Implemented Portfolios The Way Investment Management Should Be Tue, 29 Oct 2019 23:00:51 +0000 en-AU hourly 1 The space where life and money intersect Tue, 29 Oct 2019 22:59:59 +0000 Author: Santi Burridge

In a post-Hayne world, ‘client engagement’ has been the buzz phrase on the collective lips of the industry.

Yes, of course – we have heard whispers of it before that, but it’s now more than any time in my career, that we are seeing the tectonic plates actually shifting. We are seeing structural change taking place that is ensuring clients of financial advisers not only comprehend the advice they are receiving but engage with it too. And there’s no going back.

We’ve also seen an abundance of innovation and knowledge imparted about how to keep the modern client interested in their money in what is being coined as the “digital age”. And rightly so. The delivery mode by which people engage with everything – not just their finances, has undoubtably changed since the invention of the iPhone and digital media.

But I think I’m fair in saying there are a few more fundamental factors we need to think about when it comes to making people really care about what they’re doing with their money.

Client engagement in financial advice is more than just tech tools, social media and satisfaction surveys.

It’s about the space where life and money intersect.

Advisers and clients usually arrive at this intersection during the actual advice process. When you are sitting and listening to your clients talk about their values and goals – about what their dreams are and about how you can help them achieve them from a financial point of view.

Historically as an industry however, once we have had these discussions, that dialogue can often be left to sit idly in a file note.

Client engagement needs to be about breathing oxygen into that file note – after all, it’s so much more than a ‘note’. It’s the reason your clients sought you out. It’s the reason you do what you do.

I know this isn’t necessarily a new philosophy, especially in the modern advice world. But I think we are still scratching the surface to some extent when it comes to working out what ‘financial happiness and fulfillment’ translates to when delivering financial advice services.

When it comes to fulfillment in investing, there are a few things I know to be true –

1.     Human beings have emotions and feelings. I am stating the obvious, but for the sake of my point I will. When we invest in people or things, we do so because we believe in them, or we resonate with them, or simply – we care about them.

2.    Human beings enjoy choice. In fact, many of us would instantly recoil from an optionless environment. We don’t like being boxed in – we avoid inflexible people and conditions.

3.    Human beings like to be made to feel special. We are unique – our goals, our talents, our likes and dislikes. Our ideas of success and happiness may be similar to some degree, but for the most part will differ from person to person.

I didn’t mention money in any of the above points, but to be perfectly honest, when it comes to financial matters – the same observations apply.

At Implemented Portfolios, we’ve observed over time that an engaged client is more likely to be a satisfied and happier one. The business was founded on the notion that to engage and truly advise clients, we need to come to a realization that “it’s not just about the money.”

We only have to look at the findings of the RC to see that framing financial advisers purely as stock pickers with cookie-cut-out, abstract algorithms behind where and why they invest client money, is doing the profession a disservice.

We all know the value of a financial adviser lies so far beyond that.

That’s why the philosophy behind our individually managed account service is based on flexibility, individuality and unique client values.

This logic stems from the belief that a client who has the ability to tailor their investment portfolio to their individual preferences and values – who can personally relate to where their money is invested, will be more engaged in the advice process.

When looking up the meaning of ‘adviser’ the words ‘guide’ and ‘confidant’ came up as well. So simple and yet so central to what the role of a financial adviser should be perceived as, particularly post our industry’s ‘tectonic shift’.

By humanising and individualising the investment advice process a little more, we are another step closer to shifting the brand of ‘financial advice’. We are another step closer to showing clients that they can ‘confide’ in us with their financial values and goals, that we understand them, and that we’re here to ‘guide’ them through them.

To read more about our IMA service, click HERE.

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The question I keep getting asked Tue, 29 Oct 2019 22:57:34 +0000 Author: Naomi Christopher

I’ve been at Implemented Portfolios for nearly a month now, and if there is one question that has continuously been asked of me, it’s “what exactly does Implemented Portfolios do?”

A simple query, yet at the crux of it lies the very reason that I joined the team. If there was ever a time to effectively communicate the value of financial advice services, it’s now.

For those who know me well, you would be familiar with my (sometimes over-zealous) desire to elevate the value of financial advice. (I’ve got at least 5,567 tweets to prove it. Hehehe).

You may have heard me and plenty of others (particularly from the tech world) talk about a future where financial advisers sit at the “centre of their clients’ financial universe” – that it’s not just about super switching, stock picking and transitions to retirement. That it’s about helping everyday Australians live the lives they’ve always dreamed of.

