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New kids on the block

Almost half the winners at the sixth annual SMSF Service Provider Awards were fresh award recipients compared to last year.

Almost half the winners at the sixth annual SMSF Service Provider Awards were fresh award recipients compared to last year, highlighting a competitive market and shifting preferences from SMSF trustees. Krystine Lumanta and Malavika Santhebennur find find out what strategies firms have implemented to stay on top of their game or race ahead of their competitors.

When the ATO first took on the role of regulating the SMSF sector almost 20 years ago, there were around 200,000 SMSFs, which represented around $70 billion. According to ATO SMSF assistant commissioner Dana Fleming, the sector has burgeoned to over $700 billion, representing almost 600,000 funds and comprising nearly one-third of the $2.6 trillion super industry. The SMSF sector is no longer a niche player.

In conjunction with selfmanagedsuper, industry research firm CoreData shortlisted a group of service-providing finalists across 17 adviser-voted categories. On 30 August during the awards ceremony held at the Rawson Bar in Sydney’s The Rocks, CoreData principal Andrew Inwood revealed the issues front of mind for trustees and the potential implications for professional advisers and the industry in the way they service the SMSF trustee market.

“What’s on trustees’ minds is pretty clear. The market is starting to mature and one of the numbers that we’re tracking persistently is the amount of money at risk – the people who are saying they don’t think they want to do this anymore,” Inwood said, adding the issue had dropped off the radar as this number had stagnated at 10 per cent.

“But now it’s starting to grow above that and the number is starting to become relevant. If you pass that as actual funds under management, the sums become even more relevant.”

According to CoreData’s SMSF Service Provider Awards 2018 report, 9.2 per cent of the 771 trustees surveyed said they plan to exit their SMSF within the next year, while 14.2 per cent are looking to exit within the next one to five years, putting $70 billion at risk.

The most common reason given for trustees wanting to leave their SMSF is they do not enjoy it anymore.

According to Inwood, that money will simply be funnelled somewhere else if it leaves the SMSF space because the money has to sit someplace.

“It’s interesting to understand what are the drivers for money going somewhere else and where it’s likely to go,” he said.

“The other part to that is there are a lot of people in the industry that could take a lot of that work away from them pretty easily. But the message isn’t getting through to the trustees.

“They don’t know who to turn to to make their decisions; who their service provider partner is in this space.”

More than half of trustee respondents said they would rather do things themselves, but are either seeking information to support their decisions or looking for someone to assist them with their SMSF decisions.

This underscores the need for service providers to not only focus on innovation and usability, but invest in offering better client services.

Over half the winners this year have not won before, which demonstrates the competitive nature of the market and the need to remain agile and focus on usability for the client in order to remain ahead of the pack.

“Recognising people in the industry who are doing good work through awards like these is something I think is really important,” Inwood said.

Preserving a core building block

Vanguard: Australian shares winner

The Vanguard Australian Shares Index Fund was launched in 1997, offering investors broadly diversified exposure to Australian companies and property trusts listed on the Australian Securities Exchange (ASX) via a low-cost index fund. The fund also offers potential long-term capital growth along with dividend income and franking credits.

It now has a 20-year track record and in 2009 an exchange-traded fund (ETF) share class was launched as a new, flexible way for investors to access this broad diversification.

“This ETF is our largest and most popular ETF offering – with SMSFs one of the largest adopters of our ETF solutions,” Vanguard Australia head of product Evan Reedman says.

“Whether investors want a broadly diversified position in Australian shares in one solution or prefer to tailor their exposure to sub-asset classes, we aim to offer a range of high-quality options to cater for different asset allocation preferences.”

Vanguard now has more than 550 staff in Australia, all connected to its funds management function.

The investment manager’s Asia-Pacific equity index group, based in Melbourne, has investment responsibility for Asia-Pacific-domiciled equity funds. The team consists of portfolio managers, traders and ETF specialists who have average investment experience of 16 years.

Reedman notes its Australian shares offerings attract strong investment as core building blocks in portfolios, due to their low cost and broad diversification.

“While we acknowledge that dividend imputation benefits and transaction costs have meant Australian investors and SMSFs have long held large allocations to Australian shares, we continue to highlight the expected diversification and risk-mitigation benefits of allocating more significantly beyond the Australian equity market,” he explains.

The biggest challenge for the business this year is SMSF investors traditionally have favoured Australian shares in their portfolio, neglecting equity diversification.

“So a significant home-country bias can exist in their portfolios, introducing risks,” Reedman says.

“We have always advocated a broad, well-diversified portfolio as a great starting point for most investors, with holdings across and within all major asset classes, and we continue to strive to provide research and insights that resonate with SMSF investors to assist with portfolio construction.”

