FC ONE Series 2. Adviser use only. Introducing. FC ONE Series 2. Briefing pack. Dated: 17 February 2014

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1 FC ONE Series 2 Adviser use only Introducing FC ONE Series 2 Briefing pack Dated: 17 February 2014

2 About the information in this pack This information has been prepared as an information service to authorised advisers only, without assuming a duty of care to any person. The information contained was current as at 17 February 2014 and incorporates the new FC ONE Series 2 product which will apply from 3 March It reflects current FoFA legislation. We will continue to communicate with you regarding the impact of any changes to this legislation. Navigator Australia Limited ABN , AFSL ( Navigator ) is the issuer of the FC ONE Investment Builder and NULIS Nominees (Australia) Limited ABN , AFSL (NULIS) is the issuer of the FC ONE Retirement Builder. First Capital Financial Planning Pty Limited ABN AFSL is the sponsor of the FC ONE Investment Builder and FC ONE Retirement Builder. Navigator and NULIS have made all reasonable efforts to confirm that this information is accurate, but do not warrant or guarantee the accuracy of this information. Navigator and NULIS are members of the National Australia Group of companies. For more information call us from anywhere in Australia on Registered office: Ground Floor, MLC Building Miller Street North Sydney NSW 2060 mlc.com.au 2

3 Background to FC ONE Series 2 FC ONE is committed to providing you with the best solutions for your clients FoFA reforms means platforms have to change to adapt to the new world and price will play a key role in an advisers best interest consideration We re actively responding to changes to ensure we continue to offer competitively priced products in the market We re making FC ONE even better value for your clients From 3 March 2014 we re introducing the new FC ONE Series 2 product Series 2 includes FoFA compliant fee-for-service options for you and your Dealer Group 3

4 New FC ONE Series 2 Product Your new FC ONE Series 2 clients and your existing clients who opt-in to Series 2 will benefit from: a new administration fee model with lower rates automatic individual fee aggregation for super and pension accounts, and a new family account linking calculation. We re also introducing: a maximum administration fee a super administration fee, and an adviser service support fee option. 4

5 FC ONE Series 2 from 3 March 2014 Existing clients From 3 March 2014 From 3 March 2014 you can transfer existing clients who choose to opt-in to FC ONE Series 2 We re also making it simple to transfer your existing clients to FC ONE Series 2 through n-link. Benefits include: Submit request online with straight through processing No change to account numbers Performance history is retained, and No buy/sell or CGT implications. New clients From 3 March to 30 June 2014 From 3 March to 30 June 2014 you can place new clients into FC ONE Series 2 or continue with the existing FC ONE product New clients From 1 July 2014 From 1 July 2014, in line with FoFA reforms, all new clients automatically receive Series 2 pricing 5

6 FC ONE Series 2 fee table Administration Fee Fee tiers FC ONE Current * Rate (pa) $0 - $299, % $300,000 - $599, % $600,000 - $999, % $1,000, % on $1m, then 0.30% Subject to the following minimum fee amount Min Admin fee $750 ($240) Optional account linking benefit Family account linking Super & Pension fee aggregation Yes Not automatic * This is the Post 1/12/2011 pricing model for the FC ONE Retirement Builder. You should consider your client s current fee structure before opting-in to Series 2. ^ Includes non-nab Group term deposits, managed investments and SMA options. Administration Fee Fee tiers FC ONE Series 2 Rate (pa) First $200k 0.40% Next $300k 0.30% $500k % Plus Non-NAB Group investments ^ 0.10% (on portion invested) Listed investments 0.15% (on portion invested) Subject to the following minimum and maximum fee amounts Min Admin fee $750 Max Admin fee $3,700 Optional account linking benefit Family account linking Super & Pension fee aggregation Super Administration Fee Yes Yes (automatic) Super Admin Fee 0.05% (capped $1,000) Move from a stepped to a progressive fee model 10 bps fee for non-nab Group investments and 15 bps fee for Listed investments but only on portion invested A fixed minimum admin fee (but no reduction to $240) Introduction of a maximum fee ($4,700 maximum including Super administration fee) Automated aggregation of Super and Pension accounts held by the same investor for fee purposes. Min/Max admin fee applies to the combined value. New Super admin fee capped at $1,000 pa. This fee was previously included in the admin fee tiers. 6

