Jim Minto

A survey has bucked the perception that young Australians are staying at home substantially longer than their parents did.

The findings reveal offspring fly the coup and become financially independent at an average age of 23.

Surprisingly, this compares to their parents who left home only two years earlier at an average age of 21, according to the survey conducted by Australia’s largest life insurer TAL as part of its support for MoneySmart Week this week.

The survey also reveals this meets parents’ expectations: they say their children should leave home and become financially independent at about that age (age 22.7 years).

TAL Group CEO Jim Minto said: “Leaving the protection and comfort of the family home can be both exciting and daunting. It is a rite of passage. Ensuring you are financial protected makes the transition much easier.

“A crucial part of being financial independent is ensuring you can meet your obligations and commitments if for some reason you are unable to earn your income for a period. Income protection is a key form of life insurance for young people and moving out of home is a perfect time to ensure you have financial protection.”

While highlighting that the 30-something “failure to launch” cliché is an exception rather than the rule for those flying the coup, the survey also reveals far fewer children are leaving home before the age of 18.

Only three per cent of parents expect their children to leave home before 18, compared with 13% of parents saying they had moved out by this age.

Fourteen per cent of parents shied away from putting an age on the question – instead saying it should be dependent on getting a job or completing their education.

A number of parents did, however, seem resigned to having their children at home for the long term, with 8% saying their children “would probably never leave home”. In some cases there may be children with special needs or medical conditions.

Mr Minto said: “Looking at life it is clear that a person’s most important asset is their ability to earn an income because that is what sustains our lives.

“But what many young people do not fully appreciate is the impacts and consequences of what can happen when an income unexpectedly stops due to injury or illness. Youngsters will often insure their mobile phones but not themselves.”

TAL supports MoneySmart Week to improve financial literacy and because it wants to help Australians build, grow and protect the life they have created and the one they imagine for the future.

TAL is hosting a MoneySmart Week event outside Customs House at Circular Quay, Sydney give people the chance to bring their futures to life through personalised illustrations completed in real time by professional artists.

Age for leaving home and becoming financially independent

The post Myth busted: when young Australians leave the nest appeared first on AdviserVoice.

Participate in Elixir Consulting’s Adviser Pricing Models Research.

Are you keen to understand the different types of pricing models in the market, and specifically, how much other advisers are charging for the similar types of clients that you service?

What about what other advisers do in relation to commissions and fees when advising on risk insurance – with or without other areas of advice?

How about the fees charged for ongoing services? And what do other advisers actually provide for those fees?

You can receive all the answers to these questions, by participating in Elixir Consulting’s Adviser Pricing Models Research. It’s been two years since they last collected this data, so the time has come again to collect the numbers and insights.

Elixir Consulting has updated their research questions to suit the current pricing environment, and they are offering participants the chance to enter the draw for a $2,000 travel voucher.

As always, they will protect the identity of all participants and will only release the aggregated data. The survey will take 10 to 15 minutes to complete, and all valid participants (ie advisers only – and those who provide legitimate answers) will also receive the insights report free of charge.

Click here to complete the survey.

The survey closes Thursday 14th August.

The post What do other advisers charge? appeared first on AdviserVoice.

Jim Minto

Younger Australians would spend extra income on shopping for clothes and new mobile devices before considering using the money to get financial protection for the first time or increase their life insurance cover.

And while clothes and mobiles are less of a priority for older Australians, all generations would first use extra income to build savings and pay down debt as their main priorities, according to consumer research by Australia’s largest life insurer TAL.

As part of TAL’s ongoing research into consumer attitudes and behaviours, Australians were asked what they would spend an extra 10% increase in income on, and they said overwhelmingly they would use the money to ‘deleverage’.

The research found that 87% of Australians would choose to deleverage across four areas: building up savings which was the highest individual response category at 59%, followed by putting towards the mortgage (38%), paying off credit card/personal loan (30%) and paying off bills (28%).

After these immediate financial needs, Australians would next put the extra income towards paying for a holiday (38%).