A key process for Vanguard is regularly reviewing its fund management expense ratios to see where it may have capacity to lower its fees, allowing investors to keep more of their returns.

In addition to cost, transparency is key along with a strong focus on providing the outcomes it promises.

“Our crew are the driver of this success, from our investments team to our product and finance teams to those who work directly with our clients and many more,” Reedman says.

“We are delighted to be recognised with this award, which I know will spur us on to achieve greater success for our clients as we continue to play our part in evolving the investment management landscape to better meet the needs of the modern investor.

“We are fortunate that our client-owned mutual structure allows our team to put clients first in all of our decisions.”

Preserving capital through diversification

Magellan Asset Management: International shares winner

Global asset manager Magellan Asset Management follows a dual objective to safeguard success in its international shares asset class: preserve capital and ensure no money is lost, and make sure the firm delivers a return above 9 per cent a year.

Magellan head of distribution Frank Casarotti says while it is not an absolute return strategy, there is an absolute return focus, and in the 12 months to August, the international shares asset class experienced returns around 27 per cent.

Casarotti knows SMSFs are significantly underweight global equities as most funds hold domestic equities and have concentrated holdings in companies such as Woolworths, Telstra and the banks. They also hold term deposits and cash, while many are now venturing into exchange-traded funds (ETF).

“What we’re hearing though is that now advisers and self-directed investors are looking for alternatives to complement those exposures. I don’t think alternating Commonwealth Bank with ANZ or NAB is necessarily doing a lot for the diversification story, but if you build in some global equities, then you’re getting some true diversification in that SMSF,” Casarotti explains.

What we’re saying is here is an opportunity to invest in some of the most amazing businesses on the face of the planet in a convenient form/structure like an actively managed strategy.

Frank Casarotti, Magellan

“There are no opportunities for Australian investors to invest in any company listed on the ASX (Australian Securities Exchange) that mildly resembles a company like Google or a company like Apple or a company like Microsoft or a company like Visa.

“What we’re saying is here is an opportunity to invest in some of the most amazing businesses on the face of the planet in a convenient form/structure like an actively managed strategy.”

Magellan’s international shares asset class has 25 companies, holding about 17 per cent to 18 per cent cash, as the firm is currently cautious about the markets. It invests in technology stocks including Facebook, Apple, Alphabet, Microsoft and Visa, while also investing in other stocks including Kraft, Heinz and United States home improvement store Lowe’s.

The manager has an investment team of 30 staff, who are very much sector specialists. There is an infrastructure team, a financials team, a consumer team and a technology team among others.

“Our objective is quite disciplined, it’s quite stated, it’s quite defined. All we want to do is not lose money and at the same time generate this targeted 9 per cent return,” Casarotti says.

“We don’t have to find the next tenfold company. All we’ve got to do is find good-quality amazing businesses with strong economic moats, healthy balance sheets that are well-managed and we can feel comfortable in knowing they’re going to be around for the next decade or two.”

He adds the firm has always maintained a transparent and communicative method of operating through video content on its website and nationwide roadshows in front of thousands of advisers.

“We’re, at the end of the day, fiduciaries of other people’s money. They trust us with a portion of their wealth creation, whether it’s SMSF or otherwise,” he says.

“It’s not something we take lightly. We want people to know what we’re thinking on world key macro issues, as well as obviously talking about what we’re doing in the portfolios.”

Staying true to label

PIMCO: Fixed income winner

PIMCO has been the recipient of the fixed income award for four consecutive years, demonstrating SMSF advisers’ loyalty to the active manager’s overall strategy.

“We see it as recognition for our commitment to servicing our clients, long-term performance and capability in navigating different market cycles,” PIMCO Australia and New Zealand head Adrian Stewart says.

“These attributes are an integral part of PIMCO’s DNA.

“We pride ourselves on providing an industry-leading client experience and are committed to being the investment solution provider of choice in the fixed income space for Australians.”

Stewart says he believes the success of its fixed income offerings with SMSF investors is about staying true to label in relation to what clients expect of the manager.

“We see clients investing in our global bond, Australian bond, credit-oriented and dedicated income strategies to form part of their defensive allocations, and we are glad to have been able to deliver to these expectations over the long term,” he says, adding education has been a key focus this year.

“We have strived to ensure that the benefits of defensive assets are clearly articulated and understood. This has been increasingly important in light of continued uncertainty and volatility present in markets.”

PIMCO’s offering to the broader global wealth industry has focused predominantly on core fixed interest offerings, including global bond and Australian bond portfolios that form part of many clients’ defensive allocations.

