Working with an Invest Blue Financial Planner is the perfect partnership to ensure that you have the understanding, time and confidence to build wealth and achieve your short, medium & long term goals and objectives. We focus on three key areas when developing your financial plan, built around your goals, objectives and vision of your best possible life: strategy, structure and product. Let us explore these areas a little further now.

Strategy

What is the right strategy for you to maximise your chance of achieving your goals?

Once we understand clearly your goals and vision for your best possible life, we will work with you to define a strategy that holistically maximises your chance of achieving this. Our preference is to provide a solution focusing on ALL aspects of your financial situation so that we can have confidence we can assist you to live your best possible life.

As part of this we consider strategies to maximise outcomes in relation to your personal needs from the following key advice areas, asking a range of questions:

• Budgeting and Cashflow Management: How do we maximise your free cash flow to be able to direct to your short, medium- and long-term savings goals?
• Debt Management: How do we help you manage your debt in the most effective way possible to meet your debt, wealth creation and other objectives?
• Wealth Protection: What is the right amount of Wealth protection (either through Insurance, Self-Insurance or savings) to ensure the achievement of your goals and objectives aren’t jeopardised in the event of the unforeseen?
• Wealth Management (pre-retirement): How do we build and protect your wealth in the most tax-effective manner during your working life to ensure it grows over time to be able to meet your needs now and in the future?
• Retirement Planning: What is the best strategy to ensure you have sufficient funds to maximise the chance of you achieving your retirement and estate planning objectives?
• Maximisation of Government Benefits: What is the most effective strategy to ensure you maximise your entitlement to any government support payments, in order to help you achieve your goals?
• Estate Planning: How do we ensure your assets go to the right people at the right time?

 

Structure

How do we work with you to structure your wealth in the most effective way to meet your goals?

This includes consideration of:

• The different tax environments and ownership structures to hold your wealth, including the benefits of superannuation vs holding your assets outside of the superannuation environment.
• Your wealth protection needs and the most effective structure to hold your insurances from a tax, cash flow and cover perspective.
• Your lending and banking needs and the best way to structure your day to day banking arrangements for cash flow management and the best way to structure your loans to manage your interest payments and maximise tax-deductibility of any investment loans.
• Your estate planning needs and the best way to structure how your wealth flows from you to your dependents and beneficiaries.

Product

Where we identify that a product solution is required, what are the right products for you to maximise your chance of achieving your goals across all areas of your situation, including consideration of lending products, wealth protection products and investment products to meet your needs?

Our Wealth Management approach is focused on determining the right investment solution for you and your needs. The remainder of this e-book is designed to outline our philosophy and approach to managing your wealth. For information on our approach to other elements mentioned, please see the relevant philosophy documents for those services here:

Our philosophy on debt and lending

Our philosophy on wealth protection

Our philosophy on Self-Managed Super Funds

The facilitation of the above financial planning process is conducted via our Invest Blue Advice Process.

 

Selecting a product for your Wealth Management strategy

Once we have determined the right strategy and structure to meet your Wealth Management needs, via our Wealth Management approach, we will work with you to select the most appropriate platforms, investment structures and investments to manage your wealth in a manner that maximises your chance of achieving your Wealth Management objectives.

Platforms

What is an investment platform and what does it do?

In simple terms, a platform is an administration service for your investments.

Platforms (also labelled as ‘wraps’), master trusts or investor directed portfolio services (IDPSs) are all designed for one purpose: to simplify the administration, management and reporting of the increasingly complex portfolios investors are accumulating. Essentially, platforms are administration facilities for investment and superannuation money and in the case of superannuation they also allow you to co-ordinate your wealth protection needs within the fund. When you are ready to start to draw an income from your superannuation, platforms allow for the administration and payment of your income streams.

They simplify the investment process because they consolidate all the investment reporting and administration for you and send you regular portfolio valuations and tax statements.

Benefits of the platforms

Choice: A platform will give you access to a range of investments across all the major asset classes – shares, property, cash and fixed interest. Depending on the product you choose, you may have anything from a limited choice of managed funds, right up to a choice of hundreds of managed funds, exchange traded funds (ETFs) shares and cash options.

Your investments are in one place without compromising on diversity: platforms can combine your investments under a single administration facility.  You receive consolidated reports (simplifying your tax reporting), regular updates, and often 24-hour online access to your portfolio.  In addition, the use of a consistent reporting style enables you to compare ‘apples with apples’ when analyzing the performance of your investments.

