Managed Funds Industry Now Worth $2.8 Trillion

The ABS released the latest Managed Funds data to September 2016. The managed funds industry had $2,774.5b funds under management, an increase of $59.0b (2%) on the June quarter 2016 figure of $2,715.5b.

The main valuation effects that occurred during the September quarter 2016 were as follows: the S&P/ASX 200 increased 3.9%; the price of foreign shares, as represented by the MSCI World Index excluding Australia, increased 4.3%; and the A$ appreciated 2.7% against the US$.

At 30 September 2016, the consolidated assets of managed funds institutions were $2,182.8b, an increase of $45.3b (2%) on the June quarter 2016 figure of $2,137.5b.

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The asset types that increased were shares, $46.2b (8%); overseas assets, $41.2b (10%); bonds, etc., $10.5b (9%); deposits, $8.8b (3%); short term securities, $6.5b (6%); land, buildings and equipment, $3.0b (1%) and loans and placements, $0.8b (2%). These were partially offset by decreases in units in trusts, $65.2b (29%); other financial assets, $5.9b (14%); other non-financial assets, $0.4b (4%) and derivatives, $0.3b (7%).

At 30 September 2016, there were $490.0b of assets cross invested between managed funds institutions.

At 30 September 2016, the unconsolidated assets of superannuation (pension) funds increased $56.3b (3%), cash management trusts increased $1.5b (4%), public offer (retail) unit trusts increased $1.2b (0%), friendly societies increased $0.3b (4%) and common funds increased $0.2b (2%). Life insurance corporations decreased $69.7b (24%).

 

NAB Financial Planners Restructured

NAB Financial Planning has announced changes “to deliver better customer outcomes, provide greater support to advisers, and position the business for future growth”.

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In September this year, NAB reaffirmed its commitment to financial advice through the creation of its Consumer & Wealth division, and the announcement of a $300 million investment in its Wealth business.

Following from this, NAB Financial Planning (NAB FP) is proposing to realign its business from 1 February 2017.

“The changes we’re making demonstrate our commitment to face-to-face advice, and ensure we have a customer-focused business that’s positioned for growth,” General Manager of NAB FP, Tim Steele, said.

Under the changes, NAB FP will offer enhanced support to its financial advice practitioners from both their leaders and support staff, and the leadership team will be aligned geographically.

“These changes will enable our business to build deeper local relationships with our customers,” Mr Steele said.

As it realigns its business, NAB FP has had to make some difficult decisions that affect its people, including the decision to reduce the number of entry-level advisor roles from 90 to 35. However, 30 new roles will also be created within NAB FP, and the business will continue to grow its Senior Financial Planner ranks, including supporting eligible advisers to successfully transition into our self-employed franchise business.

“Decisions that affect our people are always the most difficult to make, but we expect that these 30 new roles and other available roles across the wider NAB Group will be attractive to many of the affected advisers, and will present opportunities for career progression and development,” Mr Steele said.

“We’re making these changes so that we can deliver better outcomes to more customers, and position our advisers – and, through it, NAB FP – to succeed,” Mr Steele said.

Macquarie Largest Asset Manager In Australia

Assets managed by the world’s largest 500 asset managers fell in 2015 for the first time since 2011. In Australia, Macquarie is the largest asset manager and ranked 52 globally, with US$355 billion in assets under management. It was ranked 50 in 2015 and saw a decline of US$14.8 billion in assets, or 4%.

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Australia’s second largest manager, the Commonwealth Bank of Australia, owners of Colonial First State experienced a 9% drop in funds under management from $US156.3 billion to US$142.3 billion. Their rank  increased from 100 in 2014 to 99 in 2015.

Westpac, due to its decision to sell down its stake in BT Investment Management, saw the largest fall in assets during the year. Its assets under management fell 53% from $US72.6 billion to $US33.7 billion.

Charter Hall experienced the greatest increase in rank, moving from 468 in 2014 to 425 in 2015 and had the greatest percentage increase in funds among Australian managers, rising 23% from $US9.4 billion to $US11.6 billion.

