Praemium Ltd · ASX:PPS
Praemium — Non-Deal Roadshow (July 2010)
60 slides from Praemium's roadshow presentation, July 2010
Slide 1: The Future of Financial Advice: A Nuts & Bolts Solution
THE FUTURE OF FINANCIAL ADVICE A Nuts & Bolts Solution Roadshow July 2010
Slide 2: Introductory Comments
THE FUTURE OF FINANCIAL ADVICE INTRODUCTORY COMMENTS July 2010 Dr Don Stammer Chairman, Praemium Limited
Slide 3: Economies and Markets: Three Key Points
Economies and Markets: Three Key Points There‟s both cycle and trend in the economy, shares, interest rates, property prices etc Too often, people extrapolate ahead a phase in the cycle and call it a new trend: dot.com and “old economy” “the new moderation” “the L-shaped economy” “the ne
Slide 4: All Ordinaries Index
All Ordinaries Index 10,000 4,000 100 "Fear & Greed" Index - All Ordinaries - 1875 to June 2010 "AI Ord Price Index Trend Trend +180 Trond +2 SDs Trend +3SDs 1875 1880 1885 1890 1895 1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975, 1980 1985 1990 1995 2000 2005 Standa
Slide 5: Australia's Retirement System
Australia’s Retirement System We often hear about “the 3 pillars”: Aged pension (means tested; safety net) Compulsion (3%9%12%?) Tax benefits for super (have been cut back) There‟s a 4th pillar: The shift from defined benefits to defined contributions 5
Slide 6: Australia's Retirement System (continued)
Australia’s Retirement System (continued) Superannuation A good framework, but still too complex and ever changing Advice is important Increasingly, many people will need to build up some retirement savings outside their superannuation saving Also, an increasing number of people in retirem
Slide 7: Recommendations from the Cooper Review of Superannuation
Recommendations from the Cooper Review of Superannuation Commissions to end Happening in other countries too Financial planners to move to asset-based fees and advice fees MySuper and “default” funds Important that people still be encouraged to exercise choice and to take responsibility fo
Slide 8: Recommendations from the Cooper Review of Superannuation
Recommendations from the Cooper Review of Superannuation Costs Trend has been for costs to become more transparent and to be reduced Cooper‟s numbers look a bit optimistic but recommendations will add to the trend to lower costs Industry funds and retail funds Differences are narrowing alr
Slide 9: Recommendations from the Cooper Review of Superannuation
Recommendations from the Cooper Review of Superannuation SMSFs Review acknowledges SMSFs have done well No minimum size Overall, SMSFs are a big winner except for “exotic assets” “Opt-in” Retail clients and financial planners to agree on fees with annual renewal of details Framework to
Slide 10: Important Notices
Important Notices The information in this presentation is an overview and does not contain all information necessary for investment decisions. In making investment decisions investors should rely on their own examination of Praemium Limited and consult with their own legal, tax, business and/or fina
Slide 11: The Future of Financial Advice
Value Added Services The Future of Financial Advice Presented by Kenyon Prendeville July 2010
Slide 12: Agenda
Value Added Services Agenda 1. The Past 2. The Present 3. The Future
Slide 13: Kenyon Prendeville: Who We Are & What We Do
Value Added Services Kenyon Prendeville Who We Are & What We Do • Established Kenyon Prendeville in 2003 • First Independent to Market • Over $13b FUA transacted • Price Range $200k - $10m+ • 40% of transactions off market • Over 140 transactions • Financial Planning, Risk, Accounting and Mortgage
Slide 14: The Recent Past
Value Added Services The Recent Past State Recurring Revenue • Victoria 3.43 • New South Wales 3.27 • Queensland 3.19 • National Average 3.3
Slide 15: Most Used Methodology
Value Added Services Most Used Methodology • Recurring and/or Renewal Revenue 94% • E.B.I.T* * (earnings before interest & tax) 6% Excludes merges, succession arrangements and Joint Ventures.
