VolumeVolume 2277 IsIssuesue 7

AAugustugust 20201515 $15.00$15.00

Survive and thrive Chris Riddell talks about embracing change as a way of shaping the future

THIS ISSUE: The National Disability Insurance Scheme / Congress 2015

P100007614 Financial impacts of insurance funding options PP100007614 P Isn’t it your time to shine?

Entries for the 2015 FPA Awards are now open. Visit fpa.asn.au/awards for more details.

Do you have a client story to share? Have you gone above and beyond for your local community? Maybe it’s your time to shine.

Entries for the 2015 FPA Awards are now open!

The categories this year are: ‡ FPA CERTIFIED FINANCIAL PLANNER® Professional of the Year Award ‡ FPA Financial Planner AFP® of the Year Award ‡ Future2 Community Service Award ‡ University Student of the Year Award

We believe your hard work and dedication deserves recognition.

Find out more at fpa.asn.au/awards. Contents August 2015

4 CEO message 10 Opinion 6 News 38 Centrelink 9 Chapter Events 39 Directory

12 Change through actions John Moran CFP®, winner of the Gwen Fletcher Memorial Award for semester one, talks about winning the award and attaining the CFP® designation. 16 Survive and thrive Speaking at the upcoming FPA Professionals Congress, Chris Riddell talks about embracing change as a way of shaping the future. JAYSON FORREST reports. 20 Customer due diligence 16 Compliance with the new customer due diligence obligations for Anti-Money Laundering and Counter- Terrorism Financing is fast approaching. EMMA HUNTER asks, will you be ready for the 1 January 2016 deadline? 22 Making sense of global markets Investment specialists provide their opinions on where opportunities sit and what needs to happen to reignite the local market. JAYSON FORREST reports. 28 National Disability Insurance Scheme CPD MONTHLY: It is important for planners to know the 12 22 difference between what the National Disability Insurance Scheme provides when compared with personal insurance cover, writes KATHERINE ASHBY. Financial Planning magazine is the offi cial publication of the Financial Planning Association of Australia Limited (ABN 62 054 174 453) www.fpa.asn.au • [email protected] • Level 4, 75 Castlereagh Street, Sydney NSW 2000 32 Insurance funding options Phone 02 9220 4500 • Fax 02 9220 4580 CPD MONTHLY: RACHEL LEONG looks at the fi nancial

Editor: implications of various insurance funding options, such Jayson Forrest as the impact on disposable income, tax deductions, tax Locked Bag 2999, Chatswood NSW 2067 T: 02 8484 0906 ABN 80 132 719 861 on proceeds and retirement savings. E: [email protected] www.cirrusmedia.com.au Copyright Cirrus Media 2014 Advertising: © Financial Planning Association of Australia Limited. All material published in Financial Planning is copyright. Suma Donnelly David Robertson Reproduction in whole or part is prohibited without the written permission of the FPA Chief Executive Offi cer. T: 02 8484 0796 T: 02 8484 0613 Applications to use material should be made in writing and sent to the Chief Executive Offi cer at the above e-mail M: 0416 815 429 M: 0408 242 009 address. Material published in Financial Planning is of a general nature only and is not intended to be comprehensive nor does it constitute advice. The material should not be relied on without seeking independent professional advice E: suma.donnelly@ E: david.robertson@ and the Financial Planning Association of Australia Limited is not liable for any loss suffered in connection with cirrusmedia.com.au cirrusmedia.com.au the use of such material. Any views expressed in this publication are those of the individual author, except where Jimmy Gupta Craig Pecar they are specifi cally stated to be the views of the FPA. All advertising is sourced by Cirrus Media. The FPA does not endorse any products or services advertised in the magazine. References or web links to products or services T: 02 8484 0839 T: 02 8484 0978 do not constitute endorsement. Supplied images © 2014 Shutterstock. ISNN 1033-0046 Financial Planning is M: 0421 422 722 M: 0411 955 368 Average Net Distribution published by Cirrus Media on behalf of the Financial Planning Association of Australia Limited. E: jimmy.gupta@ E: craig.pecar@ Period ending Sep ’14 , CFP® and CERTIFIED FINANCIAL PLANNER® are certifi cation marks owned outside the U.S. by the cirrusmedia.com.au cirrusmedia.com.au 10,537 Financial Planning Standards Board Ltd. The Financial Planning Association of Australia Limited is the mark’s licensing authority for the CFP marks in Australia, through agreement with the FPSB.

August 2015 | 3 CEO Message

Connecting consumers I am proud of our growing professional community, and all that we achieve together. We have some exciting consumer initiatives coming up, so make sure you get involved. At the FPA, we are passionate 10thousandgirl Building on the work we already about connecting consumers with do with universities through the high quality fi nancial advice. We partnership Financial Planning Education do this through raising awareness Back in May, we proudly Council (FPEC), this program will about FPA members, participating announced our partnership recognise the top performing in fi nancial literacy initiatives with 10thousandgirl, a social student nationally. and encouraging members to enterprise that promotes fi nancial become role models in their local literacy amongst women. In Future2 fundraising community. support of their 2015-17 Regional Women’s Financial Literacy If you are not too familiar with the Financial Planning Project, we have sponsored 20 Future2 Foundation, I encourage FPA members to participate in you to take a look at the marvellous Week the program. work it does, with support from Taking place on 24-30 August, the FPA community. Through Participation includes speaking fundraising, personal donation and Financial Planning Week will once at a local workshop, being again raise consumer awareness volunteering, together we raised listed in the online directory $267,000 last year. about fi nancial advice and ensure of Australia’s Top 100 Trusted Australians at every life stage are Advisers for Women, blog The signature annual Future2 thinking about the future. This content submission and the Wheel Classic heads north year’s campaign includes an opportunity to have coffee this year, leaving Sydney on extensive public relations program, catch ups with women in the 10 November and arriving in social media advertising, a local local area. New locations will be Brisbane on 18 November for the ambassador program and our announced later this year. FPA Professionals Congress. I signature ‘Ask an FPA Expert’ encourage you to consider entering online forum, where consumers FPA Awards or supporting one of the riders. can put their questions to FPA This year, Future2 also launched experts. program the Future2 Kilimanjaro We were delighted with the level We are delighted to open Challenge, a hike up the world’s of interest from FPA members nominations for the 2015 highest freestanding mountain wanting to be involved with the FPA Awards program, which next February. For more online forum. If you weren’t able recognises outstanding fi nancial information about both these to participate on the panel, you advice and also FPA members events, you can visit can still support Financial Planning who have gone above and www.future2foundation.org.au Week by spreading the word on beyond for their local community. Of course, this is only the tip social media. You will hear more Nominations will close on 11 of the iceberg. There are many about this as we kick off the September and you can fi nd out more initiatives in the pipeline campaign. more about this year’s awards on and I look forward to sharing the FPA website. them with you soon. This year, I am particularly Enjoy this edition. We were delighted with the level of excited about the new University interest from FPA members wanting to Student of the Year award, which recognises students who have Mark Rantall CFP® be involved with the online forum. achieved excellence early on. Chief Executive Offi cer

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Industry united in life insurance proposals On 25 June, the FPA announced a response • ASIC to review Statements of Advice, with a to the life insurance debate, which was made view to making disclosure simpler and more in conjunction with the Association of Financial effective. Advisers (AFA) and the Financial Services The Government has welcomed the proposed Council (FSC). reform package. According to FPA chief executive offi cer “These proposals are intended to produce Mark Rantall, the response follows a lengthy signifi cant benefi ts for consumers,” said and challenging consultation period, during Assistant Treasurer, Josh Frydenberg. “This which the FPA gained feedback from will be achieved through improved quality FPA members on its FPA Life Insurance of advice as a result of a better alignment of Blueprint, before working towards a interests, more product choice and enhanced sustainable solution for the industry. competition. The proposals have the potential Key features of the combined response include: • A ban on other volume-based payments to be the most signifi cant reforms to the retail • A transition from high upfront commissions from 1 July 2016, with appropriate life insurance sector since the Wallis Inquiry to a hybrid commission, level commission or grandfathering arrangements, consistent recommendations were implemented in 2001.” with the Future of Financial Advice laws. fee-for-service model. Frydenberg said the Government will now • Government to consider measures to widen • From 1 January 2016, upfront commissions consider the industry’s proposals in the context of Approved Product Lists by 1 July 2016. will be capped at 80 per cent and then its response to the Financial System Inquiry (FSI). reduced to 70 per cent from 1 July 2017, • Ongoing reporting by life insurance before settling at 60 per cent from companies of policy replacement data to “We are pleased that the industry response 1 July 2018. ASIC, commencing 1 January 2016. has been welcomed by Government, and • Where a hybrid model is adopted, ongoing • Life insurance companies to offer will be taken into account in response to the commissions will be capped at 20 per cent fee-for-service insurance products to FSI Inquiry,” Rantall said. “The alternative from 1 January 2016. support advisers who wish to operate on a of level commissions only, as outlined in • New retention clawback provisions will fee-for-service basis. the FSI Inquiry, would not have provided commence from 1 January 2016, starting • Life Insurance Code of Conduct to be comprehensive consumer protection, access with 100 per cent of the commission in year developed by the FSC by 1 July 2016, to affordable advice and industry sustainability. one, 60 per cent in year two and 30 per cent setting out best practice standards for These three elements have been core in year three of the policy. insurers. considerations in this response.” Entries open for FPA Awards 2015 Early bird The search for Australia’s top Rantall, is particularly excited about winners and as an opportunity to fi nancial planners is underway, with the new category for university showcase his own expertise to the closes soon entries now open for the prestigious students, which recognises top wider profession. Early bird registrations for this year’s FPA Awards for 2015. The awards performing students studying “I looked at the previous award FPA Professionals Congress in recognise FPA practitioners fi nancial planning. He says the winners and thought, as a planner, Brisbane (18-20 November 2015) who provide superior outcomes award builds on the work the FPA what a privilege it would be to be in close on 31 August. for clients, while aligning their is already doing with universities their company,” Stout said. The theme of this year’s Congress professional expertise to the FPA’s through the Financial Planning Stout has used his 2014 national is ‘Shaping Futures’. As the fi nancial Code of Professional Practice and Education Council. planning profession transforms, this Code of Ethics. award to help raise awareness Individual regional winners will be of the CFP designation and to year’s Congress will focus on the Four categories are open for recognised in each award category, promote the message that fi nancial ways practitioners are shaping the submissions. They are: with an overall national winner then planners do make a difference to future for themselves, their clients • FPA CERTIFIED FINANCIAL selected in each category from the lives of their clients. and the profession in a powerful and PLANNER® Professional of the the pool of regional winners. All positive way. The deadline for submissions for the Year Award; practitioner members of the FPA The 2015 program includes inspiring ® FPA Awards 2015 is 11 September, • FPA Financial Planner AFP of are eligible to enter the awards. speakers, opportunities to learn the Year Award; with the winning awards announced Last year’s winner of the 2014 FPA at the FPA Professionals Congress and network. One of the Congress’ • Future2 Community Service CERTIFIED FINANCIAL PLANNER® keynote speakers, Chris Riddell, is Award; and in November. For more information Professional of the Year Award, on the FPA Awards or to download profi led on p16-19 of this issue. • University Student of the Year Randall Stout CFP® said he was Award. an entry form, go to For more Congress information, go motivated to enter the awards by www.fpa.asn.au/awards to www.fpacongress.com.au FPA chief executive offi cer, Mark seeing the quality of the previous

6 | Financial Planning www.fi nancialplanningmagazine.com.au A retirement plan needs a strong foundation.

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CHL2438/FP News

The FPA congratulates the following members who have been admitted as CERTIFIED FINANCIAL PLANNER® practitioners and who recently achieved the LRS® Life Risk Specialist designation.

