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I am a nearly 40-year-old female with over $154,000 in superannuation. That makes me an outlier. Measure after measure corroborates woeful facts that as a woman, I am expected to retire with about 45% ... I am a nearly 40-year-old female with over $154,000 in superannuation. That makes me an outlier. Measure after measure corroborates woeful facts that as a woman, I am expected to retire with about 45% less than men and that my balance should currently sit at $60,000 (Figure 1). After 22 years in the workforce, my super balance has never received an additional cent in contributions. I recently came back from maternity leave after one year. During my 20s, I took months off to travel and had sporadic but protracted periods of unemployment in between jobs that string together to leave an indelible hole in my bank and super account. I've taken hard-to-swallow pay cuts to switch industries. I've silently sat through salary negotiations, fearful to ask for more or the same amount my male counterparts earn. Topping it all off, I had multiple superannuation accounts with costly retail funds running simultaneously with insurance cover I did not know I was entitled to - which I probably would not have been able to claim. How I managed to more than double my nest egg compared to the average balance is nothing short of a superannuation-gender gap miracle. Entering the workforce at 16, I remember being bewildered with filling out my first-ever superannuation-application form. What was a binding death nomination? I have a younger brother. Does that mean he's my dependent? Or was I a dependent? When it came to the investments section, there was an option to "default". I didn't like the sound of that, so I opted to split my contributions across eight asset classes to add up to 100%. I distinctly recall that Australian shares was at the top of the list by happenstance and allocated a nice, neat figure of 40% to it, followed by international shares, which also received 40%. With my year 10 commerce education in tow, I knew leaving my cash in the bank would guarantee interest, so I allocated the remaining 20% to the cash option. That was a fun exercise, I thought to myself, and oddly gratifying to have a vague level of control for something I had no language or enough understanding for. So, for every job I started and super fund application form I had to fill out thereafter, I never deviated from splitting my money across 40% Aussie and international shares respectively, and leaving 20% in cash. At the onset of the Global Financial Crisis, I was working for an investment bank when the financial world started to implode. As stock markets and capital markets crumbled, a sage colleague told me that he moved all his superannuation to cash. I did the same thing. In mid-2009, as signs of recovery began to flicker, he told me that he went back to equities. I did the same thing. When the coronavirus pandemic hit and ravaged the markets, I moved everything to cash. Four months later, I reverted to my 40-40-20 split. You could hardly say that I was 'engaged' with my super. I left multiple accounts open only to bleed fees for a decade. Prior to becoming a financial journalist for the super fund and investment sectors four years ago, I had no idea what industry or retail funds were, or what a MySuper product was. Even after years of studying and working in accounting, the concept of 9.5% superannuation did not leave the confines of my employment contract. The critical importance of superannuation to me now is the by-product of occupational hazardry. I took my Gen-Z brother out of a pitiful lifecycle product and yanked my husband out of a crummy industry fund that took 10 business days to implement investment switches (it was 20 March 2020 by the time the fund moved all his savings to cash and, by that stage, the market had plunged 30%, leaving me infuriated). The fact that I will retire with a hefty nest egg propped up by an overreliance on equities and unsolicited intra-fund advice is underwritten purely by kismet. To think what could have been if I knew my way around the superannuation system back then - to understand what 'Superannuation Guarantee' meant or the difference between bonds and equities from as young as 14 years and nine months - would solve the current superannuation-financial literacy gap that is much-decried about. Quantifying the financial literacy and socioeconomic capital opportunity costs is distressing, and, at worst growing. I wish that all hard-working, low-income earning women who leave the workforce to have kids; don't have the confidence to ask for a pay rise; or cannot work but want to work because they are experiencing domestic violence have the same luck.Read more