And while taking out life insurance/increasing life cover scored very low across all demographic areas, more Generation Xers would prefer to spend extra income shopping, going out to dinner and new technology than their older generations.

TAL Group CEO Jim Minto said: “This survey reveals the very low priority people place in thinking about using extra income to ensure they have adequate financial protection. It is a massive challenge but we need to change this mindset.

“The global financial crisis marked a turning point in consumer attitudes towards savings and debt, and deleveraging became an important priority. What we are seeing from this research is that this trend continues.”

“And with interest rates having been low for some time now, it seems people are paying down their mortgages while they feel they can.”

After ‘deleveraging’ and using extra income for a holiday, the areas people were least likely to spend extra income on were upgrading the car (15%), increasing spending on shopping for items such as clothes (10%) and going out for dinner more often (9%). Life insurance and ‘other insurance’ spending each came out last at 4% each.

“We undertook the poll because we want to understand the relative importance of life insurance versus other areas of spending priority,” Mr Minto said.

“People have expressed a desire to increase their financial buffer by building savings and reducing their outgoing payments on debt, but life insurance remains a low priority for many.

“This is a concern because in the event that a primary earner is no longer able to provide for his or her family, life insurance, income protection, critical illness and disability cover can help ensure that outgoings are still met without having to dip into savings.

“And for many people, a 10% increase in household income would more than pay for a policy or ensure adequate cover that gives this peace of mind.”

Mr Minto said life insurance not only protects what people have created in life and their immediate obligations, but it can also help achieve what they dream of for the future.

What would Australians spend a 10% increase in income on? 

The post Extra money goes to savings and holidays appeared first on AdviserVoice.

Jack Inglis

Investors increasingly are striking partnerships with hedge funds, underlining the closer collaboration taking place between the hedge fund industry and its investor base, according to a new survey by the Alternative Investment Management Association (AIMA), the global hedge fund industry association, and Barclays.

According to the new survey of investors and managers, called ‘The Extra Mile: Partnerships between Hedge Funds and Investors’, partnerships of varying forms between hedge funds and their investors are becoming increasingly common.

More than three-quarters of managers and two-thirds of investors who took part in the survey said they had entered into partnerships.

The survey found five key elements of partnerships: access to expertise and resources; customised products and solutions; co-investment; product seeding; and equity stakes.

The survey revealed a number of benefits to investors, including improved knowledge and understanding, better alignment of interest with managers, and better value for money.

Both larger and smaller managers and hedge funds of all strategies were found to be striking partnerships. Benefits to managers included “stickier” or more loyal investors, support for new product development, cross-selling opportunities and the offer of investor references.

The investors surveyed manage a combined $2 trillion in assets, of which approximately $260 billion is allocated to hedge funds. They include pension funds, endowments, foundations, sovereign wealth funds and family offices globally. The managers surveyed manage approximately $200 billion in assets.

Jack Inglis, AIMA’s CEO, said: “It is encouraging that so many hedge funds and their investors are striking such deep and wide-ranging partnerships. These arrangements represent a win-win for both sides, with significant benefits for both the manager and the investor.

“What the survey shows is that managers are truly going ‘the extra mile’ in terms of sharing knowledge and resources and providing customised products and services to their investor partners. These partnerships are also providing further evidence of very high levels of satisfaction among investors in their hedge fund investments.”

“The publication of this paper comes at an important time in the evolution of the hedge fund industry. Amidst the on-going process of institutionalisation, investors are actively pursuing a more direct engagement with the underlying hedge funds in which they are invested,” said Michelle McGregor-Smith, the Chief Executive of British Airways Pension Investment Management Ltd and the Chair of the AIMA Investor Steering Committee, which helped to direct the survey.

Lou Molinari, Managing Director, Global Head of Capital Solutions, Barclays, said: “The growth of partnerships represents an exciting new direction for the hedge fund industry as it continues to evolve. Successfully building partnerships with investors can allow managers to grow their business whilst increasing the stability of their assets under management, and cater to the specific needs of an increasingly-sophisticated investor base.

“Managers who are interested in pursuing partnerships should put in place a strategy to do so, identifying those investors they want to partner with, and deciding which of the elements of partnership they are best-placed to deliver.”