ACT Mark Heanly CFP® SA John Kirk CFP® Timothy Webb CFP® Hillross Financial Services McLean Whittaker CFP® Grimsey Wealth ASET Wealth Management Elders Financial Planning Katherine Lowe CFP® William Jackson CFP® ® ® Trina Wood CFP Macquarie Group Gerrit Lombard CFP O’Brien Accountants and Green Associates NGS Financial Planning Matthew Congiusta CFP® Advisors ® ® Jie Huang CFP Perpetual Trustee Company Steven Sansovini CFP Catherine Halliburton CFP® State Super Financial Services Optimal Financial Services ® Huy Huy Luu CFP ® Crowe Horwath Financial Advice ® Yee-Wah Hooi-Duran CFP Alison Smith CFP Fulcrum Wealth ASET Wealth Management Beyond Bank Australia Wealth Jesse Purser CFP® Lydia Blakemore CFP® Management Anthony Whipp CFP® Crowe Horwath Financial Advice Crosbie Wealth Management Craig Scroop CFP® ASET Wealth Management Matthew McMahon CFP® ® Hood Sweeney Securities NSW Zhangjie Weng CFP MPFS ANZ Financial Planning Jodie Garden CFP® Shanaka De Silva CFP® Macquarie Private Wealth Peter Tribolet CFP® Synergy Financial Services Group Donald McRae CFP® Anona Fitzgerald CFP® ESSSuper Daniel Crump CFP® Lifetrack Financial Services Anona Financial Planning WA State Super Financial Services Antoinette Galluzzo CFP® TAS ® ® ipac Securities Desiree Male CFP Gregory Thornton CFP ® Cameron Pereira CFP Male & Co Financial Services First State Super Financial ® Nathan Hancock CFP UnicaWealth Services The Wealth Connection Rudy Leong CFP® VIC Diana Gowdie CFP® Mercer Financial Advice Chang Liu CFP® John Moran CFP® Grimsey Wealth Future Assist Financial Services Apt Wealth Partners James Mooney CFP® Ana Maglaya CFP® ® Steven Toniazzo CFP® Perth Financial Planning Services Tess Maglaya & Associates Kevin McDonald CFP Apt Wealth Partners Financial Planners Finance Control Li Hang Low CFP® Marie Chelnokova CFP® Elliot Watson CFP® QLD ipac Western Australia Lifespan Financial Planning Rethink Financial Group Maria Ricketts CFP® LRS Practitioners Morne De Villiers CFP® ® Count Financial Daniel Cohen CFP ESSSuper Heinz Hillenbrand AFP® LRS® Fifteen Hundred Financial Mark Milner CFP® Adam Gotsalks CFP® My Planner Australia Strategists Tupicoffs Commonwealth Financial Edward Bell AFP® LRS® Jakub Czlonka CFP® Jason Whitaker CFP® Planning Encompass Wealth Solutions Perks Wealth Management True Financial Peter Naumenko CFP® Vanessa Woodley CFP® Evan Goode AFP® LRS® Brendan McAllister CFP® Catholic Financial Services Sentinel Wealth Management NAB Prestige Wealth Management Yuen Loy Ngeow CFP® John Kritsimas CFP® Wealth Matrix ® ® ® Trent Allen CFP LRS Newcombe Kritsimas Partners Quin Smith CFP ® Lifepath Financial Planning Colonial First State Seda Zielke CFP Michelle Ram CFP® Westpac Banking Corporation Simon Bresnehan AFP® LRS® JB Were Rachel Garniss CFP® Jack Ngo CFP® ® Shadforth Financial Group Myles Thornton CFP® Luke Palmer CFP First Samuel Westpac Banking Corporation Timothy Dawe CFP® LRS® Ark Total Wealth Stavros Lambou CFP® Innate Wealth Joseph Napoli CFP® Graham Turner CFP® NAB Financial Planning State Super Financial Services Horsey Jameson Bird Ritu Verma CFP® Michael Pearce CFP® LRS® AMP Financial Planning Mercer Financial Advice

8 | Financial Planning www.fi nancialplanningmagazine.com.au AFL Grand Final Lunch Upcoming Chapter events Registrations are now open for the Melbourne Chapter’s annual AFL 3 August Grand Final Lunch on Monday 28 Geelong: Member Lunch September. 6 August This year, the ‘all-star’ line-up will Gold Coast: Networking Evening include father and son duo, Tim 14 August and Jobe Watson, who will be Northern Territory: Golf Day accompanied by Chris Judd and 19 August Billy Brownless. Western Australia: Member Breakfast Book early to avoid disappointment 27 August at www.fpa.asn.au/events Sydney: Elev8 Young Professionals Networking event 28 August South Australia: Young Professionals Networking event A woman’s worth For a list of upcoming FPA events in your local Chapter, go to ‘A woman’s worth’ was the topic discussed at the Melbourne www.fpa.asn.au/events/ Chapter’s sold out Women in Financial Planning lunch on 16 July. During this event, guests heard from two inspirational speakers: Mel Novak, the founder of GOSS – a female networking group; and Leah Thank you to our Callon-Butler, a Sydney-based small business consultant. Chapter supporters Both speakers explored the topic ‘A woman’s worth’, which included providing advice on how not to sell yourself short and ways of Allan Gray BlackRock protecting your worth through your networks. APN Property Group Colonial First State Guests were treated to a fi ne lunch at TheDutchess Melbourne, and BOQ Specialist Fidelity each received a gift bag provided by the event’s supporters. Bennelong Funds Management Triple A Super

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August 2015 | 9 Opinion Making super fairer for all Australians Q: What changes would you make to super to make it more equitable and fairer for all Australians?

Furthermore, there is nothing benefi t afforded by concessional to prevent such people from super contributions and make exhausting their entire capital the benefi t the same proportion base, then applying for the Aged of contribution for all taxpayers, Pension. With those over 65 regardless of their marginal tax representing the fastest growing rate. age cohort in the Australian population, and the proportion of them to taxpayers growing ® ® Rob Coyte CFP Wayne Leggett CFP rapidly, the country simply cannot CEO and representative, Principal, Paramount Wealth sustain such a system. Shartru Wealth Management Management Licensee: Shartru Wealth Management Licensee: Fortnum Financial Advisers The other fl aw in the system is that concessional contribution caps do not take into account the In my opinion, to make the super Barring a few ‘mis-steps’ along realities of the capacity of most system fairer we simply need to the journey, superannuation Tony Gilham CFP® people to save for retirement. wind back the clock on a couple has steadily improved, ever Typically, people spend their Founding Partner, GFM Wealth of issues. since the industry super regime Advisory earlier years paying off homes came into existence in the late Licensee: GFM Wealth Advisory The concept of RBLs was to cap and raising families and can 1980s, making it the preferred the amount of tax concession only place an emphasis on vehicle for retirement savings in within superannuation that would retirement saving in their later I am completely of the opinion Australia. be available to an individual. In years of working life. The current that the current system is very saying this, when these regulations That said, there are a number concessional contribution limits fair, and gives all Australians were in, there was no limit of inconsistencies in the make little allowance for this and a chance to build up their on undeducted contributions superannuation system in compromise the capacity of many retirement nest egg if they are that were excluded from RBL comparison to the rest of Australians to save tax effectively conscientious enough. calculations. Some form of our investment and taxation for their retirement. There is this constant argument RBL (not the old system but framework. Much has been made of the that those on higher incomes and something simple) along with While most applaud the tax viewpoint that superannuation those with larger super balances non-concessional caps currently concessions afforded to account- tax concessions give a have an unfair advantage over in place, will ‘cap’ the amount of based pension income, it is a disproportionate benefi t to everyone else, but it’s just not true. tax concessions available to each strange anomaly that a self-funded the section of the Australian As far as concessional individual. retiree aged 60 or more in receipt population that need it least. contributions go, for anyone I would also reintroduce the tax on of such a pension has an unlimited This is a consequence of the fact earning less than $300,000, they lump sum withdrawals in the same annual tax-free income (at least that concessional contributions all pay exactly the same tax rate form that it was previously. This until their capital is exhausted), reduce tax payable from the – 15 per cent. And those with an will encourage superannuants to while his/her employee counterpart taxpayer’s marginal rate to 15 per income over $300,000 actually leave their super in a pension form, pays tax on their income from cent. pay as much as 15 per cent which could be counted towards personal exertion. So, the solution to making more. the asset and income test for Age Another inexplicable quirk in our super tax concessions more As far as non-concessional Pension purposes, thus reducing system is that once a person has equitable is simple; rather than contributions are concerned, that burden on the Government. retired beyond their ‘preservation concessional contributions being these contributions don’t With these measures in place, age’, they have tax-free access tax deductible, they should be incur any tax, but it must be I would then remove the to their entire superannuation subject to a tax rebate. This remembered that in the majority ‘superannuation surcharge’ on balance, as either a lump sum or would remove the marginal tax of cases, fund members have high income earners. pension. rate as a consideration of the paid personal income tax

10 | Financial Planning www.fi nancialplanningmagazine.com.au Want to have your say? Join the debate on the FPA Members’ LinkedIn Forum. on the money they received with a combined cap of, say, $2.5 average income tax rate is 30.3 There is around $2 trillion of before it is contributed into the million. per cent on salary. I know I have accumulated monies in the super superannuation environment, and Sure, there is something like used extreme cases at either end system at the moment, and obviously higher income earners 475 people in Australia with a of the spectrum to illustrate my annual contributions are worth actually end up paying more tax. super balance in excess of $10 case here, but this is where the tens of billions of dollars. So, the Yes, clearly, higher income million, and they certainly are in system can be made fairer. amount of money to play with is earners probably have a privileged taxation position, A very simple change could be large and it’s not as if the Federal the capacity to make but there are also lots of people to increase the contributions tax Government can’t do without the larger contributions to the living in places like Vaucluse on super contributions for those extra tax revenue. superannuation environment, but and Toorak, in a home worth earning more money, so that inevitably, need larger balances $10 million or more, which is the tax benefi t to high income at the retirement end in order to completely exempt from any tax earners isn’t any greater than low fund the lifestyle that they have when they eventually sell it, or income earners. been used to. pass it down to their estate. If the average wage is now Someone with a taxable income It’s a clearly stated objective nearly $80,000 per annum of $200,000 pays $67,947 in of all political parties to have a and the marginal tax rate for tax, yet another person with a decent level of self-funding for those earning $80,000 per taxable income of $50,000 pays Australians in retirement, and annum is 32.5 per cent, then by Rebecca Fergusson CFP® $8,547 in tax, and it’s easy to imposing any new taxes on super putting money into super on a Principal and Private Client Adviser, see who is the bigger contributor fund members who have followed concessional basis people on this Main Street Financial Solutions to the Federal Government tax all of the rules, would almost income saved 17.5 per cent in Licensee: Fitzpatricks Financial pool. But it’s interesting to note certainly be a discouragement for tax. A person earning $180,000 that the taxpayer with an income all Australians to attain their own and above saved 34 per cent in It has been suggested of $200,000 (four times as much self-funded retirement. tax. that a ‘fairer’ superannuation as the $50,000 taxpayer) pays So a solution to make the system system is required, as the nearly eight times more in tax, more equitable is to charge high majority of tax concessions so it’s hard to criticise them for income earners a higher super accrue for the top income trying to take advantage of a legal contributions tax. This is already earners. taxation concession granted by occurring for those earning more the Government. Tax concessions are an important than $300,000 annually where part of the superannuation We have had a superannuation the super contributions tax is system, as they encourage system in Australia that has now 30 per cent. These income people to contribute monies provided signifi cant taxation Daryl La’Brooy CFP® earners are still 19 per cent better and increase savings. Higher concessions for many years, off making super contributions Financial Adviser, national savings improves and many people have taken Hillross Financial Services compared with taking more of economic resilience and fosters advantage of those concessions Licensee: Hillross Financial Services their salary package in cash fi scal sustainability, and the and built up considerable Further changes could be made superannuation system is an superannuation balances, to those with higher super integral part of this. and it would be wrong now to Currently, if a person is a low income owner or has an balances. The Labor Party when Given the Higher Income Super retrospectively impose additional in government was looking at taxes on those higher balances. income of less than $37,000 Charge that already exists, the a year, they pay 15 per cent charging those with balances contribution caps, which limit The only fair way to prevent contributions tax on monies above $500,000 extra tax. the extent to which individuals ‘rich people’ from piling too contributed to super, despite Those in pension phase who can use the superannuation much money into the super their average tax rate being have turned 60 presently receive system anyway, and the fact system is to put a lifetime cap on 9.65 per cent. tax-free income. This tax-free that if the tax concessions were contributions, probably with some Contrast this with a person status could be altered, although not available, less people would indexation. There might be a cap it unfairly penalises people who put money into super, then I of $1 million on concessional earning $180,000 a year where their super contributions are still have planned on the current rules believe the system is already well contributions and $2 million on persisting. balanced. non-concessional contributions, taxed at 15 per cent, but the Would you like to join our panel of FPA members willing to give their opinion on topical issues? Email editor@fi nancialplanningmagazine.com.au to register your interest.

August 2015 | 11 CFP

Change through actions John Moran is the winner of the Gwen Fletcher Memorial Award for being the highest achieving student in the CFP® Certifi cation unit for semester one. He views the award and attainment of the CFP® mark as a true achievement.

1. Why did you decide to Name: John Moran CFP® become a CFP® professional?

Educational Qualifi cations: Bachelor Both my fi rm, Apt Wealth Partners of Commerce (Accounting), Diploma of (being an FPA Professional Financial Planning Practice) and I believe strongly Position: Head of Advice and Director in the CFP designation and the Practice: Apt Wealth Partners valuable work the FPA does. Licensee: Apt Wealth Partners I decided to become a CFP you do the hard work, put the time a key focus. A client fi rst approach FPA Professional Practice: Yes professional because I knew the in and understand the knowledge requires keeping abreast of CFP designation: 19 June, 2015 CFP Certifi cation Program was areas in detail. Doing past exam constant change in legislation and Years as a fi nancial planner: 16 years necessary for my professional papers is also important. Without also ensuring continuous updating development and the high the hard work, you won’t get the of technical skills. However, these standards expected of me. return, so ensure you put the time in. are really only the base skills to The CFP Certifi cation Program 3. What does winning the Gwen have in order to be an effective ensures planners gain a thorough Fletcher Memorial Award mean fi nancial planner. understanding of all fi nancial to you? Increasingly, it is important that planning principles. The program It’s amazing to read about Gwen planners build their skills more in is also essential for developing the how to build strong relationships skills required for our profession. and her achievements. Gwen was a true pioneer of our profession with clients, how to enhance 2. How did you approach your and laid the groundwork for what emotional intelligence, and how studies for CFP certifi cation? we all practise and aspire to to drive the effi ciencies of their practices through good practice Structure, routine and most today. Winning this award is a true management. importantly, start early. For the honour for me. I want to thank the assignment, it is vitally important FPA for this award and also pay 5. What is the most challenging that you start this immediately and tribute to Gwen Fletcher – the fi rst aspect of being a fi nancial you attend the webinar to pick up lady of fi nancial planning. planner? the key concepts and points the [As part of his award, John The most challenging aspect is the assessors are looking for. Moran receives a certifi cate of negative press our profession has Summarising the education recognition and $1,000, which endured over the years through materials for CFP 1-4 should is funded by the FPA. John has the actions of a minority. It’s up start before the semester begins. kindly donated his cash prize to the to all of us to change this through You should also ensure a quick Future2 Foundation, which assists our actions and our continued reference system is in place for disadvantaged young Australians focus on professionalism. We can the open book exam. For me, the in need.] do this by placing the client fi rst at Mastech Big Black Book was a 4. How important is structured all times. great resource, in addition to the and ongoing education for It’s also important that we all Financial Planning magazine CPD planners in the journey towards adhere to a Code of Practice quizzes. professionalism? and support the FPA in its In the exam there is hardly time to This is crucial. At Apt Wealth endeavours to raising the bar on reference notes, so it’s important Partners, education and training is professionalism.

