Happy Planners How to make sure your advisers

Happy Planners How to make sure your advisers stick around June 2011 Prepared by Coredata

About Core. Data § Core. Data is an Australian based market intelligence and research consultancy specialising in financial services. § The group provides clients with market intelligence, guidance on strategic positioning, methods for developing new business, advice on operational marketing and other consulting services. § We pride ourselves on our ability to: ú ú ú identify market trends at the earliest opportunity formulate insightful quantifiable research bring deep market knowledge to research and strategy development blend experienced financial services, research, marketing and media professionals bring perspective to existing market conditions and evolving trends. Prepared by Coredata 2

Where Does Core. Data Operate? Prepared by Coredata

Sampling Prepared by Coredata

What We’ll Talk About Today • Background and methodology: Licensee Research • Key Insights: 1. Shape of the industry 2. What advisers want 3. And the winner is… • Wrap Up/Q&A Prepared by Coredata 5

About the Licensee Research Core. Data’s annual licensee study aims to deliver financial planning dealer groups key insight into the evolving needs and demands of financial advisers and outlines the specific triggers influencing them to join/leave a given licensee. It assesses the ability of dealer groups to attract and retain quality financial advisers in the Australian financial services market. The research provides insight into the shifting demands of financial advisers and their overall satisfaction with their licensee across a broad range of areas. Prepared by Coredata 6

Research Context methodology Online survey sent to Core. Data’s adviser database (1, 558 respondents). sample segmentation period Prepared by Coredata Total sample: 966 financial advisers & 592 practice principals By licensee versus the industry and by adviser behavioural profile. Year-on-year comparisons provide a view as to the trends in the market and how the industry is shifting. March 2011 7

STAR Index - Internal Quantitative adviser ratings within the following subsets Support Depth and quality of compliance support Extent of practice management support We will also separately assess value of marketing and technical support Trade Mark Brand Adviser opinion towards operating under their dealer brand Adviser perception towards each licensee brand Weighting given to branding importance by advisers Autonomy Range of available investment and administration products Adviser opinion on levels of bureaucracy in the dealer group Perceived independence of dealer group Revenues Existing income structure of licensee (benchmarked against broader industry) Satisfaction levels of planners with remuneration Prepared by Coredata 8

STAR Index - External Quantitative external adviser ratings within the following subsets Support Perceptions of depth and quality of compliance, practice management, marketing and all types of support of dealers Trade Mark Brand External adviser opinion on pros/cons of operating under each licensee How important is branding per se to external advisers Autonomy Industry view as to the range of investment products available Adviser perceptions as to the levels of bureaucracy in the dealer External opinions on the independence of the licensee Revenues Prepared by Coredata Comparison of all income structures of industry advisers Comparison of the attitudes of each licensee’s advisers towards remuneration levels vs the broader industry 9

Key Insights 1. Shape of the industry 2. What advisers want 3. And the winner is… Prepared by Coredata 10

Commission Still Relied Upon By Many Which of the following are a part of the remuneration model you operate under? Prepared by Coredata How do your clients pay you for the financial advice they receive? 11

Things Will Have To Change… Approximately how many clients do you have? • On average advisers oversee 300 clients, a reduction on 2010 (360) but still too many to service in an Opt-in environment. Prepared by Coredata What percentage of these would you personally meet with at least once a year? • On average, advisers meet with just three in five clients in person at least annually (58. 3%). 12

The Success Of Diversified Businesses Which of the following advisory services do you offer clients? Have you experienced profit growth in your business in the past 12 months? By Services offered cluster • Those businesses offering the four key pillars plus either SMSFs, direct equities or direct property are more likely to have experienced profit growth both in 2010 and 2011. Prepared by Coredata 13

Profit Growth Up, But Loyalty Down Profit growth & industry sentiment towards their licensee • Profit growth is on a strong upwards trend, yet loyalty at an industry level is declining, suggesting that advisers’ focus has shifted beyond survival mode and they are now focusing on their future. Prepared by Coredata 14

An Industry Divided Prepared by Coredata 15

Almost One Third Are Disengaged Industry Fee driven generalists Salaried support seeker Stretched risk specialist Unloved disengaged Prepared by Coredata 26. 8% 35. 3% 8. 3% 29. 6% 16

State Representation By Segment In which state are you based? By Segments • Salaried support seekers are most prevalent in NSW, QLD and SA. • The highest proportion of Unloved disengaged advisers are in TAS (34. 6%) and NSW (33. 5%). Prepared by Coredata 17

Satisfaction & Profit Growth Correlated • Advisers who experienced profit growth are four times as likely to be satisfied with their licensee than those who did not experience profit growth (80. 3% compared to 19. 7%). Overall satisfaction By Have you experienced profit growth in your business in the past 12 months? • In saying that, 58. 6% of those advisers who experienced profit growth in the last 12 months remain dissatisfied with their licensee. Prepared by Coredata 18

