This follows a thorough review of the business to determine the sustainability of the Genesys business model going forward.

For Genesys advisers wishing to stay with AMP, they will be offered a transition to another AMP licensee and advisers will be able to choose the licensee which they think best fits their business.

Managing Director, Genesys & ipac, Tim Steele said Genesys advisers wishing to stay with AMP will be offered a choice to move to another AMP licensee.

“Genesys has great advisers and firms. AMP and Genesys share a mutual commitment to delivering quality financial advice to customers and we believe many of these firms will make the choice to stay with AMP.

“Our priority now is meeting with Genesys firms to discuss their options and support their decisions.

“AMP has a strong value proposition for our financial advisers. Financial advice is at the heart of our business, and we have the infrastructure and resources to help advisers grow and develop their businesses, and give clients the benefit of high quality financial advice backed by a large and trusted brand.

“For firms who opt to stay with AMP, our intention is to minimise disruption to their business, for the benefit of both advisers and their clients,” Mr Steele said.

Genesys has more than 200 advisers and 92 firms around Australia.

The Genesys leadership team will be meeting with member firm principals over the coming weeks to discuss migration plans for those firms that decide to remain with the AMP Group.

AMP’s financial advice network has around 3,800 financial advisers in Australia and comprises of AMP Financial Planning, Charter Financial Planning, Hillross, Horizons, ipac and smsf advice.  Operating earnings of the AMP Australian wealth management business are not expected to be materially impacted by this change.

The post AMP completes strategic review of Genesys Wealth Advisers appeared first on AdviserVoice.

Five new funds were added to Lonsec’s Large Cap Australian Equity universe in this review, including the CFS Australian Share Core Fund, Ironbark Karara Australian Share Fund and the Perpetual Concentrated Equity Fund.

Sector observations

Market environment

The Australian sharemarket, as measured by the S&P/ASX300 Accumulation Index, delivered a modest gain of 1.9% over the 2010 calendar year. Andrew Scifo, Investment Analyst responsible for this review, commented, “The market could best be described as lacking direction in 2010, with large deviations in month to month performance.”

“In the absence of a broad sharemarket rally, individual stock picking proved to be critically important, with global macro-economic factors contributing to sharemarket volatility during the year.”

The second half of 2010 saw the re-emergence of a strongly performing resources sector. “Resources outperformed relative to industrials, and small and mid-cap stocks outperformed relative to large cap stocks,” said Scifo.

Australia is not immune to global events and uncertainty surrounding the macroeconomic environment is expected to cloud the outlook in 2011.

“The key macro factors likely to impact the Australian market this year include the recent events in Japan, impediments to US recovery, China‟s inflationary pressures, ongoing European debt issues and the high AUD (for exporters),” observed Scifo.

Fund performance

There was a large divergence between top and bottom performing funds across the peer group, with no trend of fund outperformance based on investment style alone.

“A key factor influencing fund performance during 2010 was the disparity in returns delivered by small, medium and large cap stocks,” commented Scifo.

“Some of the better performing funds for the year exhibited a bias toward smaller stocks.”

Inflows and funds under management

The trend towards low cost, passive alternatives in Australian equities continued in 2010, with retail fund flows towards active strategies being relatively flat.

“The increasing popularity of ETFs and availability of SMAs has created increased competition for the traditional managed fund,” said Scifo.

The post Lonsec releases its Large Cap Australian Equity Sector Review appeared first on AdviserVoice.

In its report, S&P noted that the ‘ “STRONG” rating reflects the benefits of a strong product and service offering, timely execution of portfolio managers’ investment decisions, cost effective management of trades, and a technology platform that is convenient for advisers and portfolio managers.’

The review went on to say that, ‘having now established an extensive product and service offering, advisers have the ability to use the platform as their main or sole investment implementation application. The service is convenient and simple to use for advisers and portfolio managers. Additionally, the service provides direct data feeds (EPI 4.0) into the largest adviser software applications.’

Commenting on this review, Chief Executive Officer of Investorfirst, Mr Darren Pettiona, said “It is pleasing to receive independent confirmation of the HUB24 SMA platform. We have a strong and stable team, with each member playing an equally important role in our success.”

