Carl Richards Keeping it simplethinking that price is so important.” ... Jenny Pearse, key relationship manager with The Social Adviser, said using social ... than any testimonial”

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I N S P I R I N G A d v I c e

PROFESSIONAL PLANNEROctober 17-18, 2013, Sydney DAY 1 2

Financial planners need to simplify their advice and better connect with their clients’ underlying

goals, or risk remaining part of an industry which is eroding investor value, according to US-based certified financial planner Carl Richards.

“People are begging for this to be simpler – they do not understand what you are saying,” Richards, who came to fame with simple but effective sketches in his New York Times column three years ago, said.

“You think you use the word ‘risk’ and you get a blank look and so you think you’ll fix it by using ‘standard deviation’ and then that doesn’t work so you use ‘volatility’.”

Richards said that the financial planning industry needs to admit that it is adding to an investor behavioural gap

which erodes value rather than creates it. About 80 per cent of mutual fund investment in the US is ‘advised’ money and yet continual churning of funds results in returns below the average mutual fund.

“To a large degree we are creating this problem,” he said.

He pointed to a range of behavioural traps that people – including advisers – regularly fall into such as: coming up with a theory and then ignoring evidence which contradicts it, following the herd mentality (which leads to a counter-intuitive buy high-sell low strategy), or following the latest investment trends spouted by the media.

“Often we should get paid for telling people to do nothing if nothing is the right thing to do.”

Richards said that people are taught to not talk about money (alongside religion, politics and sex) and it can be a challenging process to find out just what a client really wants. He compared the adviser-client relationship with that between a patient and doctor: it requires a proper diagnosis that the client fully trusts.

“If you want your investment solution… to be accepted in a really elegantly simple way, and for people to understand that your proposal represents this simplicity (on the other side of complexity) - if you want that to happen, invest a bunch of time and energy into becoming a great listener.

“That first meeting should be 55 minutes of them talking and five minutes of you asking great questions.”

Keeping it simple

“People are begging for this to be simpler

Carl Richards

InsIde02 Future2 recipients named

02 Appeal to women

03 Embraces social media

03 Influence with emotion

04 Captured

06 Baby boomers: dangerous

06 Women learn from men

07 Certified makes difference

08 CFS boosts platform functionality

Call Cbus on 1300 361 784 or visit www.cbussuper.com.au

When it comes to super, you can rely on



Steve Helmich

Appeal to women

Future2 grant recipients namedFuture2, the charitable foundation

of the Australian Financial Planning Association, has awarded

$50,000 in grants to five new charities and recommitted to supporting Byron Community Association and Bridge Builders Youth Organisation.

The new grants were awarded to Beyond Empathy, supported by Kyle Pearson of Roberts & Morrow; The Esther Foundation, supported by Peter Dowling of Australian Life Planners; Palngun Wurnangat Association supported by Kathy Havers from Catalyst Financial Group; Shine for Kid supported by Susan Du Chesne of Equilibrium Wealth; and Streetworks, supported by Sally Manion of State Super Financial Services.

At the FPA Congress Gala Dinner on Thursday, which featured singing sensation Miss Murphy from Channel

Seven’s The Voice, AMP director Steve Helmich said the recipients were helping young Australians hope for a better future.

“This year 68 grant applications were received for all over Australia – each one endorsed by a financial planning professional in the local community,” Helmich said.

“It is especially satisfying to give grants for the first time to organisations in the Northern Territory and Western Australia.

“By nature, financial planners want to help people towards better, more secure lives. As well as giving financial advice, many find enormous personal satisfaction and enrichment from their involvement with those in the community who are most in need.”

Since Future2 was established in 2007, the foundation has granted over $250,000 to 22 organisations across Australia.

Australia is the second worst country in terms of customer service, beaten only by France,

which presents an enormous opportunity for those who work in service industries, according to author, speaker and marketing consultant Amanda Stevens.

“If you’re willing to deliver a great service to clients, then you don’t really need to do that much to stand out because the expectations of Australian consumers aren’t that high,” she said.

“Consumers see value in the experience yet so many businesses fall into the trap of thinking that price is so important.”

If advisers only remembered one thing from her message, Stevens said it should be to send clients cards and/or a

small gift on their birthday. “Go back and send your entire clientbase a birthday gift and you’ll reap the benefits,” she said.

“Remember key emotional milestones in their lives, such as weddings and the anniversary of the day they became a client. That will make you worthy of advocacy.”

Stevens said Australian consumers would pay between 12 and 16 per cent more on a product or service if it delivered value.

She also said financial advisers needed to target women between the ages of 25 and 40, because women in this demographic were five to ten times more likely to become advocates and engage

in positive word of mouth, and “word of mouse” promotion via the internet.