12 | Financial Planning www.fi nancialplanningmagazine.com.au 6. What is the most challenging to become a CFP professional, aspect facing the profession? however, looking back, I have The Gwen Fletcher Memorial Award I believe it’s changing the culture really got an enormous amount out of it. The Gwen Fletcher Memorial Award was established in 2014 in from that of an investment memory of Gwen Fletcher AM, who was considered by many to be manager/product approach to a My advice is to start early and the matriarch of fi nancial planning in this country. project manager/principal adviser continue to do it uninterrupted. approach. The transactional part of Obviously, family and business The award honours in perpetuity the memory of Gwen Fletcher, what we do should be part of our demands can dictate study and supports one of her key legacies in her lifelong endeavours to role, but not the only part. arrangements but getting it done champion the vital role of education and its central importance in nurturing the fi nancial planning profession. From the outset, a goals-based quickly is important. approach to planning is required For me, obtaining this global Gwen Fletcher was not only a respected fi nancial planner but also and clients should see their designation is a true achievement. an educator, and helped shaped the industry into an emerging ® fi nancial planner as their ‘principal profession. She was also responsible for bringing the CFP Mark to The fi nancial landscape is Australia in 1990. adviser’. The principal adviser is changing and the way in which the the professional they turn to for all profession is heading will mean The Gwen Fletcher Memorial Award is presented each semester of their fi nancial needs and is the that consumers in the future will to the highest achieving student in the CFP Certifi cation unit, which person who is with them to sort only look for the CFP designation covers all three required assessments in the CFP Certifi cation through any complex issues. when seeking advice. Program. 7. What advice do you have The CFP designation is the mark As part of the award, recipients receive a certifi cate of recognition and for any planner considering of excellence and I would highly $1,000, which is funded by the FPA. This year’s Semester 1 winner, becoming a CFP professional? recommend the CFP Certifi cation John Moran, has kindly donated his cash prize to Future2 – the Simply do it. It has been hard work Program to anyone. charitable foundation of the FPA.

August 2015 | 13 Professionalism

Launch of new Journal recognition of fi nancial planning The journal will initially begin with as a profession. two issues per year, comprising “Financial planning is new as six articles per issue. As papers a profession in the academic are reviewed and authorised space,” Dr Brimble said. “Up for publication, they will be until now, there has been no promoted through Financial specifi c fi nancial planning Planning magazine and the academic journal in Australia FPA’s e-newsletter FPA Express, where academics can have their enabling members to read these research papers peer reviewed. research papers. When six This journal will now provide papers are available, they will be that means and will assist in fully paginated into the journal establishing fi nancial planning – available as both a hard and as a profession in its own right digital copy. amongst Australian universities.” “The fi nancial planning Brimble added that by profession needs an offi cial and producing a collective body robust body of knowledge that of work, the journal would has been tested and reviewed eventually be ranked by at an academic level. It’s an academics. He said this was not important and necessary step in Launching the new Financial Planning Research Journal: only necessary for the credibility the evolution of fi nancial planning Mark Rantall, Dr Mark Brimble and Dr Rakesh Gupta. of fi nancial planning but was into a respected profession,” another important step in Rantall said. The launch of the Financial Planning Australian universities accepting “The journal is about promoting this discipline as a profession. dialogue and discussion Research Journal will bring the The journal will be promoted to between the academic community and the profession. profession and academics closer the 75 members of the FPAF, comprising 24 tertiary institutions. It’s about building a bridge between both. And importantly, together. Jayson Forrest reports. Dr Rakesh Gupta, from Griffi th we want practitioners to read it University, joined Dr Brimble in and benefi t from it.” The Financial Planning complements earlier initiatives emphasising the journal would Academics Forum (FPAF) has by the FPA and the Financial be independent, with strict Rantall said the journal was joined with the FPA to launch Planning Education Council academic rigour in place for another important step in the Financial Planning Research (FPEC), including the annual the peer review process of all bringing the fi nancial planning Journal – a collection of fi nancial funding of fi nancial planning research papers. and academic communities planning specifi c academic research grants to university closer together. “The editorial review committee research papers showcasing the academics. “It will be exciting to see some of work done by academics. The consists of academics from a “The FPA is working closely wide range of tertiary institutions. the research papers published journal is aimed at encouraging with the tertiary sector and we in this journal, some of which thought and discussion in All papers submitted will be believe the launch of the journal, sent for ‘blind’ peer review. This may be the result of the annual the wider fi nancial planning along with the grants scheme, research grants given to profession. means concealing the identity of will lead to a further deepening the author and their institution, university academics from the According to FPA chief of the relationship between the to ensure a non-biased review of FPA,” Rantall said. executive offi cer Mark Rantall, fi nancial planning profession and their paper,” Dr Gupta said. “This is all part of a wider the journal is part of a wider the higher education sector,” And as part of the criteria for strategy that brings the strategy targeted at bringing Rantall said. profession and academics closer together academia and the the research papers, all papers Co-chair of the FPAF, Griffi th submitted for review must be together. The benefi ts of working fi nancial planning profession University Associate Professor in a collegiate way are many and for the benefi t of practitioners original pieces of work and Mark Brimble said the launch importantly, make a contribution will refl ect well on our journey and consumers alike. As part of the journal was an important towards becoming a recognised of the strategy, the journal also to the intellectual standing of the part of gaining academic profession. and respected profession.”

14 | Financial Planning www.fi nancialplanningmagazine.com.au Financial Planning Week

Life stage awareness in Financial Planning Week This month, the FPA celebrates its 15th consecutive Financial Planning Week (24-30 August), with an integrated campaign to promote the value of fi nancial planning advice amongst consumers.

With the spotlight fi rmly by life stage, with blog content Planning Week. The campaign Ask an FPA Expert focused on the fi nancial they can easily identify with. The will target national, metropolitan planning profession, the FPA content will direct consumers to and local media outlets, as This year’s ‘Ask an Expert’ is committed to using this the ‘Ask an FPA Expert’ forum, well as selective social media has been renamed ‘Ask an year’s Financial Planning Week which in turn will also drive platforms. For each day of FPA Expert’. This online forum (24-30 August) to again raise traffi c to Find a Planner. Financial Planning Week, enables consumers to post awareness about the benefi ts content will be designed to their questions to an expert of good fi nancial advice to the Media blitz focus on a different life stage panel of FPA members for a two wider Australian community. of a consumer – from young to week period. The ‘Ask an FPA The FPA will roll out an intensive Expert’ online forum will go live A key component of this year’s mid-life to retirees. media campaign in the lead before Financial Planning Week campaign will be to educate up to, and during, Financial offi cially begins. and engage with Australians Local Ambassador Program Social media FPA Chapter Chairs will Following on from previous participate in local media successes, the FPA will again opportunities that raise ramp up social media activity awareness of the benefi ts with a range of strategies to of good fi nancial advice. engage different consumer This includes assisting with segments in the campaign. newspaper articles and radio Content from the blog will be Q&A sessions with consumers. re-purposed for various social It is expected this activity will media channels, such as increase awareness of Financial Facebook. You can follow the Planning Week at a local level latest updates at @AustraliaFPA and help create a buzz in and follow the #FPWeek communities nationwide. conversation on Twitter.

August 2015 | 15 Financial planners can become the next wave of technology adopters with their vision fi rmly fi xed on the future.

16 | Financial Planning www.fi nancialplanningmagazine.com.au In a keynote presentation at the FPA Professionals Congress in Brisbane, Chris Riddell shows how planners must move past disruption and embrace technological change as a way of shaping the future for themselves, the profession and their clients. Jayson Forrest reports.

The speed at which change and a term Chris prefers to use means that anybody can set disruption is happening within instead of ‘disruption’, which he themselves up over-night and the fi nancial services industry is fi nds too negative. have huge success because something to embrace and be “The reason why I refer to it of the number of networks you comfortable with, not be fearful of. as ‘redistribution’ is because can connect to at a press of a This will be one of the key ‘disruption’ is just a re-shifting button.” messages that strategist He says the power these large and global emerging trend institutions once had has now spotter, Chris Riddell will In a fast-paced shifted to the individual. “That’s be emphasising in a highly and compelling why I call it ‘redistribution’ energised and fast paced presentation, Chris rather than ‘disruption’. And this plenary session at this year’s Riddell will discuss: ‘redistribution’ is an opportunity FPA Professionals Congress. that will allow planners to shape Adapting and their future.” Underpinning the theme of embracing change as Chris’ presentation will be how opportunities for you According to Chris, his planners can get their mindset and your clients. presentation will focus on ready for the future, thereby challenging delegates to look allowing them to shape their The power of human forward to the future and own future and that of their interaction and showing them how to tap into clients. This, he says, includes professional trust in trends and technology that is how to embrace the new world responding to digital changing on a seemingly daily that we’re in, which is highly disruption. basis. “It’s about changing disruptive and very volatile. mindsets,” he says. It’s not about disruption “The fi nancial services industry but a redistribution of “It’s not always about is under an incredible amount technology,” Chris says. “It’s what it is we do and how of ‘disruption’, probably more also about having the mindset so than any other industry. It’s we go about doing it. to being able to deal with also one of the most regulated change and volatility. Even industries. So, this can make it of power and balance from the though I will be talking about really tough for planners to cut large institutions that previously digital, I’m also going to be through all the noise in order dominated industries. But in the talking about the mindset shift to succeed. It can be a really world we live in now, through that needs to happen now in daunting challenge.” the power of networks (both order to be able to survive and However, ‘redistribution’ is professional and social), it Continued on p18

August 2015 | 17 Congress

thrive in this new and changing you just be dealing with the Robo-advice things. Imagine if you can free world.” reactionary stuff of today. up 50 per cent of your time and Instead, fi nancial planners In his presentation, Chris will then reinvest that time back in to Future can become the next wave of dispel some common myths and actually helping your clients and technology adopters with their show how changing technology, focusing on your business,” he As a futurist, Chris also has vision fi rmly fi xed on the future.” like cloud-based systems says. “It’s about looking forward very strong views on what the and automated advice, are Chris says this transformation to the future, rather than just future for the fi nancial planning something to be embraced and is absolutely essential, as the dealing with the stuff of today. profession is likely to look like, not feared. Instead, he believes needs of clients are also rapidly That’s a huge opportunity for which he will also cover off in his they form part of the suite of changing. planners and their clients.” presentation. services planners can provide “Consumers are increasingly To illustrate his point, Chris “I think the fi nancial planning their clients. coming under as much refers to the initial arrival of the profession is going to go through “There’s a lot of fear around disruption as the fi nancial ATM machine in Australia and an incredible amount of change robo-advice, which is a hot topic services industry itself,” he says. the fear it caused amongst over the next few years. But it’s all at the moment. People and “Consumers continuously need people. Many thought ATMs going to be good,” he says. organisations are fearful that would result in job losses and advice about what they should automated advice will mean a He believes planners are in a be doing. And who is best the end of face-to-face banking. unique position, having built loss of jobs and loss of clients. But none of that happened. to provide that? It’s fi nancial But that’s not true at all,” he says. up trust with their clients over planners. You’re trusted and you “Since the days of the industrial a number of years. He says intimately understand the needs “This is just another tool that can revolution, people have the opportunity for planners is and objectives of your clients. be used by you and your clients feared change. Whenever to take that trust and position You are well positioned to be the to free up time, so you can new technology is introduced themselves as professionals at next wave of professionals in the concentrate on more important and processes start to get the forefront of change. technology space.” EARLY BIRD CLOSES SOON “By doing so, no longer will FPA members will receive a 12 per cent discount off the standard YOUR SPEAKER registration fee, if they register before 31 August. Chris Riddell is Australia’s most sought after futurist, and award- The 2015 FPA Professionals Congress will take place at the Brisbane winning industry recognised keynote speaker on digital. He is also a Convention and Exhibition Centre (BCEC) on 18-20 November. renowned strategist and global emerging trend spotter for businesses Before the Congress offi cially kicks-off on Thursday 19 November, and leaders in today’s disrupted world. delegates are invited to attend a ‘Welcome Reception’ on the evening A global trailblazer, Chris has worked for some of the largest and of Wednesday 18 November. Other social events at the Congress will most successful companies and brands in the world. He has lived include a ‘Women in Financial Planning Breakfast’ on Thursday 19 and worked in the UK, Saudi Arabia, Dubai, Kuwait, China, New November, along with the highly anticipated Future2 Gala Dinner on Zealand and Australia. His understanding of our new world is Thursday evening. compelling and thought provoking. Three keynote sessions will bookend the Congress, which will also Chris was the fi rst ever Chief Digital Offi cer for MARS Incorporated in feature four workshop streams - Technical, Best Practice, Personal Australia and New Zealand, where he was responsible for developing Development, and Leadership – that will run throughout the two days the corporate digital strategy behind brands such as Whiskas, of the Congress. Pedigree, Wrigley, Starburst, Masterfoods, Snickers and Maltesers. The Congress ticket entitles delegates to the following: According to Chris, being a futurist is about “authentically embedding • the Welcome Reception; yourself into the very space from where true innovation and disruption • all keynote sessions; is taking place, analysing future and emerging trends, then distilling • all workshops (delegates are encouraged to pre-select their them into a clear and meaningful keynote message for business to be workshops); able to take affi rmative and decisive action on”. • access to the exhibition hall; • lunch; and Chris is a senior adviser and consultant to businesses across • light refreshments at breaks. a number of industries, including technology, transportation, manufacturing, healthcare, fi nance and communications. He is a There is an additional cost for the Women in Financial Planning current board member of the Museum for Australian Democracy Breakfast and the Future2 Gala Dinner. at Eureka, and writes columns for online digital agencies and For more information on the Congress or to register and receive an corporations, providing deep insights into the world of digital, Early Bird discount (available to 31 August), go to disruption and future change. www.fpacongress.com.au

18 | Financial Planning www.fi nancialplanningmagazine.com.au “I think the fi nancial planning profession is going to go through an incredible amount of change over the next few years. But it’s all going to be good.”

automated, people fear losing comfortable with change. And their jobs and tend to only think one thing is for certain, we’re of the negative implications. always going to have change. But the reality is there are more So, let’s embrace it and allow jobs today than ever before. All change to help shape our we are doing is getting more future.” effi cient each time as new For more information on the technology is released. FPA Professionals Congress “New technology allows (18-20 November, Brisbane), us to redefi ne our jobs and including registration and processes. Change is a good accommodation details, go to thing. The challenge is getting www.fpacongress.com.au our headspace into being

August 2015 | 19 AML/CTF

Customer due diligence: Are you ready?