“However, we are also increasingly having conversations on alternative sources of return to help clients meet long-term income objectives,” Stewart says.

“While performance is key, the consistency of being able to deliver this performance for clients across market cycles is something that has been difficult for many fund managers in the industry. This consistency is an attribute that our clients have really appreciated.”

Globally, PIMCO has more than 2300 employees, including more than 740 investment professionals in 14 offices throughout the Americas, Europe and Asia. Domestically, it has 49 employees with its Australian fixed interest funds managed from the Sydney office.

“Our size and scale gives us advantages, especially in today’s environment where fixed interest investing requires a global perspective to effectively cover the opportunity set,” Stewart says.

“As an example, we have a world-class team of 55-plus credit analysts – sector specialists with wide-ranging expertise who independently rate more than 11,000 securities – located around the world to pinpoint individual opportunities.

“A truly collaborative team approach, supported by disciplined portfolio and risk management, has been the stalwart of PIMCO’s approach to managing fixed income mandates.

“At PIMCO, we fully integrate the firm’s deep global resources in risk management, research and investment analysis to ensure that the best insights and investment ideas from each of our dedicated regional and sector specialty desks are transferred into the everyday management of portfolios.”

He says in light of increasing market volatility and uncertainty, the manager’s dedication to constructing carefully diversified portfolios that are not overexposed to single sectors or certain events has really set it apart from competitors.

“Our investment process has been honed over decades and tested in virtually every market environment,” he says.

Embedding systems and processes at scale

Heffron SMSF Solutions: SMSF administration winner

Adapting to the changing needs of customers and designing products that match these needs has been Heffron SMSF Solutions’ mantra in servicing its client base.

“Rather than a one-offer-fits-all approach, we have a number of offers that are focused on different market niches,” Heffron managing director Martin Heffron says in identifying the reason behind winning the award.

On the administration front, Heffron SMSF Solutions has introduced significant amounts of technology over the past few years, including its own fund documentation and financial data online portal, Maestro.

The firm built its own database and controls its own data.

“Customers can get access to all the information they need through the one portal and the interactions with our customers are largely done through that portal now,” Heffron says.

“The digital written communication is all in the one place so all stakeholders in the fund or all the stakeholders with the client can actually see what has happened, what is happening and what is outstanding, so that has simplified the means by which we communicate with clients.”

He adds SMSF administration is not complicated in itself if the firm embeds systems and processes in the business at scale.

The other contributing factor for Heffron SMSF Solutions’ continued success over the past 20 years is the technical competence of its team. The firm prides itself on the ethical values that underlie its comprehensive understanding of the law.

The organisation is also proud of its ability to provide technical advice through legislative interpretation, and minimise threats and maximise opportunities that can result from legislative change.

“When you look at what’s happening in large areas of other parts of our industry, you can see the need for competent ethical companies focused on the customer in our industry, and there are not enough of them to be honest,” Heffron points out.

He considers the super reforms introduced in the 2016 federal budget as the most significant changes to the sector in 10 years and that has brought more customers through the doors as clients look to its expertise to navigate through the legislative changes.

“When there’s legislative change, then if the advisers are looking for an overlay of consulting on top of the administration, then that’s what attracts them to us,” he says.

Looking ahead, the company has acknowledged the movement of digital data around the financial services industry is becoming a vital component in delivering efficiency and the customer experience.

“All of us and even smaller businesses are becoming aware of the importance of data and improving the movement of the data and the accuracy of the movement around their business, into their business and out of their business is more of an issue than it was. The ownership of the data is becoming important,” Heffron says.

Retaining SMSF trust no easy feat

AMP Capital: Commercial property winner

AMP Capital has been investing in real estate for over 50 years and manages over $25 billion of real estate in Australia and New Zealand. Engaging the growing pool of SMSFs for their business, however, has required real effort and having to make a solid case for commercial property.

“People with an SMSF are often very discerning; winning and retaining their trust is always the largest ongoing challenge with these investors,” AMP Capital Wholesale Australian Property Fund manager Christopher Davitt reveals.

“However, if you deliver excellence and are transparent, SMSFs can provide a very loyal investor base.”

Davitt explains commercial real estate can help SMSF investors wanting to add a well-diversified income stream into a balanced investment portfolio.“Many SMSF investors are looking for investments that will give them a better income return than cash and they are prepared to accept the extra risk that comes with this,” he reveals.

“Our approach is to provide them with excellent real estate options, with a portfolio of quality assets, to facilitate their choices.”