“S&P’s review process is extremely thorough and this rating not only recognises HUB24’s development achievements but also our deep understanding of SMA specific risks and commitment to very high implementation standards – all critical components of efficient, transparent and effective portfolio delivery to investors.”

The key strengths stated in the report include:

• Cost effective management of trades, both in relation to brokerage rates (5.5 bps) and the minimisation of market impact price risks.
• Investment decisions are implemented on a same-day or next-day basis, greatly mitigating a number of SMA-specific risks.
• The platform’s online tools are convenient for both advisers and portfolio managers.
• The SMA product range is large, with 25 investment managers and 58 SMA model portfolios. The platform also provides access to a broader asset-class menu, including managed funds, exchange traded funds (ETFs) and direct equities.
• Internally developed IT systems that, among other things, enable the manager to respond to client requests for additional functionality.
• The management team has a strong pedigree and a proven track record in the development of financial planning software.
• Model portfolio managers are empowered to easily manage and maintain their portfolios through an online “work bench”.
• Reporting of performance differentials between a model portfolio and unit trust version (where one exists) provides advisers valuable transparency regarding the efficiency of the model portfolio.
• As a part of the review process S&P noted that it believed that ‘the risk that the service will be discontinued at some future point is extremely remote based on the manager’s financial position, the strategic importance of HUB24 to the growth prospects of the listed entity that owns HUB24, and solid client prospects based on the strength of the service offering.’

A full copy of the S&P Report is available on the Investorfirst Ltd website http://investorfirst.com.au/archives/1235

Additionally more information about S&P’s SMA ratings approach can be found in the explanatory guides: ‘Guide to S&P SMA Model Portfolio Ratings’ and ‘Guide to S&P SMA Model Platform Ratings’ on the Standard & Poor’s website http://www2.standardandpoors.com/portal/site/sp/en/au/page.article/2,4,2,0,1148442711865.html

The post Standard & Poor’s assigns ‘STRONG’ rating to HUB24’s Portfolio Service SMA Platform appeared first on AdviserVoice.

Two new funds were added to Zenith’s Recommended List, and one fund was upgraded to Highly Recommended.

Also, this year Zenith sub-divided the sector into Mid Cap Funds and Small Cap Funds, in recognition of the different characteristics and diverse risk / return profiles these funds offer.

As part of this year’s Small Cap Funds Review, Zenith examined the issue of ‘fund capacity’.

“In the relatively small Australian equities market, capacity is an important point to consider when selecting a managed fund,” said Angela Burmeister.

“The reason this is important is simple: high levels of Funds Under Management (FUM) can limit the ability of the manager to enter or exit a stock at the desired market price, impairing performance.

“Excessive FUM levels are particularly pertinent in the small cap sector, given the inherently lower liquidity of these stocks.”

With this in mind, this year Zenith undertook capacity studies for a number of funds where higher levels of FUM are a potential concern. This was considered from both a strategy  specific and a firm-wide standpoint, and national research provider examined the managers’ ability to generate excess returns against their historical levels of FUM.

The post Zenith 2011 Small Cap Australian Equities Review Rates 12 Funds ‘Recommended’ appeared first on AdviserVoice.

The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has welcomed comments in the media this week by Cooper Panel chairman Jeremy Cooper about the high level of competency and financial expertise of SMSF trustees, but has questioned speculation about whether trustee quality could be eroded by future sector growth.

The final Cooper panel report, released by Jeremy Cooper in July called the $390 billion SMSF sector, the largest by assets in the $1.2 trillion super system, “well functioning and successful”. The SMSF sector is
home to 428,000 funds and 815,000 trustees with an average member balance of $480,000.

“We agree with Jeremy Cooper, chairman of the Cooper Panel, that the SMSF sector is successful due to the high level of competency and financial expertise of those who set them up and we intend to see that
standard increased through pushing for higher standards for advisers, while expanding educational opportunities for trustees,” said Sharyn Long, chairman of SPAA.

“SPAA is supportive of the Cooper Review’s recommendations for higher competencies for SMSF auditors and advisers and has advocated for this through our contribution to the Cooper Review process and the Future of Financial Advice (FoFA) reform process,” said Ms Long.

