Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 271

Cuffelinks Newsletter Edition 271

  •   14 September 2018

A common management technique to motivate staff is to identify an enemy. The theory is that an adversary unites a team much better than an abstraction like 'efficiency' or 'lower costs'. An enemy that is an immediate threat to the business inspires a strong response.

I worked at Colonial First State from 2001 to 2012, and for much of the time, the enemy was either BT or Macquarie. We wanted more flows, better products, superior performance, more clients ... measuring ourselves against them. Nobody thought the industry funds were the common enemy. Rivals, maybe, but not a serious threat.

How times change. Last week, the peak body for the industry funds, the Australian Institute of Superannuation Trustees (AIST), held its annual conference in Cairns. They did their best to keep a lid on their successes at the Royal Commission, but they were clearly delighted. In June 2018, the size of industry funds ($632 billion) exceeded retail funds ($622 billion) for the first time, and as most major banks exit wealth management, retail will never catch up. Billions of super money will switch from retail, with some into SMSFs. To mark this milestone, we publish CEO Eva Scheerlinck's opening address at the AIST conference.

Royal Commission update 

It's not well known that thousands of exhibits presented to the Commission, previously highly confidential internal documents, are now in the public domain. For a finance geek, it's a rich store of once-private material. For example, there's a 2011 Colonial First State document for 'Adviser Use Only' which defines best interests duty on product replacement advice. If only they had followed it. This week, adviser Alex Denham explains how she interprets best interests duty.   

At the Commission, it's now the insurance companies being hauled over the coals, and again CBA was a target with CommInsure admitting it engaged in misconduct over medical definitions for life insurance. CBA CEO Matt Comyn will be pleased when these businesses are off his hands.

Sportsbet is accepting bets on 'Which of the Big4 parent bank owned superannuation funds will pay out the most compensation in 2019?'. The current betting for $1 outlay is: CBA $1.65, ANZ$4.00, Westpac $7.00, National $8.00. Not a race where you want to be favourite. 

Clearview's Risk Officer, Greg Martin, explained life insurance is a 'grudge' purchase and:

"the life insurance sales process inevitably involves some level of customer disturbance to achieve engagement".

Unfortunately for Clearview, the Corporations Act includes anti-hawking provisions limiting such 'disturbance'. And just when it seemed it couldn't get worse, the Commission heard a tape of Freedom Insurance pressuring a young man with Down syndrome to buy insurance. Over $6 billion in commissions was paid to financial advisers by 10 life insurers in the last five years.

Saturday is a decade on from the GFC

It's easy to forget after a decade of central bank liquidity that the GFC was an existential moment for the financial system. We have previously published personal insider accounts, including hereand hereShane Oliver brings it up to date with seven lessons from the GFC.

One significant market improvement since 2008 is the ability of retail investors to access strategies only previously available to institutions. Marcus Tuck gives a quick tour

Three investment articles on specific sectors: Reece Birtles asks why value investing has underperformed, Gopi Karunakaran explores another way of making money from fixed interest, and Mark Tobin summarises the results from microcap managers in FY2018. Finally, Ben Hocking reports on a survey which identifies what retirees are most worried about.

In Additional Features, the White Paper is Vanguard's latest Asset Allocation Report, while BetaShares provides its ETF Review for August 2018. For the first time, ETFs now exceed $40 billion with highest flows into global equities. Two LIC updates are also attached.

Phew, a packed edition with more than a bit of weekend reading. Remember our new 'Have Your Say' section on our website, where you can set the agenda by raising relevant issues.

Graham Hand, Managing Editor


For a PDF version of this week’s newsletter articles, click here.



Leave a Comment:


Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates


$1 billion and counting: how consultants maximise fees

Despite cutbacks in public service staff, we are spending over a billion dollars a year with five consulting firms. There is little public scrutiny on the value for money. How do consultants decide what to charge?

Investment strategies

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Financial planning

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.


Many people misunderstand what life expectancy means

Life expectancy numbers are often interpreted as the likely maximum age of a person but that is incorrect. Here are three reasons why the odds are in favor of people outliving life expectancy estimates.

Investment strategies

Slowing global trade not the threat investors fear

Investors ask whether global supply chains were stretched too far and too complex, and following COVID, is globalisation dead? New research suggests the impact on investment returns will not be as great as feared.

Investment strategies

Wealth doesn’t equal wisdom for 'sophisticated' investors

'Sophisticated' investors can be offered securities without the usual disclosure requirements given to everyday investors, but far more people now qualify than was ever intended. Many are far from sophisticated.

Investment strategies

Is the golden era for active fund managers ending?

Most active fund managers are the beneficiaries of a confluence of favourable events. As future strong returns look challenging, passive is rising and new investors do their own thing, a golden age may be closing.



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.