5 keys to positioning your practice for sale. There are a number of elements to consider in successfully setting up and positioning your financial planning business for sale, according to Barry Lambert, executive chairman and founder of Count Financial. In a recent No More Practice blog, Lambert outlined five steps for selling your practice – the first of which was building a good quality business. "Perhaps most important, you have to be a good quality business that is uniquely positioned if you’re going to be attractive to a buyer," he said. "Second, you need mechanisms in place to attract new clients to the table and retain them. Third, you need systems and processes in place to run an efficient business. Fourth, you have to be able to attract quality staff to help build and sustain your business. Fifth, you don't present any risk to a potential buyer. In other words, you know what you’re doing and you provide quality advice."
Advisers demonstrate mature portfolio management. Financial advisers are adopting a mature and proactive approach to portfolio management to assist their clients in minimising investment risk. Recent Wealthtrac research found that 85 per cent of advisers have made changes to their clients' asset allocation in the past 12 months, and almost half of a client’s portfolio now focused on capital preservation, almost a quarter on income and growth strategies and just 5 per cent on cash. While advisers acknowledged the importance of preserving capital, 70 per cent said they are prepared to accept some level of risk to generate strong returns – despite 55 per cent of clients remaining "deeply scarred and bearish" following the global financial crisis.
FoFA: financial planner or financial adviser? The Future of Financial Advice (FOFA) legislation recently passed through the Senate, but it remains unclear as to whether or not the terms "financial planner" and/or "financial adviser" will become part of the law. Minister for Financial Services and Superannuation Bill Shorten, said the Government is "consulting on whether the term financial planner or adviser should be defined in the Corporations Act". Shadow Minister for Financial Services and Superannuation Senator Mathias Cormann, said Labor arrogantly shut down debate in the Senate and rammed through its flawed Future of Financial Advice legislation without allowing any debate at all on 63 separate amendments. He noted the important regulations that underpin the FOFA legislation have yet to be finalised.
Driving SMSF audit quality. The federal government's new registration process for self-managed superannuation funds (SMSF) auditors will assist in raising the bar in SMSF audit quality in Australia, according to the Institute of Chartered Accountants in Australia. Details of the SMSF auditor registration process, commencing 31 January 2013, have been announced along with the removal of the accountants' exemption policy. A registration process that facilitates and promotes quality audits being carried out by competent auditors will be in the best interests of the SMSF industry, according to the institute's head of superannuation, Liz Westover. However, she said regulators need to be mindful in further developing details of the registration process, which includes a competency test for new and less experienced auditors, to ensure policy objectives are being met.
Accountants get green light on advice. The introduction of a new conditional licensing regime for professional accountants under the Future of Financial Advice legislation represents a significant win for Australian consumers, according to CPA Australia and the Institute of Chartered Accountants in Australia. Under the changes, they said Australians will, for the first time, have access to non-product strategic financial advice from their professional accountants on a broad range of investment classes. "This final element of the FoFA reforms reflects the prominent role professional accountants play in the provision of financial advice, and will go a long way towards achieving the objectives of broadening access to financial advice across the community," said CPA Australia CEO, Alex Malley.
Govt criticised over accountants' exemption delay. The Federal Government wants to avoid scrutiny of its Future of Financial Advice legislation and has dragged its heels on the accountants’ exemption, according to Shadow Minister for Financial Services and Superannuation, Senator Mathias Cormann. In February, 2012 Minister for Financial Services and Superannuation Bill Shorten said he would make an announcement on the existing accountants' exemption "in the next two weeks". Senator Cormann also noted the recent introduction of legislation to implement the Investment Manager Regime, 18 months after it was actually announced. "The Coalition will carefully examine the regulations to ensure that the new licensing requirements would not impose unnecessary additional red tape and costs for small business professional accountants and their clients," said Senator Cormann.
Institutional investors looking to alternatives. Institutional investors are demonstrating significant demand for alternatives to support investment objectives such as diversification and alpha generation, and these expanding allocations are spurring greater interest in customised, investor-driven implementation approaches. Recent Russell Investments research found that attitudes about alternatives were in flux as institutions were still adjusting to the repercussions of the global financial crisis across their entire portfolios. Locally, 85 per cent of Asia Pacific investors (ex-Japan) say alternatives are meeting their expectations for the role they play in portfolios, compared to just 70 per cent globally. Compared to alternative investments available elsewhere around the globe, Asia-Pacific alternatives also appear to be less sensitive to low-return risks or global economic/geopolitical risks than are traditional investments such as global shares and bonds.
Global funds focused on defensive blue chips. Many global fund managers are worried the market recovery will run out of steam and have steered their funds toward defensive blue-chip companies, many with a large allocation to Asian markets, according to Standard & Poor’s. In its 2011–2012 global equities sector review, S&P noted there was a high degree of disparity in performance among major share markets in 2011, with all major equity markets losing value. Emerging markets experienced larger losses than most developed markets over the course of the year, which was heavily influenced by commodity price trends and the outlook for China. With the Australian dollar opening and closing the year at around the US$1.02 level, there was minimal difference in returns between hedged and unhedged MSCI World Indices.