Compliance with the new customer due diligence obligations have taken reasonable steps towards full compliance with for Anti-Money Laundering and Counter-Terrorism Financing is the new customer due diligence obligations. While reporting fast approaching. Emma Hunter asks, will your organisation be entities are not expected to be fully compliant today, they are compliant for the 1 January 2016 deadline? expected to have been taking reasonable steps to ensure they Whilst the changes to the AML/ funds and wealth, the nature Background will be fully compliant come 1 CTF Rules became effective and purpose of a business January 2016. If a reporting entity In May 2014, amendments to 1 June 2014, the Minister for relationship with a customer has not taken reasonable steps the Anti-Money Laundering and Justice released the Policy and the control structure of non- towards compliance, AUSTRAC Counter-Terrorism Financing Rules (Additional Customer Due Diligence individual customers when it is can impose penalties. Instrument 2007 (No.1) (Cth) (AML/ Requirements) Principles 2014 assessing money laundering and CTF Rules) were announced. giving reporting entities until 1 terrorism fi nancing risk; With a view to being fully compliant The Financial Action Task Force January 2016 to comply with the • reporting entities must collect by 1 January 2016, many of our 1 (FATF) had previously identifi ed amendments. and verify information from the clients have done the following: customer due diligence as an area • developed transition plans During this ‘implementation benefi cial owners of customers – of Australia’s AML/CTF regime that (prior to 1 November 2014) period’, the Australian Transaction note that for customers who are required improvement. Specifi cally, setting out the path towards full Reports and Analysis Centre individuals, reporting entities can FATF highlighted that the Australian compliance; (AUSTRAC) has welcomed $20 assume that the customer and legislative regime did not include • revised AML/CTF programs million of funding to improve the benefi cial owner are one and requirements for reporting entities to: to ensure compliance with the the detection and disruption of the same (unless the reporting • take reasonable measures to amended AML/CTF Rules; terrorism fi nancing. entity should reasonably consider understand the ownership and this not to be the case); • revised and re-conducted risk control structure of customers; Reporting entities have seen • reporting entities must collect assessments; • identify and verify benefi cial increased enforcement activity and verify information from the • changed applicable customer owners of customers; (particularly in high risk areas such settlor of a trust when dealing identifi cation procedures • determine whether a customer as the remittance sector), with with a trust customer; immediately for all new is acting on behalf of another AUSTRAC focusing on the new • reporting entities must identify customers (so that the new person and if so, take reasonable customer due diligence obligations and verify PEPs and have customer due diligence steps to identify that person; during routine desk-audits. additional measures in place standards are applied to all new • identify and verify the settlors of With 1 January 2016 looming, if a PEP is rated high risk or is customers); trusts; reporting entities are advised to foreign; • provided AML/CTF training to • take additional measures when ensure they are currently taking • reporting entities must staff regarding the new customer dealing with politically exposed ‘reasonable steps’ towards incorporate benefi cial owners due diligence obligations; persons (PEPs); and compliance with the new customer into ongoing customer due • provided AML/CTF training to • collect information on the due diligence obligations. Are you diligence procedures.This staff on PEPs and benefi cial purpose and intended nature of ready for 1 January 2016? obligation does not apply to item ownership; the business relationship. 54 designated service providers • revised and re-conducted The amendments were made New obligations (who are exempt from ongoing customer type profi les and risk to address FATF’s concerns, customer due diligence). assessments; to ensure Australia’s AML/CTF The amendments to the AML/CTF • considered third-party service regulatory regime remained Rules imposed the following new What this means providers who offer services consistent with international obligations on reporting entities: specifi c to benefi cial owner and standards, and to meet specifi c • reporting entities must now also Between now and 1 January PEP know-your-customer; FATF requirements regarding the consider customers’ benefi cial 2016, reporting entities must • designed and implemented identifi cation of benefi cial owners. owners, customers’ source of be able to show that they (or partially implemented)

20 | Financial Planning www.fi nancialplanningmagazine.com.au new customer due diligence obligations as soon as could What next? Government has commenced this procedures to accommodate be reasonably accommodated review with relevant fi ndings of benefi cial owner and PEP know- through existing operations; During 2014, FATF assessed the FATF review to be taken into your-customer; and • between 1 June 2014 and Australia’s compliance with the account. • revised AML/CTF procedures 1 January 2016 and for new FATF Standards through a mutual evaluation process. Reporting entities should expect generally to ensure that the clients with a ‘high’ risk rating, further amendments to the purpose of transactions, the reporting entity complied Whilst the FATF report AML/CTF regime. Designated a customer’s source of with the new customer due acknowledged that Australia has a non-fi nancial businesses and wealth and who is funding or diligence obligations as soon as strong regime for combating money professions should expect a revival benefi ting from a transaction, is practicable; laundering and terrorism fi nancing, of tranche two of the AML/CTF considered. • the reporting entity developed key areas remain unaddressed. legislative regime. Tranche two of On and from 1 January 2016, a transition plan before 1 FATF noted in the report that whilst the AML/CTF legislative regime is reporting entities are expected to November 2014, which Australia regulates its major money intended to expand the application be fully compliant with the new included actions and timelines laundering industries (such as of anti-money laundering legislation customer due diligence obligations. for compliance with the new banking, remittance and gaming), to the real estate, legal and precious customer due diligence most designated non-fi nancial metal industries. obligations prior to 1 January businesses and professions Reasonable steps 2016; are still not subject to AML/CTF Emma Hunter, Senior Associate, Baker & McKenzie. When determining whether • the transition plan is approved regulation. Designated non-fi nancial a reporting entity has taken by the relevant board; businesses and professions include ‘reasonable steps’ towards • the transition plan is suffi ciently real estate agents and lawyers. Footnote resourced; compliance with the new customer The Government was required 1. FATF is an international policy • the transition plan is regularly due diligence obligations, to commence a review of the making body responsible for setting monitored; and AUSTRAC will consider all relevant operation of the AML/CTF regime the International Standards on • the transition plan is made matters, including whether: before 13 December 2013 and Combating Money Laundering available to AUSTRAC on • the reporting entity complied with to prepare a report of the review and the Financing of Terrorism and request. the new customer due diligence to be tabled in Parliament. The Proliferation (the FATF Standards).

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August 2015 | 21 Roundtable

The new norm A roundtable of investment specialists try to make sense of global markets by providing their opinions on where opportunities sit and what needs to happen to reignite the local market. Jayson Forrest reports.

Participants

Tim Samway – Managing Director, Hyperion Asset Management

Alva Devoy – Investment Director, Fidelity Worldwide Investment FP: Given the current volatility don’t see that yet. Instead, I see in global and local markets, a lot of caution which makes me what should planners be feel that things are currently okay. focusing on in terms of From a stock market point-of- Dr Phil Hoffl in – Portfolio Manager, investment opportunities? view, it’s very diffi cult to fi nd great Lazard Asset Management Anton Tagliaferro (AT): We’re value, which is a relative thing living in interesting times. There in terms of where interest rates are sorts of bubbles appearing are at the moment. You’ve got that I prefer to call over- to be very selective with stock Anton Tagliaferro – Investment valuations. selection. Director, Investors Mutual Limited In terms of the stock market, I’m One thing is for certain, we are not too worried at this stage. I’m going to be living in this low not saying that there are bargains growth environment for a while. galore but in my experience, Alva Devoy (AD): I think you don’t normally get a crash there needs to be a focus on Matthew Drennan – Group Head of when people are expecting it. Research and Portfolio Construction, IOOF up-scaling, and tactical asset Normally, crashes come – as we allocation is an absolute must saw in 2007 and 1987 – when for where we are, both as an everybody was super bullish. I industry and in terms of investing.

22 | Financial Planning www.fi nancialplanningmagazine.com.au We are in a ‘new normal’. I yield play, very safe, returning got to change your mindset to thinks it, then it’s probably not the actually think interest rates will dividends. But the banking sector now focus on the preservation of right way to go.” take 10 years to normalise is under pressure. So, you need capital. It’s not that many years ago that because we’ve got this low to think differently to the traditional That is, there is an awful amount the resources market was bigger growth environment, and because modelling in terms of what of investors out there who are very than the banking market. Those infl ation won’t necessarily be the constitutes a safe-haven asset. focused on yield, have a short- things change. Innovation and risk that it would have been prior. Phil Hoffl in (PH): The 2 per term mindset, and are looking disruption is the new norm. This means when you think about cent cash rate is extraordinary. pretty safe on a huge number Innovation and disruption will duration risk within portfolios, it In Australia, we need to be very of yield-type investments – like may not be as big or as bad as create a bubble out of something aware of what that 2 per cent the banks and Telstra – but are that might be only a mere over- expected. But on the fl ip side of means. Traditionally, we’ve had a ignoring the potential capital loss. that, the hunt for yield continues. valuation. So, if something only 2.5 per cent infl ation target. The They’ve had a bit of a reminder looks slightly over-valued, a new Given where we’ve come from – question is, what does a 2 per that those types of stocks can way of looking at it can turn it monetary support and the easing cent cash rate mean? come off 10 per cent pretty into a bubble. For example, the of monetary policy – we must For me, it’s one of two things. quickly. But they continue to look guy who was making buggy have an eye on measuring risk- for yield. whips didn’t think he was in a adjusted returns. Firstly, the very large amount of debt that is in the Australian In his 1841 book Extraordinary bubble until the fi rst horseless So, in terms of looking at what the economy means that we too are Popular Delusions and the carriage arrived. bubble is today and then adding turning Japanese and there’s Madness of Crowds, Charles AD: And then you come into the next big thing where you’re going to be economic stagnation, Mackay said: “Men, it has been the actual effect of the bubble going to make your returns from similar to all the issues they well said, think in herds; it will be bursting. If you look at Australia, because yields are low, I think are addressing in the northern seen that they go mad in herds, being diversifi ed is not just owning you have to step away from that hemisphere, in which case, there while they only recover their Australian property plus Australian approach and instead look at a is going to be very little earnings senses slowly, and one by one.” I bonds plus Australian fi xed blended approach. growth and that needs to be think this is a great quote and one income plus direct investments For example, if you’ve got ‘x, y factored in. that should be remembered. into the Australian equity market and z’ in your portfolio, what are Or secondly, we can take the view You need to ask yourself, is the plus investments through your the risk-adjusted returns going to that Australia is fi ne. herd all on the one side? Clearly, super fund. be? with 30 per cent of the market So, given the current So, when you look at the sitting in banks, to imagine that is Matthew Drennan (MD): My opportunities, the fi rst thing is circumstances, if the local market advice is to have a diversifi ed going to continue to happen for was to falter – and that’s not you need to be consistent and years to come, is to completely approach, where you are getting make sure that your interest even to have a bubble burst – the right away from any kind of ignore innovation and disruption. actual ramifi cations are absolutely rate scenario and your growth It’s to ignore that the banks benchmark relative return focus scenarios are consistent, because phenomenal because of the and really start to look at the and other yield plays won’t get double and triple layering effect in some cases, people are using disrupted. I think that is where the absolute returns you get on a scenarios that are not consistent. through investments and through risk-adjusted basis. You need real challenge lies. the economy. to be nimble. You need to be Tim Samway (TS): In my view, Q: There is talk of a property it requires a change of mindset. We have a window of opportunity able to move as opportunities and yield bubble. What other to look at diversifying externally present themselves because We’ve had fi ve years of rising bubbles and underlying risks prices in the equities market. So, and reaching out for returns that typically, they’re not there for are you worried about? are not correlated to the domestic long – because there’s so much there was a fairly large amount of easy beta to be made. In a rising TS: I don’t think you can market. And while there has been global hot money running around reasonably look at any situation a lot of discussion about looking hunting for yield. market, it’s a matter of not missing out. That has been the focus for a and say you are in a bubble. If you for uncorrelated returns, the And you need to be able to do lot of people. look back through history, very question is, uncorrelated to what? that in an old-style diversifi ed few people have been able to So, you need to think in terms approach that looks at using With the increased focus on yield, determine they were in a bubble you need to work out how fat of, you’re fully invested today futures and options to move when they were actually in the but there might be massive quickly. the metaphorical pendulum has middle of a bubble. swung. Have we gone through implications because you are Also, you really need to think the bottom and how far are we I think the best thing you can do double or triple loaded. You want about traditional safe-havens very up before the pendulum starts is have a look at that pendulum to move offshore; you want to differently to the way that we have swinging back? I think it’s pretty and ask yourself: ‘What is the move into other assets; but you’re traditionally thought about them. clear that the pendulum has gone majority thinking?’ You need to afraid that if there is a bubble For example, banks in Australia remember people like Charlie through the bottom and you’ve Continued on p24 have traditionally been a high Munger, who said: “If everybody

