Managed Accounts in Australia

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This presentation provides an overview of the Managed Accounts industry in Australia, as well as the key features & benefits of SMAs/IMAs for financial intermediaries and investors.

This presentation provides an overview of the Managed Accounts industry in Australia, as well as the key features & benefits of SMAs/IMAs for financial intermediaries and investors.

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  • 1. Managed Accounts 2009
  • 2. About Ralton Asset Management
    • Boutique Management
    • Established in 2005, Ralton Asset Management Ltd (“RAML”) is a boutique investment manager, owned and operated by executives & directors
    • Value Investing
    • Our disciplined, “value-oriented” investment approach has delivered strong and tax-efficient returns since inception
    • SMA Specialists
    • RAML specialises in the active management of Australian share portfolios, and we currently manage assets on behalf of a wide range of investors via financial intermediaries
  • 3.
    • Ralton is a pioneer in Australia’s managed accounts industry
    • A Managed Account is a professionally managed portfolio of investments directly held (1) by the client
    • Managed Accounts represent the latest evolution in retail investing, and consist of 2 broad categories:
      • SMA: Similar to a fund, managed on a “model portfolio” basis
      • IMA: HNW portfolios, tailored to an investors requirements
    Managed Accounts The Latest Evolution in Retail Investing (1) Client retains beneficial legal ownership of the underlying investments, unlike a unit trust Retail Funds Master Trusts Wrap Accounts Managed Accounts
  • 4. Managed Accounts US Managed Accounts Experience
    • In the US, SMAs are a mainstream category
    • One of the fastest growing components of the financial services industry
    • Total SMA assets hit $1.5trn in 2008 (which is larger than Australia’s superannuation and ASX listed equity market) and are forecast to reach $3.4trn by 2011 (1)
    • SMA success in the US has been driven by:
      • Distribution structure – product manufacturers dominate
      • Retail “wirehouse” broker sales channels (80% of FUM)
    (1) Source: Boston Financial Research, Cerulli Associates
  • 5. Managed Accounts Australia’s Managed Accounts Experience
    • SMAs have not enjoyed the same success in Australia. Why?
    • IDPS/Wrap platforms dominate distribution, making it difficult for new administrative services to win market share
    • The underlying technology supporting managed accounts has generally not offered true back-office efficiency, scalability and connectivity to other systems in a cost-effective manner
    • There has been general resistance from “mainstream” fund managers to offer their portfolios given transparency and IP protection concerns
    • Independent research and ratings on SMA portfolios and services have been non-existent
  • 6. Managed Accounts The Future of Managed Accounts in Australia…
    • Why will Managed Accounts be successful?
    • The landscape in financial services is changing
    • There is intense competition for the HNW dollar
    • A more discerning investor will want to “engage” with their advisers and investment portfolios
    • The SMSF market will be a key “battle ground”
    • Back-office efficiency, integration, flexibility, scalability are critical drivers of profitability
    • Managed accounts (SMAs/IMAs) are a perfect tool for advisers with sophisticated clients
  • 7. Managed Accounts The “Next Generation” SMA Service Has Arrived
    • Key Characteristics
    • Low cost
      • Dealing expense – very low, flexible application
      • Ongoing administration
    • Administration efficiency, scalability
      • Single HIN structure delivers significant transaction efficiencies
      • Integrated transaction “engines”
        • Trading & re-balancing – wholesale execution
        • Individual client tax parceling and CGT optimisation
    • Financial adviser benefits
      • Desktop software integration available or soon to be available
      • Familiarity of MIS (PDS) offer versus MDA (FSG)
      • Model/manager choice is growing
  • 8. Managed Accounts Next Generation SMAs – Investor Benefits    Portfolio Reporting and Administration    Customisation    Low Cost Structure    Professional Management     SMA – Next Gen-     Managed Funds     Direct Share Portfolio Key Investor Benefit Tax Advantages of Ownership (No inheritance of capital gains from others) Portability of Shares (without triggering CGT) Direct Ownership of Assets Transparency
  • 9. Managed Accounts Next Generation SMAs – Investor Benefits
    • Tax Benefits Defined
    • No inheritance of embedded unrealised CGT from others (an inefficiency of the trust structure)
    • Ability to “manage” CGT to some degree
      • LIFO, FIFO, Max/Min CGT
      • Off-setting capital gains and losses within portfolio & across service
    • Portability – ability to transition securities “in-specie” without crystallising and capital gains
    • Customisation – ability to exclude stocks from sale if it is not tax effective?
  • 10. Managed Accounts Next Generation SMAs – Adviser Benefits
    • The Next Gen SMAs will offer advisers:
      • A compelling alternative to managed funds
      • An efficient, professionally managed direct shares service
      • Familiarity – manager choice, PDS/FSG offer, Desktop access
      • Relief from time consuming back-office share administration
      • A more exclusive value-add service
    • … .and an opportunity to:
      • Engage clients in a more robust advice relationship
      • Capture a greater share-of-wallet
      • Improve business profitability
    Efficiency, Scalability & Profitability…
  • 11. Managed Accounts Key Players in Australia
    • Investment Managers
    • ABN Amro
    • Above the Index
    • Aegis
    • AMP Capital
    • Ausbil Dexia
    • Bell Potter
    • Blackrock
    • Dalton Nichol Reid
    • Fat Prophets
    • Fortis
    • Goldman Sachs JB Were
    • iShares
    • Lonsec
    • Macquarie
    • Perpetual
    • Perennial
    • Ralton Asset Management
    • SG Hiscock
    • UBS
    • VanEyk
    • Platform Administration
    • Avanteos
    • Aviva
    • Blackrock
    • Linear
    • IAS
    • Perpetual
    • Macquarie
    • Next Financial
    • Onevue/ShareInvest
    • First Prudential Wealth
    • NAB/MLC
    • AMP Financial Planning
    • Praemium
    • Powerwrap
    • Hub24
    • Financial Simplicity
  • 12. Disclaimer Ralton Asset Management Limited (“Ralton”) and its respective directors, officers and agents believe that any information contained in this document be correct and that any opinions, conclusions or recommendations contained are reasonably held or made at the time of compilation. However, no warranty is made as to the accuracy or reliability of any estimates, opinions, conclusions, recommendations (which may change without notice) or other information contained within this document and, to the maximum extent permitted by law, Ralton disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document. This document is provided as an information service only and should not be relied upon as a substitute for financial advice. None of the information contained in this document takes into account the investment objectives, financial circumstances or investment needs of any particular investor. You must therefore asses whether it is appropriate, in the light of your own individual circumstances, to act upon the relevant information. It is advisable that you obtain professional independent financial advice before making any investment decision based on information contained in this document. Ralton may hold securities referred to in this document. Ralton does not guarantee the repayment of capital or the performance of any client’s portfolio. Past performance is not indicative of future performance.
  • 13.