Flatlining: The future of underwriting

KARREN VERGARA

Eight years ago, researchers from the University of Oxford analysed over 700 jobs to determine which will likely fall prey to computerisation. The famous research found insurance jobs (which had a good ... Eight years ago, researchers from the University of Oxford analysed over 700 jobs to determine which will likely fall prey to computerisation. The famous research found insurance jobs (which had a good representation of life insurers) in the US are highly at risk of becoming digitised - well ahead of cashiers, telephone operators and machinists. The study by economist Carl Benedikt Frey and academic Michael Osborne determined insurance underwriting roles had a staggering 99% chance of being overtaken by artificial intelligence. Insurance claims and policy processing clerks (98%), and insurance sales workers (92%) are also at risk. Data from Seek in Figure 1 paints a bleak picture of the declining demand for underwriters. Job advertisements for underwriters tumbled starting roughly the same time as the release of the Oxford study, with the index peaking 120 points then plummeting about 95 points in 2020. Contributing to the decline was the introduction of UnderwriteMe, a rules-based engine backed by global reinsurer Pacific Life Re in 2015, which has since become the dominant technology used by major players like Zurich, MLC Life, while boutiques such as NEOS Life and Integrity Life have recently jumped on board. Meanwhile, Munich Re's proprietary technology ALLFINANZ is gaining momentum as TAL and ClearView put it to use. Seek's data reinforces the accuracy of the Oxford prediction - but how much is attributable to the rise of automation given the life insurance sector is taking a hit on several fronts? Adrian Karloci, a director at B&K Consulting specialising in recruitment in wealth management, life insurance and superannuation, does not see life insurance underwriters becoming extinct. He believes traditional underwriting roles will continue to exist as changes the industry is undergoing tend to be more cyclical rather than structural. "The underwriter's role will continue to evolve. The development of underwriting rules engines and technology in underwriting has provided an alternative career path in the space," he says. "Some roles definitely have an automation aspect to them and technology will help add value." The advantages of AI moving in for most or some portion of underwriting functions are well pronounced: the removal of mundane and laborious tasks paves the way for strategic high-level work. "Digital skills are the obvious skill set life insurance underwriters will need to adopt, together with an analytical mindset to interpret data and increased client-facing communication skills," Karloci says. Chenthuran Suthersan, the head of protection advice at UK-based boutique life insurer Anorak, says technology like UnderwriteMe can significantly help with less complex cases, but more complex cases and medical exams are still being referred to human underwriters. "So while there are less cases that underwriters see, the ones that they do see are complex so the reduction in need for underwriters is not proportional to the number of cases that they will see," he says. Financial advisers are still reliant on human underwriters. Most advisers will pick up the phone to speak to underwriters to get a decision as well as understand what the issues are. "That allows us to communicate with the client about what to expect and why. That ensures that we look more knowledgeable to the client, but also the client will be more understanding of the outcome," Suthersan says. In a 2009 global study, Deloitte examined life insurers' underwriting strategies and found that less than a third (29%) adopted a system to streamline the process. At the time, all the systems analysed used some form of insurance application to base decisions; 65% incorporated either a traditional application or one with reflexive questioning digging deeper into applicants' responses. Twenty-six percent of insurers used traditional applications, while the minority used reflexive applications only. "Nearly half of these reflexive applications are relatively basic (10 or fewer drill-down questions), but one-third of them do have detailed follow-up (over 60 drill-down questions)," Deloitte found. Fast forward to 2020-21, Deloitte found in a separate study that many insurers are in the early stages of underwriting transformation projects going well beyond automating routine, labor-intensive data gathering and processing tasks. Insurers' ultimate goal is to better leverage AI, alternative data sources, and advanced predictive models to augment an underwriter's capabilities and eventually transition them to higher-level, multi-faceted roles, Deloitte said, in terms of portfolio management and increased interaction with brokers and customers. In the year ahead, North American insurers are prioritising underwriting automation, but this is less so for Europeans and those in APAC. It isn't just the power of technology that is threatening jobs, the cost of regulation is forcing life insurers to hike prices and scrap some products. Structural changes to life insurance policies have resulted in many policy definitions changing, says HLB Mann Judd Insurance Services risk adviser Andrew Kennedy. Prudential regulator APRA's intervention on income protection to improve sustainability guidelines resulted in life insurance, particularly within industry superannuation funds, has increased premiums significantly - some as much as 40% in recent months, he says. To make matters worse, the local life insurance market is contracting, driven by the major banks fleeing the industry over the last five years. Bancassurance, in the Australian context, is becoming a thing of the past. AIA Australia swallowed up CBA's CommInsure; Zurich took over ANZ's life insurance arm via OnePath; while NAB's minority stake in MLC Life Insurance hangs by a thread. Westpac is the only major bank tied to life insurance via subsidiary BT Wealth Connect, but even that strategy is up for review. Life insurance, which was the lifeblood of AMP, was sold off to Resolution Life for $3 billion, while Suncorp divested its unit to TAL. This has left the door wide open to foreign conglomerates, running thriving life insurance operations in their respective countries, to try their hand at the local market beset by red tape and suffering blows to profitability. Foreign companies currently control the majority of Australia's life insurance industry. According to Plan For Life, Dai-ichi Life Group's TAL holds the largest market (28%), followed by Hong Kong-based AIA Australia (17%), Swiss firm Zurich (14%) and Nippon Life's MLC Life (11%). Consolidation has inevitably led to redundancies and many employees reapplying for their jobs in the merged entity. A former life insurance underwriter who still works closely in the industry told me some underwriters are having such a tough time finding roles that they have turned to jobs outside of life insurance well below their skill set. The life insurance market has undoubtedly shrunk, another experienced life insurance underwriter told me on the condition of anonymity, and the workload has spiked for those left behind. This is not because of AI or consolidation, the underwriter said, but because a shift back to human underwriting is taking place. The industry is currently feeling the negative impacts of straight-through acceptance and automated underwriting in claims. What's more worrying is that insurers are not creating additional human underwriting roles. This is because the numbers were crunched years ago when insurers budgeted how much money they will save by not paying underwriters' salary. Now, it is the underwriters slogging it out and feeling the pinch of outdated modelling and cost savings, the underwriter said.Read more