Access to specialist and/or wholesale funds which may otherwise be outside your reach.  For example, many wholesale funds have lower management fees but higher entry levels, such as a minimum investment of $500,000. While this puts the fund out of the reach for most individual investors, by using a platform, the minimum investment amount is generally a lot lower.

Reporting: One major difference between investing through a platform and investing directly is the comprehensive and consolidated reporting provided. You can have 20 managed funds and 15 share investments yet receive just one regular report detailing and summarising all your financial information. This is particularly useful when it comes to calculating your tax. Your capital gains tax liabilities and your franking credits will be consolidated and calculated for you.

Online access: Most platforms give you online access to your account, so you can see how your portfolio is performing and access other information 24/7.

Flexible fees: some platforms provide flexible fee structures and certain fees may even be tax-deductible.

Platforms in Australia tend to be offered by two distinct providers;

1. Industry based or Union provided Not for Profit Investment Managers, known as Industry funds
2. Banks and Professional Wealth Management firms known as Retail funds.

Things to consider

If your money remains invested through the platform, you can instruct your adviser to switch investments or change your strategy at any time, online or over the telephone. As a result of these added services and functionalities, however, you may incur an administration fee for using the platform.

A Platform is suitable for those investors looking for a cost-effective, comprehensive all in one solution wanting to hold all their investments in one place. The responsibility for compliance, administration and reporting is outsourced to a third party as they are not prepared to take on the legal liability and accountability for compliance with the regulatory framework and relevant penalties for non-compliance.

If you’re thinking about investing through a platform, it’s important to consider your circumstances. In terms of the fees/benefits trade‑off, you should consider whether you will be better off using a platform or investing directly in the individual funds.

Directly held investments

An alternate to holding your investments through a platform, you also have the ability to hold Investments directly, though it can often be difficult to attain significant diversification cost-effectively by doing this. Direct investment would usually suit those that either has significant wealth,  (greater than $1,000,000), those that have the time and inclination to co-ordinate and manage their affairs, conducting their own reporting and analysis or those that would prefer to invest in single large assets, like a direct property, rather than a diversified portfolio.

When investing your superannuation monies, if you wish to hold your assets directly, this needs to be done via an SMSF. Under an SMSF you take on the administration, auditing, tax management and reporting obligations. Whilst you are able outsource these tasks to accountants and other professionals, the cost means that unless you have a significant amount to invest, this can be expensive.

Additionally, under an SMSF you take full legal liability for the compliance of your funds with relevant tax and legislative requirements. An SMSF suits those who wish to invest in direct assets, business premises, or assets not usually held on platforms like artwork and other collectables. Additionally, it would suit those with unique estate planning needs or those that want to manage their own affairs and are willing to take on the legal accountability to manage compliance or are prepared to outsource this and willing to pay the cost of doing so.

In general, our view is that the minimum requirement for an SMSF to be cost-effective is $500,000 of investable assets.

How we select the most appropriate platform

When reviewing the type of platform that would work best for your personal circumstances, there are a range of considerations that factor into our decision. Questions such as, will your current platform provide you with an outcome that will support your overarching goals? Is there another platform on the market that would be more beneficial to your situation? Do we need to use a range of platforms in order to deliver the best possible outcome for you?

Generally speaking, our process to guide these considerations are noted below:

Review and compare your existing platform. During this process, we engage in several tools and resources to assist us to complete an analysis of your situation. If we deem that your current platform is suitable, appropriate and is benefiting your position, there may not be a reason to change.

Where we believe that a change in platform is the best thing for you to achieve your wealth management goals, we will consider alternative platforms and compare their functionality, performance, accessibility, and cost, to determine the best solution for you.

We will continue to monitor and assess your Platform’s appropriateness, where you have engaged in an ongoing relationship with an Adviser.

Selecting the structure to hold your investment products

Direct Assets

An asset is ‘direct’ when you transact directly and therefore hold either shares or property title.

Investor Suitability

This suits a highly engaged and educated investor who wants more control over the asset they are purchasing and is prepared to do the research to understand the value of their investment opportunities and ongoing performance.

Managed Fund

A managed asset or fund involves pooling together money from different investors into one fund that is invested by the fund manager. These funds allow an investor to participate in a diversified way, but do not offer a great deal of control over specific investment selection. They often have low minimum investment requirements which means they are accessible to many investors. When you use a professional you will benefit from their knowledge and skills to make informed investment decisions but you will incur costs including entry and exit fees, as well as management and administration fees. Additionally, in a managed fund, you share the costs and tax consequences of the entire pool of investors and often have limited transparency as to the underlying holdings.