Over 500 people in AMP Capital’s real estate team hold expertise in fields such as investment management, debt advisory, capital transactions, development, leasing, property management, facilities management and research.

“We work collaboratively to manage the portfolio, create opportunities and solve problems,” Davitt says.

The low interest rate environment has resulted in the continuation of steady demand for commercial property.

“Indeed, there has probably been an uptick in the level of interest in commercial property from SMSF investors due to the downturn in the residential property market,” Davitt notes.

“If residential prices aren’t growing, the return from an investment property is often around 3 per cent.”

He cites the scale of AMP Capital and the size of its real estate funds as key reasons SMSF investors are drawn to its proposition.

“Real estate is a lumpy asset class and you need substantial scale in order to achieve a diversified portfolio with exposure to multiple markets around Australia. Some look to achieve this scale by using higher levels of debt, whereas our funds generally have low gearing, which appeals to many people who have their own SMSF,” he says.

“Real estate continues to offer income returns of 5 per cent to 6 per cent with a little bit of long-term capital growth. So long as this continues, the demand for our funds will be strong due to the growing number of people that find this return profile attractive.”

He says advisers are looking to real estate as part of the answer to their clients’ income challenge and will continue to have these conversations with them.

The award is significant because it is adviser-voted, he says.

“This resonates with SMSF investors and we think that’s important as we have a suite of funds that have been established to meet a real and growing need in the community,” he notes.

“If we were to cite a single reason for the win, it’s probably the collective experience that you only get from managing as much as we manage for as long as we’ve managed it.”

Ease of use key to platforms

BT Panorama: Investment platform winner

A focus on ease of use, as well as strong reporting capabilities, central to the needs of advisers, has resulted in BT Panorama taking out the investment platform award for the second consecutive year.

BT Financial Group head of platforms product management Dina Kotsopoulous attributes the win to positive user experience and interface, as well as the offering’s range of products and reporting capabilities.

“We understand the importance of being part of an SMSF practitioner’s ecosystem and providing access to up-to-date data,” Kotsopoulous says.

BT Panorama was built from scratch based on engagement and feedback from financial advisers, and she forecasts the firm will continue to seek feedback to build on its product offerings.

“This year we have added a range of functionality, including digital consent, allowing advisers to request approval from clients, a new cash management account – CMA Saver – as well as Challenger annuities on BT Panorama,” she says.

“The digital consent feature allows advisers to request approval from clients electronically, helping them to readily seize investment opportunities.”

SMSFs are particularly eager to use managed accounts and she reveals 20 per cent of the managed account funds under administration (FUA) on BT Panorama sit with SMSFs. “This enables clients to hold direct ownership in the underlying investments and for their fund to benefit from any income from distributions and the tax offset of franking credits,” she explains.

Listed securities are the most popular asset class, making up more than 45 per cent of SMSF assets held in managed accounts on the BT platform.

Kotsopoulous says due to the hands-on nature of SMSFs for trustees and their practitioners, the firm knows the BT offering needs features that service adviser requirements, allowing them to help clients manage their SMSFs.

The platform offers options to track a client’s portfolio, access a secure online document library, SMSF administration, tax and audit services, as well as mobile capability to monitor investments on the go.

“We also recognise the importance of delivering quality data feeds to SMSF practitioners,” Kotsopoulous notes.

“We’ll be looking to further build out our data capability, working with leading financial planning and accounting software partners, and enhancing our reporting.

“This will ensure we have a fast, efficient platform catering to the needs of our clients and advisers.”

BT Panorama’s FUA has surpassed $12.5 billion, with SMSF assets contributing over 40 per cent of total FUA. It has a dedicated team that consists of specialists across investments, super and SMSFs.

A deeper understanding of SMSF needs

Macquarie: Cash and term deposits winner

Macquarie has a long history of innovation in cash management and has supported the SMSF sector for over 30 years.

During this time, it has developed a deep understanding of the needs of advisers and trustees, while continuing to invest in its cash management and term deposit products, including the technology that underpins them.

“Our Cash Management Account (CMA) is a cash hub that is designed to enable advisers and their clients to act on investment opportunities as they arise,” Macquarie head of payments and deposits Olivia McArdle says.

“As the chosen cash hub of choice for one in three SMSFs in Australia, the CMA helps advisers manage complex structures like SMSFs through a range of features. The CMA gives all professional advisers on the fund access to 10 years’ worth of transaction data, as well as enabling advisers to open a client’s account immediately and transact on behalf of their client with the appropriate authority.”

Macquarie understands when it comes to SMSFs, advisers value a deep level of insight and transparency on transactions.

“Recognising this, over the past three decades we’ve focused on using data so advisers can see all the details and financial positions of their clients in one place,” McArdle reveals.