So, when people ask, ‘what does Implemented Portfolios (IP) do?’, it’s quickly become a two-part answer. Yes, at the core of our service proposition is a world class Managed Discretionary Account service, with flexibility, individuality, and practice efficiency being some of the cool features making it unique.

At the risk of sounding explicit… Actually, with the intent purpose of being so – IP provides a scalable, individually managed account (IMA) service, which allows advisers to spend less time in the back office and more quality time with their clients.

However, it is the second part – the part that encouraged me to grab this opportunity with both hands and run with it, that is the business’ fundamental purpose.

That is – to see the relationships between advisers and clients develop and flourish; to help advisers break free from the pure “investment manager” mould and step deeper into the role they were designed to do – helping their clients live their best lives.

At the heart of IP, the people who founded it and have worked hard to help it grow, is a mission to drive better advice experiences and outcomes for both advisers and clients.

Very similarly, some of the things financial advisers ‘do’ (particularly in the day-to-day running their businesses) can sound a little different from their overarching purpose.

‘Cashflow management’, ‘Aged Care’, ‘Insurance’ and ‘Debt Reduction’ sound a little different from ‘helping people lead financially happy lives’.

The things we ‘do’ and the outcomes we achieve are linked – no doubt. But they aren’t one and the same. And for the most part, I don’t think they’re received in the same way.

When it comes to communicating value, particularly in financial services – I think we can all agree with Simon Sinek that we could lean a little bit more on our purpose, on the why of what we ‘do’, rather than merely just ‘the doing’.

Having witnessed a giddy desire to positively evolve our industry, both within the company I work for now and within so many of the organisations and advice practices that make up our tightly knit community, I can’t help but believe that the future looks bright for financial advice.

So maybe, the challenge for us all then is to stop and think before we answer, the next time somebody asks that age old question, ‘what exactly do you do?’

Let’s make sure we don’t just list the ‘doing’.

Let’s make sure we also reveal ‘the brightness’ gleaming on the other side of ‘do’.

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Implemented Portfolios cracks its first $1Bn in Funds Under Management and expands executive strength Wed, 06 Mar 2019 23:29:57 +0000 Implemented Portfolios Limited has cracked its first $1Bn under management across their highly valued IMA based MDA service.

Greg Kirk, Chairman of Implemented Portfolios, said that “another solid year of growth in 2018 had led to the milestone. Continued momentum in sales, strong retention and an increasing interest in our unique IMA offering underpinned the result. We are seeing a consistent increase in the number of advice practices actively looking for effective, transparent, cost and tax efficient investment solutions to meet their clients’ needs, whilst enabling advisers to focus on providing a superior and individualised client experience.”

Because of this growth, and an anticipated further surge in interest emanating from the recently delivered Royal Commission recommendations, Implemented Portfolios also concurrently announced two new senior key appointments to bring additional capacity and strength to the business:

Susi Collas has joined Implemented Portfolios as Regional Manager, Partnerships and is based in Melbourne, with a focus on working in partnership with advisers to deliver our unique MDA service and enhance client practice efficiencies and client engagement processes. Susi’s experience includes 25 years working in sales and marketing within financial services at organisations including Morgan Stanley, Macquarie Bank and NAB.

Ian White also joined the group as General Manager, Corporate, and brings 30 years of governance and compliance experience to the role. This appointment is critical in ensuring Implemented Portfolios is at the forefront of applying best industry practice in risk and compliance and is in a strong position to support advisers in a dynamic and complex market.

Mr. Kirk also added that “Implemented Portfolios had transitioned from a private company to an unlisted public company in mid-2018 and is close to announcing the additional appointment of a new Non-Executive Director as the business seeks to broaden its Board capabilities in concert with the growth of the underlying business.”

Implemented Portfolios launches bespoke IMA offering Tue, 07 Mar 2017 04:44:06 +0000 Implemented Portfolios created a white label individually managed account solution for clients of a $350 million Hobart-based financial planning firm.

The managed accounts provider has designed a bespoke solution for integrated accounting and self-licensed advice firm Collins SBA, with managing director Jonathan Elliot describing it as an exciting development to be able to offer a service leveraging the Implemented Portfolios investment eco-system.

“Our value proposition is to help client’s make informed decisions about their financial life so that they feel confident they’re on track. We extensively researched the US and Australian markets and clearly technology is enabling far more effective portfolio implementation than ever before,” Elliot said.

Elliot found the GFC demonstrated that charging high fees “at the big brand wire house wasn’t sprinkling gold dust on their portfolios after all,” with the IFA and ETF markets in the US surging as consumers seek greater value, and progressive advisers want to deliver solutions tailored to their clients.