The digital push

KARREN VERGARA | In Technology

The subject of life insurance does not spark interest for many, typically because it's perceived as boring, complicated and expensive. Over the last decade, however, the life insurance industry accelerated ... The subject of life insurance does not spark interest for many, typically because it's perceived as boring, complicated and expensive. Over the last decade, however, the life insurance industry accelerated its efforts to shed this perception by launching new products, lowering costs and modernising its processes in the name of innovation. Nowhere is this more evident than underwriting. With a click of a button, FaceQuote guesstimates a person's age and then calculates a quote for a premium - based on a selfie. Zurich UK introduced FaceQuote three years ago hoping to reach the masses. This is a way, Zurich says, to make life insurance "fun" in the hope more people will engage with it. Lapetus Life Event Solutions takes it one step further, launching CHRONOS, an end-to-end underwriting platform that predicts a person's life expectancy by scanning a person's face to extract information like body mass index, physiological age and how fast someone is ageing. Most Australian life insurers are automating their underwriting capabilities by partnering with established providers. UnderwriteMe has since become the most popular piece of technology used by major players such as MLC Life, Zurich, while boutiques such as NEOS Life and Integrity Life have also partnered with the UK-based firm. Munich Re's proprietary technology ALLFINANZ meanwhile has been adopted by TAL and ClearView. While Australia's life insurance is facing its own challenges - consolidation, lower profit margins and higher claims - its global counterparts paint a different story. Demand for life insurance overseas remains solid, buoyed by a large cohort of the population that is not insured or underinsured. COVID-19 has also helped spur demand. Life insurance is a large part of the global economy and the interesting thing is that it is a high growth area, says according to Sunil Rawat, the co-founder and chief executive of Omniscience, an artificial intelligence start-up based in Palo Alto, California. About 200 million new life insurance policies are written every year, he says, with the US market growing about 3% to 4% per year. Omniscience helps underwriters make complex decisions faster using maths and algorithms that underpins the technology, which according to the firm's last measure, accelerated life insurance decisions 1000 times or more. "A blood report would have common things like. cholesterol - extra tests like C-reactive protein and other markers and factors that get more and more complex. My BMI could be the same as an obese person's BMI but could have dropped due to my diet; I could have reduced my medication as a result and be in better health. "Where we shine is taking all of these factors that are very complex and make decisions based on those computations," he says. Currently, Rawat and his team are looking at 14,000 variables. In Germany, the life insurance market is thriving, says Laila Neuthor, the chief executive and co-founder of we4 Impact. She is seeing a spike in demand for life insurance products since COVID-19 hit, not only for personal cover for loved ones, but also products that cover mortality or mobility issues like death, loss of income and loss of ability. "It is surprising, even with the coronavirus, how many more people seem to be aware that illnesses can prevent them from earning their living. They are buying more of those types of products that can protect their family's financial situation," she says,Read more

