1. Self Managed Superannuation – Value Proposition PRESENTED BY Joncarl La Rosa | Best Practice Mgr

2. The facts Total number of SMSF's = 440,000 Total number of SMSF members = 840,000 Net new funds established in 12 months to June 2010 = 26,000 Total FUM in SMSF's = $420B SMSF Asset allocation = $112B (27%) in cash, $131B (31%) in listed shares, $64B (15%) in Australian direct property Location = 31% of SMSF's are located in NSW Member's ages = 80% of SMSF members are aged 45 and above Member's income = 16% of SMSF members earn between $100,000 to $500,000 pa

3. What’s in it for them? “A selfish perspective” Accountants – promotes recurring tax based advice Real estate agents – promotes direct property sales. GI Brokers – promotes strata, landlord and SME bus. insurance. Mortgage Brokers – promotes related party loans

4. SMSF’s as a value driver for clients Control Structure of portfolio Timing of purchases and sales Greater discretion for estate planning purposes than public offer funds. Flexibility Greater range of investment opportunities unique to SMSFs (e.g. commercial property) Ability to transfer some personal investments Tax Savings Concessionally taxed Investments can be held into pension phase and sold CGT free. Ability to structure related party loans to grow the fund and maximise personal deductions. Cost Most fees and charges are fixed costs which means the real cost of ownership falls as asset values rise.

5. In both cases, the Value Proposition needs to focus on the psychological and emotive drivers linked to outcomes that the target audience will have. 4 Two levels to consider  Broad positioning statement which articulates what you do and how your target audience will benefit in their relationship with you. It is not a simple slogan – the business must believe and deliver on this!  The individual drivers which are specific and personal to your target audience & can assist in drawing out what is important to them as part of the ongoing relationship. Value Proposition – What is it? The positioning statement on its own wont get the prospective alliance partner to start referring Individual Drivers Addressed + Trust = Success

6. 5 CVP – Is trust an issue for you? What could be the causes for the loss in trust? – Investment losses – Lack of contact – Lack of accountability Charles Green (US Based Consultant) built a formula for trust: Trust = C + R + I / S C = Credibility - your competence, track record and ability to instil confidence R = Reliability - do you deliver what you say you will? Service and advice I = Intimacy - how well do you engage with them on a personal level? S = Self orientation - to what extent are you putting their interests before yours?

7. What is keeping you awake at night? Cater to FoFA reforms Profitability Working harder for every dollar Increased competition Must increase automation and efficiency Find new clients and add value to existing clients Revenue squeeze What will my business be worth?

8. What about prospective alliance partners? Keeping up with regulators & legislation Profitability Working harder for every dollar Increased competition Must increase automation and efficiency Find new clients and add value to existing clients Revenue squeeze

9. How will you pitch your value? #1 - We place the interest of our clients first. We specialise in financial advice and collaborate with our clients and their professional partners. Our goal is to provide clients with good outcomes. Peace of mind Does your client have enough to meet their retirement and legacy goals? What happens if the client’s SMSF is non- compliant? How will your clients meet their living needs in the event of injury, illness or death? What is the risk to your business in getting this wrong? Thought partner Who can you talk to about technical queries relating to legislation, technical strategy and product solutions? Who can you talk to about the challenges to your business and access practice management tools and processes? Growth partner Are we trying to be all things to all people? Can we focus on our core strengths and collaborate in a cross referral approach to provide clients with improved services, grow our business and protect against competitors? Can you leverage from an aligned specialist? Can you diversify your income source?