“The functionality that underpins this includes data integration, and we’ve continued to add to this over the last year with 70 software programs now available in order to provide quality data feeds to advisers.”

Speaking to the business’s strategy for SMSFs, she says Macquarie believes the future is in highly personalised, more “human” technology, that enables clients to use technology more intuitively when it comes to managing their cash flow.

“We’ve rebuilt our technology stack and in doing so we’ve introduced features that are firsts of their kind in Australian banking,” she says.

Our software partners are so efficient now that our touchpoints to our clients are reducing. So we want to maintain our contact with clients and make sure they’re aware of the support they can get if they need it from us.

Doug McBirnie, Accurium

“This year, we’ve continued in invest in our leading digital banking offering and the functionality it delivers to advisers and their clients. Our CMA is a core part of that.

“As a digitally-led bank, our focus is on empowering clients to achieve their financial goals through a range of innovative digital solutions and creating personalised experiences.”

Macquarie has also grasped a deep understanding of the issues advisers and accountants face in servicing the needs of SMSF clients.

“We’ve continued to invest significantly in our technology and solutions that advisers tell us that they need in order to deliver the best possible service to clients,” McArdle says.

“Our leading digital banking offering provides advisers and trustees with the tools they need to manage SMSFs in a transparent and secure way, led by data-driven insights.

“We’re continuing to see strong demand in the market for cash and term deposit products as advisers look for solutions to ensure efficient cash management for their clients. There will always be a need for products that deliver value, drive efficiencies and manage client administration needs in an effective manner.”

She says advisers expect a high level of functionality and deep insight from SMSF products.

“We’re proud to be recognised with this award and for the work we’re doing to deliver value to our clients. As innovation and digitisation continue to drive change in financial services, we look forward to continuing to empower clients to achieve their financial goals through a range of digital solutions,” she says.

Supporting specialist insurance education

TAL: Insurance winner

Constantly working to improve efficiency in the business and investing in technology to support advisers have been givens for life insurance specialist TAL. But it has now found itself taking a leadership position in SMSF adviser standards.

“Through our Risk Academy, we’re working to lift education standards, which has specific courses for SMSF advice,” TAL individual life general manager Gavin Teichner says.

“Advisers are finding it more difficult to meet the debt and liquidity needs of their clients as this area of advice has become more complex.”

Teichner points out that because of the changing laws, TAL has experienced a marked increase in attendance for its SMSF masterclass, run through the Risk Academy.

“More advisers are recognising the need to seek specialised education in the SMSF insurance space and are tapping into the academy to meet this need,” he says.

“We also run an SMSF webinar, which focuses on debt and liquidity strategies specifically. Our dedicated Ask An Expert adviser service also receives SMSF-related queries on a regular basis, tackling SMSF issues such as debt and liquidity, estate planning and pension issues.”

Commenting on further adviser challenges, he says the risk provider recognises the importance of having adviser relationships in the SMSF space.

“There are a number of headwinds facing financial advisers and the retail insurance market at present,” he notes.

“We’re working hard to continue to meet the needs of advisers and customers in the SMSF space through investment in technology and education, and a focus on customer health within our business.

“Around 50 people at TAL manage relationships with our financial adviser partners.”

With one of the largest distribution teams in the market, TAL believes this enables the business to be well-informed about opportunities for performance and process improvement, as well as adviser needs.

“We constantly measure our own performance and gather feedback via Net Promoter scoring, user feedback surveys and our distribution and service teams,” Teichner explains.

“The SMSF masterclass was rated 4.8 out of 5, while our debt and liquidity session was rated 4.5 out of 5 by advisers.

“The biggest challenges we see from an SMSF perspective is managing those debt and liquidity issues, the application of the transfer balance cap in estate planning, a lack of trustee understanding in the complexity of illiquid assets and the application of regulation 4.07D as it relates to grandfathered policies.”

Under the TAL brand, its Accelerated Protection product offers a high level of customisation to support SMSF advice strategies.

“We’re continuing to expand our product flexibility and technology solutions to better support our customers and adviser partners,” Teichner says.

“For example, we will shortly launch our new TAL Adviser Centre, which has been redesigned from the ground up to improve efficiency and flexibility in quote, apply and policy management.”

He says TAL’s win reflects its focus on “getting it right for our customers and business partners and the business will continue to strive for improvement in this space.

“TAL’s distribution teams, particularly the TAL Risk Academy team and technical support team, are the key contributors to this fantastic result,” he notes.

“We’ll continue to ensure that TAL’s product offerings are top tier and have the flexibility required to suit customer solutions for SMSF clients.”

