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Forward Thinking Magazine : December 2010
8 Macquarie Adviser Services A model experience Citadel Wealth Solutions Citadel had been undergoing a business review and found that because of the growth it was experiencing – both in terms of clients and staff – a change in the way the organisation operated was needed. “After overlaying our growth with the industry move towards fee-for-service, we needed to make sure we could continue to deliver service at a profit to our business,” he says. “A move towards model portfolios was inevitable and the benefits to us were clear.” Jessop says the trial is working well and the inclusion of direct shares is a valuable added benefit. “Macquarie’s system is user- friendly and minimal training is needed to understand its functionality – my paraplanner was familiar with it after just one hour’s training,” he says. “I can already see how it can be used by the administrative team and how it can support better quality reviews and more effective use of a paraplanner’s time.” Jessop says there is only one area where he feels more work could be carried out and this has already been identified by Macquarie. “Some of our clients have frozen funds with pending orders to sell once they are no longer frozen,” he says. “These investments cannot currently be incorporated into the model portfolios.” Before Citadel participated in the trial, they manually customised portfolios for each client. However, their clients are not losing the personal touch as a result of model portfolios. Financial planning practice Citadel Wealth Solutions is one of the adviser firms trialling Macquarie Wrap’s new model portfolios. Citadel advisers and staff have found that making timely and efficient adjustments to clients’ portfolios is one of several benefits offered by the system. Macquarie Wrap’s model portfolios have been trialled by 10 financial planning firms around the country. At Citadel, certified financial planner Ben Jessop is overseeing the project. “Within our practice we have established a number of inhouse model portfolios, which we are incorporating into clients’ existing accounts,” Jessop says. “At the moment we are testing them with 15 to 20 clients, using a combination of Australian shares and managed funds. We are particularly interested in how the direct shares work within the platform.” Jessop says clients still have the choice as to whether they want to go into a model portfolio or not. “The model portfolios that we set up are the result of extensive research undertaken by us and dealer groups and analysts. That research produces a list of funds and direct shares that are appropriate for a number of different portfolios,” Jessop says. “We match one of the portfolios to the client and the client is invested accordingly.” If an adjustment needs to be made to the portfolio, the adjustment is made once and applies to all clients in the portfolio without our needing to let them know prior to the transaction – clients agree in the statement of advice that small adjustments will be made without notification. In the future, Jessop hopes that the system will be able to send clients an email telling them what’s about to happen. “But at this stage we can make a buy or sell order and all clients can benefit immediately,” he says. “If a substantial change was called for then we would contact them individually.” “Having individual portfolios for every client is very time consuming,” Jessop says. “If a practice has a small number of clients then this is achievable, but as we grow they become much harder to manage. With the increasing amount of compliance in the industry, it is becoming difficult to provide timely recommendations and model portfolios have assisted us to become more efficient.”