August 2015 | 23 Roundtable

there, technically, there might be But there are also underlying it’s the same in Auckland and to contend with. You have this factors that carry assets well into factors, such as we’ve been Vancouver. There is a lot of ‘hot’ wall of money being printed out over-valued space before that underbuilding for a long time and Asian market coming into these of the US. If you want to be hairy bubble ever bursts. There are although that gap is starting to housing markets. Whether this is chested and take some bets, many factors to consider. narrow, we’re still about 90,000 sustainable and how long it will then follow the money, because PH: I use the 65/65 model when dwellings below what we need. continue for, only time will tell. it always fl ows into asset markets looking at banks. Sixty-fi ve per So, yes, property is expensive So, the main thing for me is to and we’ve already seen that cent of their assets are secured but it has been more expensive simply watch the index. To have happen in the US. by assets greater than 65 times in the past. I don’t see an 35-40 per cent of your holdings But in terms of the change that price earnings. immediate problem there. I think in any one sector – whether it’s could come out of left fi eld, I think Residential property is fi ve to six the biggest issue is the layered banks or resources or building it’s about the infl ation risk that times the size of the Australian impact – household debt, limited materials – is just madness. could be generated from this wall equity market and it’s owned equity sector exposure that is Whenever we look at our of money that has been around by households. In the US at the concentrated on the banks, and portfolio, we try and think about a for a long time. I suspect that the peak in 2006, residential property where the investment sits with diverse group of assets. We ask winding back of this is going to accounted for 39 per cent of the average household. You only ourselves: are they reasonably be a very slow process. People in the net worth of the American need one of these things to start priced and if the world changes the US get nervous because the household, whereas in Australia it falling over and you can get a its view next week, can we justify bond buying program is fi nished, was 70 per cent. domino effect starting to impact holding them and will they be but there is still this wall of money household wealth and the impact larger companies in three years’ out there that hasn’t been reeled The only other things Australians that has to the real economy. back yet. And Europe is really in general own other than their time? That’s all you can really do, So, I’m not as worried about the because at the moment, so many only at the beginning of its QE house are some deposits with policy. So, this latent infl ation risk the banks and some bank residential property side of things things are unpredictable. Nobody on its own, but I do accept there has ever seen governments is probably one we should be shares. Australian households aware of. are phenomenally exposed and are a lot of layering problems and printing money; nobody has ever I think that is a problem for the a lot of concentration of risk in seen cash rates overseas at 0 per And the important point here is economy. That’s why we are very narrow sectors. cent; nobody has ever seen rates that central banks around the hearing statements from the RBA AT: I think the biggest risk is the in Australia at 2 per cent. These world – and I think the RBA is the Governor and the Treasurer that concentration of the Australian are unprecedented times. prime example – absolutely do not you wouldn’t normally hear. market. This is a concern because All you can do is focus on value, or very belatedly value, the risks associated with asset price MD: Property is very expensive at we’ve gone from a concentration holding good quality assets with of 35 per cent in resources to the underlying fundamentals to justify infl ation versus the normal goods the moment, particularly in Sydney and services infl ation. We’ve seen and Melbourne. With residential present allocation of 35 per cent them. in banks. that the RBA has underestimated property, we do have some Q: There is a good deal of that impact consistently over the underlying dynamics which at And in my view, the index in caution with investors at last 15 years. least can support it in the medium- Australia is not a very good the moment. Do you see term, like housing construction, guide to making money; it never anything on the horizon that AT: In terms of QE, it took me a local demand for housing, and has been. I think banks are might change the investment while to understand its effects. I high immigration rates. So, we’ve okay but there are some risks, appetite of investors? kept on hearing that all QE was got a situation in Sydney, for such as housing. I’ve given doing was making rich people MD: People are very nervous richer and poor people poorer. example, of high global demand up trying to pick the top of the and for good reason. There are for residential property. Sydney property market. But And at the time, I couldn’t a lot of issues around the world understand it but now I do.

24 | Financial Planning www.fi nancialplanningmagazine.com.au With all this weight of money as a So, that’s one thing on the cushion. And it’s one of the Wagga with a population of result of QE, all it’s done is push positive side for Australia. reasons we can be positive about 48,000 people and a lot of space asset prices up. So, if you own a The one thing that does need the Australian economy. to grow, has more expensive house and a portfolio of shares, to be discussed is that of We need to refocus on resetting housing and higher price/income then you’re winning. But if you demographics and population and recalibrating, and maximising ratios than Chicago. Property is don’t own a house and a portfolio analysis. As investors, I think those capital returns that we’ve expensive almost everywhere in of shares, then it becomes more we have to be extremely enjoyed here. This will set us up Australia. expensive to buy them. That’s conscious of what demographic well for the future. TS: Back in the mid-80s prior to the truth about QE. It’s creating and population trends do to 1987, I remember a presentation this longer term social impact PH: Despite the fact that we have investments. these great lessons from overseas where we were advised to ‘Keep that at some stage has to be on dancing but dance closer to readdressed. In Australia, we have about 2 per to learn from, we seem to be cent population growth, which the intent on repeating them. We now the door’. But I just don’t believe AD: When you compare Australia experts are revising back down to have about 2 million landlords in this notion of ‘keep on dancing’. to other countries, we are in a about 1.5 per cent. This means in Australia and they own over Instead, when the pendulum has much stronger position. Do not that cities like Brisbane and $1 trillion worth of property and gone through, you need to start underestimate how powerful Melbourne will probably commit over $500 billion in debt. And working straight away. and how fantastic the RBA is as to overbuilding the number of if you look at the P&L that they Some of the issues discussed a central bank. We set our own dwellings they’re likely to need collectively run, they are losing on this panel may be beyond the monetary policy. Ireland did not, probably in late 2016 and 2017, money, which is really not a great tipping point. Investor housing instead, it imported monetary and Sydney about one year after return for a $1 trillion investment. is one of them. So, the day that policy. Ireland had very low that. You have to ask yourself: why do starts tipping the other way, the interest rates that were set for A huge amount of people who they buy? The answer is, they whole market will change in a Germany and France, which were expect capital gains. heartbeat. growing. have migrated to Australia for economic reasons are now To me, buying a negative I like looking at the drivers and Australia also has a market where choosing to leave. If inbound cashfl ow investment for capital drawing graphs and looking at the 92 per cent of mortgages are migration is about 190,000 gain has a name: speculation. graphs. Infl ation is one of them, variable rate. So, when the RBA people, about 50,000 people are Speculation runs on sentiment unemployment is another one of cuts rates, the actual impact leaving each year. We just need and sentiment can turn on the them. We’ve talked about yield to the economy is sharp and to be conscious of this. I’m not proverbial dime. If those people stock, particularly with the banks. fast. And that’s the same when saying it’s a near-term risk, but buying these properties were not Clearly, a rise in unemployment rates are moving back up. The you need to factor it into your sure that property prices were will start to challenge their bad economy is able to be managed thinking. going up or were concerned debt provisions and that could very well. Thankfully, we have the luxury of about their job, then they would change the scene fairly quickly. But, you can look at the US where time to respond to these issues act differently. So, you’ve got to think about the system is completely the and Australia has learnt from other This speculative problem is just those drivers: employment/ opposite. It’s about 90 per cent economies. You only have to look not confi ned to Sydney and unemployment and infl ation. fi xed rate mortgages. Therefore, at the personal savings rate in Melbourne. Firstly, Sydney is one- you have a very blunt instrument Once you start getting to full Australia. Even though we’re at third of the total value of Australian employment, you get the other in interest rates. And that’s in part about 6 per cent unemployment, residential real estate, and when why you’re not seeing the effects situation where you start to get we have a personal savings rate combined with Melbourne, it’s wage growth and that could of the easing of monetary policy of about 10 per cent, which more than half. and the weight of money fl owing is phenomenal. That’s a great Continued on p26 down to the underlying economy. Some regional cities, like Wagga

August 2015 | 25 provide an infl ationary effect. AT: Well, there’s not too much dollar net lending in our banking superannuation pool that we Infl ation will change interest rates more governments can do apart system has gone to residential have accumulated. If companies and that’s the big driver of all the from keeping interest rates low mortgages. Clearly, these are can wisely tap into that and use things we’ve been talking about. and hope they can engineer some lifestyle assets that are not it to grow, like Sonic Healthcare Governments all around the world sort of recovery. They need to productive and have led to higher and Amcor have done, they will are trying this experiment with keep things stable as they have and higher household debt levels. be able to grow their earnings. infl ation to see if they can get out been. When you look at the last So, there has been a capital And there are companies that of paying the debt that they’ve fi ve years, governments have misallocation. It’s not something are restructuring, like Caltex and created, while continuing to grow. generally been able to stabilise that the Government can easily GWA, which are selling off non- Q: The only lead governments things. Confi dence is reasonably control. performing assets. have taken is to reduce cash good and people are relatively But I would certainly agree So, we are in this low growth rates to 0 per cent. What calm, compared to the GFC and that if there is an issue on the environment. Infl ation doesn’t look should they be doing now to Euro crisis a few years ago. So, housing side, and people don’t like it will be on the horizon for a get the world back to growth? as it happens, that’s not a bad want to gear up anymore, while and interest rates don’t look result. But is it sustainable? TS: With interest rates where then Government spending in like they’ll go up in a hurry. That’s they are now, the Australian AD: There is a psychology here. infrastructure could make a big the environment you’re going to Government has a fantastic Australians are very much like the difference. have to work in. opportunity to borrow and invest Germans – we don’t want to carry Q: How do you view the TS: We’re clearly in a low growth in infrastructure. We’re borrowing debt. Australia is triple A backed Australian economy and share market. So, the businesses to invest in annual expenditure and we also have one of the most market over the next few you’re going to invest in are ones to fund defi cits, when in fact, liquid currencies in the world, but years? that have fantastic customer the infrastructure opportunities there’s still this psyche around ‘we propositions, great pricing power don’t want to carry debt’. PH: In terms of the Australian are right there in front of us. And market, or any equity market, it’s and they’ve got large growing where the bond rate is, you can’t What is actually going to absolutely impossible to forecast investment markets. Essentially, tell me there aren’t potential change that psychology is if the any returns shorter than fi ve to these are businesses that can do projects all over the place. unemployment rate in Australia seven years. We look at all stocks something in Australia and then AT: And that applies all over starts to move upwards – and this and we also look at the position take it to other jurisdictions. the world. But it’s diffi cult to get is something the RBA focuses from top down. Australia doesn’t The challenge for most advisers this consensus of support in a on continuously – then the look particularly expensive. I think investing in these types of democracy. In China, it’s a lot Government will have a mandate there are parts, like the banks, companies is that they are easier to do. I think governments for change to get in, borrow and that are expensive, while other expensive because everybody understand the benefi ts and create jobs. parts are not. recognises that they’re expensive. productivity that infrastructure The RBA has been focused AT: Always be careful when And so, you just have to take a projects bring, particularly when on the lack of improvement you’re talking economies and long-term view. you include the private sector in productivity. Infrastructure share markets. Often, a strong If you’re taking a two year view, to help fund projects, but it just brings huge gains in productivity. economy means a weak stock a lot of these stocks you already doesn’t seem to be happening. You’re building infrastructure market, because people worry know the names of – like Ramsay MD: I think infrastructure should for GDP growth much higher about infl ation and interest Health Care or Domino’s Pizza – be supplemented where it can than the current very low 2 per rates. The argument for the local all look very expensive. But if you be through recycling assets, as cent. Productivity gains are economy and economies around think they can do it for fi ve years Premier Mike Baird is doing in phenomenal and they benefi t the the world is that I don’t see any or 10 years, then they’re cheap. entire economy. NSW. For example, selling the boom around the corner. Interest And so, if you concentrate on poles and wires and investing So, I think we’re in that limbo rates can’t really get much lower. those types of businesses, you in something else that will build period where the Government We are in a period of lacklustre can probably get good double productivity. I think that’s a doesn’t have the mandate yet to growth with low interest rates for digit earnings growth out of a good adjunct to leveraging off do that. The tipping point will be a a while. It will start to feel like a portfolio. the low interest rates. But the rise in unemployment. recession because nothing much Financial Planning magazine political cycle is too short and PH: The problem in Australia has is happening. governments are less inclined to thanks the participants for their been that since the GFC crisis to But the one big advantage we insights. make the hard decisions for long- the end of 2014, every last single have in Australia is the massive term benefi t.