Given the growing number of single women households, women were turning to their inner circle of three to four close girlfriends to bounce ideas around, seek guidance and help with decision-making.

“When you sell and market to these women, you sell and market to their inner circle too,” Stevens said.

Amanda Stevens

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Two things you can rely on to help drive your business efficiency.Power Scale&

Andrew Bayly

The Social Adviser and FPA team



Influence with emotion

FPA embraces social mediaThe Financial Planning Association’s

social media campaign has proved a success with its official Twitter

hashtag topping the national trending topics list on the congress’ opening day.

Jenny Pearse, key relationship manager with The Social Adviser, said using social media was now an important part of being a financial planner and could help explain the ‘why’ of financial planning. “Get involved, get engaged and get social,” she said. The Social Adviser, which had a hub at the conference, encouraged people to open social media accounts such as LinkedIn, Facebook, Twitter and Instagram to share their experiences and engage with the public throughout the conference.

“A lot of what we do is removing the myth.” FPA chief executive Mark Rantall was among those who joined Twitter

No amount of logic will convince someone to change their behaviour if they’re not emotionally engaged,

according to facilitator Andrew Bayly.It is a crucial hurdle to overcome for

financial planners, who must emotionally engage with their clients after showing them the facts, if they are to have any hope of influencing their investment decisions.

“At the moment you want to influence them, switch all that off and think emotionally because that’s what’s really going to make the shift happen at the crucial moment,” Bayly, who is also an actor with an M.B.A, said during a session during the congress.

“If we seek to put ourselves in a better more emotional state, and we feel emotionally more positive, all sorts of

benefits will flow,” he said, pointing out that people gravitate to those who exude positivity.

People are wired to mirror and empathise with the emotions of those around them, he said, and changing your own behaviour is a crucial step on the path to influencing others.

This can be done by modelling your own behaviour on a close friend who exhibits positive attributes and by adopting open body language.

Bayly also referred to research which found that strongly performing teams exhibited three characteristics: a strong social sensitivity among group members, an equal distribution of conversational turn-taking, and a higher proportion of women in the group.

and began to actively tweet during the congress. The official Twitter hashtag #FPACONGRESS (hashtags allows people to identify messages on a certain topic) was in strong use, topping Australia’s trending list.

Pearse said clients were increasingly using social media to directly discuss their financial planning experiences and how planners can add value “which is far better than any testimonial”. Clients are now often using LinkedIn, Twitter or Facebook to check out a prospective planner rather than their official websites, Pearse said.

The FPA has also been using social media to publicise its own positive work in the community, such as the Future2 grant program, which was not always highlighted by the mainstream media, she said.

* Growth (Cbus Choice) investment option (after fees and tax). Past performance is not a reliable indicator of future performance. Cbus’ Trustee: United Super Pty Ltd ABN 46 006 261 623 AFSL 233792 Cbus ABN 75 493 363 262.

Call Cbus on 1300 361 784 or visit www.cbussuper.com.au9.1% Return over 29 years*



Captured

Sharon Green from Bridges Finanical Services at the MLC juice stand

Macquarie Private Wealth’s Themi Karakaidos and Chris Forrest

Tim Mackay from Quantum Financial, James Kenny from Tupicoffs and Jason Bragger from Dolfinwise

Stephanie Nyein from Byron Community Cafe, Ray Hadley MC Gala Dinner, Paul Murphy from AdvicePlus Financial Solutions, Rostyn Showell from Byron Community Table Cafe and Amanda Gorr from Community Table Cafe

Sean Abbott from Aqua Private Wealth, Anthony Warr from Warr Hunt and Errol Woodbury from Woodbury Financial Services Erin Brokovich

Different clients.Different futures.

Many different ways to help them get there.




Rachael Wade from Count, Pauline McFarlane from Commonwealth Bank, Lisa Chambers from Commonwealth Financial Planning and Judy Clark from Count

Bull Financial Group’s Caryn Spence and Leanne Bull flank the FPA’s Matthew Brown

Fidelity’s Kanish Chugh and AMP Horizon’s Simon Thwaites

Captured

Lara Hansen from Aged Care Steps, Louise Biti from Strategy Steps and Lisa Hayley from Unified Financial

Sentinel Wealth’s Justin Hooper and Vanessa Woodley

Neil McKissock from Scholten Collins McKissock and Paul Latemore from QInvest

The fund for

Call Cbus on 1300 361 784 or visit www.cbussuper.com.au

Deborah Thomas



Women need to be financially independent to live the kind of lives they want to live,

according to Deborah Thomas, former editor-in-chief of The Australian Women’s Weekly.