7 Lower administration fee rates We have reduced our administration fees to benefit your clients irrespective of their allocation to Group, non-group or listed investments. Additional benefits apply for Group product investments: Being part of the National Australia Bank Group gives us the opportunity to pass on the lower cost benefits associated with investments managed within the Group. And to make it easier for your clients to save, the lower rates will now apply to all NAB Group investments, including: NAB Term Deposits SMAs managed by Antares Equities, JB Were and ThreeSixty Research Investments managed by MLC, Antares and JANA, and Investments managed by NABInvest partners. The FC ONE Cash Account also qualifies as a NAB Group investment. Investments not managed within the Group and all listed investments will incur an additional fee only on the portion invested. 7

8 Minimum and Maximum Administration fee changes We re also changing the minimum administration fee and introducing a maximum administration fee: The minimum administration fee remains at $750 pa The reduced minimum administration fee of $240 pa (e.g. where the account has linked insurance, is a pension account, has a regular investment facility or the total value of a linked group exceeds $300,000) has been removed The maximum administration fee will be $3,700 pa (or $4,700 for FC ONE Retirement Builder accounts) The account balance at which the new fees apply will depend on the client s investment allocation, for example: For FC ONE Investment Builder: Investment allocation Min Admin fee applies below Max Admin fee applies from 100% NAB Group investments $187,500 $4,500, % Non-NAB Group investments $150,000 $1,500, % Listed investments $136,363 $1,125,000 15% / 75% / 10% (NAB Group/non-NAB Group/ Listed investments ) $153,061 $1,607,143 8

9 Case study FC ONE Series 2 fees Super and Pension Account This example shows a client s administration fees on a $300,000 account balance in FC ONE Retirement Builder Series 2. Investments held Total account balance Portion not managed by NAB Group Portion in listed investments Cash account $10,000 MLC Wholesale Horizon 4 Balanced Portfolio $50,000 SMA - Antares Dividend Builder $50,000 NAB 12 month Term Deposit $20,000 Colonial First State Wholesale Equity Income Fund $50,000 $50,000 SMA Perennial Growth Shares $50,000 $50,000 St.George 12 month Term Deposit $20,000 $20,000 NAB shares $50,000 $50,000 Total $300,000 $120,000 $50,000 Total Administration Fee Calculation Total On Total Account Balance ($300,000) = ($200,000*0.40%) + ($100,000*0.30%) $1,100 Plus 0.10% on Non-NAB Group options = $120,000*0.10% $120 Plus 0.15% on listed investments = $50,000*0.15% $75 Total administration fee $1,295 Super administration fee = $300,000*0.05% $150 Total administration related fees $1,445 9

10 Other important changes Your clients should consider the following changes along with the reduced administration fees: Cash Account interest rate We understand you and your clients generally value reductions in administration fees on the entire account balance more than higher interest rates on just the cash component. As a result, the Series 2 Cash Account target interest rate will change to the RBA cash rate less 75 bps (25 bps less than the existing Cash Account). Investment manager rebates Investment manager rebates will only be passed on to clients for NAB Group managed investments and on some non-nab Group managed investments (see the relevant investment menu for more information). 10

11 A capped super administration fee In FC ONE Series 2, the portion of costs associated with managing a super fund has been separated into a new super administration fee of 0.05% pa. It s charged in addition to the administration fees and is capped at a maximum of $1,000 pa. This means the maximum total administration fees your FC ONE Retirement Builder clients will pay is $4,700 pa. Super administration fee Current Series 2 Included in total administration fees Separate fee of 0.05% pa capped at a maximum of $1,000 pa 11

12 Asset Allocation Fee Example 0% NAB Group* investments Non-NAB Group investment allocation 0% NAB Group* investments Super & Pension account $250k $500k $1million $2million FC ONE Current Pricing $2,725 $4,200 $7,400 $10,400 New pricing $1, $2,445 $3,445 $4,700 Difference $1, $1,755 $3,955 $5,700 * Modelling considers 1% minimum cash holding to a maximum of $5,000 and no listed investments. Note: The above example demonstrates a client scenario under FC ONE Series 2. Not all clients will be better off in Series 2 e.g. some clients with a combination of high cash, large non-nab Group investments paying rebates or small account balances. Advisers will be provided with calculators to determine which clients should or should not opt-in to FC ONE Series 2. Slide title 12

13 Asset Allocation Fee Example Listed investments tilt Listed investments tilt 10% NAB Group investments,10% non-nab Group investments, 80% Listed investments Super & Pension account $250k $500k $1million $2million FC ONE Current Pricing $2,725 $4,200 $7,400 $10,400 New pricing $1,400 $2,600 $3,750 $4,700 Difference $1,325 $1,600 $3,650 $5,700 Note: The above example demonstrates a client scenario under FC ONE Series 2. Not all clients will be better off in Series 2 e.g. some clients with a combination of high cash, large non-nab Group investments paying rebates or small account balances. Advisers will be provided with calculators to determine which clients should or should not opt-in to FC ONE Series 2. 13

