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1Copyright 2016 Investment Trends Pty Ltd. Feb 2016 How investor attitudes and product needs are evolving – Handouts. Confidential. Webinar attendee use only.

How investor attitudes and

product needs are evolving

Webinar Handouts

Contact: Recep Peker

Head of Research, Wealth Management

[email protected]

@recep3

Confidential. Webinar attendee use only

Reproduction prohibited


Investor sentiment

Investors are being battered by share market volatility, poor Australian stock market return expectations and low interest rates, making it harder to identify domestic investment opportunities


Methodology: Investor Product Needs Report

Online quantitative survey of Australian investors conducted in September and October 2015

Survey respondents were recruited in a number of ways:

1. Members of Investment Trends’ opt-in panel

2. Institutional clients including a variety of investor information providers, private banks, product providers, advice networks, online brokers and the ASX

Total responses after data cleaning and validation: n=9,793

Maximum sampling error (95% confidence interval, centre of the range): +/-1.0%

Analysis of subgroups will have a higher sampling error

Results of the report are representative of Australian investors.Compared to Australian adults, investors are more likely to:

• Have higher levels of investable assets

• Currently invest in direct shares, managed funds and/or residential property (excluding their own home)

• Be engaged with their super


The impact of a Chinese slowdown on the Australian economy, high debtlevels and volatility weigh on investors’ outlook for 2016

China and debt slowing Australian economyInvestors’ top concerns

56%

50%

47%

37%

33%

32%

28%

26%

22%

22%

20%

19%

18%

13%

9%

4%

0% 20% 40% 60%

China slowdownAnother global financial crisis/

market crash

Australian economy

Global debt levels

Australian debt level

Share market volatility

Changes in resource value

Exchange rates/value of AUD

European economy

A military conflict

Interest rates

Property prices

US economy

Impact of regulatory changes

Inflation

Other

Nov-14 [n=790]

Nov-15 [n=490]

12 month market return expectationsVery bearish

Nov-12 Nov-13 Nov-14 Nov-15

6.6

5.4

6.1

Nov-12 Nov-13 Nov-14 Nov-15

7.7%

1.6%

3.2%

Steady at a moderately high levelInvestors’ concern levels (out of 10)


In 2016, slightly more intend to focus on protecting their wealth rather than growth

Average portfolio allocation to cash and cash produ ctsModerate but did not increase despite volatility

Marginally more defensiveInvestment priorities for the next 12 months

Less risk tolerance among those not retiredRisk tolerance index

2010[n=5765]

2011[n=5214]

2012[n=7738]

2013[n=6468]

2014[n=7770]

2015[n=7209]

13%

14%

16%

17%

10%

13%

23%

26%

27%

34%

34%

34%

30%

28%

26%

29%

34%

33%

34%

31%

31%

19%

21%

20%

10% 36% 32% 22%

2009

2010

2011

2012

2013

2014

2015

Protect Income Balanced growth Maximum growth

Defensive Aggressive

14%

18% 17% 18%

15%

24%

46%

58%

55%

Accumulator/pre-retirees

52%51% All investors

45% Retirees

2013 2014 2015

Ris

k av

erse

Ris

k to

lera

nt

52%

48%

43%


Appetite for overseas exposure was on par with domestic equities for the first half of 2015. The (net) appetite for international assets remains healthy

Source: November 2015 Investor Intentions Index Rep ort

Net Intentions Index by asset class (% planning to increase exposure - % planning to dec rease exposure)

22%

16%

8%

-1%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Sep-1

1Nov

-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

Sep-1

2Nov

-12

Jan-

13M

ar-1

3M

ay-1

3Ju

l-13

Sep-1

3Nov

-13

Jan-

14M

ar-1

4M

ay-1

4Ju

l-14

Sep-1

4Nov

-14

Jan-

15M

ar-1

5M

ay-1

5Ju

l-15

Sep-1

5Nov

-15

Australian shares International assets Term deposits/online savings accountInvestment property

Net

Inte

ntio

ns In

dex

XX

*Option added in Nov-12


Acquiring new client relationships

Effective communications are key to client acquisition, referrals and retention for planners


Methodology: Financial Advice Report

Quantitative survey July to August 2015

Core sample: n=2,543. Drawn from total responses: n=10,367.