Women can also learn a lot from men about business, mateship, taking risks and blatant self-promotion, she said.

“Listen and learn from the boys. They know how to play the game and takes risks versus security,” Thomas said.

“Men support each other and put themselves forward for jobs but women tend to wait to be tapped on the shoulder.”

Thomas inspired delegates at the Women in Finance breakfast on Friday with her personal stories of juggling work, relationships and motherhood.

Single female financial planners, who want to find an eligible unmarried man between the ages of 25 and 34

in Sydney, have the best odds in Lakemba, while single men have the best chance of finding love in Woollahra, according to demographer, author and partner at KPMG Bernard Salt.

Based on Census data, the bachelor hotspot in Melbourne is West Footscray with spinsters congregating in Flemington. Salt provided many insights into Australian life during his session including the main triggers that push people to seek financial advice. These differ depending on a person’s stage in life.

For example, the triggers for a 40 year old are divorce, children and work

frustration. For 50 year olds, the triggers are divorce, a health scare, receiving an inheritance and kids leaving home. For those in their 60s and 70s, it’s usually retirement, the birth of grandchildren, the death of a friend or partner, or one of their children getting a divorce.

He described baby boomers as a “dangerous” group to provide advice on retirement because of their extremely high expectations.

Unlike their parents who were children of the depression and who developed a frugal and modest mentality, many baby boomers had unrealistic ideals.

“The retired baby boomers are a dangerous group because they’re the first group to retire who are educated and

articulate and now they’ve got time on their hands,” Salt said.

“When they’re feeling sick they want a blood test, catscan and x-ray and they want it all from a doctor who’s just down the road. Advisers really need to manage the expectations of baby boomers in retirement and that’s going to be a real challenge.”

Managing longevity risk is another major challenge for advisers given actuaries are forecasting that the extension of life expectancy could see baby boomers spend 32 years in retirement.

The baby boomer trajectory is now age 92, which is 10 years longer than the current average life expectancy.

She urged women to take advantage of every opportunity and, as early as possible, develop a financial plan. She described income protection insurance as one of the most important financial products, sharing how she rushed out and bought cover via her financial adviser after her brother suffered a stroke and was unable to work.

Fortunately he had income protection.“It’s tough when you don’t have a

plan,” Thomas said, recalling her move to Sydney from Melbourne as a young woman with no job and no money.

Now director of media, public affairs and brand development at Bauer Media and a director on the boards of several foundations, Thomas credited Lisa Wilkinson, formerly editor of CLEO, for her start in magazines. Both women are still very close.

Thomas later hired and mentored journalists Mia Freedman and Paula Joye.

“Women need to help other women and be generous to each other. We need to help other women reach their full potential,” she said.

Thomas said she had just one regret. She turned down the opportunity to interview an up and coming celebrity, Johnny Depp, in the 1980s before he became a major movie star.

“My editor asked me if I could interview and spend the day with a guy from the TV show 21 Jump Street, and I said, ‘Isn’t that a crappy TV show?’ That was of course Johnny Depp.

“One of my colleagues went and he treated her to a fabulous day and fabulous night, and that’s my regret,” she said.

Women can learn from men

Baby boomers: dangerous

“Advisers really need to manage the expectations of baby boomers in retirement


First class service with no surprises.

Service Support&



An estimated 97 per cent of attendees at the 2013 FPA Professionals Congress are

practitioner members – working financial planners – giving lie to the claim that the FPA “is just a group for the big end of town”, according to the association’s chair, Matthew Rowe.

Rowe says that following strong growth in member numbers over the past 18 months the association is in a strong position to promote financial planning to the public as a profession, and to promote its members as the elite of the financial planning community.

“The fact is, we’ve been able to move from industry body to professional body; it’s resonated with planners; it’s resonated with consumers and with the government and the regulators,” Rowe says.

“There’s going to be 25,000 members of the FPA in 10 years. There’s 12,000 now. They’ll be coming from universities. We’ve built the education council [and] 17 universities have got a career pathway now into [the Certified Financial Planner (CFP) designation]. And we’ve got our chapters working with universities to give all the kids work experience. Students are joining.

“They want to have certification, because we know that 94 per cent of the public want to know that you have certification. And we’re going to go down that path and absolutely promote and very proudly be saying that the trust mark or the standard is CFP – because we can prove it.”

Rowe says the strength of the FPA reflects the fundamental desire of its members to mark themselves out as the best in the business, yet anyone working as a financial planner can call themselves that. Rowe says a single word will make the difference.

“Certified,” he says. “This is all now around [the fact that] 94 per cent of

consumers want to deal with a planner who is certified – who has a trust mark from a professional body. It’s not ‘CFP’; we’re going to refer to it as a certified financial planner.