Slide 16: Market Observations
Value Added Services Market Observations • More vendors seeking longer retention • More dealers assisting acquisitions / minority shareholdings • More Institutions seeking dealer acquisitions • Greater awareness and focus on risk • Several aggregations / mergers with listing ambitions • Significant
Slide 17: The Present
Value Added Services The Present • GFC Impacts • Revenues and Profits still not at 08 highs • Little new business • Marginal profitability
Slide 18: Choices: Grow or Go - Grow
Value Added Services CHOICES Grow or Go Grow • Diversify revenue streams • Value Chain Participation • Increase marketing • Look at pricing model - segmentation • Acquisitions
Slide 19: Choices: Grow or Go - Go
Value Added Services CHOICES Grow or Go Go • 21 businesses for sale • Succession/partnership issues • Growth Partners • Book Sales
Slide 20: The Future
Value Added Services The Future Legislative change: – Ripoll • Fiduciary Care – IFSA • No commission products 2012 – Bowen • Ban commission & Volume Overrides • Opt in/Opt Out – Cooper • My Super •No commission on risk within Super
Slide 21: The Future cont…
Value Added Services The Future cont… • Transparent fee for service • Volume overrides – 2 schools of thought • Opt in/ Opt out • More book sales • Proactive service
Slide 22: The Future cont…
Value Added Services The Future cont… • May experience more supply which could impact on price • If not volume override or substitute, EBIT pricing may become more prevalent • Fees must deliver service, better business models • More consumer trust • Challenges to all owners now.
Slide 23: Questions?
Value Added Services Questions?
Slide 24: Get ahead in the Transition to Fees
Get ahead in the Transition to Fees Presented by Sue Viskovic
Slide 25: Adviser Pricing Models
Adviser Pricing Models Research Report 2009
Slide 26: What were the outcomes?
What were the outcomes? • Better profits • Better advice for clients • More sustainable business model • More enjoyable relationships • Easier marketing
Slide 27: Key Findings
Key Findings… Number One: There is no “one-size-fits-all” pricing model.
Slide 28: Pricing is not easy!
Pricing is not easy! • Art and Science
Slide 29: Pricing is not easy!
Pricing is not easy! • Method and Instinct
Slide 30: Pricing is not easy!
Pricing is not easy! • Process and Practice
Slide 31: Adviser Sentiment
Adviser Sentiment More than half of advisers surveyed (53%) anticipate a decrease in revenue if the proposed financial services reforms take effect in 2012. Source: Investment Trends Planner Sentiment Survey June 2010
Slide 32: What are the outcomes?
What are the outcomes? ‘\m=aavice C D CREATING THE RIGHT FEE MODEL FOR YOUR FINANCIAL PLANNING BUSINESS ELIXIR
Slide 33: Advice
Advice Review your options- CREATING THE RIGHT FEE MODEL FOR YOUR FINANCIAL PLANNING BUSINESS E LIX 1 Reoansuitine
Slide 34: The future of financial advice…
The future of financial advice… “...percentage-based fees (know as assets under management fees) can only be charged on ungeared products or investment amounts.”
Slide 35: Four Fee Models that work
Four Fee Models that work 1.Flat Fees – upfront and ongoing 2.Asset-based Fees – upfront and ongoing 3.Flat fee for upfront, asset-based for ongoing 4.Flat fee for upfront and ongoing plus asset-based fee if you also manage investments for the client.
Slide 36: Advice
“> Advice CREATING THE RIGHT FEE MODEL FOR YOUR FINANCIAL PLANNING BUSINESS ELIXIR
Slide 37: What are the outcomes?
What are the outcomes? • Better profits • Better advice for clients • More sustainable business model • More enjoyable relationships • Easier marketing
Slide 38: Help is at hand
Help is at hand | -~<PRIGING » Advice CREATING THE RIGHT FEE MODEL FOR YOUR FINANCIAL PLANNING BUSINESS CREATING THE RIGHT FEE MODEL FOR YOUR FINANCIAL PLANNING BUSINESS E LIX 1I Rees
Slide 39: www.elixirconsulting.com.au
www.elixirconsulting.com.au Ph: 1300 683 680
Slide 40: Introducing SMARTwrap
Introducing SMARTwrap July 2010 Arthur Naoumidis Group CEO
Slide 41: Why Praemium?
Why Praemium? Praemium is a provider of market-leading portfolio administration services that have been designed to reduce costs, improve practice efficiency and enhance client relationships Founded in 2001, Praemium has been the fee-for- service administration provider of choice to hundreds of fi
Slide 42: Why Praemium SMARTwrap?
Why Praemium SMARTwrap? Consistent and ongoing demand for Praemium to provide a full solution for managed funds V-Wrap - Praemium‟s proprietary, state of the art online portfolio administration service: Originally non-transactional & non-custodial Now includes direct equity trading And in
Slide 43: Why Praemium SMARTwrap?
Why Praemium SMARTwrap? Regulatory reforms - Future of Financial Advice, The Cooper Review: It is likely that from 1 July 2012 payment of commissions on all investments other than insurance will be prohibited Praemium SMARTwrap is a natural evolution of V-Wrap: Designed to cater for estimate
Slide 44: Praemium SMARTwrap
Praemium SMARTwrap One technology platform, offering: • Comprehensive consolidated investment & tax reporting •Online trading for both managed funds and direct equities • White-labelling Superannuation & V-Wrap Investments Pension • ASX listed securities • Superannuation/ • Over 650 wholesale • Priv
Slide 45: Why Praemium SMARTwrap?