“We wanted a portfolio service that had the client at the core and would provide a scalable, consistent and individual experience,” Elliot said.

“It became clear that a technology enabled service, not a product, was going to achieve what we were looking for and that the strategic vision from the team at Implemented Portfolios aligned strongly with our own views.”

“We can use Implemented Portfolios as a model portfolio MDA with different value and price points, or as a true customisable IMA where required whilst maintaining flexibility and leveraging the mutual benefit for both the client and our business.”

Implemented Portfolios co-founder and chief executive, corporate development, Santi Burridge said the company is thrilled to have been selected by a firm like Collins SBA.

“The fact that Collins SBA also has a large and successful accounting practice makes the decision all the more satisfying as we know accountants have been looking for a better way for their clients to be served in the wealth sector for many years now,” Burridge said.

The white label marks the first of a number of partnerships Implemented Portfolios is planning to launch in 2017.

AAIC – Adviser Briefing with Jon Reilly (CIO)

American IFA model set for Australia, says Burridge Fri, 09 Dec 2016 02:09:30 +0000

The demise of institutionally aligned advice in the US is set to be mimicked in Australia, which is going to make room for “large independents”, Santi Burridge of Implemented Portfolios has said.

In a netwealth webinar this week, Mr Burridge reflected on his recent trip to Silicon Valley, saying the Australian financial services sector is a “huge, fat, lazy beast that hasn’t been attacked properly”.

One of his findings from the trip was that independent financial advice will be “the way of the future”, he said.

“We were very happy to hear that this is the dominant advice channel now in the US and it was put to us that if you are not independent, you can’t compete. The independents are becoming massive and are now actually developing as small institutions.

“The institutional model is dead. It is considered un-American to be institutionally aligned.”

Mr Burridge believes what helped the IFA sector in the US thrive was disruption to adviser remuneration.

“The independents over there can’t receive commissions – the aligned advisers can. This is part of the success of independents over in the US and the independent movement has been facilitated by that,” he said.

“We were disappointed and frustrated with how they are able to, via technology, become much more profitable. They are making twice as much as Australian advisers on average … they collaborate brilliantly, data is everything to them, and how they market from that data is crucial.”

Mr Burridge added that he expects this trend to take off in Australia as well, with many institutions here already moving out of the advice sector.

“What we’ve seen over the last 20 years in Australia is that good independents are created but then bought up by institutions. I think that cycle has ended here and we’re going to see the rise of the large independents in the country, which is going to be great for our businesses,” he said.

Australian advisers “need to start winning the service game, not the product game … how are we going to change our business models, knowing full well that we are going to be attacked?”, Mr Burridge said.

Space Invaders Tue, 01 Nov 2016 22:39:14 +0000

Silicon Valley entrepreneurs have set their sights on global financial services, but advisers alert to the coming disruption can avoid – even embrace – the invaders. Aleks Vickovich reports from the United States.

Dressed simply in blue jeans and a San Francisco Giants windbreaker, a subtle smile across his face, Rich Arnold didn’t look as though he was about to blow our minds. But the prolific investor and entrepreneur didn’t hold back in warning of the impending disruption.

“There are now more than 800 startups and tech companies within a hundred miles of here that are focused purely on financial services, and that number is growing,” he told delegates to the Implemented Portfolios Thought Leaders Study Tour, perched on the edge of their seats in the high-rise, Alcatraz-onlooking boardroom.

“Silicon Valley is out to eat your lunch. Software is eating the world.”

Born in the suburbs of Melbourne, Mr Arnold was a pioneer of the Aussie brain drain, first arriving in the Bay Area as a teenager in the early ‘60s, well before the region became widely regarded as the technology industry’s global headquarters. In subsequent decades, he moved back and forth between the two countries many times in a career that gave him a unique insight into both the Australian and American business cultures and their provision of financial services in particular, including a stint as chief of Kerry Packer’s financial services division within Consolidated Press.

Asked whether these disruptors have set their gaze specifically on the Australian market, Mr Arnold said they are truly global in their focus and that the sizeable pool of Aussie superannuation assets makes it a natural target. A noticeable disquiet settled upon the room, even though the delegates represented some of the more innovative businesses in Aussie financial services and are, therefore, arguably more prepared for the onslaught to come than many others.

Fintech developments like robo-advice have moved in Australia from being a headline buzz-term and fear factor to an everyday reality, with a growing number of retail investors utilising automated investment tools and an increasing amount of financial advice businesses incorporating B2B digital advice offerings into their practices. And yet, even though many Australians are already across this particular disruption, the pace at which automation-focused startups are emerging in the US – and the considerable funding they seem to be receiving from a venture capital and private investment market that is bullish on fintech – still requires that advisers acknowledge the parts of their value proposition that are defensible, and those that the digital disruptors will challenge.