In 2005 Australia accounted for 0.89% of global assets, now in 2015 it has risen to 1.47%. Assets grew 12% in the last 5 years in local currency, and 5% in US$ terms.

According to the Pensions & Investments / Willis Towers Watson World 500 research, total assets under management (AUM) were down 1.7% to US$ 76.7 trillion at the end of 2015, compared to US$ 78.1 trillion the year before.

The world’s 500 largest asset managers – Year end 2015t

North American firms’ AUM were US$ 44.0 trillion at the end of 2015, a decrease of 1.1% from the previous year, while assets managed by European managers, including the U.K., decreased by 3.3%, to US$ 25.1 trillion. UK-based firms’ assets decreased 2%, reducing their AUM to US$ 6.6 trillion.

The top 20 managers’ share of the total assets increased from 41.6% to 41.9%, even though their assets decreased from US$ 32.5 trillion to US$ 32.1 trillion. The bottom 250 managers’ share of total assets decreased from 6.0% to 5.8%, having assets of US$ 4.4 trillion.

The research, which was conducted in conjunction with Pensions & Investments, a leading US investment newspaper, reveals that actively managed assets, which continue to make up the majority of total assets (78.3%), also fell 2.8% in 2015, while passive assets declined at a faster rate, 5.5% during the year.

ASIC Says Up To $178m In Fees For No Service May Be Refunded To Major Bank Customers

ASIC has released Report 499 Financial advice: Fees for no service (REP 499). They say to date, approximately $23.7 million of fee refunds and compensation has been paid, or agreed to be paid, to over 27,000 customers of ANZ, NAB, CBA, Westpac and AMP. But further reviews are being conducted and based on estimates, compensation may increase by approximately $154 million, plus interest, to over 175,000 further customers, meaning that total compensation for related failures could be over $178 million, plus interest.

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The report provides an update on ASIC’s work to address financial institutions’ and advisers’ systemic failures, over a number of years, to provide ongoing advice services to customers who paid fees to receive those services. The report summarises ASIC’s work to ensure customers are fairly compensated. The report is part of ASIC’s Wealth Management Project which is focusing on the conduct of the largest financial advice firms, including the advice arms of AMP, ANZ, CBA, NAB and Westpac groups (refer: 15-081MR).

The failures set out in the report relate to instances where customers were charged a fee to receive an ongoing advice services, but had not been provided with this service because:

  1. The customer did not have an adviser allocated to them, but was charged a fee for ongoing advice – usually by deduction from the customer’s investment products; or
  2. The adviser allocated to the customer failed to deliver on their obligation to provide the ongoing advice service and the licensee failed to ensure that the service was provided.

To date, approximately $23.7 million of fee refunds and compensation has been paid, or agreed to be paid, to over 27,000 customers of ANZ, NAB, CBA, Westpac and AMP under various Australian Financial Services (AFS) licensees that are owned by these businesses. Further reviews are being conducted by the licensees to determine the extent of their ongoing service fee failures. Refunds and compensation are expected to increase substantially as the licensees’ investigations and reviews continue. Based on estimates provided by the licensees to ASIC, compensation may increase by approximately $154 million, plus interest, to over 175,000 further customers, meaning that total compensation for related failures could be over $178 million, plus interest.

ASIC has commenced several enforcement investigations in relation to this conduct.

Most of the failures outlined in this report occurred before the commencement of the Future of Financial Advice (FOFA) reforms. The changes made by those reforms were a significant factor in the identification of the failures, and also substantially reduce the likelihood that the type of systemic failures described in this report will occur in the future. In particular, the requirement to now provide an annual Fee Disclosure Statement to the client, and the requirement for the client to ‘opt-in’ to the advice relationship every two years, will significantly reduce the risk of fees being charged without any advice service provided.

‘Changes introduced through the FOFA reforms have shone a light on the advice fees that customers are paying and the services they should be receiving in return,’ said ASIC Deputy Chair Peter Kell. ‘Our report identifies the institutions’ systemic failures in this area, which we are putting right by ensuring that customers are fairly compensated.’

