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:

banner

Most viewed in recent weeks

Finding the best income-yielding assets

With fixed term deposit rates declining and bank hybrids being phased out, what are the best options for investors seeking income? This goes through the choices, and the opportunities and risks involved.

What history reveals about market corrections and crashes

The S&P 500's recent correction raises concerns about a bear market. History shows corrections are driven by high rates, unemployment, or global shocks, and that there's reason for optimism for nervous investors today. 

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 605 with weekend update

Trump's tariffs and China's retaliatory strike have sent the Nasdaq into a bear market with the S&P 500 not far behind. What are the implications for the economy and markets, and what should investors do now? 

  • 3 April 2025

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

World's largest asset manager wants to revolutionise your portfolio

Larry Fink is one of the smartest people in the finance industry. In his latest shareholder letter, the Blackrock CEO outlines his quest to become the biggest player in private assets and upend investor portfolios.

Latest Updates

Investment strategies

An enlightened dividend path

While many chase high yields, true investment power lies in companies that steadily grow dividends. This strategy, rooted in patience and discipline, quietly compounds wealth and anchors investors through market turbulence.

Investment strategies

Don't let Trump derail your wealth creation plans

If you want to build wealth over the long-term, trying to guess the stock market's next move is generally a bad idea. In a month where this might be more tempting than ever, here is what you should focus on instead.

Economics

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Investment strategies

Will China's EV boom end in tears?

China's EV dominance is reshaping global auto markets - but with soaring tariffs, overcapacity, and rising scrutiny, the industry’s meteoric rise may face a turbulent road ahead. Can China maintain its lead - or will it stall?

Investment strategies

REITs: a haven in a Trumpian world?

Equity markets have been lashed by Trump's tariff policies, yet REITs have outperformed. Not only are they largely unaffected by tariffs, but they offer a unique combination of growth, sound fundamentals, and value.

Shares

Why Europe is back on the global investor map

European equities are surging ahead of the U.S this year, driven by strong earnings, undervaluation, and fiscal stimulus. With quality founder-led firms and a strengthening Euro, Europe may be the next global investment hotspot.

Chalmers' disingenuous budget claims

The Treasurer often touts a $207 billion improvement in Australia's financial position. A deeper look at the numbers reveals something less impressive, caused far more by commodity price surprises than policy.

Fixed interest

Duration: Friend or foe in a defensive allocation?

Duration is back. After years in the doghouse, shifting markets and higher yields are restoring its role as a reliable diversifier and income source - offering defensive strength in today’s uncertain environment.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
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. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. 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.