Flatlining: The future of underwriting

KARREN VERGARA | In Technology

The cost of regulation

KARREN VERGARA | In Compliance

The corporate regulator justified the staggering 160% jump in the adviser levy, from the time it was introduced in 2017-18, as a consequence of advisers abandoning the industry. The levy for the 2019-20 ... The corporate regulator justified the staggering 160% jump in the adviser levy, from the time it was introduced in 2017-18, as a consequence of advisers abandoning the industry. The levy for the 2019-20 financial year, which is charged retrospectively based on ASIC's enforcement activity, amounts to $1500 per licensee plus $2426 per adviser. Ross Smith, the director of advice firm Shenton, operates two AFSLs, one of which is based in Hong Kong and the other in Brisbane. ASIC is billing Smith for two sets of levies for each AFSL: $24,534 and $14,288. Smith, who is fighting the government tirelessly to have the levy removed, says one unintended consequence of the legislation will force advisers to increase their fees and pass this on to clients, which was not the intent of the legislation. "We are not the guilty party," he says, pointing out that it feels as though the good advisers are paying for the sins of bad advisers of the past. Smith has made several complaints to ASIC about the levy, but only receives a "standard generic, bureaucratic reply". He has also submitted complaints to the Commonwealth Ombudsman, but also receives the same reply. Smith has even applied for a waiver based on economic grounds. "I've had to stop contributing to superannuation and I cannot afford to retire," he says. "I owe $273,000 on my home loan in Australia and at the end of March, working capital for one practices had increased from $11,000 to $18,000 which was still not enough to pay ASIC." Other advisers, like PCH Financial principal and business owner Paul Herring, do not understand why advisers have to pay a levy in the first place, which is making it more challenging for advisers to stay in business. "It adds to the challenges of being in business. I am the only adviser in my business and I have to pay that levy, which is a solid slug," Herring says. ASIC deputy chair and commissioner Karen Chester acknowledged the significant uptick at a Parliamentary Joint Committee on Corporation and Financial Services in March. While Chester lent a sympathetic ear to advisers needing to fork out an unprecedented amount of money, she ultimately blamed the increases to the "denominator effect" of advisers exiting the industry. "Indeed, when we look at the numbers, it has gone from $276 million, which is the total amount recovered, to $320 million. It is important to look at the drivers of that increase. The lion's share of the increase were the costs related to the Royal Commission, and a large part of that is enforcement," she says. There were 19,992 ASIC-registered financial advisers as at June 3, which according to Rainmaker analysis is a five-year low not seen since the pre-financial services Royal Commission days. In keeping the levy down, Chester hopes that adviser numbers will stabilise, but also hints that the "numerator should come down over time [in] several ways". The hearing also found that ASIC typically recovers the costs incurred in prosecuting the major financial institutions and offsets these against the levy. The problem is that a massive lag exists between the time ASIC recoups such costs to the offset trickling down to the smaller players. "So, when we recover from the big end of town, the small end of town doesn't see that coming off their bill until a couple of years later," Chester said. The Global Financial Planning Institute co-founder Ashley Murphy says the regulation of financial advisers in Australia has gone too far. "While the regulations are consumer friendly and have raised the standards in the industry, the fact that financial advice is becoming out of reach for many is unfortunately the sad side effect of over-regulation," he says. In the US, there are tiers of advisers overseen by different jurisdictions and regulators. They are regulated based on the size of their book of business and which particular financial products they offer, Murphy says, who has practised as an adviser for many years in the state of California. "If the advised amount is less than US$100 million, the adviser is regulated by their state of residence. If the amount is over US $100 million, the adviser is regulated by the Securities and Exchange Commission (SEC)." Financial products are also defined differently. "In the US, a financial product can be thought of as a product that is financial in nature where capital is invested, and the possibility of a capital loss exists," he adds. Interestingly, the SEC does not regulate financial products per se, that is done by the Financial Industry Regulatory Authority (FINRA), a self-governing organisation that oversees brokerage firms and exchange markets. There are also different types of financial advisers - fiduciary advisers which are mostly fee-only and advisers who accept commissions for the sale of financial products. The latter 'advisers' are also known as product salespeople, Murphy says, and are not regulated as fiduciaries. So, how much fees does Murphy pay to the US regulator that is equivalent to ASIC's levy? It is about US$300 per year. US researchers found that porous boundaries dividing regulatory regimes are conducive to bad advisers to "wandering". Academics Colleen Honigsberg, Edwin Hu and Robert Jackson, Jr. analysed 1.2 million advisers across four major regulatory regimes and found wandering advisers with a prior record of misconduct have a "heightened" tendency to commit future wrongdoing. Such advisers are more than 40% more likely to re-offend compared to other advisers with misconduct who do not change regulatory regimes. "Most Americans experience financial advice as an undifferentiated product, making no distinction among the individuals who execute their stock trades, advise them on their 401(k) investments, and sell them life insurance linked to the performance of a stock-market index indeed - even though each of these three individuals is subject to a different legal regime," the authors found. The financial services Royal Commission unearthed the ineffectiveness of ASIC and APRA as regulators, failing to escalate matters to the courts and instead relying on enforceable undertakings by negotiating fines with perpetrators, which in some instances, took place over long lunches. After the Royal Commission, both regulators received a funding boost worth hundreds of millions of dollars to carry out their functions effectively. The 2019-20 budget allocated to them $606.7 million over the next five years. On top of this, ASIC's industry funding levy charged to super trustees, custodians, market intermediaries, listed companies and a slew of others operating in the financial services and insurance subsectors amounted to $320.33 million for the same period. Given the cash injection ASIC received right after the Royal Commission, it leaves many scratching their heads and asking why this was not enough to help it carry out its enforcement duties. Read more

