Can be expensive and time-consuming

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1 OPTIONS IN AN PAT GARRETT CEO SIX PARK OPTIONS IN AN Investing Is Hard 8 of 10 Australians typically do not get advice Even most experts underperform benchmarks Can be expensive and time-consuming Result: Performance and diversification suffer 2 1

2 OPTIONS IN AN A Problem for Most Investors is Diversification Diversification is protection against ignorance. 3 OPTIONS IN AN Why diversification matters What is the impact of a 50% price drop in a single stock? Concentrated Portfolio Diversified Portfolio Lose 50% of portfolio value For illustrative purposes only. This is not a recommendation to invest in any particular financial product. No analysis of their suitability was conducted and no statement of opinion in relation to their suitability is provided. 4 2

3 OPTIONS IN AN Good news: Impact of Technology and Automation Costs are lower (trading/admin efficiencies) Easier access (internet/digital technologies) Simpler ways to diversify investments enter robo-advice 5 OPTIONS IN AN What Exactly Is Robo-Advice? Oxford Dictionary: An online application that provides automated financial guidance and service Robo-advice can be one your strategies 6 3

4 Billions (USD) 31/10/2017 What Robo-Advice Does NOT Do OPTIONS IN AN Promise to beat the market Provide holistic advice Extensive human interaction 7 Robo-Advice is Growing Rapidly OPTIONS IN AN Robo-Advise Funds Under Management (AT Kearney) $2,500.0 $2,000.0 $1,500.0 $1,000.0 $ % 5.0% 4.0% 3.0% 2.0% 1.0% David Koch July 2016 By 2019, roboadvice is expected to manage $255bn of investor capital $ E 2017E 2018E 2019E 2020E 0.0% FUM Adoption Rate 8 4

5 OPTIONS IN AN And Is Becoming More Adopted in Australia 9 OPTIONS IN AN How Does Robo-Advice Work 10 5

6 OPTIONS IN AN Automated Online Account Setup Cash Management Account in trustee name Brokerage account (HIN model) Fund CMA and robo-advisor trades and manages portfolio 11 OPTIONS IN AN Typical Asset Classes Growth Assets Australian shares International shares Emerging markets Listed property Defensive Assets Infrastructure Bonds Cash 12 6

7 OPTIONS IN AN Sample Investment Recommendations 13 OPTIONS IN AN Automatically Get Invested Balanced Growth Portfolio 17.5% Aust Shares (STW) 27.5% Intl Shares (VGS) 10.0% Emerging Markets (VGE) Intl Property (DJRE) 10.0% Global Infrastructure (IFRA) 7.5% 27.5% Bond/Fixed Income (IAF) 14 7

8 OPTIONS IN AN Once Invested, Let the Robo-Advice Work For You 15 OPTIONS IN AN Ongoing Portfolio Management and Reporting 24/7 Reporting Annual statements Auto Rebalancing (free) Account review/ suitability Expert oversight Deposits/ Drawdowns Support/ information 16 8

9 OPTIONS IN AN Robo-Advice Fees (all inclusive, excl ETF indirect fees)) OPTIONS IN AN Why Fees Matter $1,200,000 Impact of Fees on Long Term Investment Growth $250k investment, 7% annual return $1,000,000 $800,000 $600, % fee 2.0% Fee $400,000 $200,000 $

10 OPTIONS IN AN Robo-Advice Can Form Core with Satellite Strategies 19 OPTIONS IN AN What To Look For in a Robo-Advice Service People behind robot" (IC, mgmt, investors) Simple and transparent HIN/third parties/security Costs Track record/returns 20 10

11 OPTIONS IN AN Robo-Advice: Smart Value-for-Money for Your $250,000 account 0.40% management fee Total costs = $1,000 plus indirect ETF fees 21 ABOUT About the Association The Association is an independent organisation focussed on informing, educating, empowering and advocating for all Australians who self manage their superannuation. We believe that every Australian has the right to control their own destiny, and to create a good quality of life in retirement. Further to that, we believe better outcomes arise when professional advisors and trustees are armed with the best and latest information, especially in the growing and sometimes complex world of s. Disclaimer This presentation is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs It does not contain and is not to be taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional advice. Actions, reactions and interpretations cannot be relied upon. The presentation is purely the opinion of the presenter on the day and this presentation is record of that opinion. This presentation was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author Association Pty Ltd 22 11