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Sterling – Extreme Makeover..the right investment decision.

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Presentation on theme: "Sterling – Extreme Makeover..the right investment decision."— Presentation transcript:

1 Sterling – Extreme Makeover..the right investment decision

2 Why Was Sterling Created ? Enable you to provide boutique professional managed direct investment portfolios to clients but without the administration or ongoing advice burden Enable you to use the same approach as that used by leading private client firms and family offices - you can compete against every other adviser and maintain your relevance to the client relationship FoFA and the “new world” of advice Potential for lower cost to client without compromising margins to Futuro or the adviser

3 Recap on Sterling An Investment Management business created to deliver investment solutions for the “new world” Launched Managed Account Service in mid 2010 and a Super Solution in late 2010 A range of Investment Options made available across the asset classes Fee structure in line with wrap Online functionality and reporting through a Sterling branded website

4 Original Sterling Investment Options Asset Class OptionsOriginal Mandated Manager Australian Equity CoreDalton Nicol Reid Australian Equity GrowthBennelong Australian Equity Smaller CompaniesPaterson’s Asset Management Diversified YieldRIMsec Property SecuritiesDalton Nicol Reid InternationalSterling Alternative AssetSterling Risk TargetedSterling TransitionSterling CashIAS

5 Cost – demand for an end to end reduction in cost Transparency – requirement to be able to know what is going on within their portfolio After tax outcome – for both income and capital Ownership – greater sense of ownership created by direct investments Sterling Responds to Retail Client Requirements

6 Where Are We At ? $55m in Sterling as at 15 October One practice with significant FUM, should be more ! Why ?

7 Feedback From Advisers Existing Managed Fund Portfolios available on wrap not catered for I don’t understand what a managed account is ? Or how to use it for my clients Don’t use direct investments for my clients No blended Investment Options has meant that advisers have had to manage asset allocation Fees are higher than wraps Does not provide the same outcome as DNR directly I pick my own stocks No different to a wrap Where do I get some education ? How do I go about transitioning clients ?

8 What Has Been Done ? Significant rework of Sterling in conjunction with IAS Extended range of Investment Options after significant effort in identifying, meeting and assessing suitable managers to manage the Diversified Options Replacement of some managers after identifying, meeting and assessing suitable managers Revised pricing - some of the Options are the sharpest in the market

9 What Has Been Done ? Revised pricing - some of the Investment Options are the sharpest in the market, particularly in the Managed Account Service Upgrade and replacement of Managed Account Service documents near complete Upgrade and replace Super documents

10 Revised Sterling Investment Options Managed Fund Investment OptionsMandated Manager Conservative PlusSterling Moderate PlusSterling Balanced PlusSterling Growth PlusSterling High Growth PlusSterling Diversified Portfolio Investment Options ConservativeJoseph Palmer and Sons Conservative PensionJoseph Palmer and Sons BalancedJoseph Palmer and Sons Balanced PensionJoseph Palmer and Sons GrowthJoseph Palmer and Sons

11 Revised Sterling Investment Options Asset Class OptionsMandated Manager Australian Equity CoreDalton Nicol Reid Australian Equity GrowthJoseph Palmer and Sons Australian Equity Smaller CompaniesPaterson’s Asset Management Diversified YieldRealm Investment House Property SecuritiesDalton Nicol Reid InternationalSterling Alternative AssetSterling Risk TargetedSterling TransitionJoseph Palmer and Sons CashIAS

12 Key Mandated Manager Changes Joseph Palmer and Sons to manage a range of Diversified Portfolios AE Growth – Bennelong replaced by Joseph Palmer and Sons Diversified FI – RIMSEC replaced by Realm Investment House (Joseph Palmer and Sons interim) Sterling to manage an extended range of Investment Options, particularly focused on managed funds

13 Sterling Managed Account Pricing Replacement of Administration Fee and Investment Management Fee with one Portfolio Management Fee approach Note: Portfolio Management Fee includes all administration, mandated manager fees and Sterling fee but excludes any MERs MERs will vary according to the Funds used in the model in which a client is invested Fees are plus 5% GST not 10% GST due to IAS GST Private Ruling

14 Sterling Managed Account Pricing Managed Fund Investment OptionsMDA Portfolio Management Fee (ex GST and external MERs) Conservative Plus0.55% Moderate Plus0.55% Balanced Plus0.55% Growth Plus0.55% High Growth Plus0.55% Diversified Portfolio Investment Options Conservative0.80% Conservative Pension0.80% Balanced0.80% Balanced Pension0.80% Growth0.80%

15 Sterling Managed Account Pricing Asset Class OptionsMDA Portfolio Management Fee (ex GST and external MERs) Australian Equity Core1.30% Australian Equity Growth0.80% Australian Equity Smaller Companies1.30% Diversified Yield1.05% Property Securities1.30% International0.55% Alternative Asset0.55% Risk Targeted0.25% Transition0.80% Cash0.25%

16 Sterling Managed Account Pricing Comparison of the Sterling Balanced Portfolio against managed funds on a wrap for a $250k client A saving of $1,000 – can you afford not to pass this onto your clients ? Or an opportunity to increase your own fee ? FeeWrapSterling Managed Account Administration (40bp) $1,000 MER (80bp)$2,000 Portfolio Management Fee $2,000 Total Fee$3,000$2,000