ASIC’s MoneySmart website has updated information on how much financial advice costs and what to expect from a financial adviser. Customers should check they are receiving the services they are paying for. Customers who are paying ongoing advice fees for services they do not need can ask for those fees to be switched off. Customers who have paid fees for services they did not receive may be entitled to refunds and compensation, and should lodge a complaint through the bank or licensee’s internal dispute resolution system or the Financial Ombudsman Service.

The big banks and AMP must now pay for a financial adviser watchdog

From Business Insider.

New laws regulating financial advisers will see the big four banks and AMP funding an independent body to oversee professionals standards in the troubled wealth management industry.

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The federal legislation, to be introduced to parliament later this month, will mandate professional standards for financial advisers, including qualifications, exams, continuing education and a code of ethics.

“This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector,” says Kelly O’Dwyer, the minister for financial services.

The wealth management industry has been hit by a series of scandals where customers have been given bad advice and lost life savings and retirement nest eggs.

The big bank CEOs have already been questioned in a parliamentary committee on their track record and whether any senior executive had lost their jobs because of poor financial advice.

The Australian Financial review says that the corporate regulator ASIC will next week release a report that reveals the big banks and AMP have been shortchanging customers tens of millions of dollars by charging them for services they didn’t get.

The professional standards legislation will establish an independent standards body, funded “exclusively” by the large banks and AMP, the biggest players in the wealth management industry.

The new professional standards regime will start January 2019. Existing advisers will have until January 2021 to pass the new exam and until 2024 to reach degree-equivalent status.

Professional associations and other independent third party monitoring bodies will develop compliance schemes to monitor and enforce advisers’ adherence to a code of ethics. These compliance schemes will be approved by ASIC.

O’Dwyer says the reforms ensure financial advisers will be held to a high standard of ethics, with non-compliant advisers subject to disciplinary action and sanction by the monitoring bodies.

In reaction, the Australian Bankers’ Association has today welcomed the Federal Government’s announcement that it will introduce new legislation into Parliament this year to create a new independent body to set higher professional standards for financial advisers.

“This is an important step in the professionalisation of the financial advice industry,” ABA Executive Director – Retail Policy Diane Tate said.

“Customers rightly expect to receive high quality financial advice to help them maximise their savings, build their wealth, plan for retirement or help manage their money in retirement.

“The new education and professional standards framework will mean we have more competent financial advisers who meet higher standards of ethics and conduct.

“Banks support the introduction of higher minimum qualifications, a new exam for all financial advisers, a new supervision year for new financial advisers, mandated continuous professional development requirements and a model code of ethics for all financial advisers,” she said.

“Banks (Financial advice banks are ANZ Banking Group, Bendigo and Adelaide Bank, Commonwealth Bank, Macquarie Group, National Australia Bank, Suncorp Group, and Westpac) are helping to fast-track the professionalisation of the financial advice industry by agreeing to fund the establishment costs of the new independent body. This will mean that the new professional standards framework can be introduced as soon as possible.”

Ms Tate said banks had already made significant changes to their businesses to lift standards.

“We have led the way on industry reforms including changing how banks hire financial advisers, so they know a lot more about the adviser’s conduct history and performance before employing them.

“The aim is to better identify financial advisers who have not met the industry’s minimum legal, conduct and ethical standards, and help ensure Australians can trust they receive financial advice from professional, competent and ethical financial advisers at their bank,” she said.

The ABA’s new protocol for hiring financial advisers is open to all providers of financial advice, and allows signatories to ask a standardised series of questions about the financial adviser’s conduct history, quality of advice, risk management and compliance record.

The banking industry is also working on additional industry standards to ensure that banks can apply the Government’s professional standards framework in their competency and training programs, human resources policies, and compliance frameworks.

“Our efforts as well as the new standards set by the Government will serve to professionalise, and build trust and confidence in financial advice from banks,” Ms Tate said.

AMP launches new advice business

AMP has launched a contemporary financial advice business, AMP Advice, creating a new customer experience and making goals-based advice more accessible to more Australians. AMP Advice combines interactive technology with personalised advice to help customers explore, plan, track and realise their goals.

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The implementation follows an extensive period of testing and feedback from AMP’s aligned adviser network and customers.