Risk A Boon For Advisers Which of the following advisory services do you offer clients? By Have you experienced profit growth in your business in the past 12 months? • Those advisers offering insurance and risk protection are more likely to have experienced profit growth than those who are not (75. 8% vs. 61. 9%). Likewise, advisers offering agribusiness investment, direct equities, direct property investment and SMSFs are slightly more likely to have reported a growth in profits in the last 12 months. Prepared by Coredata 19

Key Insights 1. Shape of the industry 2. What advisers want 3. And the winner is… Prepared by Coredata 20

Value For Money & Flexibility Valued “Some of the new licensees that are positioning themselves now with the ‘pick and poke’ service menu where you tick what you want on the shopping list and that’s what you pay for… I think that will gather momentum, particularly in the new environment we’re moving to because everybody’s at a different stage in their career and everyone requires something different. Where the licensees have an offering that allows you, depending on which stage you’re at within your business, to choose the services you want and pay for those, that’s a winning structure” Male, adviser for 30 years, Futuro Financial Services Prepared by Coredata “It’s value for money. So it’s essentially looking at it like a client. ‘Am I getting value for money for what I want? ’ And also, can you support MDAs? If there’s a check list of I want this, this and it adds up to a fee that’s reasonable – and they’re not going to be ramming stuff down your throat that challenges your independence. ” Male, adviser for 22 years, Morgan Stanley Smith Barney “It comes back to things like, to me, the recommended list. What are the available investments on the recommended list? What is the policy for recommending outside the recommended list? What’s their policy on direct equities? Can we buy some direct equities? That to me is important, the flexibility around that. ” Male, adviser for 19 years, Financial Wisdom 21

The Most Critical Licensee Services Which of the following licensee support services have you used in the last 12 months? Prepared by Coredata In terms of importance, please allocate percentages to the following licensee attributes. 22

Product Independence A Key Trigger • Product independence/choice is the number one driver for joining a licensee (49. 9%), just ahead of compliance support (44. 9%), remuneration (43. 2%) and technical services (42. 7%). Please tick any of the following factors that if good/bad would make you more inclined to join/leave a licensee? • However compliance support & remuneration appear to be ‘hygiene factors’; advisers are more likely to leave a licensee if compliance is poor, than they are to join if it’s strong. Prepared by Coredata 23

Driver Analysis (STAR Index) Prepared by Coredata 24

Top 15 Attributes Prepared by Coredata 25

Attribute Ratings Prepared by Coredata 26

Attribute Ratings Prepared by Coredata 27

Key Insights 1. Shape of the industry 2. What advisers want 3. And the winner is… Prepared by Coredata 28

Internal STAR: Commonwealth FP Overall STAR Internal Ratings Prepared by Coredata 29

External STAR: ipac EP & ipac FP Overall STAR External Ratings Prepared by Coredata 30

CFP & ipac EP Top Overall Satisfaction. . . Overall, how satisfied are you with your licensee? Prepared by Coredata 31

. . . And Have Highest Advocacy Levels How likely are you to recommend your licensee? Prepared by Coredata 32

Switching Intent Increases Over Time How likely are you to switch to a new licensee within the next 12 months? How likely are you to switch to a new licensee within the next 5 years? Prepared by Coredata 33

Having Own AFSL Trumps All Offers • When asked to rank the ‘top five’ dealer groups to work for, having their own ASFL was deemed the most attractive option. Please rank who you believe are the top 5 dealers to work for, where 1 indicates the top dealer to work for. • There was little differentiation among the licensees with Charter Financial Planning placing second by a small margin (3. 4). AXA Financial Planning, ipac Equity Partners, Shadforth and CFP also rated highly, all with a score of 3. 3 out of 5. Prepared by Coredata 34

Charter FP ‘Best Licensee’ In Industry Overall, which licensee do you perceive to be the best in the industry? • When asked to name the licensee they perceive to be the best in the industry (excluding their own), again having their own AFSL ranked first, with one quarter of advisers considering this option to exceed the offer of any licensee in the market (24. 4%). • Charter FP was the highest ranked licensee with 8. 0% of adviser votes, followed by Macquarie Private Wealth (7. 2%), AXA FP (6. 1%) and AMP FP (4. 8%). Prepared by Coredata 35

Core. Data Licensee Of The Year 2011 Prepared by Coredata 36

In Summary…. Industry at a tipping point. . Crunch time for licensees Advisers want flexibility & value; education & tech services increasingly important CFP trumps competition in 2011; Charter FP & ipac groups poised for growth Prepared by Coredata 37

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