FS Roundtable: Call to action

KARREN VERGARA | In Applied Financial Planning

As the global health and economic crises continue to roil equity markets, adviser-led investment strategies need to be actively monitored and managed not only to survive - but to thrive - in a post-COVID-19 ... As the global health and economic crises continue to roil equity markets, adviser-led investment strategies need to be actively monitored and managed not only to survive - but to thrive - in a post-COVID-19 world. The recent Managed Accounts Roundtable hosted by MLC and Financial Standard discussed critical issues wealth managers face as COVID-19 deeply disrupts and rattles clients' portfolios and peace of mind. After a healthy debate about which strategies can best optimise investment performance, one overarching consensus emerged among the different schools thoughts: The role that active management plays in managed accounts is vital to help financial advice practices and their clients face these turbulent times. It's not to say that passive investment strategies should be shunned altogether. Many voices from the panel of experts provided valid points on why passive strategies should not be ignored. In attendance from MLC Asset Management were: director of managed accounts Jason Komadina; general manager of distribution Mandy Mannix; and portfolio manager John Woods. Fund managers who shared their expertise included: Antares Equities investment manager John Guadagnuolo; and Banyantree Investment Group investment manager and director Max Riaz. On the research side, SQM Research head of research Rob da Silva; Lonsec chief investment officer Lukasz de Pourbaix; Zenith Investment Partners head of research Bronwen Moncrieff; Morningstar Australasia director of manager research for APAC Tim Murphy; IOOF head of research and retirement income Matt Olsen; and Rainmaker's managing director Christopher Page and head of investment research John Dyall were in attendance. Voices from consulting, investment solutions and platforms rounded up the value chain: Praemium head of investment managers and governance Damian Cilmi; Quilla director Andrew Connors; Douglas Funds Consulting chief executive Nigel Douglas; and InvestSense director Jonathan Ramsay. Ramsay says the COVID-19 experience has provided an opportunity to engage with clients, meaning that it increased the frequency (via Zoom for example) and breadth of communication, as well as productivity. "It was a very energising period," he says. The overall feedback from advisers and their clients, Douglas says, is the "great comfort" they were receiving from someone who has the ability to oversee their portfolio and provide that level of active management during the crises.Read more