The post Increased partnership between investors and hedge funds – AIMA/Barclays survey appeared first on AdviserVoice.

Matt Schiffman

The majority of Australian investors believe the investment environment facing their younger counterparts will be more difficult, according to Legg Mason’s 2014 Global Investment Survey.

The survey, which looked at the attitudes of 4,200

affluent investors in 20 key markets, found Australian investors were particularly concerned when it came to the long-term future of the investment landscape.

Overall, 70% of Australian respondents felt investment prospects would be worse for future generations. Only 45% believed they were currently doing very well or extremely well at saving for retirement.

Legg Mason’s Global Head of Distribution Marketing, Matt Schiffman, said the results demonstrated the significant challenge ahead for local investors to achieve their investment goals.

“Australians as an investor group display a larger level of concern at the way the investment landscape is changing”, said Mr Schiffman. “Low interest rates and rising property prices are impacting the ability of their younger family and friends to get on the investment ladder, and they are searching for new opportunities to generate the income they need.”

‘Reality gap’ persists for Australian investors

The survey also identified a significant gap between those investment returns Australian investors expect to get, and what they are actually receiving. While investors expected an average 9.2% annual return, the survey found they were currently receiving 6.2% on average – a ‘reality gap’ of 3%.

Interestingly, although Australians invest 10% more in property than the global average, and give property the highest allocation out of all their income producing investments, the ‘reality gap’ was most pronounced in property investment. Australians’ property investments yielded them an average of 3% per year, well below the expected 9.2%.

“Australians have a well-documented love affair with property, but current low average yields in this sector are affecting income opportunities for investors,” said Mr Schiffman. “We found returns were closer in line with expectations for asset classes like equity income and guaranteed income products, which were less popular with Australian investors.”

Emerging economies present best opportunities

When it comes to global investments, the survey found Australian investors are increasingly looking outside of traditional investment destinations and towards emerging economies. Two thirds (66%) of Australian investors believe China presents the best international investment opportunity over the next 12 months, while over half (55%) saw opportunities in emerging markets in general.

However, the incidence of overseas investing among Australian respondents was generally low compared to the global average. Less than two thirds (60%) of investors allocated more than 1% of their portfolio to international investments, while only 40% had increased their focus towards global opportunities in the past five years.

“Australians are generally more reluctant to look outside of their home market for investment opportunities,” said Mr Schiffman. “This could be a result of tax efficiencies and compliance issues that serve to reinforce the home bias, as well as a generally risk-averse investment style – 77% of investors described themselves as ‘conservative’ in outlook.”

Australian advisers compare favourably

The Global Investment Survey also examined investors’ attitudes to their advisers. Australian advisers scored better than their overseas counterparts when it came to tailoring advice (43% of investors rated their adviser well in this regard) and taking time to know their client (45%), but were below the global average in bringing clients unique investment opportunities (30%) and asking the right questions (30%).

Mr Schiffman said the findings presented important insights as to how Australian advisers could improve the client experience. “While the standard of advice in Australia is comparatively high from a global standpoint, opportunities exist for advisers to improve their service offering, particularly around responding more rapidly and comprehensively to client needs,” he said.

The post Legg Mason’s global investment survey: future generations face challenges to wealth appeared first on AdviserVoice.

Matt Walsh

Investor satisfaction with financial advisers is at its highest level since the inception of the Lifeplan ICFS Financial Advice Satisfaction Index in 2007, according to the April 2014 survey results.

Lifeplan Funds Management with the University of Adelaide undertakes a survey every six months. It looks at changes in investors’ attitudes towards financial advisers including their perception of their financial adviser’s trust and reliability, technical ability, and investment performance.

The satisfaction index increased to 74.5 per cent, up from 72.3 per cent in October 2013. The April 2014 survey saw an increase of 3 per cent over the October 2013 survey, and an increase of 2.6 per cent over the April 2013 survey.