Balancing technology and technical support

Accurium: Actuarial certificate provider winner

With the 2016 super reforms changing the circumstances under which actuarial certificates are issued to SMSFs, as well as how they should be issued, Accurium has had to ride the wave of technological system transformation and navigate its clients through the technical details of legislative reform.

Changes to how SMSFs can claim exempt current pension income resulted in the firm modifying its systems and working closely with its software partners to ensure the reforms were delivered in an intuitive way for clients, according to Accurium general manager Doug McBirnie.

“There were some changes in view of what constitutes segregation and it came from the ATO and that meant we needed to make a lot of changes to our application forms, our systems and the calculations that we do,” McBirnie says.

“It also meant the data we have to capture from our clients changed. A large proportion of our business involves getting data directly from our software partners and from SMSF accounting software systems, so we have to work closely with them to change those data feeds.

“Obviously there was a big challenge to get the technology side up and running and we’ll keep working to improve that and to try and make that experience as smooth as possible.”

The firm has also had to assist clients in understanding the super reforms over the past two years.

“The super reforms basically change the types of self-managed super funds that will need an actuarial certificate. In the past funds that had transition-to-retirement pensions were often those that needed an actuarial certificate,” McBirnie explains.

“With the changes in the tax treatment for transition-to-retirement pensions we were expecting a number of those funds to no longer need certificates.”

The firm is investing significantly in its technical offering to provide training and education to clients through monthly training webinars that regularly see over 1600 people in attendance, as well as technical support and technical hubs with free resources and training materials for clients.

“I think one of the challenges is our integrations with our software partners are so efficient now that our touchpoints to our clients are reducing. So we want to maintain our contact with clients and make sure they’re aware of the support they can get if they need it from us,” McBirnie says.

He emphasises the need to continue expanding the expertise of the professional team, and says Accurium will provide additional training and opportunities for them to obtain further qualifications.

“We’re only as good as our people. We’re lucky to have an exceptional team here and we’ll continue to invest in them to make sure we remain as the market leaders in our field,” he says.

Staying nimble to keep pace

Evolv: Audit function winner

A two-pronged approach of nurturing relationships with accountants and administrators, and collaborating with competitors is a strategy that has worked for Evolv.

It is clear the firm has hit its sweet spot with these strategies as it has won the audit function provider award for the fourth year in a row.

Evolv managing director Ron Phipps-Ellis attributes the success and the award win to a robust technology team.

“One of our major advantages that we have in our technology is we are an audit firm that conducts audits and as a result of that we’re able to build rich functionality into the software we are able and willing to extend to our competitors,” Phipps-Ellis says.

“One of the tag lines we have is our software has been built by auditors for other auditors, which is a major point of difference that we enjoy.”

About a year ago, Evolv decided to collaborate with competitors by offering the software it has been using internally for many years.

The firm aimed to facilitate a more efficient auditing process for its competitors while retaining quality with scale if that is what they wanted.

In addition, Phipps-Ellis says the firm also opened up its audit services to competitors.

“We do the audit work for them because we’ve got the technology and resourcing capability, being a scaled business, and at the end we give it back to the auditors who review any queries we’ve raised and they sign the audit report rather than us signing the audit report,” he says.

“So what we have tried to do is create two different markets for ourselves, whereby we’re dealing with accountants and administrators and also collaborating with our competitors, which we haven’t seen anyone else do before.

“Because we had built the technology and we’ve built the resourcing model, it made sense for us to share it. What we do is we provide audit services to auditor competitors and we provide software via a licensing model to our competitors.”

What has not changed for the firm, however, is its strategy of serving accountants and administrators to provide them with efficiency and value for money in a scaled manner.

“Auditors work at the back end so our relationships are with the accountants themselves rather than with the trustees of their SMSF clients. So a very important piece is developing and nurturing a relationship with the accountants and the administrators.”

Looking forward, he says his firm is already positioning itself on the basis the triennial audit proposal for SMSFs will become policy. Collaborating with competitors is one strategy he believes will help sustain the firm.

“For us certainly in our resourcing it’s business as usual. We’re not reducing our workforce. We’ve been steadily increasing the belief that a lot of our clients will continue to encourage their trustees to adopt an annual audit rather than one done on a triennial basis,” he points out.

Purposeful ETF development

Vanguard: ETFs winner

Since launching its first exchange-traded funds (ETF) nearly 10 years ago, Vanguard has been building out its offering to provide low-cost, high-quality ETF portfolio solutions, alongside educating its investors about how to effectively use them for portfolio construction.

