Introduction. Disclaimer. Clime Asset Management. SMSF Administration & Funds Management Services Holistic Wealth Solutions

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1 Clime Asset Management SMSF Administration & Funds Management Services Holistic Wealth Solutions Introduction Michael Kloeckner BCom LLB Director Private Clients Timing Questions Clime Asset Management 2 Disclaimer This information is intended to provide general advice only and does not take into account your particular investment objectives, financial situation or specific needs. The information provided is given in good faith and has been derived from sources believed to be reliable and accurate at the time of publication. This presentation does not purport to be comprehensive or to constitute personal advice. Clime Asset Management 3

2 How do I make the most of my super? Agenda The Clime Group SMSFs the fundamentals Clime s Super Administration Service Investing with Clime Clime Super and Clime Asset Management holistic wealth solution Clime Asset Management 4 Introducing the Clime Group Clime Investment Management (ASX:CIW) StocksInValue Online Stock Valuation & Research JV with Eureka (News Ltd) Clime Asset Management Funds Management - $460M Clime Super SMSF Administration Service Clime Asset Management 5 Our Results Growth of $1 million investment on 31 January 2013 Years invested 1 year (2012) 3 years (2010) 5 years (2008) Clime Australian Value Fund $1.2M $1.4M $1.6M ASX All Ords Accum. Index $1.2M $1.2M $1.1M CAVF Outperformance $5K $187K $494K Clime Asset Management 6

3 Super choices in Australia Types / Features Industry Funds Retail Funds SMSFs Choice No frills 3-10 options High Large range Unlimited Subject to legislation Flexibility Basic service levels Good but not tailored Tailored to your needs Cost 0.4% - 1.5% Average 0.8% p.a. 1.5% - 4% Average 2.2% % Clime $1850 pa Clime Asset Management 7 Tax rates in your super Rate Concessional $25K 15% Notes Employer, salary sacrifice, self-employed Non-concessional $150K Or $450K in 3 year period After Tax Personal or spouse <65 y.o. or work test Investment income (accumulation phase only - $ in) 15% No tax in pension phase ($ out) Clime Asset Management 8 What is an SMSF? - A trust: Trustees are individual members or company - 1 to 4 members - Investments held and managed by the trustee - Beneficiaries are trustees or directors of trustee company - Purpose: provide benefits to members on retirement (SPT)* *Common breaches: Mixing personal and SMSF assets Investments in wrong name Investment with pre-retirement benefit Loans to members Clime Asset Management 9

4 The growth in SMSFs Year / Size Total Super Assets ($B) 365 1,376 % in SMSFs 12% 30% Total Assets in SMSFs ($B) Source: APRA March, 2012 Clime Asset Management 10 SMSFs as at June % of SMSF assets are cash, term deposits and Australian shares 23% of SMSFs have $500K-$1M (largest single category) Shift towards direct investments and away from unit trusts 64% of SMSFs are in the accumulation phase Shift to starting SMSFs in year 1 of pension phase 75% of all SMSFs have an individual trustee 91% of recent Clime Asset Management 11 Individual Trustee Structure Individual Trustees Ben & Kate Graham Trustees: Ben Graham, Kate Graham Graham Family Superannuation Fund Superannuation Fund: Graham Family Superannuation Fund Member Ben Graham Member Kate Graham Fund Members: Ben Graham, Kate Graham Clime Asset Management 12

5 Corporate Trustee Structure Corporate Trustee XYZ Pty Ltd Directors: Ben & Kate Graham Trustee: XYZ Pty Ltd Directors: Ben Graham, Kate Graham Graham Family Superannuation Fund Superannuation Fund: Graham Family Superannuation Fund Member Ben Graham Member Kate Graham Fund Members: Ben Graham, Kate Graham Clime Asset Management 13 Corporate Trustee vs Individual Trustee - A company is a legal entity existing in perpetuity - Simpler to register assets in one name - No need to re-register assets on death of a member - No need for an outsider if you are a single member SMSF - Easy to enter and exit members; future proofing (to testamentary trust) - Unique ABN: Clime Super scans this for document processing Clime Super only uses specially drafted corporation (SPC) Clime Asset Management 14 Will your super last as long as you? Current Age Male life expectancy Female life expectancy Life expectancy in Australia is increasing If 65 today males can expect to live to 84, females to 87 Clime Asset Management 15