She said SPAA has witnessed growing numbers of advisers applying for and completing accreditation as either a SPAA Specialist Adviser or a SPAA Specialist Auditor.

On the SMSF trustee front, Ms Long said SPAA, in an industry first, had recently launched an SMSF trustee education curriculum guide to encourage education providers and industry practitioners to create and provide SMSF trustee training.

“We believe that as the numbers of funds and member balances grow, more and more trustees will seek to educate themselves about their responsibilities and obligations, many of them encouraged by their advisers,” Ms Long said.

Ms Long said SPAA would continue to work closely with regulator, the Australian Tax Office (ATO) on issues affecting the SMSF sector and with the APRA regulated fund sector on industry matters.

“SPAA supports comments made by Superannuation Minister Bill Shorten and company director and former Olympics luminary, Rod McGeoch, at the Association of Superannuation Funds of Australia conference this week, that fund sectors should work together to improve the industry and the outcomes for fund members,” Ms Long said.

The post SPAA supports Jeremy Cooper’s comments on high competencies and quality investors in SMSF sector appeared first on AdviserVoice.

“Recent events and judicial comment highlight the need for a broad review of licensing criteria for Responsible Entities, as the current approach is clearly failing many investors.

“There is increasing evidence that existing licensing criteria are now weighted too heavily in favour of fund promoters, without adequate consideration of who they are,” he said.

Mr Kalman pointed to recent comments by Supreme Court of Victoria judge Justice Judd, where he said that there was irreconcilable conflict between a particular manager’s duty to investors and its self interest regarding its role as Responsible Entity.

“New legislation may not necessarily be required, as the clear conflict of interest of fund managers and scheme promoters, and the inadequacies of investor protection that are increasingly apparent, can largely be corrected by strengthening licensing requirements,” he said.

Mr Kalman added that the Wallis Report released in 1993, which led to the introduction of the Responsible Entity concept, was called “Other People’s Money”.

“However, this investor protection factor appears to have been eroded. It is not only that the Responsible Entity concept has generally evolved into something less than was envisaged at the time, it is also that collective investments now being developed and offered to investors are more complex than when the Responsible Entity concept was developed and finally introduced.

“We have seen increasing mismatches between the complexity and liquidity of managed investments, and the type of investors to whom they are promoted – for example open-ended, daily priced, direct property funds offered to retail investors.

“As Responsible Entities are a relatively new concept, they are previously untried in a crisis and have not been used elsewhere in the world. The concept clearly appears to have weaknesses that have been exposed by the financial crisis and now need to be addressed.

“While the financial strength of a Responsible Entity and the people behind the fund is important – so that there is someone left standing, and worth suing if there is inappropriate behaviour – there are other areas requiring examination that are just as critical.

“Better investor protection starts with recognition that many investment schemes are now extremely complex and that there is a need for a greater degree of separation between a fund manager and the Responsible Entity.

“Greater deterrents in the form of punishment for wrongdoing should also be considered.”

He said that he believed licensing changes should be introduced that take today’s needs into account to better protect investors.

“For example, we could have two levels of licensing that recognise some of the more complex products now being marketed need different levels of control and protection.

“As identified by ASIC, increased capital protection for investors, whether through capital requirements placed on internal Responsible Entities or through higher levels of insurance, is also needed.

“The effect and circumstances of some of the recent collective investment collapses and the role of the Responsible Entity in funds such as the MFS Premium Income Fund and the Astarra Growth Fund, where there is speculation investors are facing losses following apparent improper use of the fund’s capital, need to be considered.

“The common denominator in these cases is an internal Responsible Entity which, as Justice Judd said, can be severely conflicted.”

Mr Kalman said that it is usually only during and after severe market downturn that malfeasance, incompetence or conflict of interest is discovered, and when this happens it nearly always costs investors.

“Inevitably, when it does happen and when systems fail, there are reviews and changes, so it is timely that all the issues surrounding the role of Responsible Entities are looked at before the next boom starts and before current problems are forgotten,” he said.

Mr Kalman added that the Responsible Entity system can work well if there is adequate separation between the Responsible Entity and the fund manager/promoter to ensure the Responsible Entity will not fail if the promoter fails.

The post Responsible Entity licensing needs review – not just financial requirements appeared first on AdviserVoice.