14 Asset Allocation Fee Example Non-NAB Group investments tilt Non-NAB Group investments tilt 15% NAB Group investments / 75% non-nab Group investments / 10% Listed investments Super & Pension account $250k $500k $1million $2million FC ONE Current Pricing $2,725 $4,200 $7,400 $10,400 New pricing $1,300 $2,400 $3,350 $4,700 Difference $1,425 $1,800 $4,050 $5,700 Note: The above example demonstrates a client scenario under FC ONE Series 2. Not all clients will be better off in Series 2 e.g. some clients with a combination of high cash, large non-nab Group investments paying rebates or small account balances. Advisers will be provided with calculators to determine which clients should or should not opt-in to FC ONE Series 2. Slide title 14

15 Example - Reduce fees with NAB Group Investments Sample allocation: For Super and Pension account Current Asset Allocation Cash account $20, % Term deposits (St.George) $50, % MLC/NAB managed investments $50, % Non-NAB managed investments $180, % Listed investments $100, % $400, % Revised Asset Allocation Fee Calculation: with additional NAB Group investments Revised Asset Allocation Cash account $20, % Term deposits (NAB) $50, % MLC/NAB managed investments $100, % Non-NAB managed investments $130, % Listed investments $50, % NAB Group SMA's $50, % $400, % Fee calculations Current fees New fees Administration fee (total FUM) $3,360 $1,400 Plus 0.10% on non-nab Group investments $0 $230 Plus 0.15% on Listed investments $0 $150 Super admin fee $0 $200 Reduced interest on cash $0 $50 Net fee position $3,360 $2,030 Difference $1,330 (39.6% saving) Note: This example ignores the potential loss of rebates on some non-nab Group investments Fee calculations New fees Administration fee (total FUM) $1,400 Plus 0.10% on non-nab Group investments $130 Plus 0.15% on Listed investments $75 Super admin fee $200 Reduced interest on cash $50 Net fee position $1,855 Difference $1,505 (44.8% saving) Slide title 15

16 New pricing vs competitors Super & Pension / without competitor transaction fees NAB Group product lowers the fees # # # Assumes 15/75/10 15% in NAB Group investments, 75% in non-nab Group investments, 10% in Listed investments Slide title 16

17 FC ONE Series 2 vs competitors Super & Pension FUM Current FC ONE FC ONE Series 2 [15/75/10]# FC ONE Series 2 [0/80/20] CFS First Wrap Macquarie Consolidator [No trans] [10 trans*] No Models BT Select Model Portfolio BT Wrap AMP North Min Admin fee $750 $750 $750 $156^ $696 $901 $550 $ $436 $91 $150k 1.09% 0.55% 0.56% 0.71% 0.59% 0.73% 0.55% 0.71% 0.84% 0.86% $250k 1.09% 0.52% 0.54% 0.66% 0.55% 0.63% 0.52% 0.62% 0.82% 0.64% $400k 0.84% 0.49% 0.51% 0.57% 0.48% 0.53% 0.47% 0.53% 0.63% 0.47% $500k 0.84% 0.48% 0.50% 0.55% 0.46% 0.50% 0.45% 0.50% 0.57% 0.47% $750k 0.74% 0.38% 0.40% 0.43% 0.36% 0.39% 0.36% 0.39% 0.48% 0.31% $1m 0.74% 0.34% 0.36% 0.38% 0.31% 0.33% 0.32% 0.34% 0.44% 0.31% $1.5m 0.59% 0.29% 0.30% 0.29% 0.23% 0.24% 0.25% 0.27% 0.35% 0.31% $2m 0.52% 0.24% 0.24% 0.24% 0.18% 0.19% 0.22% 0.24% 0.31% 0.23% Max Admin fee No maximum $4,700 $4,700 $5,835 $3,890 $4,095 $4,480 + $4,722 + $6,105 + $4,500 * A transaction fee of $20.50 applies for every buy, sell or switch transaction for managed investments, listed investments, TD s and corporate actions # Assumes 15% in NAB Group Investments, 75% in non-nab Group Investments and 10% in listed Investments Assumes 0% in NAB Group Investments, 80% in non-nab Group Investments and 20% in listed Investments ^ No minimum Admin fee but minimum account balance requirement of $20k No minimum Admin fee but a minimum account balance requirement of $50k + Maximum fee will be higher due to uncapped Trustee fee Slide title 17