A united front

KARREN VERGARA

In May 2019, Sunsuper completed its fourth merger in two years - this time it integrated 74-year-old corporate superannuation fund CBH Super. Last year, we talked to Sunsuper, Kinetic Super and AustSafe ... In May 2019, Sunsuper completed its fourth merger in two years - this time it integrated 74-year-old corporate superannuation fund CBH Super. Last year, we talked to Sunsuper, Kinetic Super and AustSafe Super about getting the difference between 'mergers' and 'acquisitions' right. Considering the possibility of a merger is the ultimate litmus test for superannuation funds. Before recruitment industry fund Kinetic Super, with $3 billion and 270,000 members, merged with Sunsuper in May 2018, its chief executive Katherine Kaspar says the fund was performing well on all accounts. "But as a board we wanted to explore how we could deliver 'more,'" she says. A process, which Kaspar says involved undertaking an intense journey of better understanding member and employer needs. Kinetic then matched these needs against potential partners - an extensive due diligence of identifying a fund with similar values, vision, complimentary member demographics and history of success. AustSafe Super chief executive Craig Stevens says the boards have put the long-term interests of members first - which can be difficult for any organisation. In considering a merger, any board that says it is going to vote itself out of existence - first and foremost - is commendable, he points out. AustSafe's board looked at all the options and saw the benefits for the future of their 100,000 members with $2.5 billion of funds. "The fund is performing extremely well and AustSafe as a whole has performed exceptionally well. But we haven't let that cloud our strategic vision," Stevens says. In merging with Kinetic and AustSafe, Sunsuper chief executive Scott Hartley says both are high quality funds with a strong performance track record - and were under no pressure to merge. The trustees looked into the future on behalf of their members' best interest to determine what would give them the best chance to have a sustainable and competitive outcome, Hartley says. "It is a very selfless and honourable action both trustee boards did in making those decisions." External pressures The superannuation industry is facing intense pressure to consolidate. One recommendation the Productivity Commission is pushing for following its three-year review into the efficiency and competitiveness in super is for more consolidation to eventuate, despite the fact that mergers have been plentiful. Members would clearly benefit from an increase in merger activity, particularly among funds with less than $1 billion in assets, it said. Members in underperforming funds can cost them $635,000 at retirement. In the banking Royal Commission final report, Commissioner Kenneth Hayne wants trustees to conduct an annual scale assessment to determine if members would benefit from merging the fund with another to create scale with more assets and beneficiaries. Hayne warned that directors shouldn't be focused on whether they will have a place on the new board, rather what is in the best interests of members. But the unfortunate reality of mergers is redundancies. Stevens says: "We were really conscious around the fact that our people were made to feel secure through the whole process and that they play an important role in the final outcome." Hartley says some roles (mostly short-term contractors) were made redundant in the case of Kinetic, while most employees had a choice to take a redundancy payment or continue in the merged opportunity. "We try to minimise job losses." Pleasingly, Hartley says most decided to stay on and close to 50 employees joined in the Kinetic merger, while about 30 employees will join from AustSafe. Project management Sunsuper approached each merger slightly differently with some variances in how Kinetic and AustSafe were transitioned. "Following a heads of agreement, the first thing we did was form a joint project steering committee with the merging party and ourselves and that team is essentially overseen by