Accountants Forum in Sydney
2nd May 2019, 9:30am-6pm, The Westin Sydney, then 6:30pm-10pm, Drinks & Dinner, Uccello.
Just a reminder that our Accountants Forum is coming up on Thursday, 2nd May 2019. Thank you to those who have committed their time to the forum & to those who have provided great input around discussion on the day. We look forward to seeing you there.
Collaboration – Helping to find Opportunities
Written by Jonathan Bayes
You may have already had the initial conversation with your adviser, but we are extremely keen to learn more about your business, your clients, and the opportunities for our combined efforts to provide genuinely first class, integrated advice.
To do this, we have to learn more about your business, your client base and their needs.
We have built a questionnaire or checklist that we hope goes a long way towards helping us learn more about your business and it is our intention to use this list as a means to cultivate more opportunities to be proactive in addressing client needs.
It would be great if you and your adviser could put away some time to discuss the questionnaire as our early feedback from those that have done this is that it has served as a really valuable connecting point between our firm and yours.
Some reminders prior to 30 June
Just a reminder to check with your clients that they have been advised of their minimum pension amounts and that these have been actioned by the clients.
If you anticipate that a Statement of Advice (SOA) will need to be completed for concessional and non-concessional contribution advices – please have this discussion in the next fortnight. It will take up to 6 weeks for a SOA to be generated in the rush before June 30.
Class SMA Feeds
Written by Angelina Rigoli
If you missed the news a few weeks ago – we received an update from Macquarie that the pilot group has wrapped up their testing and they are now receiving SMA’s via the datafeed which is great news.
Class sent out emails to 107 Class businesses (who use Macquarie Wrap) who they identified as having some sort of manual representation of their SMAs in Class. In this communication, Class advised clients to reach out so that they could help transition their funds and obtain the daily SMA data from the Macquarie Wrap feed. This was a necessary step as if they turned on the SMA functionality within the feed without transitioning the existing clients, this could cause duplication of data.
So if you haven’t contacted Class to date we suggest you do so that you can start receiving the SMA datafeed.
Macquarie advised that the next phase after this will be to release the reporting changes and updates to the User Interface to give better clarity and filtering for the SMAs on the Investment Holding screen.
In the meantime, if you have any queries please contact us:
Global equity markets continued to climb higher in March with the MSCI World Index rallying for the third consecutive month adding 1.5% to take the annual year-to-date return to 11.5%.
The Federal Reserve’s pivot on monetary policy and a possible resolution to the US/China trade war continues to provide investors with an increased appetite for risk.
US 10 year Treasury yields fell to 15-month lows to yield 2.40%.
China was the notable outperformer in March adding 5% following positive developments on a trade deal. Further policy stimulus in the Chinese economy has also boosted its equity market which has risen 24% this calendar year.
The Australian equity market was slightly ahead in March with the ASX200 Accumulation index adding 0.73% and up close to 11% for 2019.
Large amounts of dividend income hit client portfolios in March due to reporting and dividend season the month prior. PRIME continue to advocate holding a little extra cash in the medium term given our view equity markets are appearing fully valued and due a correction in the near term.
Oil rallied for a third consecutive month with Brent rising 1.8% to $68/barrel and WTI to $60/barrel (+5%.)
Contributors to performance in March were Afterpay (APT) +14%, Pendal Group (PDL) +8% and Regis Healthcare (REG) +7%. Surprisingly there was no fundamental news out on any of these individual stocks during the month so in the case of APT we are attributing its strong performance to its 1H financial results released at the end of February which continues to show strong growth in both users and merchants and continued expansion into the US market. PDLs performance was simply due to the stock having been oversold in the backend of 2018 whilst REG saw a few brokers raise their target prices.
Detractors from performance were Nufarm (NUF) and IOOF (IFL) which fell 10% and 7% respectively. NUFs temporary suspension of its interim dividend along with a minor cut to full year guidance was poorly received by investors who marked the share price down. We support management’s decision to preserve the balance sheet and whilst disappointed with the cut to EBITDA guidance remain upbeat about the company’s future prospects, so much so that we used the share price fall to significantly add to positions. IFL was weak on little news flow so we consider this to be a minor reversion of the previous month’s 30% gains.
We were active in March reducing our position sizes in APT and DOW whilst adding to TLS and NUF in the Growth SMA. The Defensive SMA received capital back for the WBCPDs which were redeemed whilst the Diversified Income and International SMAs were unchanged. On a risk profile performance basis our 5-year numbers continue to perform well against their respective benchmarks.
Risk Profile Portfolio Performance Figures as at 31 March 2019
Prime SMA – Model Portfolio Performance Figures as at 31 March 2019
We think Class Super is the superior SMSF software and here’s why we think you should consider using it!