17 Sterling Managed Account Pricing For any listed securities, brokerage will vary depending on manager Diversified Portfolios and AE Growth will incur 4bp brokerage – lowest in the market Transaction fee for any purchase or sales is $10 So a $10,000 trade for the Diversified Portfolio or AE Growth will cost $14

18 Sterling Super Pricing Management Fee covers Investment Administration, Super Administration, Promoter, Distributor and Trustee Fee Investment Management Fee in line with the Managed Account but without the benefit of RITC discount MERs will vary according to the Funds used in the model in which a client is invested

19 Sterling Super Pricing Managed Fund Investment Options Management Fee Investment Management Fee Total Management Fees Conservative Plus0.68%0.30%0.98% Moderate Plus0.68%0.30%0.98% Balanced Plus0.68%0.30%0.98% Growth Plus0.68%0.30%0.98% High Growth Plus0.68%0.30%0.98% Diversified Portfolio Investment Options Conservative0.68%0.55%1.23% Conservative Pension0.68%0.55%1.23% Balanced0.68%0.55%1.23% Balanced Pension0.68%0.55%1.23% Growth0.68%0.55%1.23%

20 Sterling Super Pricing Asset Class OptionsManagement Fee Investment Management Fee Total Management Fees Australian Equity Core0.68%1.05%1.73% Australian Equity Growth0.68%0.55%1.23% Australian Equity Smaller Companies 0.68%1.05%1.73% Diversified Yield0.68%0.80%1.48% Property Securities0.68%1.05%1.73% International0.68%0.30%0.98% Alternative Asset0.68%0.30%0.98% Risk Targeted0.68%0.30%0.98% Transition0.68%0.55%1.23% Cash0.68%0%0.68%

21 Sterling Super Pricing Comparison of the Sterling Super Balanced Portfolio against current Super options for a $250k client A better outcome for the client FeeCurrent SuperSterling Super Management Fee$1,250$1,700 Investment Management $2,125$1,375 Total Fee$3,375$3,075

22 Sterling Super Pricing For any listed securities, brokerage will vary depending on manager Diversified Portfolios and AE Growth will incur 4bp brokerage – lowest in the market Transaction fee for any purchase or sales is $10 So a $10,000 trade for the Diversified Portfolio or AE Growth will cost $14

23 Matching Your Business Model to Sterling Adviser Value Proposition ApproachSterling Approach Strategic adviserOutsource asset allocation and investment selection Diversified Portfolio or Managed Fund Portfolio Investment adviserControl asset allocation but outsource investment selection Asset class portfolio approach Portfolio managerControl investment selection and investment selection Asset class portfolio approach

24 Matching Your Business Model to Sterling Existing Delivery Approach Sterling ApproachOutcome Managed funds on wrap Outsource asset allocation and investment selection Potentially lower cost to client Transparency Sense of ownership Improved practice efficiency Equities on wrapAsset class portfolio approach or you as portfolio manager Lower cost to client Improved practice efficiency Improved portfolio management outcomes

25 Matching Your Business Model to a Sterling Existing Delivery Approach Managed Account Business Model Outcome Off platformAsset class portfolio approach or you as portfolio manager Improved practice efficiency Improved portfolio management outcomes Broker/ client managesAsset class portfolio approach or you as portfolio manager Improved portfolio management outcomes Revenue benefit to you Retain control over client

26 Looking to Use Sterling as an Investment Solution for SMSFs Super administration integration – Class Super Flexible Portfolio design – pension version of Diversified Portfolios to maximum benefits to zero tax payers GST Private Ruling removes the requirement to register for GST Potential to reduce costs – RITC for investment management fees incurred and reduced audit costs through GS007

27 Adviser Assistance Education – managed accounts, business models and Sterling through Futuro Practice Development Managers and IAS Business Development Team Practice take on kit including Transition Guide, client flyers and adviser flyers Investment into Sterling requires advice to clients by the adviser – SoA template Transition from existing administration arrangement to Sterling - Adviser support from various sources (1800 and ) and IAS Transition team

28 Mandated Manager Interaction Monthly webinars Regular Portfolio Updates – market commentary, portfolio commentary, specific investment updates for major contributors and detractors from the portfolio Adhoc Market Updates where required – specific issues in the market Portfolio implementation interaction – where an existing portfolio is migrated into Sterling Adhoc adviser requires – within reason

29 Feedback From Advisers Existing Managed Fund Portfolios available on wrap not catered for I don’t understand what a managed account is ? Or how to use it for my clients Don’t use direct investments for my clients No blended Investment Options has meant that advisers have had to manage asset allocation Fees are higher than wraps Does not provide the same outcome as DNR directly I pick my own stocks No different to a wrap Where do I get some education ? How do I go about transitioning clients ?

30 Summary Sterling provides you with a real opportunity to change your approach to client investments and the efficiency and profitability of your practice Sterling supports any practice business model Sterling is competitively priced across both the Managed Account and Super solutions Sterling enables you to deliver a different value proposition to your clients

31 Sterling has changed Over to you !


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