AMP Advice encompasses:

  • AMP Advice branded practices located around Australia where customers can identify their goals using AMP’s new Goals Explorer technology. Working with a Goals Coach they can choose from 29 goals identified by AMP’s research as being most popular for customers or create new goals specific to their circumstances.
  • Access to My Money Style, a unique application customers complete to reveal their behaviours with money and risk appetite.
  • Advice Explorer scenario modelling which customers and advisers use together to develop lifestyle and financial plans targeted at achieving their specific goals.

AMP Group Executive Advice and Banking Rob Caprioli said the purpose of AMP Advice is to make goals-based advice more accessible to the 80 per cent of Australians who don’t currently have a relationship with a financial adviser.

“When delivered well we know face-to-face financial advice improves the lives of our customers.

“We also know the concept of personal goals has long been the foundation of the most effective financial advice. This principle has driven the development of AMP Advice, through which goals frame every aspect of the advice process,” said Mr Caprioli.

AMP research indicates that Australians who have clearly defined goals and a plan to achieve them are under considerably less financial stress.

David Akers has been appointed Managing Director, AMP Advice, reporting to Mr Caprioli. Formerly Director of Future of Advice Business Solutions at AMP, Mr Akers will lead AMP Advice as it expands its national footprint.

There are currently 11 AMP Advice practices located around Australia, with between 20 to 30 expected to be operational before the end of the year.

AMP’s employed adviser licensee, ipac, is currently transitioning to the model, with five locations now operating as AMP Advice.

AMP’s other aligned licensees, Hillross, Charter and AMP Financial Planning will continue to operate under their existing brands and structures.

In announcing AMP Advice, Mr Caprioli reinforced AMP’s commitment to its existing advice network.

“We are continuing to invest in technology and systems which will benefit all our advisers, allowing them to spend more time with more customers.

“We also recognise that to deliver more advice we must operate to the highest standards of professionalism,” said Mr Caprioli. “Ethics, education and high customer service standards will continue to be integral to how we deliver advice.”

In August 2014, AMP announced a series of measures across its advice network to significantly lift the bar on adviser professionalism and reinforce its commitment to stand behind the advice it gives to consumers.

AMP Advice is core to AMP’s strategy to become a more customer focused, goals-based organisation. It will integrate with a range of other AMP goals initiatives planned for release in the second half of 2016. These include the AMP Bett3r Account, which helps customers simplify their finances, a solution to help manage and optimise income through retirement and a holistic insurance offering.

 

Challenger 2016 Results Strong In Growing Market

Challenger released their 2016 results yesterday. It gives us a good view of momentum in the wealth management and annuity sector. They highlight the growing opportunities thanks to changes in regulation designed to enhance the superannuation retirement phase. These tailwinds support future growth.

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Challenger Limited (Challenger) is an investment management firm managing $60.0 billion in assets. It is focused on providing customers with financial security for retirement. Challenger operates two core investment businesses, a fiduciary Funds Management division and an APRA-regulated Life division. Challenger Life Company Limited (Challenger Life) is Australia’s largest provider of annuities.

Normalised profit after tax (NPAT) rose 8% to $362 million while statutory net profit after tax was up 10% to $328 million.

CHallenger-2 The Group reported record annuity sales, up 22% on the previous year, boosted by superannuation industry moves to include Challenger annuities on investment and administration platforms. Sales accelerated in the second half with annuity sales up 45% on the prior corresponding period (pcp).

Normalised earnings per share were up 6% to 64.6 cents per share (cps) with earnings from higher normalised NPAT partially offset by a higher share count.

Normalised return on equity (ROE) was 17.8% pre-tax, down slightly due to the impact of Brexit and market disruption affecting Fidante Partners Europe earnings.

Challenger’s sustained growth allowed the Board to declare a final dividend of 16.5 cents per share, contributing to a full year record dividend of 32.5 cents, up 8%. Dividends have doubled over the past five years.

Chief Executive Officer Brian Benari said: “We have leveraged our leadership position in a growing retirement incomes market to deliver record annuity sales and record normalised profit. We’ve rewarded our shareholders with record dividends.