Written by Olivia Long
Across the JV Partner network, there is a mix of Class and BGL Users.
Many of you may not know what makes Class so unique. It’s called ASAE 3402 Audit Assurance. It’s a game changer, so please read on.
The future in accounting, and not just SMSF is as all about data feeds. No doubt you’ve recognised the importance for your business services division, so let’s talk SMSF.
There are two primary types of data feeds:
- Direct-connect data feeds; and
- Email based solutions
Direct-connect data feeds come directly from the financial institution into the SMSF software on a daily basis, via a secure, authenticated and end-to end encrypted link. They provide highly reliable, encrypted data over a point-to-point connection – which means they can’t be intercepted, meddled with, lost or diverted. The availability of daily data feeds is imperative for achieving the ultimate in efficiency.
Email-based solutions are less reliable. Rather than a direct connect feed, the financial institution (typically a broker or fund manager) sends an email with data and/or PDF attachments to a third-party intermediary that is a data feed provider. The third-party data feed provider uses software to ‘scrape’ the data from the email and PDFs. This means the overall process is less safe and less reliable than direct-connect data feeds. Some documents may be password protected, but they’re not end-to-end encrypted, open to transcription errors and delivery isn’t guaranteed as emails could be lost, caught as spam or resent without detection.
Most software providers now have direct-connect data feeds from banks and financial institutions for bank transaction data, however this still isn’t the case for broker feeds. Our understanding is that at this point in time Class remains the only SMSF software provider to exclusively offer direct-connect data feeds for cash, brokers and platforms.
Personally, I don’t see the point of just relying on data feeds for bank transactions when you still need source documents for all broker or platform transactions.
It’s also worth pointing out what is NOT a data feed. Manual file imports from financial institutions are not data feeds. They require manual intervention – the person with the appropriate access must obtain the file and then another person has to upload the file into the target system.
This file handling can’t be certified as it’s not secure, given the potential that the files could be tampered with.
Reasons direct-connect data feeds are important.
- To accurately and reliably automate the processing and reconciliation of trades and Dividend reinvestments, a reliable source of trade information as well as daily balances is required. Wherever a third-party intermediary is involved, or screen-scraping tools are used, accuracy is reduced and trades may be missed or recorded inaccurately. Without daily balance information, a system cannot automatically process Dividend Reinvestment plans.
- To reliably process corporate actions in bulk across multiple funds, daily balance checks and balance amounts are required. Without this information there can be little confidence that the corporate actions are being processed correctly – or that re-work will not be required later.
Next, we need to consider the end investor and ultimately clients:
- Without daily data feeds, clients are unlikely to have an up to date view of their investment data via an online portal or mobile app. This is an important consideration – without online access to their fund data, clients won’t be getting the experience and service they’ve come to expect from specialist SMSF service providers.
At present, we believe Class Super is the only software exclusively using direct-connect feeds. For this reason, they are the only SMSF software to provide an ASAE 3402 Audit Assurance.
ASAE 3402 is an Auditing and Assurance Standards Board standard that provides auditors with the assurance that the necessary controls are in place at a service organisation level.
Class has achieved ASAE 3402 Type I and Type II certiﬁcation for its data feeds system. This provides administrators and auditors with the assurance that Class has controls in place within its data feeds system that manage the security, integrity and availability of data. In turn, this means that auditors can substantially reduce the amount of testing required for balances and transactions maintained by Class.
The efficiency impact of Audit Assurance is huge and could be the biggest game changer in your practice.
The importance of the class audit comfort means you can rely that the information coming via data feeds is entirely accurate, therefore eliminating the need to obtain source documents for data fed transactions.
I think we’d all agree that majority of time spent on year-end relates to processing transactions and reconciling back to source documents to verify the actual transaction and satisfy the SMSF audit process.
Imagine, being able to run a report of all non-data fed transactions for the year on a fund basis and only reconciling the transactions highlighted that are non-data fed, or those that have been manually touched or manually entered, therefore limiting the scope of your year-end to obtaining only those documents.
The efficiency around year-end translates into significant time savings.
Most importantly, it makes administering an SMSF far easier for your client.
Imagine when you prepare your year-end work papers:
- You no longer need to file or download holding statements to verify transactions, as the data feeds are reconciling back to the source of truth daily;
- No need to obtain dividend statements to verify dividends received;
- No need to get copies of every contract note and bank statement.
The efficiency, and subsequent time/cost savings of Audit Assurance extends far beyond Trustee efficiency and Accountant ease. It’s a complete game-changer if you adopt it and model your business practices which is why we advocate Class Super software.
