Alexis Gray

Vanguard Australia has hosted its annual adviser roadshow virtually, featuring Global CEO Tim Buckley, Asia-Pacific Chief Economist Qian Wang and Senior Economist Alexis Gray.

This year’s theme ‘Forward’ heralds Vanguard’s commitment to supporting advisers manage client relationships and build their businesses in a world that is increasingly digitally enabled.

Speaking to nearly one thousand financial advisers, Mr Buckley acknowledged the new challenges facing advisers in the wake of COVID-19 and discussed ways they can more effectively manage business demands.

“Embrace advice technology,” said Mr Buckley. “It’s not a matter of beating robo[advisers], but rather streamlining your operations and driving more consistent, robust answers. Technology allows advisers to automate many rules-based activities such as portfolio management and rebalancing. It can simplify some of the more challenging financial planning tasks”.

Mr Buckley also reiterated why advisers are a highly valued part of Vanguard’s business and emphasised the importance of continuing to forge strong partnerships with advisers in Australia.

“Our mission is to take a stand for all investors, treat them fairly and give them the best chance for investment success. Our formula just has a few steps to it: deliver strong fund performance, pair that with trusted advice, and wrap both in a world class client experience. This formula delivers whether working directly with clients or through like-minded advisers.

Mr Buckley also provided insight into how Vanguard helped clients navigate the COVID-19 crisis.

“With markets reeling and economies shut down to contain the virus, investors were understandably worried. But our message to investors was clear and time tested and that is: stay the course. Don’t let short term volatility disrupt your long term portfolio because you’re diversified for a reason,” said Mr Buckley.

Developing a technology ecosystem for advisers

In line with Vanguard’s commitment to developing a technological ecosystem that helps enable advisers to meet client needs, Vanguard Australia Head of Intermediary, Rebecca Pope, announced the upcoming launch of Vanguard Retirement Income Builder.

The new digital tool will be an innovative way for advisers to work with their clients in determining investment, retirement income and wealth drawdown strategies.

“Vanguard Retirement Income Builder will help address the chief concern of many in or approaching retirement of how long their money will last” said Ms Pope. “This is a powerful tool which has been thoughtfully designed with a client friendly interface, to provide advisers a practical application of our total returns approach to retirement income”.

The Retirement Income Builder tool is set to launch in the coming weeks. More details will be provided when available.

Australia likely to outperform most developed market economies amid global recovery

Ms Wang and Ms Gray also highlighted to attending advisers the major themes of Vanguard’s 2021 Economic and Market Outlook: Approaching the Dawn, noting Australia’s economy is expected to normalise more quickly than other countries in 2021.

“Compared to other developed markets, Australia has been relatively successful in containing the virus so economic activity has not suffered as much. As a result, we expect GDP in Australia to return to pre-pandemic levels by mid-year, which is faster than most developed markets” said Ms Gray.

Furthermore, despite unprecedented government spending to support economies through the pandemic, government debt levels are sustainable and fiscal stimulus is likely to remain in place.

In response to concerns that there will be inflation consequences when government support is eventually unwound, Ms Wang said “high fiscal spending and easing monetary policy are no guarantee of higher inflation, especially in developed countries. In 2021, we are expecting more of a cyclical reflation with demand recovery to push up inflation, but we see this as a temporary overshooting rather than a sustained increase given structural forces such as technology advancement and globalisation”.

Ms Gray provided an overview of Vanguard’s long term return expectations noting that “despite the pandemic, our 10-year outlook for both Australian and international equities is better than a year ago, with median returns of between 5 -7 per cent expected. This is largely due to a drop in interest rates and long term bond yields, which are supportive of higher equity valuations. Bonds still have an important role to play in portfolios as a diversifier, rather than being evaluated as a growth asset”.

As detailed in Approaching the Dawn, Vanguard’s outlook for the global economy hinges critically on health outcomes and the production of an effective vaccine.

See the recording of Vanguard’s 2021 Virtual Adviser Roadshow.

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Dr. Qian Wang joined Vanguard on October 27 and is based in Hong Kong.

She joined the global ISG team headed by Vanguard’s Chief Economist, Joseph H. Davis, which includes 50 members globally and seven in the Asia-Pacific region.

Mr. Davis said that with Asia-Pacific being a dynamic and rapidly growing region it is timely that Vanguard appoints a senior economist based within the region to contribute to its global thought leadership effort on markets, investment strategy and economic outlook.

The Asia-Pacific head of ISG, Jeffrey Johnson, said “it is great to be able to welcome Dr. Wang to the team. We look forward to tapping into her experience both within the region and internationally.”

Prior to joining Vanguard, Dr. Wang worked on macro research and strategic development at a sovereign wealth fund based in Asia and before that as an economist and head of Greater China research at JP Morgan. She holds a PhD from Stanford University.

Vanguard’s Regional Managing Director in Asia, Shelly Painter, also welcomed the appointment of Dr. Wang. “This is another sign of Vanguard’s commitment to build its investment capability in the region and it will help us better serve both existing and future clients with market insights and thought leadership that is such an important part of Vanguard’s approach to investing.”

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