“Challenger is generating superior shareholder returns through a highly efficient, profitable and sustainable model. In our Life business we have been able to maintain consistent margins for the past four years which means the growth opportunities we are capturing feed directly through to our earnings and higher shareholder dividends.

“A key feature of these results has been sales achieved through our expanded distribution capability. Building scale via platforms is an important part of Challenger’s strategy with both retail and industry fund partners.

“Over the past year Challenger has launched a number of distribution partnerships to make Challenger annuities more readily available to financial advisers and super fund members. These are already bearing fruit. Sales momentum is building through our Colonial First State (CFS) partnership with sales volume through CFS doubling in the first year that our annuities have been on their platform. Notably this includes an increased proportion of lifetime annuity sales. In 2H16, 40% of sales from platforms were lifetime annuities.

“We are launching five new annuity partnerships in 1H17 including teaming up with Suncorp to white-label Challenger term and lifetime annuities.

“The bottom line is that more retirees are buying Challenger annuities because they better understand retirement risk and seek guidance from advisers who rate us highly and can access our products much more easily from a growing range of platforms.

“Our Funds Management business is achieving double digit organic growth in FUM, benefiting from strong underlying flows of $2.4 billion in FY16. In Europe our boutique growth plan remains on track, however our listed fund capital raising business has been affected by uncertainty in the run up to Brexit. This has reduced Funds Management earnings.”

As at 30 June 2016, Challenger Life held substantially more capital than required by the Australian Prudential Regulatory Authority (APRA) capital standards comprising $1.1 billion of excess regulatory capital and group cash. Challenger Life’s prescribed capital amount ratio of 1.57 times is at the top end of its target range.

Looking at the segmental contributions:

CHallenger-11. Challenger Life had average assets under management (AUM) over the year of $13.2 billion, up 8%. Margins continued to be stable at 4.5% which meant AUM growth in the Life business fed directly through to higher cash operating earnings (COE) of $592 million, up 9%. Life’s COE margin has consistently been in the range of 4.4% to 4.5% since 1H13.

Annuity sales were supported by new distribution initiatives through investment and administration platforms. This contributed not only to volume but also to longer tenor of annuities. An increasing proportion of lifetime sales and longer tenor term annuity sales resulted in new business tenor for FY16 extending to 6.5 years and, for 2H16, 7.2 years.

Total annuity sales were up 22% to $3.4 billion. They comprised term sales of $2.8 billion, up 22%, with sales increasing in all quarters relative to the pcp, and lifetime sales of $0.6 billion, up 21%. Lifetime sales accounted for 21% of 2H16 annuity sales, up from 14% in 1H16.

FY16 total Life net book growth was 11.1%. Challenger’s annuity book grew by 8.5% and a Guaranteed Index Return mandate contributed a further 2.6% growth.

Sales of the CarePlus aged care product, which was launched in August 2015, accounted for $60 million, with $32 million of that being in Q416. CarePlus will be available on the CFS FirstChoice platform by September 2016.

2. Funds Management. Despite challenging markets, average funds under management (FUM) rose to $55.1 billion, up 11% once allowing for the derecognition of $5.4 billion of institutional client FUM from Kapstream Capital following our sale of that business in July 2015. The Funds Management business continued to generate strong organic net flows, amounting to $2.4 billion. This comprised $1.3 billion from pre-existing Fidante Partners boutiques, $1.0 billion from Fidante Partners Europe and $0.1 billion from Challenger Investment Partners.

Funds Management has a broad base of boutique fund managers and has a strong track record of growth. FUM has more than doubled from $24 billion five years ago at an annual growth rate of 19%, twice system growth during that period. Despite volatile markets, the business has achieved 11 consecutive quarters of positive organic flows.

In FY16 Challenger Investment Partners expanded its offshore client base, including $0.4 billion in new property and fixed income mandates from offshore investors which contributed to a 14% increase in third party FUM.