myself, the other chief executive and the respective boards," Hartley says. The steering committee, which typically comprises three to four people from each side, spends time thinking about design and how best to merge the funds. The joint project team - which is much larger - is established to monitor the execution of the merger. For example, the Kinetic team had more than 30 people, a combination of Kinetic and Sunsuper people working together. In the case of Kinetic, Hartley says insurance arrangements were grandfathered for a period of time. Meanwhile, insurance arrangements with AustSafe will be harmonised with Sunsuper. "It is important to be able to get the scale benefits they need to be integrated in a similar design on a single platform while allowing for some differences, where it makes sense for the membership of the fund. Kinetic's integration was a good example of that," he says. During the Kinetic merger Kaspar ran dual strategies: one team ran the business strategy while the other focused on the merger. Sunsuper set up a joint advisory committee comprising its directors and ex-Kinetic directors exploring and recommending ways to continue to support the recruitment industry, and help contingent or casual workers achieve better retirement outcomes. In searching for a potential merger partner, AustSafe had to ensure it could connect with a fund that already had the scale and capabilities, and was strategically aligned. Once that was determined, Stevens says the process happened quite quickly. AustSafe has merged with small funds in the past and as part of its strategy has been looking at other merger opportunities. "What we found is people are already aware of the Sunsuper brand. About 75% of our employers that partner with us also partner with Sunsuper." Top of Stevens' mind is getting the communication piece to employers right. Interacting and supporting them through the change is important, he adds. "From a member point of view, our values with Sunsuper are actually quite similar. It's been quite easy to integrate and work with the teams." Synergies Each fund going into a merger had significant requirements and plans to ensure synergies were maximised. From Sunsuper's end, an advisory board, which comprises directors from each trustee board, was established to provide oversight of the merged entity and to ensure specific strategies are executed to maximise member value. It oversees management to monitor how the merged entity is operating in terms of retaining and growing members and employers, and overall making sure the value of the merged fund's legacy is maintained. Hartley says the same governance structure for Kinetic will be established for AustSafe whereby the advisory board oversees Sunsuper's management of the merged operations. Kinetic and Sunsuper members will benefit from combined synergies of about $30 million per year. For the AustSafe merger, this calculates to about $10 million per annum. In total, members will be better off $40 million per annum. In March 2019, when the AustSafe merger is expected to complete, Sunsuper will overall have close to 1.4 million members and $60 billion in assets. On top of that, IAG & NRMA Superannuation Plan will merge into Sunsuper sometime in 2019 after determining it can no longer operate as a standalone corporate super fund. It's important to know, Hartley says, that mergers are not takeovers or acquisitions. "Some people might be cynical about that, but that is the mindset that we approach these exercises with," he says.Read more

Giant steps for growth

HARRISON WORLEY | In Applied Financial Planning

In the previous edition of Financial Standard, Karren Vergara explored managed accounts and how the $50 billion market impacts the lives of its ever growing client base. Managed accounts are clearly important ... Read more

Booming with confidence

KARREN VERGARA | In Applied Financial Planning

The tide has turned. The skepticism that followed managed accounts in its early days has waned, says Cameron Harrison Private Wealth partner and Certified Financial Planner Anne-Marie Tassoni. Over the ... Read more

Is robo-advice taboo?