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The National Disability Insurance Scheme: friend or foe? The National Disability Insurance of care, dependent on an for people with signifi cant KATHERINE ASHBY Scheme (NDIS) was launched in individual’s state of residence. disabilities. Everyone would BT FINANCIAL GROUP July 2013 and will progressively While the program had been be insured and around roll out throughout Australia 410,000 people would THIS ARTICLE IS WORTH lobbied for in numerous formats over the six years to July 2019. over previous decades, it was receive scheme funding 0.5 CPD HOURS The scheme has been eagerly the Productivity Commission’s support. CRITICAL THINKING awaited by those suffering from 2011 report, Disability Care • The NDIS would have other serious disabilities, as well as and Support, which set out the roles. It would aim to better their carers and families. economic and social case for link the community and people with disabilities, Includes However, given the name the scheme. ‘Disability Insurance’ there including by using not-for- • Eligibility criteria for The report found: are serious concerns that the profi t organisations. It would NDIS cover • Most families and individuals scheme may be confused with also provide information to • Outline of what the cannot adequately prepare life insurance products, giving people, help break down NDIS provides for the risk and fi nancial people the incorrect belief that stereotypes, and ensure • How the NDIS impacts impact of signifi cant disability. they are covered for certain quality assurance and insurance advice The costs of lifetime care can disablements when they are not, diffusion of best practice • The National Injury be so substantial that the and resulting in an even greater among providers. Insurance Scheme risks and costs need to be level of underinsurance. pooled. The National Disability Insurance As an advice provider, it is • The current disability support Scheme Act 2013 (NDIA) important to know the difference system was underfunded, was passed by the Gillard between what this scheme unfair, fragmented and Government and sets out provides when compared with ineffi cient, and gave people how the scheme will operate personal insurance cover like with a disability little choice including: Income Protection, Total and and no certainty of access to • The objects and principles Permanent Disability (TPD) or appropriate supports. under which the NDIS will Trauma insurance, in order to • There should be a new operate; educate your clients and cater national scheme – the • How a person can become a for the scheme in any insurance National Disability Insurance participant in the NDIS; needs analysis. Scheme (NDIS) – that • How a participant’s individual, provides insurance cover for goal-based plan is prepared Background all Australians in the event of and reviewed, including signifi cant disability. Funding how the NDIA approves the The NDIS is a national scheme of the scheme should be a funding of reasonable and designed to provide a holistic core function of government necessary supports; and life time care approach (just like Medicare). • How a provider can become to support those suffering • The main function (and a registered provider of from a serious and permanent source of cost) of the NDIS supports; disability. It replaces the would be to fund long-term • The governance previous state-based schemes high quality care and support arrangements for the NDIA, that resulted in differing levels (but not income replacement) including its CEO, Board, Independent Advisory

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Council, and Actuaries; and Government, if elected, would physical impairments, or to and economic participation; • A process for internal and revert back to the original name. one or more impairments and external review of certain Following its election win, the attributable to a psychiatric e) the person is likely to require decisions made under the new Minister for Disabilities, condition; support under the NDIS for NDIS Act. Mitch Fifi eld, announced that b) the person’s impairment or the person’s lifetime. The Act should be read in the scheme would return to its impairments are, or are likely This makes it clear that the conjunction with the NDIS original moniker. to be, permanent; and level of disability required to Rules, which are being After all this ‘toing and froing’, it c) the impairment or access the scheme is much progressively built and provide a seems unlikely that the name of impairments result in higher than the defi nitions used greater level of detail. the program will change again, substantially reduced for Income Protection or Total particularly given that it will functional capacity to and Permanent Disability (TPD) The name become increasingly expensive undertake, or psychosocial policies, which are usually as the program rollout gathers functioning in undertaking, occupation-based. Parts of The moniker – National Disability pace. This therefore cements one or more of the following the defi nition are closer to an Insurance Scheme – was almost the need for advisers to play activities: communication, activities of daily living style immediately criticised by life a strong role in ensuring their social interaction, learning, assessment, which is generally insurance industry representatives. clients understand what the mobility, self-care, self- considered to be the strictest They argued that using the term NDIS does and does not cover. management; and disability defi nition used in ‘insurance’ could incorrectly d) the impairment or today’s life insurance contracts. give people the perception that impairments affect the they were covered by a national, Who does the person’s capacity for social Continued on p30 government-funded policy, and NDIS cover? would no longer need to provide Eligibility is based on three for their own private insurance requirements; age, residency needs. and level of disability. Former Financial Services Age Council chief executive offi cer, Participants must be under the Membership includes up to John Brogden, was one of the age of 65 when they become 5 of your representatives. fi ercest opponents, highlighting disabled, as well as when in numerous submissions and joining the program. Once in, 1 FREE complaint per membership year. public statements how implying lifetime coverage is provided. the scheme was insurance could drastically exacerbate Australia’s Residency No annual fee till 1 July Transparent, straight forward underinsurance problem. Participants must reside in 2017. No application fee service fee schedule, based Australia, be a citizen or have till 31 March 2016. on complaint stages. In response, the then Minister the appropriate visa. In the initial for Disability Reform, Jenny roll-out, only certain areas are Providing SMSF advice? Need EDR? Macklin, announced the scheme covered and people must be would be renamed Disability a resident of these areas to be Accountants join CIO for free! Care Australia as of March eligible participants. 2013. While this change was If you’re an accountant providing SMSF advice, ASIC will require you to Level of disability hold a limited Australian Financial Services licence from 1 July 1016. welcomed by the life insurance You’ll also have to join an external dispute resolution scheme like the and advice industries, there was Participants are also required to Credit and Investments Ombudsman (CIO). discontent from some quarters, be permanently disabled. including People With Disability ÀQDQFLDOVHUYLFHVSURYLGHUVFKRRVH&,2DVWKHLUSUHIHUUHG The Act sets out when a EDR scheme. Australia president, Craig person meets the disability Wallace, who labelled the new requirements: Accountants join CIO for free for a limited time. name ‘patronising’. a) the person has a disability For more, visit At the time, the then Opposition that is attributable to one or www.cio.org.au/accountants leader, Tony Abbott, made a more intellectual, cognitive, neurological, sensory or commitment that a Coalition © Credit and Investments Ombudsman Limited 2015 ABN 59 104 961 882

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It is instructive to compare the opportunity to work with a case complete tasks such as In 2015, additional sites expected number of participants worker to develop a specialised preparing a meal, banking, commenced on 1 July for with those claiming the Disability support plan of services and shopping, doing certain children and young people Support Pension (DSP). equipment. The Productivity activities and attending under the age of 18 in Western DSP is available for individuals Commission provided a long appointments; Sydney and the Blue Mountains aged 16-64 who are suffering list of services, which may be • Transport assistance, to co- regions. Queensland is the only from a treated and stabilised provided including: ordinate individual or group state without any trial sites, and disability that results in being • Aids and appliances, which needs to commute; at the time of writing, the only unlikely to work again for more include artifi cial limbs and available information pointed to • Employment assistance a July 2016 launch. than 15 hours per week in the communication aids; and support for transition to next two years. In most cases, • Home and vehicle work, to help people fi nd and Individuals suffering from a this means the disability is modifi cations, to cater for the prepare for work; disability, and their families, are permanent. It is also means disability; eagerly awaiting rollout in their tested, in that the assets and • Therapies, such as counselling areas. For those approaching income test applies. In June • Personal care, to help take and physiotherapy; 65, however, the timeline is of 2013, 821,738 people were care of themselves in their own • Emergency support, in the the utmost importance. If the claiming DSP. home, which may include the event of a family member or NDIS commences where they following activities: The NDIS has a wider age carer’s death, with organising live before turning 65, then - showering, bathing, emergency accommodation the individual will have lifetime eligibility, being from birth to dressing, grooming, age 64. It is not means tested. and respite services; and coverage. If rollout takes place toileting and personal after age 65, the NDIS will not Yet the number of expected • Guide dogs, which may hygiene; be available for them. participants is signifi cantly include the costs of the lower at 460,000 (up from the - eating and/or drinking; dog, training and veterinary Productivity Commission’s initial - mobility and transfers; services. How will the NDIS estimate of 410,000). - regular maintenance of impact insurance health, which include use Timeline advice? of medication and routine Who misses out? The scheme will roll out slowly, exercises; Since the launch of the scheme, People aged 65 or over, or but progressively, with NSW insurers have received a due to turn 65 before their - nursing care, for individuals being the fi rst state with full small number of calls from region is covered, will not be who require additional level coverage due in July 2018. All policyholders to cancel their eligible. In addition, anyone with of care and support, such as other states are expected to Income Protection, Total and a temporary and/or curable those who are quadriplegic have full coverage by July 2019. Permanent Disability (TPD) disability, such as depression, and on a ventilator; All states and territories have and Trauma insurance, due to diabetes and cancer, will not • Support for community signed up to the scheme, with the understanding that they be eligible, unless all possible access, to allow personal the sites below having launched would now be covered under a treatment options have failed. enjoyment, social interaction in July 2013. Government safety net. and leisure; From July 2014, the number What does the • Respite, to provide people Hunter Region Ages 0-64 of queries from policyholders scheme provide? with a disability, their primary NSW increased as the Medicare levy rose from 1.5 to 2 per cent The scheme provides services, carers and families with a Barwon Region Ages 0-64 to partially fund the scheme rather than money. It is not short break and/or holiday VIC – meaning all Australians saw an income replacement or programs; South Australia Ages 0-13 their take home pay packets compensation scheme. While • Specialist accommodation Tasmania Ages 15-24 reduce to fund the ‘Disability households may be provided support, such as group Insurance Scheme’. with some fi nancial relief by homes and alternative family Additional sites commenced having services provided that placement; in July 2014 in the ACT, the However, as can be seen from the above benefi ts and would otherwise need to be • Domestic assistance, to Barkly Regional of the Northern defi nitions, there is little overlap paid for, the NDIS will not provide support for people Territory, and the Shires of between what the NDIS change the income and/or with a disability to have Kalamunda and Mundaring and provides and the benefi ts of assets of the family. the freedom to live on their the City of Swan in Western disability life insurance policies. Participants will have the own in the community and Australia.

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Income Protection (IP) possible home modifi cations IP provides an income stream and medical treatment. There QUESTIONS to replace an individual’s may be some overlap with the 1. The National Disability Insurance Scheme (NDIS) is income in the event they cannot last item, but it is diffi cult to scheduled to reach full rollout from: work, either temporarily or predict whether the disability permanently, due to disability. will be of the severity level that it a. 1 July 2016. The NDIS is not an income also qualifi es for the NDIS. b. 1 January 2018. replacement scheme, and While there is little overlap c. 1 July 2019. therefore cannot be relied upon between the cover types, the d. 1 January 2021. to help maintain a families’ most important task for advisers lifestyle, continue to pay debts is to spend a moment explaining 2. The National Disability Insurance Scheme (NDIS) may and cover expenses. The NDIS what the NDIS is, and how it could provide the following: provides services, not money. compliment the insurance being Trauma put in place. At a very simple level, a. Aids and appliances, lump sum monetary compensation Trauma pays a lump sum in the insurance policies can protect and guide dog assistance. event an individual is diagnosed an individual fi nancially, while b. Home modifications, pharmaceuticals and transportation with a listed illness or injury. the NDIS may provide access to assistance. While 40-60 conditions may be support and services. covered, the majority of claims are c. Personal carers, respite services and employment support for a small number of conditions. The National Injury services. At BT, around two-thirds of claims Insurance Scheme d. Emergency support, income replacement and vehicle are for cancer, this rises to over modifications. 80 per cent for women. In the Finally, the NDIS may not be majority of cases, cancer will not the end of the federal reforms. 3. After July 2019, which of the following individuals be covered under the NDIS, as it The Productivity Commission would be covered by the NDIS? is not a permanent disability. recommended that a separate a. Mike, age 40, who is a quadriplegic. Consider the types of items scheme is needed for people normally allowed for in a trauma requiring lifetime care and b. Bryce, age 75, with Parkinson’s disease. needs analysis, including medical support for catastrophic c. Mitch, age 51, with a broken leg. injuries, such as major brain expenses, top-up income, debt d. Jason, age 19, suffering from mild anxiety. reduction, time off work for a or spinal cord injuries. This no-fault National Injury spouse, and even family holidays 4. Which of the following statements is correct? The – none of these will be covered Insurance Scheme, comprising National Injury Insurance Scheme (NIIS): by the NDIS. It is important to a federation of individual state note that the NDIS does not and territory schemes, would a. commenced on 1 July 2015. provide fully-funded care provide for medical treatment, as b. was recommended by the Productivity Commission. that is the role of Medicare. and support for all cases of catastrophic injury. c. is designed to cover temporary and permanent disabilities. TPD d. is designed for professional sports people. While TPD most closely aligns to It would draw on the best the NDIS, in that the disability is schemes currently operating permanent, the level of disability around Australia. State and Conclusion This means, as an industry, we required under an ‘any’ or ‘own’ territory governments would be the need to work together to inform major driver, with the Productivity The NDIS is an important and educate Australians as to the occupation defi nition is not of scheme that will provide a the level required for the NDIS. Commission recommending the value of their insurance coverage development of a comprehensive greater level of support to and the continuing need for Therefore, many policyholders individuals with a severe and will have successful claims for scheme by 2015. private insurance to compliment permanent disability, their the NDIS coverage. Without this TPD, but not necessarily qualify No further information has been families and carers. It has education, we may see an even for NDIS support. made public and the scheme bipartisan support from both greater number of Australians has not progressed. However, Needs analysis often allows major political parties, so while without adequate insurance. for reduction of debt, top-up it is one to look out for, the rollout is referred to as ‘trial income, child education costs particularly if there is a change sites’, the program is extremely Katherine Ashby, Senior Product and/or a pool of funds for of federal government in 2016. unlikely to be halted. Technical Manager, BT Financial Group.