Core sample has been weighted to be representative of the Australian adult population

Three sources of sample were utilised:

• Core sample:

• Broad-based survey of the Australian adult population

• Respondents from Investment Trends opt-in panel

• Additional respondents sourced from various super funds

Maximum sampling error (95% confidence interval): +/-1.0%

Results were post-weighted by age, gender, super fund type and super balance to ensure correct distribution of Australian adult population

Analysis of subgroups will have a higher sampling error


Number of Australian adults who intend to turn to a financial planner for (additional) financial advice in the next two y earsNote: This includes existing planner clients who wo uld like

to receive additional advice from their financial p lanner

1,500,0001,900,000

2,500,000

2013 [n=1479] 2014 [n=1819] 2015 [n=2224]

There was a 32% increase in the number of people intending to turnto a financial planner for (more) advice in the next 2 years

+27%

+32%

Note: Not all will do so

Based on Investment Trends modelling.

1.2m from a new planner relationship

1.3m as additional advice from their planner

Source: August 2015 Financial Advice Report


Q52 How did you find [ your financial planner ]? (Multiple responses permitted) Among those who have used a financial planner in th e last 12 months

29%

18%

9%

8%

8%

6%

3%

3%

3%

3%

2%

16%

10%

0% 10% 20% 30% 40% 50%

Asked friends/relatives for recomm.

Asked my bank

Asked an accountant

Asked my super fund

Asked a financial planner

Web / Google search

Print (newspaper/magazine) ads

Asked a product provider for recomm.

Looked for / asked member of a prof. industry assoc.

Television advertisement

I heard about it on the radio

Checked ASIC website

Yellow pages search

Through social media

Other

I'm not sure

2014 [n=247] 2015 [n=322]

Referrals matter: 66% of those using a planner found them via a referral, particularly (independent) third parties.

More are also turning to digital sources compared to last year

66% found their financial planner through referrals



Q53 What were the top three things you were looking for when selecting [ your financial planner ]? (Multiple responses permitted) Among those who

have used a financial planner in the last 12 months [n=321]

34%

32%

31%

28%

16%

12%

12%

11%

9%

6%

5%

3%

3%

3%

46%

14%

0% 10% 20% 30% 40% 50%

Ability to explain concepts in a way I can understand

Honesty/integrity

Experience

Detailed knowledge of inv products

Available/accessible when I need them

Low fees/cost

Good communication skills

Close proximity (location)

Good client testimonials

Good investment returns

Impartiality/independence

Work for a company I know/trust

Member of a professional industry association

Direct shares advice/expertise

Qualifications/education and training

Tax expertise

Access to particular investments out of reach

Other

Quality of communications matter for driving client acquisition

Communications: 54% after

removing overlaps



Thank you!


© Copyright 2016 Investment Trends Pty Limited. All rights reserved.

The material in this Report (“February 2016 How investor attitudes and product ne eds are evolving – Handouts ”) contains proprietary information including copyright material and trademarks, the rights to which must be respected. Investment Trends owns the copyright in the design, selection, arrangement, production, and presentation of the Report, as well as in the material originally developed by or for Investment Trends. You may use copyright material for your personal or internal use within your business. Otherwise, and except as permitted by law, no copying, publication, modification or commercial exploitation of the Report is permitted without the prior written permission of the owner.

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Analysis: Mark Johnston, Principal

Borhan Uddin, Director of Statistical Research

Recep III Peker, Head of Research, Wealth Management

King Loong Choi, Senior Analyst

Audience: Australian Investors

Data collected: 2015

Collection method: Online surveys


About Investment Trends

Investment Trends is a specialist research organisation which provides new business insights and decision support information to most leading Australian financial services organisations. We combine analytical rigour and strategic thinking with the most advanced market research and statistical techniques to help our clients gain competitive advantage.

Investment Trends is headed by Mark Johnston. Mark has been a leading industry analyst in the brokerage, wealth management and financial planning industry since 1999, and has been widely quoted in the Australian media.

Our clients include the industry regulators, peak industry bodies, all of the top 6 Australian banks, top 10 investment platform providers, top 6 online brokers, as well as most leading fund managers and industry super funds, margin lenders, dealer groups and financial planning software providers.

Our work is focused on helping clients answer three fundamental questions:

1. How does the market currently work?

2. How is the market evolving?

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•Acquire more customers

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•Increase revenue per customer

•Prioritise technology and process investments


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