Among those 800 finance-focused startups are players that believe they can assist consumers to invest in financial markets, manage budgets, taxes and household finances and create a financial plan using automation and data analytics, thereby cutting out the professional, human adviser.

Having ventured to the San Francisco Bay Area to investigate this very dilemma, the delegates to the IP Thought Leaders Study Tour spent a number of days digesting Rich Arnold’s words of warning and crafting the blueprint for response.

For, while there is no doubt there is a growing community of global tech players seeking to “eat your lunch”, there is also a range of practicable defences open to forward-thinking advisers interested in building businesses that survive and thrive in the fintech age. But as the Chinese military tactician and philosopher Sun Tzu advised, before you can strike, you must first “know the enemy and know yourself”. So the first step is being awake to the trends on the horizon, so that they can be turned to your advantage.

A human proposition

One of the first things that strikes you when faced with a US technology demo or PowerPoint presentation is that Americans do not shy away from value proposition. Many American businesses seemingly place a higher premium on the marketing and branding functions within the hierarchy of needs than their Australian counterpoints do, and have a steely-eyed focus on simple, effective catchphrases.

HighTower Advisors, for example, has condensed its entire value proposition to three keywords: “Culture, brand and platform”.

The “value prop” is repeatable, or so HighTower head of operations Michael Parker tells us, by any adviser or employee working for the New York-headquartered independent financial advisory firm. Similarly, the entrepreneur behind personal finance mobile app startup Levanto Financial tells us his team spent a considerable amount of time debating messaging during the incubation process before settling on “everyone’s household CFO”.

Reflecting on this most recent tour and others to the US in recent years, Implemented Portfolios co-founder and chief executive, corporate development Santi Burridge said financial advisers need to take a similar approach to their own value proposition, focusing on the more human elements of their practice.

“Anything that can be done by software will be, and that includes investment management,” Mr Burridge says. “So for financial advisers the first step will be homing in on that with which the robot cannot compete: the trust element that only humanity can provide.”

HighTower, a firm that has been at the forefront of the trend away from product-focused, institutionally-owned advice to independent, client-centric advice that is now also underway in Australia, sees the future heading in this more humanistic direction.

Mr Parker’s presentation gave us a glimpse of the firm’s vision of the adviser increasingly taking on a role as financial coach, more professionally akin to those who advise on topics such as physical fitness and psychological and spiritual wellness, rather than investment management – which software can increasingly automate.

For Mark Nagle, director of FinLife FinTech and a vocal advocate of a more behavioural approach to financial planning, this defence is already underway in Australia, albeit slowly. “In terms of thinking in Australia we are definitely getting there,” he says.

“I feel there is momentum around advisers seeing the challenges they are facing and moving to realise that the human element is crucial.”

Indeed, FinLife FinTech is developing technology that specifically speaks to advisers interested in focusing their VP in on this more personal approach in a scalable manner. The company’s soon to be released solution aims to do just that, inspired by this and other study tours to the United States. Although not fintech per se, tour delegate Alisdair Barr of Grad Mentor is also developing tech that could be helpful to advisers on this front. Mr Barr has been busy building the “e-harmony of financial planning graduate resourcing”, using algorithms and personality testing to match high quality grads to growing employers.

In response, delegate Brent Fairhead, managing director of the Lawrence Group in Perth, said his advice practice would benefit from this type of tech, particularly as the trend towards the human aspects of the advice process intensifies.

“Financial planners are going to increasingly want to hire people who have strong soft skills, not financial gurus,” Mr Fairhead says, adding that if psychometric-based tech can assist with this recruitment process, that may create some optimal cost- efficiencies.

For those advisers for whom investment advice and financial product recommendation is a central plank of their value proposition, this focus on wellness and the personal side of the profession may not be the right approach. But the tech entrepreneurs have made clear which side of the spectrum they seek to disrupt, and the evidence suggests they mean business.

Collaborative ‘Narrowcasting’

Like all human sub-cultures, Silicon Valley has its own internal language, with certain words being repeated ad nauseam in meeting after meeting. One of the buzzterms currently trending is “narrowcasting” (as opposed to broadcasting), a strategy of targeting increasingly niche customer bases.

For tour delegate John Hanrahan, chief information officer at Netwealth, the tactic is an interesting new development.

“Quite a few of our speakers spoke about going after very fine slices of markets and it’s all about putting together ‘co-operative syndicates’ to go after the entire market,” Mr Hanrahan explains.