All three drivers of advocacy – perception of performance, trust and reliability, technical ability – increased since the October 2013 survey. The largest increase among the three drivers of advocacy was for the perception of performance, which increased by 4.13 per cent. The perception of trust and reliability increased by 2.2 per cent, while the perception of adviser technical ability increased by 2.9 per cent.

Mr Matt Walsh, head of Lifeplan, says this improvement in perception is due to better client – adviser relationships.

“Not enough has changed in the domestic and global landscape since the October 2013 survey to move the index this much, but the quality of advice seems to have improved when benchmarked against the capital markets.

“While the domestic equity market index, the ASX200, continued to show gains for the past year of 8 per cent, it has not reached the 2007 levels.

“Despite capital markets not yet achieving pre-GFC levels, the Index and its three drivers are at record levels. This indicates that financial advisers, in an increasing complex and dynamic capital market, are providing value-added services.”

The survey results, on the back of the implementation of FoFA, should also reinforce the Government’s decision to pause any wind back of the reforms.

“Finally after years of reforms and post-GFC recovery, we have record levels of satisfaction with financial advisers, and that should be celebrated and built upon. A wind back could raise the ogre of commissions again which can work against the public’s confidence in financial advisers.”

In line with previous survey findings, female investors continue to show a higher level of perception regarding their financial advisers, across all three attributes, than male investors. Nevertheless, the survey found that male investors showed a very strong increase in all three drivers of perception over the period.

“Overall, investors in the 30-44 age bracket showed the strongest increase in all three drivers of perception, and now have the same or higher levels as investors in the 45-60 age group.

“This group assess the level of trust and reliability as lower than older group. This is expected as they have had shorter duration with their current financial adviser, and as the client-adviser relationship continues there will be an improvement in the level of this driver.

“Financial advisers should remain particularly vigilant with clients early in the advice relationship, as trust takes time to build and should not be taken for granted,” says Mr Walsh.

“Investors in the 45-60 year age group seem most satisfied with the quality of advice they are receiving, and this group seems to be most affected by the technical abilities of their financial adviser, as well as the performance due to financial advice.

“As the advice relationship seasons, clients become more financially literate and have a better understanding of the long term benefits and outcomes of the planning relationship. Planning is rarely about quick fixes or the short term”.

“Financial dvisers need to maintain a high level of technical ability to satisfy these older individuals with markedly higher levels of financial literacy,” Mr Walsh concluded.

Lifeplan Funds Management is a specialist business of Australian Unity Investments. It is the market leader in investment and funeral bonds, and leading provider of education investment funds.The Lifeplan ICFS Financial Advice Satisfaction Index was established in 2007 and is a tool for financial advisers that want to improve their levels of client service. It is based on academic research that models the factors that explain a client’s willingness to recommend their financial adviser to a friend or acquaintance.

The research also analyses how investors’ age, levels of investment and length of their relationship with their adviser impact these attributes. It is sponsored by Lifeplan Funds Management and conducted every six months by the University of Adelaide’s International Centre for Financial Services.

The survey of 403 investors who use financial advisers was undertaken in March 2014 by the University of Adelaide’s International Centre for Financial Services (ICFS) for Lifeplan, and sought feedback about the performance, trust and reliability, and technical ability of their financial adviser.

The post Lifeplan Financial Advice Satisfaction Index hits all time high appeared first on AdviserVoice.

The survey aims to provide a current picture of the industry to identify the diverse range of business models in the sector. The initiative is intended to contribute to the ongoing development of the SMSF sector that manages about one third of all superannuation assets.

SPAA CEO Andrea Slattery said: “The survey is an exciting project and an excellent opportunity for SMSF professional members of SPAA to be involved in a leading survey on ways to improve efficiencies and drive growth. I strongly encourage SPAA members to participate.”

The findings of the survey will be shared through a comprehensive report to be launched at the SPAA State Technical Conferences in July.

Macquarie Banking and Financial Services Group Division Director, Sarah Penn, said that as the popularity of SMSFs continues to grow, understanding business models becomes a very important part of the landscape.

“SMSFs are becoming an increasingly large part of many financial advice businesses and we know from our work in the industry that firms are approaching this in quite different ways,” Ms Penn said.