What we have tried to do is create two different markets for ourselves, whereby we’re dealing with accountants and administrators and also collaborating with our competitors, which we haven’t seen anyone else do before.

Ron Phipps-Ellis, Evolv

“Our strategy is based on our core philosophy of long-term, low-cost investing,” Vanguard Australia head of product Evan Reedman says.

“That’s why we are deliberate about which ETFs we introduce. We are focused on providing products that will be enduring in long-term portfolios, rather than catering to short-term trends.”

The four diversified ETFs launched last November were the first in the Australian market to offer investors simple, single-trade access to globally diversified low-cost portfolio solutions.

Since launching these funds, Vanguard has experienced strong adoption from SMSFs and their advisers.

“In addition, we launched a range of diversified managed accounts strategies in August, catering to those advisers who are seeing business efficiencies in a managed account structure. These strategies are predominantly implemented using our ETFs as underlying investments,” Reedman says.

“At the core of our ETF business are our crew working in our investment management and ETF capital markets teams, along with our distribution and client services crew who interact with our investors on a daily basis.”

He highlights as SMSF investors gradually embrace the value of diversification in their portfolios, many have looked to adopt ETFs in recent years.

“Our distribution team spends time with advisers to assist with effective uses for ETFs in delivering diversification at a low cost in portfolio construction,” he says.

“We believe a successful ETF product suite is not about having the biggest range of products, but rather ensuring that the products offered are well constructed and deliver on their promise for investors.

“Any funds we launch will possess the hallmarks of low-cost, broad diversification with transparent and enduring investment strategies. And we are always eager to hear client feedback on how we can better serve them.”

Commenting on 2018 achievements, he says Vanguard has continued to attract steady cash flows across its ETF range, and with assets under management surpassing $11 billion this year, it became the largest manager of ETFs in Australia.

“We are incredibly grateful that investors continue to entrust their assets to Vanguard and take very seriously our responsibility as stewards of other people’s money,” he says.

Creating convenience in the listed market

Platinum Capital: Listed investment company winner

Platinum Capital’s approach to investing is to offer investors access to consistent strategies in whichever form they desire, be it listed investment companies (LIC), unlisted open funds or active exchange-traded funds (ETF). Regardless of the vehicle, the underlying investment strategy is the same: global, unconstrained, index unaware and absolute-return focused.

“We don’t alter strategies year to year. We are an investment-focused organisation, rather than marketing-focused,” Platinum Capital investment specialist Julian McCormack says.

Our team performance has been really pleasing in recent years, from investor services staff who answer clients’ calls through to our senior portfolio managers. It takes the whole team to get good outcomes for clients.

Julian McCormack, Platinum Capital

“As such, we avoid product proliferation, while trying to provide access to our funds in ways that clients find convenient. This is increasing in a listed context.

“To that end, in the last three years we have introduced an Asian LIC and two active ETF structures, which buy units in our underlying international fund and Asian fund. In essence, our strategy is to be consistent while trying to offer convenience.”

With 100 full-time staff, of which 32 are in the investment team, McCormack reveals demand for Platinum’s products has been steady and notes a gradual increase in SMSF demand for international equities exposure.

“We see this via consistent growth in our active ETF structures and in the pricing of shares in our LICs,” he says.

“Performance is the most important driver, with consistency of style being nearly as important.”

He says he believes the biggest challenge for Platinum this year has been the profusion of product in the international equities space.

“There are a lot of investors who seem to have discovered international equities in recent years,” he says.

“Business has been consistently good, with steady inflows. We look forward to broadening access to our funds – the Australian Securities Exchange mFund Settlement Service strikes as another possible avenue to do this.

“We are constantly getting feedback from our clients and the challenge remains constant – making money for clients and avoiding significant capital loss.”

He describes the award win as great recognition and affirmation of the firm’s performance.

“Given that Platinum has been in operation for 24 years, it is easy to feel that markets present an endless grind, where one never finishes and one never wins, so we are grateful for the award,” he says.

“Our team performance has been really pleasing in recent years, from investor services staff who answer clients’ calls through to our senior portfolio managers. It takes the whole team to get good outcomes for clients.”

Turning everyday utilities into gold

Magellan Asset Management: Infrastructure winner

Venturing beyond Australian shores in the infrastructure space for diversification to achieve genuine investment objectives and returns has resonated with global fund manager Magellan Asset Management’s clients.

Magellan head of distribution Frank Casarotti says investors now recognise the value of the firm’s investment strategy given its 11-year track record.

According to Casarotti, investors understand where the firm is investing due to its transparent method of operation.