DARREN SNYDER

... platform to start tapping our emotional connections. In the latest Financial Standard edition journalist Karren Vergara has dedicated her cover story to the robo-advice conundrum and looks at how both ... An observation from my recent attendance at the AFA National Adviser Conference was the little reference to robo-advice. It's not that I expected robo to be mentioned at every turn, it just appeared to me as though the word had been wiped from the conference agenda. Has robo-advice reached the point where it's now one of the taboo terms among financial advisers? Perhaps this was a strategic decision. Rather than place the attention on what clever robots can do, why not reinforce how much value astute human advisers provide to the advice experience. It makes sense when the conference had a clear and deliberate focus on soft skills - or the tools human advisers need to best interact with everyday not-so financially savvy humans. Emotional interaction is the easiest touch point in the case for human-based financial advice and throughout the conference several speakers tailored their presentations to this particular soft skill - Amy Florian's keynote being one of the highlights. It's hard for robo-advisers to replicate this skill and it's one of the biggest challenges they face to gain further traction in the Australian advice market. The 'a-ha' moment will come for robo-advice when it can deliver the kind of emotional intelligence that engages humans well beyond the current screen-to-face relationship. Futurist Chris Riddell opened the conference's keynote sessions where he talked about 'the human revolution'. You can gather that as a futurist, Chris' presentation was heavily weighted to technology but his main point wasn't focused on robo-advice per se, rather he decided to pinpoint blockchain as the next big move. While robo-advice didn't appear to lead the technology discussions, cybercrime was one area that is clearly on advisers' minds. Midwinter managing director Julian Plummer performed a live hack and AUSTRAC said there are opportunities for financial advisers to value-add by providing cyber training services. But really the takeout for me would be that robo-advisers will have to dabble in blockchain to stay ahead of the game. If blockchain delivers on its promise of data security then it could well establish the trust us humans are reported to be constantly looking for in our advisers and therefore it would give robo-advisers the platform to start tapping our emotional connections. In the latest Financial Standard edition journalist Karren Vergara has dedicated her cover story to the robo-advice conundrum and looks at how both the traditional and new forms of advice might be able to work side-by-side. Association of Real Return Investment Advisers general manager Rebecca Jacques says smart robo-advisers will build in functionality where both forms of advice can co-exist. We've also published all the highlights from the AFA National Adviser Conference and profiled SQM Research owner Louis Christopher.Read more

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$450 super threshold to be scrapped ELIZABETH MCARTHUR \| 12:49PM The government has moved on its election promise to scrap the $450 threshold for superannuation.	Unpaid super tops $5bn per year: ISA JAMIE WILLIAMSON \| 12:40PM Latest analysis by Industry Super Australia shows about $5 billion in super went unpaid in the 2018-19 financial year, owed to about three million workers.

SCA slams five super funds' junk insurance KARREN VERGARA \| 12:33PM Super Consumers Australia is calling out several superannuation funds for maintaining junk insurance that embed restrictive disability tests.	LGIAsuper, Energy Super change fees ANNABELLE DICKSON The newly merged LGIAsuper and Energy Super have scrapped a weekly administration fee and will retain an annual fee as a result of scale benefits.

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In four short years, HESTA chief investment officer Sonya Sawtell-Rickson has transformed the way the industry fund invests. With $64 billion in members' money to look after, she tells Kanika Sood exactly what it takes.

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Robert Almeida Jr Global Investment Strategist MFS International Australia	John Dyall Head of Investment Research Rainmaker Information	Steve Miller Advisor GSFM	Fintan Thornton Head of Institutional Solutions Allianz Retire+ Powered by PIMCO
It's the second mouse that gets the cheese	Red pill or blue pill?	Stagflation: Livin' in the '70s	Retirement covenant prompts urgent rethink on sustainability
In brief The markets are awash in crosscurrents, so it's critical to focus on what's material and filter out market noise. Profits are a function of revenues ...	There's a new Matrix movie coming out, and I wanted to be the first person (in finance at least) to appropriate it for my own purposes. Fortunately ...	It is sometimes said that those who remember the '70s didn't really 'live' them. It is true to say that as culturally innovative as the ...	While Australia has built an impressive defined contribution system, the task of converting those contributions into sustainable retirement incomes remains ...
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