MANAGED ACCOUNTS 2009

Chris Hipkin, Managing DirectorThursday 26 February, 2009

MANAGED ACCOUNTS 2009

ABOUT LINEAR

SERVICESLinear Managed Accounts

White Label Products

R.E. and Admin Services

Practice Management Consulting

CLIENTSFinancial Advisers

Fund Managers

Accounting Firms

Institutions

MANAGED ACCOUNTS 2009

AGENDA

Overcoming limitations

Understanding the benefits

Building a profitable business

Implementation

MANAGED ACCOUNTS 2009

KEY POINTS

Reposition your business – don’t repeat the pastManaged Accounts represent a win / win / winArguing the case for why not

MANAGED ACCOUNTS 2009

OVERCOMING LIMITATIONS

Some of the commonly sighted limitations of managed accounts:

Asset class selection

Manager selection

Market penetration

Derivatives and complexity

The importance of administration engines and number of providers.

MANAGED ACCOUNTS 2009

ROLE OF ADVISERS

0.90%

MEET CLIENT OBJECTIVESMaximising after tax risk adjusted return

RISKSStatistical RiskFundamental RiskOther Risks

RETURNSCapital GrowthIncomeTaxesFees

MANAGED ACCOUNTS 2009

MANAGING RISK

Statistical Risk- StDev- VAR - Sharpe - Tracking Error

Fundamental Risk - Ratio Analysis - Underlying Gearing - Earnings Susceptibility - Sector Allocation - Duration Risk - Liquidity Risk

AttributionDrawdownCross Sectional Risk Profile

Risk Budget

Risk Capacity

MANAGED ACCOUNTS 2009

MANAGING NET RETURNS

Capital growth - overlays

Income - clarity around dividends, franking and F.I. maturity dates

Taxes - embedded CGT, harvesting, netting

Fees

MANAGED ACCOUNTS 2009

PORTFOLIO CONSTRUCTION

Available investments

Blending

Concentration v tracking error

A place for unit trusts

MANAGED ACCOUNTS 2009

COMPARING COSTS

MANAGED ACCOUNTS 2009

Investment Transactions SMA v Unit Trust v Direct Portfolio

TRANSACTION COSTS

Business TransactionsStandardising processes

- Reviews- New business - Alterations

Integrating adviser desktops

Integrated managed account delivers scalability and efficiency whilst maintaining benefits of investor personalisation.

MANAGED ACCOUNTS 2009

MAXIMISING MARGINS

GROSS PROFIT = Sales – (COGS + Operating Expenses)

Sales / QS

% New

Cost / QS

- Cost of new business

- Cost of maintaining business

QS = Quantity Sold = FUM

MANAGED ACCOUNTS 2009

EFFICIENCY GAINS

New Business Processing

Reviews

Portfolio Rebalancing

Tax Parcel Management

Administration is about more than just software.

MANAGED ACCOUNTS 2009

IMPLEMENTATION

PROCESSDiscovery

Construction

Implementation

Review

CONSIDERATIONSIn source / outsource

Legal structure

Liability and risk

Lead time

Ensuring success

MANAGED ACCOUNTS 2009

ENSURING SUCCESS

Core business offering

Investment menu

Workflow procedures

Believe in the benefits

MANAGED ACCOUNTS 2009

Thank you

DISCLAIMER

Linear Asset Management Limited ABN 11 119 757 596 AFSL No. 304542 is the issuer of interests in the Linear Managed Accounts ARSN: 128 111 857 and has prepared this presentation for general information only.

It does not take into account your current or future financial circumstances. You should consider these matters and read the Product Disclosure Statement (PDS) before you make an investment decision on holding or acquiring units in this product. To obtain a current PDS, please ask your financial adviser, call Linear Financial on 1300 669 891, or visit www.linearfinancial.com.au.

Whilst due care has been taken in the compilation of this report, and we believe that the information contained herein is based on reliable current relevant information, we do not guarantee the absolute accuracy of such information or the integrity of source material, nor do we accept responsibility for any errors and omissions which may subsequently be found evident in our appraisal.