August 2015 | 31 ToCentrelink answer questions www.fi nancialplanningmagazine.com.au/cpd

The fi nancial impacts of insurance funding options RACHEL LEONG The method of premium The benefi ts of an ordinary of gross income is required BT payment may be restricted, owned policy include: to fund the same premium and in some cases determined, • full access to an insurer’s amount, and if accumulated THIS ARTICLE IS WORTH by the way life insurance product suite; savings or mandated employer 0.5 CPD HOURS is structured. Often the • the ability to own a feature- contributions are used, this will client doesn’t control which rich policy; not impact disposable income CRITICAL THINKING structure is used, such as • the availability of a tax at all. with employer arrangements deduction for income Includes Tax savings or group schemes. In other protection (IP) insurance; Tax savings for the member/ • Impact on disposable circumstances, the client may • the absence of tax on lump client income be deciding between owning sum proceeds; and Voluntary concessional • Tax deductions insurance inside or outside • no effect on retirement contributions lower the tax • Tax on proceeds superannuation. savings. liability of the individual as a • Retirement savings If insurance is owned inside In addition, as ordinary policies result of: super, there are several ways are not subject to the same • lower assessable income to fund premiums and therefore legislation as super-owned through salary sacrifi ce (for several different fi nancial policies, payment of proceeds employed individuals); or outcomes. For example, will not be inhibited by super law • lower taxable income through concessional contributions may restrictions. claiming a tax deduction be used, which could result in on personal contributions a reduction of taxable income. Super-owned to super (self-employed, Alternatively, the client may substantially self-employed, use an existing super balance, policies unemployed or retired however, this will result in a Super policies may be funded in individuals). decrease to retirement savings. a number of ways, such as: A client’s ability to claim a In this article, we look at the 1. voluntary concessional tax deduction on personal fi nancial implications of various contributions; contributions to super does not funding options, such as the 2. non-concessional solely relate to whether they impact on disposable income, contributions; are self-employed, substantially tax deductions, tax on proceeds 3. accumulated savings self-employed, unemployed or and retirement savings. or mandated employer retired1. contributions; or 4. a rollover of 3. Other important factors may Ordinary policies infl uence their claim, such as Disposable income whether the client has provided An ordinary owned policy is a Unlike ordinary insurance, a ‘notice of intent to claim a policy owned outside super. It owning insurance inside deduction for personal super may be owned by a person, a super will have a smaller or no contributions’ (290-170 notice) company or a non-super trust. effect on disposable income, within the required timeframe; Usually, it is owned by the life provided contributions to and whether any withdrawals insured, and will be wholly super are being made to fund or rollovers have occurred, funded from disposable income, the premiums. If voluntary subsequent to when the relevant which has an immediate negative concessional contributions contributions were made. effect on take-home pay. are used, a lower amount A policy may be funded on a

32 | Financial Planning www.fi nancialplanningmagazine.com.au CPD MONTHLY

perpetual basis through ongoing or any other combination that of ill-health, it is unlikely that earlier ESD, which may result in rollovers. Therefore, the client the trustee decides on. Advisers the individual can ever be a larger tax liability at claim time. needs to be aware of when this should be mindful to check what gainfully employed in a capacity Term Life policies will occur each year, and ensure the arrangement is with each for which they are reasonably The tax treatment of Term Life that their 290-170 notice is super fund. qualifi ed because of education, proceeds paid from super is submitted to (and acknowledged Tax on proceeds experience or training. shown in Table 2. by) the original super fund prior Income Protection (IP) proceeds The formula for the disability The taxable (untaxed) element to the rollover. will be taxed at marginal tax super benefi t is: super lump applies when the super fund When a rollover of the full rates and there are specifi c sum x days to retirement / total trustee claims a tax deduction contribution occurs after provisions for IP proceeds paid days. for premiums paid, or for a personal contributions are made through super that prevent future liability to pay a benefi t. (but prior to the submission of rebates or tax concessions Days to retirement refers to the Therefore, a tax rate of up to 32 a 290-170 notice to the super applying. Therefore, IP proceeds number of days from when the per cent will generally apply on fund), the original fund no longer received through super or disability occurred, through to Term Life insurance proceeds holds the contribution, and a directly from the insurer the individual’s date of retirement paid from super. tax deduction is completely (ordinary) will be taxed in the (usually age 65). Total days refers unavailable to the client. When same way. Lump sum insurance to the number of days from the The formula for the taxable a partial rollover occurs, this will proceeds, however, may be eligible service date (usually the (taxed) element is: death benefi t result in a lower tax deduction taxed differently when paid from fi rst date of contribution) through x service days/total days – tax- 2 being available . super. to the date of retirement. free component. Tax savings for the super fund TPD and Trauma policies If the number of service days The taxable (untaxed) element trustee The tax treatment of TPD and are lower (number of days from is: death benefi t – tax-free The super fund trustee can claim pre 1 July 2014 Trauma policies, fi rst contribution date [known as component – taxable (taxed) a tax deduction on premiums where proceeds are paid from ‘Eligible Service Date’ (ESD)] to element. paid. The deduction is usually super, is shown in Table 1. the date of disability), the days to In a non-accumulation super passed back to the individual’s For non-accumulation insurance retirement will be higher. This will super fund account, however, account, there will not be any accounts, the tax-free result in a larger tax-free portion tax-free component. the trustee has complete component will be comprised and therefore a lower overall tax discretion. Therefore, the way entirely of the disability super liability. A higher tax rate applies to any ‘premium rebate’ is applied the taxable (untaxed) element benefi t. The disability super In order to ensure the shortest may differ across trustees. The benefi t can be calculated if (32 per cent) compared to the premium rebate may apply to service period possible, taxable (taxed) element (17 per two legally qualifi ed medical insurance cover could be all contributions, concessional practitioners certify that because cent). The larger the service contributions only, rollovers only, housed in a super account period, the larger the taxable separate to accumulated (taxed) element, and therefore, Table 1 savings, and premiums should the lower the total tax liability. To be funded from contributions Age Component Tax rate (including create a larger service period, only. If a rollover is used at any Medicare levy) time, this will also transfer an Continued on p34 Age 60 or older Any 0% Table 2 Preservation Tax-free 0% age < age 60 Benefi ciary Component Tax rate (including Taxable under $185,000 0% Medicare levy) (2014/15) Dependant Any 0% Taxable above $185,000 17% (2014/15) Non-dependant Tax-free 0% Under Tax-free 0% Taxable (taxed) 17% preservation age Taxable 22% Taxable (untaxed) 32%

August 2015 | 33 ToCentrelink answer questions www.fi nancialplanningmagazine.com.au/cpd

insurance could be held with deductible contributions) or contributions being made on a subsequent tax deduction for accumulated savings, or a non-concessional contributions behalf of an employee. payment of premiums. rollover could be used to fund are made, this may offset any Further, the concessional The benefi t of using the future part/all of the premium. reduction to retirement savings. contribution limit (despite having liability tax deduction is that it is Terminal illness proceeds will be For low income earners, non- risen over recent years), is low at a much larger amount compared paid tax-free under the terminal concessional contributions may $30,000 for those under age 50, to the premium. medical condition of release result in the co-contributions and $35,000 for those age 50 or from super. The Government being payable, which can result older (2014/15). The future liability tax deduction in either additional retirement is: benefi t amount x future recently announced that In addition, individuals regulations will be changed to savings or the ability to obtain a service days/total service days. higher level of insurance. approaching retirement may prefer expand the terminal medical to utilise their full concessional condition of release defi nition, Note: If insurance is held in an This tax deduction can be contribution limit for retirement carried forward to offset income proposed to commence from insurance-only account, the co- savings, rather than diverting 1 July 2015. Each insurer will contribution will need to be paid for future years, provided the part of these contributions to entire tax deduction is not used consider whether to align their to an accumulation account. insurance. insurance defi nition to the in the current fi nancial year. Contribution limits SMSF-owned policies Using the future liability tax longer timeframe allowable If any concessional or non- under the condition of release, While the same tax deductions deduction can mean that the concessional contributions are are available to any type of super fund may not pay income which will depend on any made, contribution limits will additional risk to the insurer and super fund, it is much more tax for several years. However, in apply. While non-concessional likely that self-managed super order to take advantage of this whether any price increases are contributions do not usually anticipated. funds (SMSFs) will utilise the tax strategy, there would need to be pose an issue when funding deduction available for a future members that continue in the Retirement savings insurance inside super (unless liability to pay benefi ts. SMSF accumulation phase. Using accumulated savings, large after-tax contributions trustees can choose between mandated contributions or are being made at the same this and the tax deduction Employer-paid a rollover of the same will time), it is not the case for the available for payment of have the effect of reducing concessional contributions. Part insurance premiums. However, policies retirement savings. If voluntary of the concessional limit may if trustees elect to claim the tax Employer-owned or concessional contributions have already been used due deduction for a future liability to super-owned policies (either salary sacrifi ce or personal to mandatory super guarantee pay benefi ts, they cannot claim When an employer owns and pays for a policy on behalf of Table 3 an employee, it may be as an Type of lump Employer-owned and paid policies Super-owned and incentive to work for them, sum insurance employer-paid policies and therefore forms part of the employee’s salary package. In this Term Life Death benefi t termination payment rates apply: Death benefi t rates apply: instance, there is no impact to the • paid to tax dependant, tax-free up to $185,000 • paid to tax dependant, tax-free employee’s disposable income. and 49% on amounts above (2014/15) • paid to non-tax dependant, up A tax deduction will be available • paid to non-tax dependant, 32% on amounts to 32% to the employer, regardless of up to $185,000 and 49% on amounts above whether the policies are owned by (2014/15) the employer (ordinary policy) or by the super fund trustee. TPD or trauma3 Life benefi t termination payment rates apply: Super lump sum rates apply: • Preservation age or older, 17% on taxable • Aged 60 or older, tax-free This is because an ordinary policy component4 under $185,000 and 49% on • Aged between preservation age premium would be part of overall taxable component above (2014/15) and 60, 0% on taxable expenses incurred in the running of • Under preservation age, 32% on taxable component up to $185,000, a business – i.e. revenue expenses component4 under $185,000 and 49% on 17% on taxable component4 (which are tax deductible) and a taxable component above (2014/15) above (2014/15) super policy would be funded from • Aged under preservation age, employer contributions (which are 22% on taxable component4 also tax deductible).

34 | Financial Planning www.fi nancialplanningmagazine.com.au CPD MONTHLY

If group insurance is available However, fringe benefi ts tax will to the employee at their cost, not apply to IP premiums due to QUESTIONS it would normally be done the otherwise deductible rule (i.e. 1. The tax rates for super-owned employer-paid TPD via super, funded from salary the employee would have been insurance proceeds are… sacrifi ce contributions. Again, able to claim a tax deduction a. lower than the tax rates for a life benefi t termination payment at all as with any other employer on IP premiums if personally- ages. contributions, this amount owned). b. higher than the tax rates for a life benefi t termination payment at all would be tax deductible to the As the proceeds will be paid ages. employer. to the employee, lump sum c. lower than the tax rates for a life benefi t termination payment for Income protection proceeds proceeds will not be subject some age brackets. will be assessable income (no to capital gains tax (CGT), but rebates or tax concessions IP benefi ts will be taxable at d. higher than the tax rates for a life benefi t termination payment for apply, regardless of age), marginal tax rates. some age brackets. regardless of whether they are 2. Income protection proceeds will be taxed at marginal tax paid from super or from the Conclusion rates if they are received from: employer. However, there will a. directly from the insurer or from super. In an ideal world, all clients be a signifi cant difference to tax b. an employer. paid on lump sum proceeds. would have personally-owned insurance to remove any c. both of the above. Table 3 compares the tax issues associated with super d. none of the above. treatment of Term Life, TPD from the outset. However, and Trauma payments from an 3. A tax deduction for a future liability to pay benefi ts may be personally-owned insurance employer and super fund. able to reduce an SMSF’s tax liability for: could have a signifi cant impact a. the fi nancial year that the tax deduction is initially claimed in only. Therefore, for Term Life sums to disposable income, which for insured that are more than many clients, is unaffordable. b. the current and future fi nancial years. $185,000 (2014/15), a higher This demonstrates that when c. future fi nancial years only. total tax bill will apply to insurance is wholly owned and d. 2014/15. proceeds that are paid by the funded through one avenue, 4. The potential effect(s) of a rollover to fund Term Life employer to the benefi ciary, there will be advantages and insurance inside super includes: compared to being paid from disadvantages regardless of super. Further, at any age which option is chosen. a. a lower overall tax liability on term life proceeds. bracket, the tax rates on TPD Flexible linking addresses this b. a reduced/nil ability to claim a tax deduction on personal or Trauma proceeds are much issue and allows clients to utilise contributions to the original super fund. higher when proceeds are paid multiple ownership structures to c. both of the above. by the employer. get the best of both worlds. It d. none of the above. While the employee may not allows clients to have extensive be able to control the method cover without super restrictions, of funding, and hence the while funding as much as cover, while funding the majority commence a pension, using any insurance structure, this will possible from super (and of the premium from super. part of a personal contribution, have a substantial effect on therefore alleviating cash fl ow). Rachel Leong, Product Technical will result in a tax deduction net proceeds received. As being unavailable on the whole Income linking builds on the Manager, Life Insurance, BT. the same tax deductions are contribution. concept of fl exible linking. IP available to the employer either plus policies provide the most 3. Pre 1 July 2014 trauma policy way, superannuation may be Footnotes comprehensive cover available, if owned inside super. the natural home for employer- 1. Clients should seek guidance with the broadest defi nitions and 4. Disability super benefi t/ funded insurance, and often is. from their accountant to many useful ancillary benefi ts. invalidity segment may apply. determine whether they are Employee-owned policies A solution to any potential This will reduce the amount eligible to claim a tax deduction If the policy is owned by the issues with additional cost is an of taxable component in on their personal contributions employee but paid by the income linking plus (super-linked the employment termination to super. employer, fringe benefi ts tax may IP) arrangement, which allows payment/super lump sum. apply on lump sum premiums. clients to obtain complete IP 2. A rollover that is used to