If you’d like to find out more feel free to give me a call:
Improved CRM and workflow system
Written by Angelina Rigoli
As mentioned previously, we have engaged an external consultant to assist us gain operational efficiencies with the implementation of an improved CRM and workflow system.
Opex our external consultants, are working with us to get the most out of our technology when it comes to our CRM system Xplan and there are several major milestones as part of this project.
The first part of the project is our Advice Framework. This looks at our Fact Find, Statement of Advice (FUM & Risk), Record of Advice & Reviews.
Step one has seen us release an online comprehensive fact find to our advisers which is directly connected to our CRM system (automatically stored in Xplan). Over the past few weeks, advisers have successfully been using our new online fact find to capture the necessary data for clients in preparation of their Statement of Advice.
Now, step two is releasing an online ‘pre-appointment questionnaire’ for the client or accountant to complete prior to a first appointment. This short form questionnaire enables either the client or you the accountant to provide us general information in relation to the client and assists the adviser in preparing for the first appointment. The questionnaire is completed online via a secure portal and again directly linked to our CRM system. As part of this integrated process, clients will also have an understanding of what to expect in the appointment and the type of documents that they will need to bring.
Our advisers will be trialling this over the next few weeks so I look forward to providing you further updates on their progress.
In the meantime, if you would like further information on this, please contact me or speak to your adviser.
The deadline for submission of applications for registration of R&D activities for R&D activities undertaken in the year ended 30 June 2018 was 30 April 2019, however if you’d like support moving forward, we are here to help.
The recent federal budget had the following changes to the EMDG and R&D tax incentive programs:
Research & Development tax incentive
Although there were no changes announced to the Research & Development Tax Incentive Program, the budget estimates prepared for the next four years indicated that the Government anticipates a drop in applications to the program.
The program is non-competitive. This means that companies that meet eligibility criteria are supported. The program is subject to review however and applicants are increasingly subject to audit by AusIndustry and the ATO on R&D claims.
Last years budget estimated that the R&D Tax Incentive Program annual budgeted cost would be $2.69 billion annually. The new forecasts released on budget night indicate this will drop to:
- $1.97 billion in 2018-19;
- $2.2 billion in 2019-20 and 2020-21; and
- $2.3 billion in 2021-22.
This decrease in program support is based on the Governments assumption that there will be less applicants to the program and reduced program funding arising from increased audit activity. Legislation that was introduced to Parliament based on last year’s budget remains unpassed and will need to be re-introduced if it is to be passed (Treasury Laws Amendment (Research and Development Incentive) Bill 2018) so there are currently no changes to the legislation that governs the program.
Export Marketing Development Grant (EMDG)
It was announced in the lead up to the budget that an additional $60 million would added to the Export Market Development Grants Scheme (EMDG) pool of funds over the next three years (3 years x $20million) from 2019-20 to boost reimbursement levels of eligible export marketing expenditure for small and medium enterprise exporters, bringing the total annual EMDG spend to $157.9 million.
For any enquiries or support:
Prime Capital Advisory’s Strategy
Written by Roger Cameron
The mantra of the Capital Division is simple… to do good deals with good people. In practice what this translates to, is selecting the clients and deals we can add value to and to bring together a team of the best service providers to guide and support clients through a transaction process. There were several driving rationales behind the establishment of the Capital Division, two of these were to provide a differentiated, integrated, client centric advisory offering and to grow, develop and support the evolving Prime ecosystem.
Corporate Advisory the Prime way
When the Capital Division is engaged to act on a deal, we seek to use the skills and expertise of existing service providers (largely accountants and wealth managers) because we recognise there is a huge benefit in leveraging their experience and knowledge of the client. This means that the accountants/advisors become a crucial part of the team, providing the technical capability and long-term advice that we require to ensure the client achieves the best possible outcome. Typical within the Australian mid-market, corporate advisory services are provided with minimal engagement and involvement of existing service providers, we see this as sub-optimal and not in the interests of the client, so we seek to do this differently by working side-by-side. For the accounting firms this means that they continue to maintain the relationship with the client and typically experience a significant increase in work through a transaction process.
Developing the Prime ecosystem
Within the Prime ecosystem of accounting partners and JV firms there are a significant number of privately held businesses that at some point would benefit from the skills, knowledge and expertise of the Capital Division’s advisers. In part, we have built the Capital Division to help service these businesses. When we work with a client within the ecosystem we ensure that the relationships and workflows are captured internally and that each part of the business(es) gains exposure to the potential benefits from our work. For example, if a business is introduced from a JV partner, we would see the JV partner working hand-in-hand with us on a transaction and then when the proceeds of a transaction are realised the wealth division would help to manage the proceeds (or a portion thereof), developing long term value creation for all parties involved.
For any enquiries:
Disclaimer: This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (‘Prime’) . Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.