity. Investing for a long retirement is complicated but a few simple steps may help your longevity work to your financial benefit: for example, investing early …and often, allotting small amounts over time could potentially be easier to bear than having to play catch up. Also, consider all your investment options, including alternative investments, and combining indexed and active strategies to manage diversification and costs along the way.”

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