“It has been really interesting to see how these startups are working together to solve problems. Importantly, most of them are not trying to solve the whole problem, [but] solve a piece of it and they collaborate with others.”

Fellow delegate Naomi Christopher, senior manager – brand, at Midwinter Financial Services, also lists marketing to a specific niche, rather than trying to “saturate the market”, as a noteworthy trend discovered on the tour upon which some Australian financial services providers could improve.

Developments in digital media and the use and analysis of data are fueling this approach, allowing entrepreneurs to identify and reach small groups of higher-likelihood or ideal customers and service them effectively by electronic means despite geographical or demographical circumstances.

But it is not only the tech entrepreneurs and their marketers that are adopting a strategy of ‘narrowcasting’. The Bay Area’s more forward-thinking advice practices are also moving to segment their client base closer to their “ideal” client, perhaps inspired by the success the tech sphere had with niche targeting, or perhaps in spite of it.

Sabrina Lowell, COO of San Francisco-based firm Mosaic Financial Partners and a two-time winner of the US FPA’s ‘heart of financial planning award’, introduces us to ‘Kate McKinsey’, a fictionalised avatar that, due to her demographic, socio-economic and life goal factors, reflects the firm’s most desirable type of client. Advisers under Ms Lowell’s management are encouraged to ask themselves “what would Kate do?”, constantly seeking to narrow and perfect their client base for the long-term.

Influential US financial advice commentator Michael Kitces also strongly encourages advisers, particularly those that charge a flat fee for their services, to consider segmenting their clients, saying no to those that do not fit within the ideal model.

Study tour delegate Sue Viskovic of Elixir Consulting says many Australian advisers are already undergoing this process and have been for some time. But, having seen some of the tech being proffered in the US, she says the “digitisation” process in Australia has a long way to go, anticipating that advisers will be able to cut out significant time and cost burdens relating to client servicing and onboarding in the future, should some of the tech solutions seen on the tour make their way Down Under.

Stewart Bell of Audere Coaching and Consulting agrees that US advisers seem to be focused far more on this process of bringing on ideal clients and servicing them in a scalable and ultimately profitable fashion.

“There is more investment going into automating and self-servicing with no loss of client experience,” the tour delegate says. “They are looking at automation at the top of the sales funnel far more than [advisers] are [back home].”

As Silicon Valley’s growing ranks of hopeful fintech unicorns embark on a process of narrowcasting, it remains to be seen just how seriously Australian financial advisers come to be seen as a lucrative niche to target.

The principle of pivoting

Another of this community’s favourite words and activities is to ‘pivot’ i.e. change course quickly following mistakes. Almost all of the entrepreneurs and investors the tour met with spoke of previous failures – almost with a sense of pride – and their ability to then alter the product, service or business strategy, with a steely eye on profitability and, in many cases, getting those precious early investors a return.

For Matt Heine, a tour sponsor/delegate and joint executive director of Netwealth, this buzzterm, and its deeper implications, stood out among the week’s findings.

“In Australia, we say that failing is OK, but if 99 things go right [in a business] and one goes wrong and a meeting is then held, what do you think the meeting is about? The one thing, not the 99,” Mr Heine says. “Until we embrace the notion that failure and mistakes are OK, then we won’t see changes.”

So too has this culture of embracing failure and making swift changes, the need to “pivot and iterate” as so many of our speakers stressed, also impacted more forward-thinking advisers in the US. Whether it be a pivot from an investment-centric business to one more focused on client values and goals, or a pivot from servicing high net worth investors to Millennials, or from a percentage-based fee remuneration model to a flat fee retainer, there is seemingly an acceptance of embracing mistakes and change – as long as it is all done in the name of increased profitability and innovation.

Importantly however, Netwealth’s Mr Hanrahan notes that the great American pivot is rarely an emotive decision but is rather focused squarely on that other prominent topic: data.

“[These entrepreneurs] have put structures in place to measure exactly what they set out to achieve and then they have gone hard after it,” he says. “There is very little gut feel.”

Should the space invaders choose to enter, you get the impression they won’t be too worried about turning around again and exiting should the Australian market prove not to be as lucrative as they imagined. Whether Australian financial services providers and startup innovators will be willing to pivot and iterate when mistakes are inevitably made is less certain.

Funding the future

Silicon Valley is not only home to some of the world’s most innovative technologists and entrepreneurs, but also to their commercial backers. Menlo Park’s famous Sand Hill Road in the heart of the valley is arguably the world’s most concentrated and sought after cluster of venture capital firms. Almost all of the technology companies the tour met with spoke of early stage capital injection being a major factor in their subsequent success. For those that do not secure seed funding from VC or private equity sources, recent changes to the legislative regime governing equity crowdfunding has also opened up new avenues for business-starters.