Investor Suitability

This suits an investor who wants to participate in a broad range of investment opportunities and who values the expertise of a professional Fund Manager who does the research into what to buy or sell and is prepared to pay for that.

https://www.canstar.com.au/managed-funds/what-are-managed-investments/

Model Portfolio

A model portfolio is a group of investments or funds that are designed to meet expected returns within corresponding amounts of risk. A Model Portfolio will blend a combination of asset classes, investment managers and investment strategies to achieve a rich level of diversification. As values in particular asset classes increase or decrease, a rebalance will ensure that the overall portfolio remains within its designated asset allocation. An investor using this strategy will pay more for the research and management of their portfolio.

Investor Suitability

This suits an investor who wants to participate in a broad range of investment opportunities and is prepared to invest in professional expertise to participate. These investors don’t have control over underlying investment selection and are comfortable allowing Qualified Investment Professionals to make those decisions on their behalf, within the predefined asset allocation mix.

What is an SMA?

A Separately Managed Account (SMA) is a unique investment structure. While it comprises of shares, bonds, cash or other individual securities and is overseen by a professional money manager, it is flexible enough to be customised to our personal preferences and goals.

The SMA structure provides some significant benefits compared to managed funds. It is more transparent, which helps manage risk and it is also more tax effective, which leads to higher return then a managed fund portfolio via a range of tax methodologies (to be expanded on) and minimisation of Buy-sell spreads and transaction costs. Thus, the SMA structure given it can help minimise risk, tax and transaction costs will provide a better risk/return outcome than the equivalent portfolio built in a model or in a diversified fund, again meaning the clients chances of achieving their goals are higher under this approach.

 

 

Benefits of an SMA

• Allows you to invest and hold your asset directly rather than be in a pool of other investors
• Combines the benefits of direct and managed
• But still take advantage of professional management
• In equities or other assets
• You can then control your tax benefits
• https://www.ppmfunds.com/imas-and-smas-explained/

Comparison of Investment Structures

Feature	Managed Funds	ETFs	SMAs	Directly Held
Tax Efficiency	Poor	Good	Good	Good
Portability	None	None	Good	None
Managed to Particular Tax Outcome	No	No	No	Yes
Transparency	Poor-Moderate	Good	Excellent	Excellent
Direct Ownership	No	No	Yes	Yes
Embedded Tax Liability	Often	Sometimes	No	No
Capital Losses can be applied to:	Future gains within  the structure	Future gains within the structure	Any current or future gains	Any current or future gains
Access to Diversification and professional Management	Excellent	Excellent	Excellent	Limited
Variety of Investment Options	Excellent	Moderate	Excellent	Limited by capital
Portfolio Construction	Manager’s discretion	Manager’s discretion	Model portfolio	Done by the investor
Tailored Management	No	No	No	No
Management Fee Tax Deductibility	No	No	No	No

 

Example of an SMA page https://www.mlc.com.au/adviser/super/products/separately-managed-accounts/multi-asset-portfolios

The Wealth Management offering

Initial Portfolio selection

We offer a number of portfolio selection options to suit your needs and preferences. Ranging from low cost and low intervention through to options that come with management fees but offer active solutions, there is something for most investor types. The Foundation, Comprehensive, Dynamic and Bespoke options are described below.

Review frequency

Once we’ve worked with you to understand your dreams and goals, and the ways in which we can support you to meet your objectives, we will provide you with our recommendation as to how frequently we should meet to track the progression of your goals and adjust for changes as they arise.

The complexity of your situation and your desire to meet to discuss your financial goals will be factored in determining how often we come together to undertake a formal review.  Generally, we like to meet with you at least once per year.

Fees

When you first meet with an adviser, there are upfront fees charged to do the initial work and get your financial plans built and implemented. These fees range from $3,000 to $10,000. There is no cost for our first meeting. Generally, there is a $500 fee for the second meeting when research is undertaken, and that fee will be deducted from your total upfront fee. These are separate to the fee schedule below.