“They understand some of the logic around the investment discipline. They’re not opaque, obscure small-cap global businesses. These are some of the big names out there in the world and people have an affinity with these companies. They use their products every day of the week,” he says.

Hear the word infrastructure and companies like AGL and Transurban may immediately spring to mind, but Casarotti reveals he wants investors to think outside the Australian square.

Highlighting the concentrated nature of SMSF investment portfolios where a major portion is invested in a small basket of domestic equities, he points out global listed infrastructure offers genuine diversification for SMSFs and the interest level in the asset class continues to grow.

“Global is a better way to go because you can invest domestically, but Australia represents around 2 per cent of the world’s listed opportunities, so why limit yourself to 2 per cent of the best?” he says.

While Magellan does invest in Transurban, one of Australia’s largest owners of domestic toll road systems, it also has holdings in French airports, Canadian railways, American communications infrastructure providers and energy infrastructure providers.

The firm is attempting to invest as much in utilities as in transport as the firm knows utility infrastructure is used every day without people thinking about it.

“The message there is along the lines of every day we flush a toilet, we switch on the light, we’re using infrastructure in some capacity without even realising it and that trend is obviously common throughout the whole developed world,” Casarotti says.

“What we’re trying to do in that strategy is bring a diversified portfolio of both transport infrastructure, as well as utilities, whether it’s electricity or water or gas or whatever those utilities are, in a packaged solution.”

He also underscores the firm’s overall performance in the past decade through the global financial crisis, trade wars, geopolitical tensions, interest rate volatility and quantitative easing, among other issues.

“The process is very disciplined in that it’s not about finding the next biotech or the next fintech or whatever,” he says.

Magellan’s $1.58 billion global listed infrastructure fund has returned 8.4 per cent a year since inception and 11.2 per cent a year over a 10-year period.

Meeting the demand for innovative solutions

OneVue: Innovator winner

When it comes to innovation within OneVue, a key point it makes is that the responsibility to innovate is not beholden to one person or one team.

“It’s a company-wide thing,” OneVue platform services executive general manager Lisa McCallum explains.

“Innovation is a part of our DNA. Our strategy is developing solutions that help our advisers and SMSF investors in managing their SMSFs by making it simpler.

“We continually speak with our clients to understand how we can help.”

The platform team consists of sales, transitions, operations, program office, product and technology.

“It’s important to have all areas of the business involved as it helps manage risk and brings in new perspectives,” McCallum says.

“Innovation isn’t easy, so working with a team to push past the status quo and understand our clients’ perspectives is really important.”

Innovation is a part of our DNA. Our strategy is developing solutions that help our advisers and SMSF investors in managing their SMSFs by making it simpler.

Lisa McCallum

She reveals OneVue is experiencing demand for innovative solutions from both advisers and accountants amid the sweeping regulatory changes.

“The recent super reforms created extra work for everyone in the SMSF sector and we’ve found that accountants and advisers need all the help that they can get,” she says.

“To that end, anything that can ease their workload is in very high demand.

“We’re offering a flexible, efficient investment platform and end-to-end administration solution, which we think is critical to making life easier for advisers and accountants. We also focused on a number of reporting changes over the last 12 months to assist advisers and accountants, and this will continue in the coming year with the introduction of the TBAR (transfer balance account report) reporting changes.”

In order to stay competitive, she says the business listens to advisers’ needs and suggestions throughout its development schedule.

“We have to keep talking to regulators, investors, advisers, fund managers, custodians and see where OneVue can add the most value, consistent with our culture,” she notes.

“We also seek feedback from our clients and have access to large-scale qualitative and quantitative research pieces undertaken by them.

“The biggest challenge for us this year was ensuring we could support the work involved around implementing the cost base resets for SMSFs with balances over $1.6 million. This was very complex, and we had a dedicated, specialist team working on it.”

She says the team’s role is to sort through all that information and data and execute on the initiatives it believes will make the most difference to the end-investor, advisers and fund managers.

“We’ve had a good year and the market has increasingly recognised our achievements, but we’re continually looking forward. For that reason, we have a number of new initiatives we’re working on for the 2019 calendar year,” she says.

She dedicated the award to the team that has been delivering an innovative service to its clients.

“We really appreciate CoreData recognising and acknowledging our efforts to make a difference,” she says.

“At OneVue, we’re all in this together: if one person is not on board, it will make a difference to the outcome, so I would like to acknowledge all my colleagues. They allow innovation to thrive – even those who prefer certainty and don’t see themselves as creative, but have learned to trust the ones who are.”

Other winners

BGL Corporate Solutions: Accounting/administration software

Westpac: Residential property loans

Cleardocs: Trust deed provider

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