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Forward Thinking Magazine : August 2010
34 The investment strategy and asset allocation of a portfolio is at the heart of every financial plan and the ability to customise the asset allocation to suit the specific needs of each client is a key value add for advisers... Macquarie Adviser Services “Planners want to be able to adapt to the market conditions much more quickly,” McCarthy says. “During the GFC, they couldn’t get their clients out of the market fast enough. When you have to contact each client individually to get approval for any transaction and the market is falling quickly, it makes it very difficult to take the action you want.” Steve Asplin manages Macquarie’s Wrap product management team and agrees advisers are impatient for meaningful business efficiency tools. “They have to meet strict compliance requirements and don’t want to have to do hours of transactions,” he says. To assist, Macquarie is launching flexible model portfolios, moving towards the “next generation” Wrap platform. The key difference is that advisers will still be able to set the asset allocation, but they will also have tools to individually manage their clients’ requirements. Asplin says that many of the tools that exist today are able to manage the core assets of a portfolio, but not any additional ones. He says a hybrid model is needed that can include not only managed funds, but also listed securities. “Investment in exchange traded funds, for example, has grown significantly during the past 12 months, so we want to be able to offer tools that can account for a client’s exposure to these as well as to managed investments,” he says. In fact, research shows exchange traded funds are touted as the next big thing for the Australian market. Since their launch in 2001, by June 2009 the category had grown to some $2 billion. Advisers need to be able to manage assets such as these in a model portfolio if they want to offer a value-added service to their clients. The same applies to shares. Of the 41 per cent of Australians that have invested in Australian shares, more than six in 10 have done so exclusively through direct investment rather than through a financial adviser. A key requirement of a model portfolio should be the ability to buy and sell shares while rebalancing it according to a client’s needs. “Our new offering includes flexible features and a processing engine that rebalances the portfolio while allowing the adviser to see how the model fits into a client’s overall portfolio,” Asplin says. For example, a client may work for an organisation where they are not allowed to buy or sell certain shares. In this instance, the tool can automatically exclude a single asset from that client’s portfolio and include a note to advisers about why the action was taken. The ability to be able to place multiple transactions in one hit is another feature likely to appeal to advisers. “For example, if advisers want to sell WES and buy WOW for a certain group of clients, they can do this in one transaction,” Asplin says. “Undertaking one transaction instead of many individual transactions saves a lot of time.” McCarthy says planners tell her the issues that need to be addressed are around efficiency and driving scale in the back office so they can deliver a more personalised service. “One way of doing this is to give them the tools to provide a more holistic portfolio management service to their clients, but without the need to charge higher fees.” diversify