As an ongoing client, there is a base amount we charge to cover working with a Financial Adviser or Advisers and the broader team that supports them. This price ranges from $1,200 to $6,600 per year. We have three ongoing support packages based on complexity. These packages are not selected by you – they will be determined by your situation and preferences. These are as follows:

 

Enhance	Elevate	Exceed
This is an entry level package that suits clients who have relatively simple financial affairs and less than $500,000 to invest. Often our families in this package are just starting out on their financial journey or are later in their retirement years. This package includes one formal meeting with your adviser per year.	Our standard package suits the majority of the families that we work with. You may have a slightly more complex financial situation, multiple goals and a combined wealth of more than $500,000 to be managed. This package includes one formal meeting with your adviser per year.	Our exceed package suits our families with more complex situations and needs who, due to that complexity, require more support to manage their strategies and advice.

 

Your Adviser will recommend the most suitable ongoing package for your based on the complexity of your situation, the amount of support required and your stage in life.

Additionally, if you undertake one of our active Wealth Management solutions, you will be charged a fee based on the amount you have invested. This means that when you undertake an active Wealth Management solution with us, we also charge a percentage-based fee that is applied to the balance of your investment. The more you have invested, the lower the percentage applied; these fees range from 0.80% to 0.65%.

Our range of portfolio solutions are designed to meet the unique needs of our clients.

Foundation: Passive or Active	Dynamic	Bespoke
Where you want a financial adviser to review your financial situation and help you plan for your future, but want your Wealth Management solution to be held outside of that arrangement utilising a set and forget Strategic Asset Allocation approach, managed in a single fund, that can be either Passive (Foundation) or Active (Comprehensive).   This suits if you are a DIY investor or have another investment arrangement that you are already happy with. It also suits those that are cost conscious and/or who do not see the benefit of having an Adviser actively involved in co-ordinating the management of their portfolio. It would also suit those who do not philosophically believe or don’t accept that Additional Risk and Return benefits over and above the market can be achieved via an Active, Tactical an or Dynamic Approach.	Where you want to work with a financial adviser to review your financial situation and help plan for your future and our Wealth Management solution suits your needs. This suits you if you can see the benefits outlined in this document around transparency, High quality research, a more defined approach to risk and return, would like to take a Tactical and Dynamic approach to Asset Allocation, managed by a 3rd party Investment manager to enhance efficiency, monitored by an adviser. Part of dynamic, if you choose to terminate our services, we will provide a final piece of advice at no cost to move to a more appropriate portfolio.	Where you want a financial adviser to review your financial situation and help you plan for your future, and build a Wealth Management solution in a bespoke fashion, tailored only for you with no consideration of cost. You are interested in some or All of the benefits outlined in this document and would like to define the elements you are interested in with your adviser and then engage your adviser to work with a research specialist to create a highly tailored and bespoke portfolio for you. Because this requires bespoke research and support, the annual fee is significantly higher and would typically suit a sophisticated investor, someone with investible Assets over $2m or someone who is not interested in the efficiency and cost savings of an all in one solution Part of Bespoke, if you choose to terminate our services, we will provide a final piece of advice at no cost to move to a more appropriate portfolio.

 

Before work commences, you will be told what fees we will apply to your situation and quoted in dollar terms. Each year we will review and discuss with you your support needs, determine appropriate fees and provide you with a quote in your Annual Advice Agreement.

 

Exiting your investment – how, what happens?

What happens if I want to cease being a client of Invest Blue?

Our driving purpose is to empower people to realise their dreams and goals to live their best possible life. We partner with you on an ongoing basis in order to support you to make better financial decisions and manage your strategy, structure and products.  However, we understand you have choice in who you partner with, and should you wish to terminate our engagement, the following process is encouraged:

1. Please call us to discuss your options and the changes to your situation and we can discuss options with you to manage this change. If you wish to proceed with ending our support agreement, following your instructions, we will terminate our adviser fees.

 

2. If you have engaged us to manage your wealth management strategy, the termination of this service will impact your investments. Where you have an Active Portfolio solution (either dynamic or bespoke) we will discuss the implications (there may be increases in Platform or product fees or other costs) and the risks of turning off adviser fees and maintaining an active portfolio solution without advice – that is, one that should not be retained without an adviser actively managing on your behalf.

 

3. We will offer you with a final complimentary piece of advice on a more suitable investment solution. This advice and the subsequent implementation is at no additional cost to you. If you take up the offer for further advice, we will review your investments, provide advice and implement these recommendations.

If you don’t take up the offer, and intend to self-manage your investment structure, we will send you a letter outlining and disclosing risks of your decision, confirming you have declined advice and are comfortable with the risks of doing so.

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