6 What are the benefits of an SMSF? - Greater choice of investments - Make in specie contributions (transfer assets) - Pool family assets, one fee - Access to franking credits - Different stages of life of members, including transition to retirement (TTR) Clime Asset Management 16 Franked dividends SMSF magic Company tax been paid by the company Access to 30% prepaid tax (franking credits) Offset tax payable by your SMSF If no tax is payable, obtain a tax refund Only available when investing direct in Australian shares Clime Asset Management 17 Tax impact of franked dividends Assumptions: $25K contribution, Fund total $1M, Yield 6% fully franked All numbers are $ 000 Dividends cash + Franking credits (a) Accumulation phase Pension phase (TTR) = Fund income Tax - 15% of fund income Contribution tax on $25K = Tax owing (b) 17 4 Refund (a - b) 9 22 Clime Asset Management 18

7 Transition to retirement (TTR) At age 55, access 4% to 10% of your super p.a. Accumulated super goes into pension phase tax free Continue to contribute/salary sacrifice Effectively, pension and accumulation phases at the same time Withdrawals may attract some tax If $ not needed, re-contribute the withdrawal (=non-concessional) The following year, the taxable portion will be lower Clime Asset Management 19 Some responsibilities of trustees - Keep it separate bank a/c, assets in fund name - Document investment strategy, make investment decisions - Accept contributions and pay benefits - Document everything, keep documents 5-10 years - Annual returns, tax returns and audits - Legislative compliance SIS Act, Tax Acts, Trust deed, Corporation Acts Clime Asset Management 20 Clime Super ensures you meet responsibilities Keeps you compliant e.g. Contribution tracking Audit ($440) prep and lodgement Manages all the paperwork Receives the mail and acts on it Document records (5-10 years) Online, real-time access to information No more waiting till year end Access to specialist strategic super advice Access to legal drafting for estate planning, testamentary trusts Clime Asset Management 21

8 Investing in your SMSF Debunking Investment Classes Real Estate Cash Australian Equities International Equities Fixed interest Clime Asset Management 22 Better than cash? Dividend growth of Commonwealth Bank shares Clime Asset Management 23 Core investment beliefs 1. Capital preservation is the key to maximising returns 2. The ROE of a company determines the value 3. Price follows value over time Clime Asset Management 24

9 The importance of capital preservation 2007 $1 Million -60% 2009 $400, % $360,000 Lost NOW $640,000 You need a 150% return to recoup your $1,000,000 Clime Asset Management 25 A company s ROE determines its value Profit is distinct from profitability Profitability is measured by Return on Equity COMPANY A Shareholders equity = $10,000 Profit = $2,000 COMPANY B Shareholders equity = $20,000 Profit = $3,000 Clime Asset Management 26 Price follows Value over time Example: McMillan Shakespeare (ASX:MMS) Source: MyClime. Data Source: Annual Company Reports Clime Asset Management 27

10 What are my options with Clime? Clime Super Comprehensive Administration Service Holistic Solution Clime Super + Clime Equity Portfolio (DSP) + Other Investments YOU Existing SMSF Other Super Non-Super Investments Clime Equity Portfolio Clear investment strategy Proven Performance Your personal portfolio Cash or in-specie 24/7 access Clime Asset Management 28 Our offer to attendees worth $ Setup/establishment or restructure free of charge* Clime will, free of charge: Establish a new SMSF Or restructure your individually based SMSF When you establish a Discrete Share Portfolio with us Within four weeks from today s date 2. Complimentary Portfolio Assessment* 3. Complimentary SMSF Health Check* * Condition: reasonable number of assets/shares Clime Asset Management 29 Discrete Share Portfolio Service (DSP) For wholesale investors ($1mil+) Concentrated portfolio of Australian listed businesses in value Also attractively priced high yielding debt/hybrid instruments The investment portfolio belongs to you it is not pooled Comprehensive tax statements are provided $460M funds under management (FUM) Clime Asset Management 30

11 Key Points - An SMSF gives you control and better flexibility - Key benefits are tax payments, franking credits, TTR - Clime Super are SMSF specialists and use corporate trustees - Clime is a top performing Australian fund manager - Sensible value-based investment principles - Portfolio of the gems in the Australian securities market - Clime can take care of your SMSF audit and manage your SMSF portfolio Clime Asset Management 31 Contact Clime Group Michael Kloeckner B Com. LLB Director Private Clients Direct line: Mobile: michael@clime.com.au Clime Asset Management 32