“Some businesses are developing hybrid models, while others are taking a more organic approach. Whatever path they choose, this survey aims to provide practical insights for the sector.”

The survey takes approximately 15 minutes to complete, and individual insights and business information will be kept strictly anonymous and confidential. Industry participants can access the survey here  and can request to receive a copy of the report at the completion of the survey.

The post SPAA and Macquarie to launch SMSF business models survey appeared first on AdviserVoice.

New SLICE survey: people management strategies in financial advice practices

The second SLICE financial planning survey examines a range of critical issues confronting financial planning practices, topics that challenge practices’ efficiency, profitability and viability.

The SLICE 2 survey provides financial planning practice owners and managers with an opportunity to quickly and easily share their views and insights with their peers, to build an understanding of trends across the sector.

Survey authors, Peter Dawson of The Dawson Partnership and Susan Rochester of Balance at Work, were thrilled with the response to the first SLICE, held in November 2013. Here’s a small sample of the results the survey uncovered:

• 32% of practices increased their headcount in 2013, with 13% expecting the implementation of FOFA would lead to them employing more staff in the future;
• 18% use social media as part of their recruitment process;
• In selecting staff, 21% of respondents always use behavioural profiles and 20% always use knowledge based test.
• Half the practices surveyed increased their training spend in 2013, but 13% spent less on training;
• 23% rated the support they receive from their licensee for recruitment and people management as ‘good’ (16%) or ‘excellent’ (7%). A further 25% rated it as ‘satisfactory’.

The second SLICE survey looks at business growth, succession planning and the impact of the proposed chances to FOFA. The survey takes than 5 minutes to complete.

Click here to complete the survey.

When you complete the survey, you will be able to access a copy of the results of the previous survey.

The post New SLICE survey: people management strategies in financial advice practices appeared first on AdviserVoice.

Positive profit expectations for 2014 within the financial planning community: Macquarie

The Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey has revealed further optimism within the financial planning community, with respondents anticipating an increase in profit in 2014.

Eight in ten (83 per cent) advisers anticipate increased profits in the next 12 months, up from 74 per cent in 2012. Practices that offer financial planning only or financial planning and accounting are the most positive, with a larger proportion expecting at least a 20 per cent increase in profit in the next financial year (32 per cent and 39 per cent respectively). Younger practices are also confident, with half of firms under three years old believing they will do the same.

“This year’s survey has shown steady growth in revenue and gross profit in advice practices, which is great news for the financial planning industry,” said Fiona Mackenzie, Head of Macquarie Practice Consulting.

The results showed that since the last survey, there was a 15 per cent increase in average revenue and an increase in average operating profit of 45 per cent over the same period. In addition to these top line measurements showing improvement, direct expenses have remained fairly steady and the average revenue per adviser has increased.

“Expenses appear to have been well managed, which can contribute to driving profit improvements,” she said. “Practices are still controlling costs but the survey suggests that some practices are feeling confident enough to invest back into their businesses.”

While revenue and profits are up, there has been a reduction in client numbers per adviser (153 clients per adviser, compared to 185 in 2012). Additionally, advisers have a higher proportion of active clients, up at 77 per cent in comparison to 69 per cent in 2012. Macquarie Banking and Financial Services Group 2

“Advisers have told us they want to spend more time with clients who genuinely value their advice. From the survey, we can see that many appear to be making real efforts to refine their client base and increase the focus on active clients, and this tends to improve the profitability per client.” said Ms Mackenzie

“Looking at the evidence of profit and revenue growth, this could be a good sign that many are having success with this strategy.”

The full report will be available in early 2014.

About the Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey:

Data was collected from 226 financial planning practices in October 2013 with the majority of respondents (82 per cent) being practice principals. The survey covers a wide range of topical areas for Australian financial planning firms, including business structure, financial management, general practice and confidence. Measures capturing profit and revenue were calculated based on the 2012/2013 financial year results for the participating firms. The previous survey was released in May 2012 and based on the 2010/2011 financial year.

The post Optimistic financial planners anticipate further growth: Macquarie Practice Consulting appeared first on AdviserVoice.