In addition to capital itself, other resources such as accommodation, workspace and business mentoring can be as precious as cash in this place, leading to the rise of incubators that provide these services to select startups, usually in exchange for equity. Meeting with Envestnet | Yodlee’s Y-Next incubator, which focuses specifically on tech enabled by financial data, including a number designed to be used by a number designed to be used by a number designed to be used by (or to replace) financial advisers, it became clear this roundabout form of capital injection is also key to the levels of innovation in this region. A comparatively more relaxed industrial relations system also plays a role, with many companies utilising unpaid interns – especially in product development phase – in a way that Australian laws no longer generally allow.

Financial advice firms have also been a beneficiary, with an increasing number of private equity firms – including the more established, old school New York- based outfits – are taking stakes in growing, independent, advice firms. Prominent recent examples include Genstar Capital’s acquisition of Mercer Advisors and Captrust’s stake in Parker, Carlson and Johnson.

Indeed, in its early years, HighTower raised upwards of US$100 million in private capital, based on a sales pitch that reportedly had only one slide detailing why the future of advice was independent and not bank- owned. Not only is capital less accessible in Australia but, culturally, few business starters seek such a heavy return on investment burden so early in the development cycle, says tour delegate Amreeta Abbott, CEO at NowInfinity.

“In Australia, it’s not the first thing people think about when they start a business – going to get a whole pile of cash to go and spend on marketing or product development.”

Julian Plummer, managing director of Midwinter Financial Services, says greater capital injection, however, wouldn’t just result in a greater pile of cash with which to develop and market products and services, but also in an important change in mindset.

“The Australian market tends to take its time with development – it gets to the same point but it takes a lot longer,” Mr Plummer explains. “Aussie fintechs (particularly startups) just aren’t at the stage where they have the capital or resources. Australia is still thinking about the three extra engineers. They need to be thinking about the 200 extra engineers.” In other words, a bigger pile of dough can lead to bigger thinking, neither of which the United States, and this region of its western coast in particular, lacks.

The silver lining

While there are evidently some structural obstacles to turning Sydney or Melbourne into Silicon Valley anytime soon – access to capital, industrial relations, regulation and cultural attitudes towards success and failure among them – the tour delegates concluded there was also ample room for optimism when looking at the Australian advice profession and its use of technology.

For example, tour delegate and sponsor Malcolm Palmer of Joseph Palmer & Sons, reflects that while we were presented with some of the most well-oiled and impressive fintech firms in America, that the Australian innovators present are by no means behind. Indeed, it was suggested that demoing delegates such as NowInfinity, Midwinter and FinLife FinTech were ahead of their American counterparts, particularly as they relate to a less investment-centric view of the future of advice.

On that particular issue, it was concluded many Australian advisers are far more advanced, having been forced – albeit by legislative intervention to some extent – to forge more professional, client-focused businesses some time ago.

On the issue of access to capital, Matt Heine sees the potential beginning of a similar trend with private equity plays slowly emerging, such as the entry of American firm Focus Financial into the market and the high profile acquisitions made by Paul Barrett and AZ NGA.

Moreover, his father and business partner Michael Heine says that having access to too much money – particularly that belonging to other people – can lead to sub-optimal business decisions, arguing that the traditional Australian independent model of private or family ownership can ultimately be advantageous.

However, while there are some promising trends emerging, and some of the more innovative and enabling fintech may already be available to advisers in Australia, all agreed that a slight cultural shift would also be required in order to truly foster a culture of innovation back home.

“I think we do have an issue in Australia that is cultural,” says Brent Fairhead. “But that doesn’t mean we can’t inspire people within our businesses to think a little differently.”

With a growing army of well-funded, success-hungry and globally-ambitious fintech entrepreneurs on the march, Aussie advisers have plenty of motivation.