10. SMSF’s – We all have a role 9 Financial PlannerAccountantAdministrator SMSF suitability against alternatives - Wrap, retail fund, corporate super Investment strategy Strategic advice to trustee and members - estate planning implications, insurance, contributions Ongoing review of investment strategy and strategic advice Maintain contribution records SMSF suitability Obtain tax file number and ABN Advice on tax deductibility of contributions Prepare income stream docs Advise on SMSF taxation considerations Advise on fund compliance requirements complete and lodge trustee declaration Prepare SMSF annual return Where paying lump sum payments or income streams, register for PAYG withholding, obtain TRN, issue PAYG payment summary forms Maintain contributions records Maintain fund records and compliance paperwork Draft or amend trust deeds Prepare income stream documents when required Maintain SMSF transaction/contribution records Prepare SMSF annual return Prepare member statements Maintain fund records and compliance paperwork

11. SMSF – Accountants can outsource service components All tax and administration kept ’in house’ ADVANTAGES Full control DISADVANTAGES Not necessarily the most cost effective option All tax and administration kept ’in house’ ADVANTAGES Full control DISADVANTAGES Not necessarily the most cost effective option All Some None You determine which components of tax and admin you want to keep ‘in house’. ADVANTAGES Client continues to deal with your practice Potential to maximise margin and/or refocus on areas of preference Peace of mind that all documents compliant with regulators DISADVANTAGES Some control handed to third party service provider You determine which components of tax and admin you want to keep ‘in house’. ADVANTAGES Client continues to deal with your practice Potential to maximise margin and/or refocus on areas of preference Peace of mind that all documents compliant with regulators DISADVANTAGES Some control handed to third party service provider Outsource all tax and administration to RI who will leverage SMSF specialist admin ADVANTAGES Redirect time and money to other service components knowing clients looked after and practice protected from competitors Peace of mind that all documents compliant with regulators Commercial arrangement can be agreed DISADVANTAGES All control regarding this aspect of your client’s financial position handed over Outsource all tax and administration to RI who will leverage SMSF specialist admin ADVANTAGES Redirect time and money to other service components knowing clients looked after and practice protected from competitors Peace of mind that all documents compliant with regulators Commercial arrangement can be agreed DISADVANTAGES All control regarding this aspect of your client’s financial position handed over

12. 11 Financial Adviser Investment Advice Direct Share advice Managed Funds Ongoing Investment and Strategic Advice – trustee and member level Lawyer / Accountant / Super specialists Trust deed & other document services Annual accounts Audit Tax return preparation Outsourcing - Our Service package solutions Option 1 – Limited service offer: We work with preferred professional advisers Fee range: $X - $X depending on number of members & complexity of personal circumstances. Investment strategy Investment selection Administration Compliance

13. 12 Investment Advice Direct Share advice Managed Funds Ongoing Investment and Strategic Advice – trustee and member level Trust deed & other document services Annual accounts Audit Tax return preparation Outsourcing - Our Service package solutions Option 2: Comprehensive service offer Fee range: $X - $X depending on number of members & complexity of personal circumstances. Investment strategy Investment selection Administration Compliance

14. 13 Perceived imbalance between the benefits derived from the parties within the relationship No clarity about how the arrangement will work in operation Perceived risks a centre of influence partner may have about the relationship Client ownership No incentives in place Lack of understanding The referees are not educated as to how to recognise the client’s needs Lack of a structured marketing plan Why Alliances Don’t Work

15. 1. What does your service offer look like? –What do you deliver? –What will be outsourced? –How is this packaged? (i.e. one stop shop where middle man margin is added vs. clearly defined referral – there is no right or wrong) 2. Identify individual practice charge-out rates (incorporating margin). 3. Once you determine what services you will deliver, identify who performs this, and how long does it take? 4. Ensure that the fixed and variable components of the SMSF process are priced separately. This allows you to build a fee range depending on the complexity of the clients individual circumstances. Pricing the service

16. Targeting SMSF Client Presentation Alliance Presentation (two parts) Super Concepts Cost Comparator COS calculator Advice SMSF PFP SMSF Checklist SMSF trustee minutes SMSF Investment strategy SMSF SOA template SMSF Snapshot template Refer to SMSF Policy guide Refer to Direct Share Policy guide. SMSF tools for you