However, Funds Management earnings before interest and tax (EBIT) was down 15% to $37 million due to a loss in the Fidante Partners Europe business that was previously flagged to the market. This was impacted by capital markets uncertainty which stalled UK capital raising activity, including in the closed-end alternative investment trust segment in which the business specialises. This market is expected to normalise as uncertainty subsides. Excluding Fidante Partners Europe, Funds Management EBIT was up 7%.

3. Distribution, Marketing and Research. Challenger continues to entrench its leadership in the retirement income market through new distribution partnerships, leveraging the strength of the Challenger brand and investing in product and service capabilities.

Five new partnerships with superannuation funds and investment and administrative platforms have launched or are expected to launch in 1H17. From July 2016, Challenger annuities have been available to financial advisers through Clearview Wealth Solutions, which utilises a CFS private label platform.

In August 2016, Challenger formed a strategic relationship with Suncorp. From December, Suncorp’s financial advisers are scheduled to sell a Suncorp-branded annuity, backed by Challenger, through its national branch network.

In the industry fund sector, a previously announced strategic partnership with Link Group, which services 10 million fund members, has led to Challenger annuities being made available to members of Local Government Super and legalsuper from Q117 while caresuper is to launch Challenger annuities in Q217. These three funds combined have more than 400,000 members.

We strengthened our position as a retirement income leader through our life expectancy brand campaign, launched in 2H16, which addresses customer concerns of outliving their savings. In May 2016 Hall & Partners research found that 52% of 55 to 64 year olds would now ask their financial planner about buying annuities.

A key competitive advantage for Challenger is its distribution capability which rates highly with financial advisers. Challenger was ranked first of 20 fund managers, including the leading wealth brands, for overall adviser satisfaction in the 2016 Wealth Insights Fund Manager Service Level Report. This comprised number one ratings for five key categories, including: our business development team, for the fifth straight year; technical services and contact centre teams; and, image and reputation.

Yellow Brick Road Restructures

Wealth management company Yellow Brick Road Holdings Ltd has announced the transition to a franchise model, consolidation in staff numbers and a focus on increased network productivity and adviser recruitment.

Yellow-Brick-RoadThe changes follow the acquisition of four businesses: Resi Mortgage Corporation, Vow Financial, Brightday and Loan Avenue, and a three-year, $20million brand investment in Yellow Brick Road to position itself for growth and offer clients a diverse range of financial and wealth management services and products respectively.

Executive Chairman Mark Bouris says the company, as part of the franchise transition, will release three proprietary technologies to the network which will ramp up local customer acquisition capabilities to improve productivity.

“Moving to a franchise model is an important progression in our operations. The old licence structure served us well but is not adequately responsive or commercial to meet the future challenges and opportunities for a retail oriented businesses like ours,” Mr Bouris said.

“We’ve had a period of phenomenal growth with multiple acquisitions and the development of new proprietary technologies. It is prudent we bed down this activity and successfully consolidate the acquisitions.”

The acquisitions were made to increase scale, market share and distribution to the existing business and there will be some ongoing costs associated with the integration of Loan Avenue.

“We’ve also developed a great brand and can now move to lower levels of advertising spend. Meanwhile, our new branch customer acquisition technology will allow us to fully leverage the brand at a local level.”

Wealth management restructure

Following the recent resignation of the CEO – Wealth Management, the wealth division will be restructured and in future will be led by the newly created role of General Manager reporting directly to the Executive Chairman. This appointment will be announced in due course and will consolidate the roles of CEO and National Manager.

“We have done a great job in attracting mortgage brokers. We now have a compelling offer for financial advisers, and with the wealth strategy set and our service offering near complete, our focus is on increasing adviser numbers and driving uptake of our wealth services with customers.”

The broader corporate restructure involves the removal of a number of management level roles across the company in lending, wealth, and marketing that are no longer required due to the fulfilment of projects and integration of acquired businesses. This will result in a decrease of direct staffing costs.

“In line with the reduction of a number of high cost senior management roles and other various management layers in the whole group, I have asked the remaining senior managers to adopt what I call a ‘step in’ mindset so they will be stepping into the roles that have been eliminated and this will be done starting with me as Executive Chairman. Consolidation is about creating new efficiencies and reducing costs and all of us working harder to achieve the targets,” Mr Bouris concluded.

