Date 10/09/2015 September 2015 Technical Day Licensee, Paraplanning and Website Update

What are TAE’s core obligations as your Licensee?  Risk Management  Business Continuity  Policies & Procedures  Incident Management  Professional Development  Tech Days  Ongoing CPD/E Management  Commission Management  Commpay The Advice Exchange Pty Ltd

What are TAE’s core obligations as your Licensee?  Compliance / Corporate Governance  Audits  Industry Updates  Guidance  Technology Management  IRESS / Xplan  Technical Guidance / Resources  TAE Technical Manager  Our alignment with:  SMSF Association  Mastec  First Tech  Dalton Nicol Reid  Pimco Tech Desk  CFS The Advice Exchange Pty Ltd

Paraplanning Statements of Advice On the whole quality is very good across the dealership Common concerns  Replacement product tables Cash into other investments Retail super funds to SMSF  Insurance replacement – Best Practice  SMSF SoAs – Covered in detail below  Asset Allocation – Best Practice  Alternative Strategies The Advice Exchange Pty Ltd

Paraplanning Example – Cash into Other Investments The Advice Exchange Pty Ltd ExistingProposed Product nameCashInvestments within Super/SMSF Current value$X$0 Proposed value$X Ongoing fees or costs (ME)$0.00$XX Administration fees$0.00$XX Membership/Trustee fees$0.00$XX Ongoing adviser service feeNil$XX TOTAL ANNUAL COSTS$X What are the exit/withdrawal fees? Nil What is/was the initial cost for the product? Nil Brokerage costs for Direct Shares, Hybrids and ETFs Reason the existing product is no longer appropriate.  Offers Growth and Income potential to build wealth for retirement which is not available within cash investments.  Offers ability to take advantage of Franking credits as majority of funds will be invested on the nil tax pension environment How the new product meets your needs and objectives. What are the consequences for changing products of which you should be aware?  Loss of a known rate of return.  Loss of future interest income.  Loss of capital stability.  Loss of immediate access to funds.  Loss of government capital guarantee.  An increase in ongoing costs.  A potential increase in investment volatility.  Generally any money held within superannuation is not accessible until retirement on or after reaching preservation age, (however as you will be commencing a pension, you will be able to access funds from super if needed).

Paraplanning Example – Retail super funds to SMSF The Advice Exchange Pty Ltd Existing Proposed Product nameABC Accumulation account BT Wrap Accumulation account Self-Managed Super Fund Current value$X $0 Investment Options XXX Proposed value$0 $1,500,000 Ongoing fees or costs (MER)$X (X%) Administration & Accounting fees$X (X%) Membership/Trustee fees$X flat fee n/a Ongoing adviser service fee$X $X (X%) TOTAL ANNUAL COSTS$X What are the exit/withdrawal fees?Nil What is/was the initial cost for the product? Unknown $X Reason the existing product is no longer appropriate. Currently you have two super funds and would like these consolidated, by having one fund you simplify the management of your super. Offers the control, flexibility you seek as the SMSF provides access to a wide range of investment choices, ranging from term deposits, direct shares, property, to Individually Managed Accounts. Offers a cost savings of approximately $Xpa. How the new product meets your needs and objectives. What are the benefits that you will lose temporarily? There will be a period of time when you will receive no return whilst the account balances are transferred from your existing accounts and new investments are placed. Your proposed asset allocation will be more aggressive than your current asset allocation, however it will be closer in line with your risk profile and designed to counter the ongoing effects of inflation on your superannuation balance. This will lead to increased volatility within your fund however may also lead to higher long may term growth. What are the consequences for changing products of which you should be aware? Buy/Sell costs. Establishment costs of SMSF. Increased responsibility albeit XXX will provide ongoing assistance. A SMSF is not protected against fraud or theft under Part 23 of the Superannuation Industry (Supervision) Act 1999 (SIS Act) Act. Potential loss of Anti-Detriment payments

Paraplanning Insurance replacement – Best Practice  Always include reasoning for : Stepped vs Level Agreed Value vs Indemnity for IP Waiting period when over 30 days for IP Benefit period when under age 65 for IP Cover amounts Any vs Own for TPD  Add Note - An overlap in premiums may accrue as the existing policy will not be cancelled until the new policy is in force. Please budget for at least one month.  When replacing and increasing insurance cover, provide a quote of what it would have cost under the existing insurer, so client can compare apples with apples.  X Plan tip – X plan offers a good comparison of benefits report, which can be attached to the SOA outlining the features of each policy. Great comparison tool. The Advice Exchange Pty Ltd

Paraplanning The Advice Exchange Pty Ltd

Paraplanning SMSF SOAs Best Practice - 2 separate SOA’s - One addressed to the individuals covering Super rollovers etc. One addressed to the Trustees of the SMSF covering establishment and investment of funds At the very least - have clearly defined scope outlining specific advice to individual and trustees Investment Strategy template on TAE website as a starting point Cannot provide advice on establishment of SMSF if not qualified to do so The Advice Exchange Pty Ltd

Paraplanning Asset Allocation Any variance of +/-10% from the client’s risk profile must include an explanation. Alternative Strategies Best Practice – Include at least 2 strategies that were considered but discounted in the SOA At very least – include a note on client file The Advice Exchange Pty Ltd

Paraplanning Records of Advice  Can be ed to the clients – no need to provide hard copy  Instructions can be received back via as long as ETA is signed and on file  ETA template on TAE website and added as part of CCQ  X-plan Tip – RoAs can be added as an template with simple coding so it is personalised and sent to multiple clients at once. Automatically saves as a note against each client  Especially useful for Corporate Action ROA’s The Advice Exchange Pty Ltd

Paraplanning Execution Only  New template on TAE website  Point to note : If you receive an ongoing advice fee in relation to the product you are placing, an EO document cannot be used as you will be providing advice in relation to the product at some point. Hence and SOA/ROA needs to be completed. Time Critical  New template on TAE website  Usually used for insurance applications  An SOA needs to be provided within 5 business days The Advice Exchange Pty Ltd

Compliance  Old Stationery – please ensure your templates for SOA’s, letters, CCQ, FSG etc have the correct TAE registered address – many are still showing old Bowen Cresent address.  Policies  All TAE policies have been reviewed and are now available on website. We will also be releasing one per fortnight via Rocketseed.  APL  ETF’s and DNR MDA recently added  CCQ/ETA  Has been updated to incorporate an authority to transact electronically  Only requires 1 signature to sign off CCQ/TFN/Privacy and electronic authority The Advice Exchange Pty Ltd

What’s new on the TAE website…  Just about everything has been reviewed and updated:  APL  SOA/ROA templates  SELCOM meeting minutes We would like the TAE website to be your one stop shop for everything you need – please let us know if there is something you’d like added. The Advice Exchange Pty Ltd