“I do think people have said, you know what? I do want to be a professional, I do want to be part of a professional community, and the FPA can give me that. They’re voting with their feet, and because they are voting with their feet all of a sudden we’ve got the resources to be able to do things. We’re just not beholden to anybody – in the past, we’ve been beholden to others.”

Rowe says being part of a profession comes at a cost – and not only in terms of membership fees. This includes complying with the code of professional conduct.

“We do that every year. When you renew your membership you’re actually signing a contract with us,” Rowe says.

“You pay membership fees but you’re also signing off that you agree to be bound by certain rules and conditions. And then there should be a process where you make sure that they actually are. “People are coming to us and paying us to be members, not for commercial gain, not to get a ticket [to work].

“They’re paying us because we are a values-based organisation. We’re not-for-profit. We ask things of them. We ask them to do continuing professional development [CPD]. Under RG146 you don’t even have to do it. We ask them to do 120 CPD hours over a triennium, and we test them on it. We ask them to join us and then go and spend hundreds of hours becoming a CFP. We ask them to attend events.

“When members renew – and out of [10,000 members] we had less than 100 who did not renew for the financial year – that means they’re engaged. They’re willing participants. They see the value.”

Certified makes the difference

“We know that 94 per cent of the public want to know that you have certification

The fund for

everyone Call Cbus on 1300 361 784 or visit www.cbussuper.com.au

Peter Chun



Publisher FPA Daily News: Colin [email protected](02) 9221 1114

Editor Professional Planner Simon [email protected](02) 9227 5716, 0403 448 047

Editor Professional Planner Online: Leng [email protected](02) 9227 5717, 0402 228 848

Director of retail media solutions: Sean [email protected](02) 9227 5719, 0422 843 155

Printing: Kwik Kopy Sydney

FPA Daily News is published by Conexus Financial, the publisher of Professional Planner magazine. All views expressed are those of the authors and do not reflect the views of the conference organisers.

Conexus Financial Pty Ltd, Level 1, 1 Castlereagh St, SydneyGPO Box 539Sydney NSW 2001Ph: 61 2 9221 1114 Fax: 61 2 9232 0547

October 18, 2013 FPA Daily News

SPONSORED EDITORIAL

Commonwealth Bank-owned wealth manager Colonial First State is positioning its FirstWrap platform

as the best investment and administration solution for sophisticated, high net wealth investors, and will more broadly offer its separately managed accounts service to financial advisers.

Separately managed accounts will be the next evolution in financial planning and platforms, according to Peter Chun, Colonial First State’s general manager, product & investments.

SMAs provide investors with new benefits, most obviously the ability to hold assets directly in the investor’s name, greater tax efficiency, transparency and customisation. “A lot has been said in the last 10 years about how SMAs would be the next big thing but that hasn’t happened because SMAs don’t suit every business model,” Chun said.

“The majority of advisers understand and use model portfolios but only a small number have chosen to recommend managed accounts. However, an increasing number of advisers are asking us to help them consistently construct and implement portfolios in an efficient and compliant way.”

Chun said one large dealer group had been successfully using FirstWrap for SMA administration, monitoring and reporting since 2000. “The capability to run SMAs (on FirstWrap) has existed for some time but now we’re actively promoting it to other groups. We’ve been developing this functionality to support dealer groups and advisers who want to run separately managed accounts for their sophisticated clients,” he said.

“Higher regulatory obligations apply to financial advisers who offer managed

accounts, so in order to help advisers we’re taking on more responsibility to drive efficiencies in their businesses.” Developing SMA functionality on FirstWrap is just one way Colonial is helping drive efficiencies in advisers’ businesses.

Last year it launched a new online portal, ePost, which makes it easier and quicker for advisers to send forms to Colonial. Using ePost, advisers can scan and email forms, and receive immediate confirmation. Around half of all forms for FirstChoice and 20 per cent of forms for FirstWrap are received via ePost.

Colonial has also enhanced its model portfolio functionality to allow advisers to blend assets, including shares, exchange traded funds and managed funds. It also offers an online dashboard service which assists advisers in managing their workflow as well as alerting them to platform news, tasks and corporate actions.

Chun said the latest developments were a result of the group’s innovative Customer Centric Design process. “We went into their offices and looked at how they used the platforms. What we saw was paper everywhere and a lot of yellow sticky notes. This is part of a new approach to design and functionality,” he said.

CFS boosts platform functionality

“What we saw was paper everywhere and a lot of yellow sticky notes

Documents

Carl Richards Keeping it simplethinking that price is so important.” ... Jenny Pearse, key relationship manager with The Social Adviser, said using social ... than any testimonial”