18 Automatic individual fee aggregation Super & Pension You will no longer need to link your client s super and pension accounts to benefit from lower administration fees. In Series 2, your client s super and pension accounts are automatically combined when determining the administration fees and treated as a single account for fee calculation purposes. 18

19 Family Account linking Series 2 We re improving the family account linking so your clients can further reduce the administration fees they pay. The Family Account Linking calculation includes: Step 1. Add up the value of all linked accounts (as if it was one account) Step 2. Apply the tiered percentage fee scale to the combined account value Step 3. Apportion the calculated tiered fee to each account Step 4. Add the extra 0.10% for non-nab Group investments and 0.15% for listed investments at the individual account level Step 5. Test the calculated fee against the min/max of $750/$3,700 at the individual account level. The Super administration fee per account is then added, where applicable Other information Can link up to 4 accounts Can only link with accounts in the same Series 2 platform Individual fee aggregation of super and pension accounts means these are together regarded as one account for Family Account linking purposes. 19

20 Fee Example Family Account linking Asset Allocation Husband Wife Combined Cash account $50,000 $20,000 $70,000 MLC/NAB managed investments $150,000 $60,000 $210,000 Non-NAB Group managed investments $300,000 $100,000 $400,000 Listed investments $100,000 $0 $100,000 Total account value $600,000 $180,000 $780,000 This example outlines the difference Family Account linking can make on fees paid Fee calculation without linking Admin fee (total FUM) $1,750 $720 $2,470 Plus 0.10% on non-nab Group investments $300 $100 $400 Plus 0.15% on Listed investments $150 $0 $150 Administration fee $2,200 $820 $3,020 Fee calculation with linking Admin fee (total FUM) $1, $ $1,840 Plus 0.10% on non-nab Group investments $300 $100 $400 Plus 0.15% on Listed investments $150 $0 $150 Administration fee $1, $750 $2, Saving $ (13.4%) Subject to a minimum Admin fee of $750 Tiered percentage fee calculated on $780k & allocated proportionately to member accounts No change to fees calculated on non-nab Group / Listed investments. Fees are calculated at the individual account level Note: Minimum, Maximum and Super administration fees (where applicable) are assessed at an individual account level. 20

21 New Adviser Service Support Fee We re introducing a new Adviser Service Support Fee (ASSF) that is deducted from a client s Cash Account. It s made up of two components: Existing Adviser Ongoing Service Fee (ASF) New Dealer Facilitation Fee (DFF): can be a dollar or percentage amount of between 0% pa and 0.5% pa of the value of the account cannot exceed the ASF, and cannot be charged without an ASF. The DFF is a separate fee paid by your client to your Dealer Group. Note: Your Dealer Group will communicate with you as to the appropriate fee you should charge. The ASSF will be included in the FC ONE Series 2 client application form and clients must consent to it 21

22 Breakdown of the Adviser Service Support Fee Adviser Service Support Fee (ASSF) = Adviser Ongoing Service Fee (ASF) (existing fee) (a fixed $ amount or a % of the client s account balance) A fee paid to the financial adviser for the advice and recommendations they give their client + Dealer Facilitation Fee (DFF) (new fee) (a $ amount or % that can be set between 0% pa and 0.5% pa) The DFF is a new fee option paid by your client to your Dealer Group. Set by your Dealer Group, it accounts for the provision of advice and dealing services by the Dealer Group such as research, business support and ongoing compliance to support an adviser s advice process. 22

23 Cost to Client Calculator We ve developed a range of tools to help you compare pricing and identify clients who ll benefit from transferring to Series 2 The Cost to Client Calculator has been developed to assist you to determine if your clients will be better off under FC ONE Series 2 The Calculator is located in our online toolkit on investinfo.com.au/fcone You can use the Calculator for FC ONE Super, Pension and Investment accounts The Calculator has help options throughout or you can contact your MLC Representative for assistance 23

24 Cost to Client Calculator example Slide title 24

25 Easy transition via n-link We ve making it simple to transfer your existing clients to FC ONE Series 2 through n-link For the chosen account, click on the Fees tab 2. Press the Edit fee Model button 3. Select Series 2 from the drop down list 4. Click Print instructions 5. Click Submit 3 Monthly Administration Fee* $68.04 $ Fee Aggregation No No Family Account Linking No No Total Portfolio Value $132, $132, NAB Group Investments $15, $15, Non NAB Group Investments $117, $117, Listed Investments $0.00 $ Slide title 25

26 Easy transition via n-link being made available on investinfo.com.au/fcone, unless opted otherwise or if a valid is not supplied. 6. Click on the Proceed button 7. Authorise transaction 6 7 Slide title 26

27 Thank you Slide title 27