Implemented Portfolios welcomes updated regulatory guidance on managed discretionary accounts Fri, 30 Sep 2016 01:02:49 +0000 Implemented Portfolios, a leading managed account specialist dedicated to helping financial advisers provide a consistent and scalable client experience, has welcomed ASIC’s announcement of changes to the regulatory regime governing managed discretionary accounts (MDA) and the collaborative approach with industry by ASIC.
The corporate regulator has announced a number of modifications, including additional disclosure of custodial, fee and termination arrangements as previously outlined in Consultation Paper 200. Adam Seccombe, chief executive of product, marketing and distribution at Implemented Portfolios says the decision to revoke the limited MDA/no-action letter provisions in particular will have broad benefits for the sector.
“The removal of no action letters will drive greater professionalism as discretionary managed account providers will need to comply with higher hurdles of technical proficiency to deliver managed portfolio services to retail investors in Australia,” Seccombe said.
The rule change will also likely have positive implications for financial advisers as clarity is provided to professional indemnity insurance underwriters, which could in turn have an advantageous effect on PI premiums for advisers. The previous no-action letter regime created confusion as to the difference between “operating” a managed account or “advising” on MDA services which has now been clarified by ASIC.
Many professional advisers may now have to reconsider their business model and make an important choice on the provision of advice related to managed accounts.
“We expect to see reconfiguration of business models where many advisers will either choose to strengthen their internal investment, governance and compliance competencies or they will look to partner with specialist providers,” Seccombe said. “In addition, growth prospects now look stronger for individually managed accounts (IMAs). This speaks to the benefits to investors of receiving a customised service rather than being sold a product.”
Seccombe anticipated that the new regime will see a greater number of advisers looking at white-labelling and insourced options, such as those provided by Implemented Portfolios, as well as the release of innovative new product lines for advisers that were held back due to the unclear ‘no-action letter’ framework.

How advisers can avoid becoming the next taxi drivers Sun, 25 Sep 2016 23:45:05 +0000

By Santi Burridge

We have been hearing about digital disruption of financial services for some time, and in some cases experiencing it first hand with the first wave of Australian robo-advisers now in the market.

But it’s not until you are on the ground in Silicon Valley, the world’s hotbed of innovation, that you get a sense of just how major the disruption will be.

Over the last week, Implemented Portfolios led a team of Australian industry thought leaders and some of our closest stakeholders to the San Francisco Bay Area to get a better picture of the challenges ahead and better prepare for the onslaught, helping us and our clients to build businesses that will not only survive, but thrive in the fintech era.

Meeting with some of the world’s top experts on this topic – entrepreneurs, venture capitalists and private equity investors, CTOs, CIOs, consultants, wealth managers and others – it became clear that the Valley has set its sights on financial services. In fact, Rich Arnold, a man who truly understands both the Australian financial services industry and the funding and innovation circles of Silicon Valley (having emigrated there from Melbourne in the early ‘60s!) estimates there are as many as 800 tech firms in the Bay Area right now solely focused on the financial sector, including many who have plans to enter the Aussie market.

The good news is that for those professional service providers – particularly financial advisers – who acknowledge the threat and start taking steps to mitigate it, the future seems very bright indeed. Those who do not will be eaten alive by the barbarians at the gate. As Rich puts it, “software is eating the world”.

Just as we have seen Uber fundamentally disrupt the taxi industry and Airbnb do the same to hotels, software-based applications that are focused, capitalised and (most importantly) data-driven are coming for personal investment. Anything that can be done by software will be, and that includes investment management. So for financial advisers the first step will be homing in on that with which the robot cannot compete: the trust element that only humanity can provide.

What became clear during our sessions last week is that the investment function for advisers has changed for good. Providing advice is no longer about managing a product, it needs to be about managing a system – a system that engages our clients in a way we previously could never have dreamed, using predictive analytics and data tools.

The old paradigm of advisers choosing a product first, then a platform, then implementing one by one is dead. This old school approach can never provide the scalability an advice practice needs or the consistency consumers are demanding. Instead, advisers need to shift focus to mass customisation – this is the key to not only defending against digital disruption but turning the trend to an adviser’s advantage. Using technology, not pen and paper, advisers can achieve the scale they so sorely need while still providing a valued and personalised service to clients. In the future, it is not only front- and back-end processes that will be automated. Even asset allocation decisions can be executed without the need of a human adviser, with portfolios managed that remember client preferences and act accordingly across an entire client base using robots, not humans.

But in order for this to happen, we don’t just need access to innovative technology solutions (though this is critical). We also need to see some cultural changes within advice practices, with experimentation and potential failure embraced and an understanding that the client relations portion of the advice proposition is the one thing that cannot be automated.

Of course, if you don’t control the decisions in your business all of this is irrelevant, which is why independence is also key. It is no coincidence that those advice firms in the US that are best utilising technology are those that split from the banks and ‘wire-houses’ long ago.

The ultimate challenge posed by the last week is “how can you manage 1,000 clients, not 100, using technology, not people?”

Advisers that are thinking this way are already ahead. Those more interested in short-term goals or hamstrung by embedded conflicts and licensees should get ready to be eaten and become the next taxi drivers.