August 2015 | 35 Complaints and Discipline

Quarterly Complaints – April to June 2015 –

The FPA is committed to barrister whose expertise informing members and the COMPLAINTS AND DISCIPLINARY REPORT includes Administrative Law, community of the trends April to June 2015 Statutory Tribunals, Equity and outcomes of complaints and Regulation, was recently Investigations ongoing as at 31 March 2015 7 and disciplinary action in the appointed as the Acting CRC fi nancial planning profession. New investigations 4 Chair. Mark had been the It is important for members Investigations closed 3 Deputy Chair for a period of and the community to be about 12 months. Investigations ongoing as at 30 June 2015 8 confi dent that the profession Separately, a number of CRC takes a strong position on the Members suspended 0 panel member appointments protection of the reputation of and re-appointments were Members expelled (CRC) 0 fi nancial planners by responding approved by the FPA Board, to breaches of its professional Members Terminated (Constitution) 0 including three new panel expectations. Other Sanctions (CRC) 0 members. Each appointment As well as communicating was approved for a period of the activities of professional Referred to Professional Designations Committee for Sanction 0 three years, effective 31 July accountability, our goal is to 2015. Of those ongoing investigations, assist members in appreciating Changes to the The panel currently comprises one matter was reported to the types of complaints received, one legal practitioner, eight the FPA’s Conduct Review composition of to encourage members to CFP® members and a fi nancial Commission (CRC) for consider their own practices, and the CRC advice consultant: consideration to issuing a to provide guidance for complaint The CRC is independently Notice of Disciplinary Breach The FPA congratulates and protection. chaired, supported by a panel and one matter was subject welcomes the following new of experienced members of the of a hearing before a CRC CRC members: fi nancial planning profession, Disciplinary Activity Disciplinary Panel. The Panel • Michael Chalmers CFP® relevant experts and members is in the process of making a • Lisa Palmer CFP® Summary of the public, to regulate the written determination in this • Ragnhild Sky CFP® In the June 2015 quarter (April conduct of members of the matter, which will include a to June 2015), the FPA received FPA and upholding the highest The FPA thanks continuing finding in respect of each four new complaints, fi nalised ethical standards within the members: alleged breach, as well as a ® three investigations and has fi nancial planning profession. • Sandra Bowley CFP eight ongoing investigations. statement of reasons for its • Guyon Cates determination. Mark Vincent, a Sydney-based

Table 1: CRC Determinations Case No Member Details Member No Effective Date* Member Category Sanction CRC 2014_1 Robert (Bob) Jones 38582 19 Sept 2014 CFP Expelled, fi ned and costs of CRC Hearing

* Note: The Effective Date refers to the date of the event triggering the automatic termination, rather than the date the FPA became aware of the event.

Table 2: Summary Disposal Case No Member Details Member No Effective Date* Member Category Sanction SD2015_1 Blinded Blinded 15 Jan 2015 CFP Reprimanded, fi ned and professional education * Note: The Effective Date refers to the date of the event triggering the automatic termination, rather than the date the FPA became aware of the event.

36 | Financial Planning www.fi nancialplanningmagazine.com.au and Discipline Report

• Greg Cook CFP® fi nancial year, our Professional Special Breach due to the • James Cotis CFP® Accountability program resulted member’s non co-operation; It should be ® • Cherie Feher CFP in the following: • A matter was fi nalised by ® • Dacian Moses CFP • We received a total of 30 Summary Disposal, enabling noted that • Mark Vincent (Acting Chair) formal complaints, a 36 per cent us to work co-operatively with The FPA expresses gratitude to increase from last year; the member (under the watchful during the the following outgoing members • We fi nalised a total of 29 eye of the CRC) to achieve for their valuable contributions complaints, a 20 per cent a corrective professional 2014/15 to the CRC over many years: increase from last year; regulatory outcome that • Chris Benson CFP® fosters the protection of the • Bruce Christie CFP® • As at 30 June 2015, we had profession and the community fi nancial year, • Michael Perkins eight outstanding complaints, (see Table 2). The member • Dr June Smith (Chair 2014/15) compared to seven at the same was reprimanded, required to ASIC banned • Brett Walker time last year; complete professional education • Additionally, we received a and fi ned (see Table 2); 19 individuals The year in review total of 17 FPA Confi dential • We automatically terminated matters and fi nalised a total the membership of four FPA Once again, the Annual Report from practising of 19 matters. As at 30 June members by operation of the on Professional Standards will 2015, we had fi ve outstanding FPA Constitution (see Table 3). be published later on in the year, matters, compared to six at the as fi nancial expected to be available on the same time last year; We further fostered the FPA website in October 2015 protection of the profession and planners and (following publication of the FPA • We dealt with 84 instances the community in responding Annual Report). of misuse or unauthorised use to over 368 enquiries from of either the FPA brand or CFP members, consumers and of these, only The Annual Report on designation. This is an increase other stakeholders in relation to Professional Standards has of 200 per cent from last year; professional standards related one was a been published on an annual activity and guidance. basis since 2010, and contains • We conducted a total of 74 insights into the FPA’s work and Advice Reviews as part of the It should be noted that during member of developments broadly across Cbus Referral Program; the 2014/15 fi nancial year, the Professional Regulatory • The CRC delivered a ASIC banned 19 individuals the FPA. Framework, as well as specifi cally determination as a result of from practising as fi nancial within the FPA’s Professional a Disciplinary Hearing. The planners and of these, only Membership, Professional member was expelled, fi ned one was a member of the FPA. Conduct and Professional and ordered to pay the hearing It is noteworthy that of the 46 Accountability programs. costs (see Table 1); individuals banned by ASIC since 1 July 2012, only two In the meantime, and at a very • The CRC issued an were members of the FPA. high level, during the 2014/15 Infringement Notice for a

Table 3: Automatic Termination pursuant to FPA Constitution Member Details Member No Effective Date* Member Category Reason Stuart Jamieson 29884 17 May 2012 CFP Authority terminated by AFSL for breach of the law Michael Irwin 13235 18 Sept 2014 CFP Banned by ASIC Alan Kenyon 592 29 May 2012 AFP Insolvent under Administration Shane Thompson 26732 17 Feb 2015 CFP Failure to pay monetary penalty

* Note: The Effective Date refers to the date of the event triggering the automatic termination, rather than the date the FPA became aware of the event.

August 2015 | 37 Centrelink

Income Streams: a dream online Income Stream Review. Using the Document Lodgement Service, customers and nominees can now lodge documents with the department online, without the need to post anything or visit a service centre. The Document Lodgement Service is available to people completing a review online using myGov or their access code, and is a convenient way to lodge any supporting documents that may be requested as part of the Income Stream Review process. If you or your clients need further help completing the review online, visit humanservices.gov.au/ onlineguides myGov So what about myGov? Why is it in your clients’ interest to sign up and start taking advantage of it? In August, some Department of Human 2. Select their ‘review reminder’. Their review reminder will show myGov has now been around for Services clients receiving income them step-by-step how to more than two years and has over 6.7 million active accounts. support payments will be required to complete their review. If your clients would prefer you to The department offers Centrelink, complete their Income Stream Reviews. complete their Income Stream Medicare and Child Support Review on their behalf, the quickest services on myGov. Income Stream Reviews are When it comes to doing the and easiest way for you to Other myGov member services conducted when a client and/or review, we’ve talked about complete the review is also online. include the Australian Taxation their partner owns an income myGov before, and it probably Once the review is submitted, it will Offi ce, the Department of Veterans’ stream product. won’t come as a surprise to hear automatically apply to the Affairs, the Personally Controlled Income stream products include that it’s the best way to do it. customer’s record. eHealth Record, the National account-based pensions and This is a great time to encourage To do this, your clients will need Disability Insurance Scheme, and market linked pensions (also your clients to sign up for myGov if to provide you with the unique the Department of Employment known as term allocated they haven’t already. Signing up One-Time Access Code that can with Australian JobSearch. pensions), and they are reviewed now is going to save them time be found in their review letter and Once your clients have signed up each year in February and August. later on if they need to update their their Customer Reference for myGov they can choose which The fi rst thing to note is if your income and assets, or want to view Number. You can then complete of these member services they clients need to complete an their current rate of payment. the review online by visiting would like to link to their account. humanservices.gov.au/ Income Stream Review, they will If your clients want to complete Given the range of Government incomestreamreviews receive a letter from the their own review using myGov, online accounts available, fi nancial Department of Human Services they will need to: Your clients can also complete the planners are encouraged to informing them of the requirement 1. Access their Centrelink online review online using their access introduce their clients to myGov if to complete a review. If your account through my.gov.au code. they haven’t already done so. It’s a clients do not receive a letter, where a list of all their Sometimes your clients may need simple way to access a range of they do not need to complete a reminders will be displayed in to attach documents to verify the Government services online. Simply review in August. the ‘Reminders’ section. information provided as part of their visit my.gov.au to learn more.

38 | Financial Planning www.fi nancialplanningmagazine.com.au FPA Chapter directory New South Wales Ballarat Mackay Member Services: Paul Bilson CFP® James Wortley CFP® 1300 337 301 Sydney Chairperson Chairperson Vicky Ampoulos T: (03) 5332 3344 T: (07) 4957 1600 Phone: 02 9220 4500 Chairperson E: [email protected] E: [email protected] T: 0411 743 098 Email: [email protected] E: [email protected] Bendigo Rockhampton/Central Qld Web: www.fpa.asn.au Gary Jones AFP® David French AFP® Mid North Coast Chairperson Chairperson Julie Berry CFP® T: (03) 5441 8043 T: (07) 4920 4600 Chairperson E: garyjones@ E: [email protected] T: (02) 6584 5655 platinumwealthbendigo.com.au E: [email protected] Sunshine Coast Geelong Andrew Geddes CFP® FPA Board Newcastle Brian Quarrell CFP® Chairperson Mark Alexander CFP® Chairperson T: 0437 835 609 Chair Chairperson T: (03) 5222 3055 E: [email protected] Neil Kendall CFP® (QLD) T: (02) 4923 4000 E: brian.quarrell@ E: [email protected] bendigoadelaide.com.au Toowoomba/Darling Downs Chief Executive Offi cer Bob Currie CFP® Mark Rantall CFP® New England Gippsland ® Chairperson ® Rod Lavin CFP David Newberry AFP T: 0420 301 081 Directors Chairperson Chairperson E: [email protected] ® T: (03) 5176 0618 Marisa Broome CFP (NSW) T: (02) 6766 9373 Matthew Brown CFP® (QLD) E: [email protected] E: [email protected] Townsville Gavin Runde CFP® Bruce Foy (NSW) Riverina Goulburn Valley Julie Matheson CFP® (WA) ® Chairperson ® John Foster CFP Marie Suthern CFP T: (07) 4723 9188 Delma Newton CFP® (QLD) Chairperson Chairperson E: gavin@journeyfi nancial.com.au Philip Pledge (SA) T: (02) 6921 1999 T: (03) 5821 4711 E: msuthern@fl ynnsprake.com.au E: [email protected] Wide Bay Louise Jealous-Bennett AFP® Board Committees Western Division South East Melbourne ® Chairperson Peter Roan CFP® Scott Brouwer CFP T: (07) 4153 5212 Regional Chapter Committee Chairperson Chairperson E: [email protected] Matthew Brown CFP® T: 0447 538 216 T: (02) 6361 8100 E: [email protected] E: peterr@roanfi nancial.com E: [email protected] South Australia Professional Standards Wollongong Sunraysia Petra Churcher AFP® ® and Conduct Committee ® Stephen Wait CFP Mark Lockhart AFP Chairperson Marisa Broome CFP® Chairperson Chairperson T: (08) 8291 2800 E: [email protected] T: (02) 4244 0624 T: (03) 5022 8118 E: [email protected] E: [email protected] E: mark@allfi nancialservices.com.au Audit Committee Queensland Northern Territory Philip Pledge ACT Susie Erratt CFP® E: [email protected] Claus Merck CFP® Brisbane Chairperson Governance and Chairperson Steven O’Donoghue CFP® T: (08) 8980 9300 T: (02) 6262 5542 Chairperson E: [email protected] Remuneration Committee E: [email protected] T: 0457 528 114 Neil Kendall CFP® E: steven.o’donoghue@ Western Australia E: [email protected] suncorp.com.au Victoria David Sharpe CFP® Policy and Melbourne Cairns Chairperson Regulations Committee Julian Place CFP® Contact: FPA Events T: (08) 9463 0047 Marisa Broome CFP® T: (02) 9220 4543 E: [email protected] Chairperson E: [email protected] T: 0418 111 224 E: [email protected] Professional Designations E: [email protected] Far North Coast NSW Tasmania ® ® Committee Albury Wodonga Shane Hayes CFP Todd Kennedy CFP Julie Matheson CFP® Wayne Barber CFP® Chairperson Chairperson Chairperson T: 0411 264 002 T: 1300 651 600 E: [email protected] T: (02) 6056 2229 E: [email protected] E: [email protected] E: [email protected] Gold Coast Matthew Brown CFP® Chairperson T: 0418 747 559 E: [email protected]

To update these details, please advise FPA Events on 02 9220 4543 or [email protected]

August 2015 | 39 Th e future is in our hands.

How can we use technology to create incredible client experiences? How can we innovate and remain relevant in a rapidly changing profession?

Join Australia’s most compelling futurist Chris Riddell at this year’s FPA Professionals Congress. Chris will tap into his vast knowledge and experience in global emerging trend spotting and share powerful insights and ideas that will transform the way we do business.

Register at fpacongress.com.au

REGISTER BEFORE 31 AUGUST AND SAVE $150