ASIC takes first action against licensee for alleged breaches of FOFA ‘best interests duty’

ASIC has said it has commenced proceedings against Melbourne-based NSG Services Pty Ltd (formerly National Sterling Group Pty Ltd) (NSG) for breaches of the ‘best interests duty’ introduced under the ‘Future of Financial Advice’ (FOFA) reforms.

This is the first civil penalty action ASIC has taken against a licensee alleging breaches of the best interests duty and is seeking declarations of breaches and financial penalties.

Since 3 April 2008, NSG has been licensed to provide personal advice on risk insurance and superannuation products to retail clients. NSG employs advisers to provide financial services advice on its behalf as its representatives and authorised representatives (NSG advisers).

ASIC alleges that:

  • NSG failed to take reasonable steps to ensure that its advisers complied with the best interests obligation when providing advice to clients; and
  • as a result, on numerous occasions, NSG advisers did not act in the best interests of their clients.

In addition, ASIC alleges that:

  • NSG has not provided appropriate training to its advisers to ensure clients receive advice in their best interests. Instead, ASIC contends that NSG has trained its advisers that it is almost always in a client’s best interest to take out some form of life risk insurance, regardless of a client’s financial situation;
  • NSG’s written policies relating to legal and regulatory compliance and risk management have been inadequate, and in any event, not followed or enforced;
  • since 1 July 2013, on eight specific occasions, and because of advice provided by NSG advisers, clients were sold insurance and/or advised to rollover superannuation accounts that committed them to costly, unsuitable, and unnecessary financial arrangements; and
  • regular and or substantive performance reviews of advisers have not been conducted, and disciplinary action against advisers who do not act in compliance with their obligations under the Corporations Act has not been taken.

Younger Investors Are Saving More

Young Australians are getting serious about saving and plan to increase their levels of investment in the coming months, the latest MLC Wealth Sentiment Survey shows.

The quarterly survey of over 2,000 Australians found that 42 per cent of 18 – 29 year olds added to their savings in the last three months, compared to 29 per cent of people aged 30-49, and 21 per cent of the over 50’s. Younger investors are also more likely than any other age group to invest more in the next quarter.

While young investors are demonstrating optimism, older people are taking a more conservative approach – with debt consolidation and superannuation the main priorities.  On balance, Australians added more to their superannuation (+2 per cent) and paid down more of their debts (+6 per cent) in the last quarter.

The survey found that the retirement savings gap is still a looming concern for many Australians, who now expect to retire with just over $450,000 on average – down from $501,000 last quarter.  Men, on average, expect to retire with $192,000 more than women.

MLC General Manager Corporate Super Lara Bourguignon believes the focus on building super and reducing debt is a positive sign.

”We can see that Australians are taking action to contribute more to their super to address their concerns about how much money they will retire with.

”While we are moving in the right direction, it’s also important for people to consider long-term investment options to help maximise their retirement savings.

”Our research found that over 40 per cent of Australians have never used a financial planner and don’t have a financial plan, so there is more work to be done to ensure that Australians are adequately prepared for their later years,” said Bourguignon.

The survey includes results from MLC’s Investment Intentions Index, which measures whether Australians are planning to invest more or less in the next three months.

While overall investment intentions improved this quarter, rising three points to -5 points, the number of investors who are planning to cut back the amount they invest still outweighs those planning to invest more.

Additional findings include:

  • In the past three months, one in four Australians have added to their savings and deposits, whilst one in five have elected to pay off debt.
  • Almost one in three women believe they’ll have ”far from enough” to retire on, compared to one in five men.
  • Fifty-six per cent of women don’t think they will have enough to retire on and live to their desired standard, compared to 46 per cent of men.
  • One in five of us expect to have less than $100,000 in savings when we retire – which may explain why almost one in five of us also plan to keep working into our 70’s.
  • One in five young Australians expect to retire before 60, compared to less than one in ten of those over the age of 50.
  • Significantly more men (43 per cent) believe they are holding more super than their partners. Just 14 per cent of women believe they hold more super than their partners.
  • Around one in five ”don’t know” how much they’ll have in retirement