Why Praemium SMARTwrap? Praemium SMARTwrap can help advisers to transition their business to fee-for-service: Allows rebate to be received through pricing model until July 2012 Ability to „switch off‟ the rebate when required Certainty on the underlying technology platform Praemium has bee
Slide 46: SMARTwrap: Supporting transition to fee for service
Praemium SMARTwrap: Supporting transition to fee for service Praemium SMARTwrap will be a low cost wrap solution „Factory Gate‟ price of 32bps tiering down Supports transition to fee for service Full PDS price will be 82 bps, making 50bps Adviser commission available on top of base price to
Slide 47: SMARTwrap Investment Account Fee
Praemium SMARTwrap Investment Account Fee *1 Investment Range Praemium SMARTwrap Investments Fee (Factory Gate pricing ex GST) $0 $250,000 0.32% $250,001 $500,000 0.22% $500,001 $750,000 0.14% $750,001 $1,000,000 0.11% $1,00,001 $2,000,000 0.05% Over $2,000,001 $10,000,000 Capped at $2475 Note 1 - (
Slide 48: Pricing Scenario 1
Pricing Scenario 1 *1 Portfolio Value $250,000 Managed Funds = 100% ($250,000) Managed Fund Value Praemium SMARTwrap % per annum (Factory Gate pricing ex GST) Investments Fee ( p.a. ex GST) $250,000 $800 0.32% Direct Equity Value V-Wrap Fee (pa) % per annum 0 0 0 Total Portfolio Total Fee (pa) %
Slide 49: Pricing Scenario 2
*1 Pricing Scenario 2 Portfolio Value $500,000 Managed Funds = 60% ($300,000) Direct Equities = 40% ($200,000) Managed Fund Value Praemium SMARTwrap % per annum (Factory Gate pricing p.a. ex Investments Fee ( p.a. ex GST) GST) $300,000 $910 0.30% Direct Equity Value V-Wrap Fee (pa) % per annum
Slide 50: Pricing Scenario 3
*1 Pricing Scenario 3 Portfolio Value $550,000 Managed Funds = 40% ($150,000) Direct Equities = 60% ($400,000) Managed Fund Value Praemium SMARTwrap % per annum (Factory Gate pricing p.a. ex Investments Fee ( p.a. ex GST) GST) $150,000 $480 0.32% Direct Equity Value V-Wrap Fee (pa) % per annum
Slide 51: SMARTwrap: Investment choice
Praemium SMARTwrap: Investment choice Praemium SMARTwrap offers a comprehensive list of investment options*: Over 650 wholesale Managed Funds Cash held with individual CMA All ASX-listed securities on V-Wrap Record other personal assets on V-Wrap Integrates with Praemium-powered SMAs *Su
Slide 52: SMARTwrap: Administrative integration
Praemium SMARTwrap: Administrative integration Praemium SMARTwrap can offer seamless integration with accountants: Accountant-strength tax reports that can be utilised by affiliate accountants Fully functional BGL Simple Fund/Desktop Super interfaces Full discretion on disposal method for se
Slide 53: SMARTwrap: Future proof
Praemium SMARTwrap: Future proof Praemium SMARTwrap can assist advisers to future proof their business & service offering: Competitive fee structure Provides the ability to substitute part of client cost into strategic advice fees Provides for greater control and capture of advice fees Add
Slide 54: Example: Approved Managed Funds
Example: Approved Managed Funds 54
Slide 55: SMARTwrap: Summary or What to do next slide
Praemium SMARTWrap: Summary or What to do next slide (Arthur, what would be a compelling summaryExample: to overwhelm the crowd? Maybe something along the lines of Fiduciary Duty: “Sign up or go to jail”) Managed Funds Trading 55
Slide 56: Example: Managed Funds Trading
Example: Managed Funds Trading 56
Slide 57: Example: Managed Funds Trading
Example: Managed Funds Trading 57
Slide 58: Example: Order Management
Example: Order Management 58
Slide 59: SMARTwrap: Start the transition today
Praemium SMARTwrap: Everyone will be fee-based one day SMARTwrap support current commission based advisers SMARTwrap supports Fee based advisers SMARTwrap supports the transition Start the transition today One step at a time 59
Slide 60: Important Notices
Important Notices This document describes a financial product that Praemium Australia Pty Ltd ACN 117 611 784 AFSL 297956 intends to promote following the issue of a disclosure document (PDS). As at the date of this presentation that product is not available for sale or investment and nothing in thi