Silicon Valley disruptors heading for Aussie advice market Tue, 20 Sep 2016 01:21:28 +0000

Australian financial advisers need to be prepared for the next generation of fintech disruption, delegates to the Implemented Portfolios Thought Leaders Study Tour have heard.

Addressing the delegation in San Francisco last week, respected Australian-born investor and entrepreneur Rich Arnold – an independent director of Financial Simplicity and former director of financial services for the Packer Family’s Consolidated Press Holdings – said the Bay Area’s sizeable innovation community has wisened up to the fintech opportunity.

“There are more than 800 businesses in Silicon Valley now focused solely on financial services and many more innovative startups being launched each day,” Mr Arnold said.

“They are data-driven and know more about your clients than you do. Software is eating the world.”

Asked whether many of these potential disruptors intend to enter the Australian market, Mr Arnold said most are truly global in their focus and that the sizeable pool of Australian superannuation assets make it a natural target.

However, Implemented Portfolios chief executive, corporate development, Santi Burridge said there are a number of key measures that Australian financial advisers can take to ensure that the coming disruption is complimentary to their businesses and does not reduce their professional value.

“Our meetings with some of the world’s leading experts on fintech and the future of financial advice this week has confirmed my long-held view that the old way of delivering advice in Australia is dead and advisers that don’t see this will be disrupted by software that is more focused, capitalised and data-driven,” Mr Burridge told ifa.

“The adviser’s role in the investment piece is fundamentally changing. It is no longer about managing product, it is about managing a system that more deeply engages our clients and allows us to service more of them. The old normal of choosing product then platform then implementing it one by one is over. The new world is all about mass customisation via technology, allowing advisers to build scalable businesses and personalised client experiences.”

Original article


Advisers need to control the finance food chain Wed, 07 Sep 2016 23:15:11 +0000 The food chain of financial advice has long been the wrong way around and needs to change, says Implemented Portfolios’ co-founder and chief executive of strategic development Santi Burridge.

Speaking at the recent Financial Standard Managed Accounts Forum in Melbourne, Burridge encouraged delegates to dismiss the traditional business structures that have hindered the financial advice industry.”At the top of the food chain has always been expensive investment management and we have had far too much focus on platforms. We haven’t created any ability to mass-customise. It’s all been one by one, review by review, product by product and paper by paper with no real control over it – this needs to be fixed.

“Currently advisers are at the bottom of the food chain defending someone else’s decisions. Advisers need to be at the top of that food chain, taking control,” he said.

“With managed accounts, we can control that the client beneficially owns every asset, we can control tax, we can control things that are really important to people – their preferences, their journeys. We can control implementation so, in my mind, the ability to mass-portfolio customize for an IMA means we control how quickly we implement money, how quickly we re-model.”

Burridge also told delegates that technology – particularly implementing the ability to mass-customise with IMA’s – is fundamental to building a scalable business.”Technology should be at the core of all advice businesses and mass-customisation is critical to the success of advice businesses. The ability to mass-portfolio customise is everything, it will unlock all of the true value in your business.”

Burridge believes that all of this, coupled with a sincere focus on human connection and building strong client relationships to better understand their needs and objectives will result in greater consumer trust of the industry.

“You want to be great at that human connection and client relationship to build that trust, because that’s where all the value lies. No technology can disrupt that – it’s impossible to disrupt that,” he said.

Burridge strongly believes that being non-aligned and taking control of your own business and advice offering is the key to achieving better client and business outcomes.

Speaking to Financial Standard at the event, Burridge said he would encourage all new entrants to the industry to go sans licensee, to establish a business with CRM at its core which is integrated with their chosen financial planning software provider and finally, to focus on client engagement.

“People that seek advice don’t understand the industry, so they trust you with their finances, and you as a financial planner are perhaps dealing with people or groups that aren’t necessarily aligned with making sure that the service provided is equal to the amount of trust being afforded by the client.

“Go independent, put an integrated CRM at the core of your business and really focus on your clients. They’re the very simple denominators of an advice business that will win the game today.”

He also believes that encouraging advisers to take greater control of their businesses will not only see a significant increase in profitability and improvements in compliance but, more broadly, would encourage more female engagement, both as advisers and clients.

“I think, currently, women don’t like the product and sales nature of the industry – they like the softer side which is the goals-based investing and helping you through your life and that’s actually where all the value lies. The industry has long been trained by men who teach us to sell world’s best product, but that’s not where the value lies.

“Females are going to be the ones that own most of the money because they’re going to live longer – that’s just the reality. We will all be dealing with women as the wealth transfer happens with baby boomers.”

Originally posted Financial Standard