Wealth Management
At Invest Blue we assist in the management of our client’s wealth to ensure that they maximise the opportunity to live their best possible life.
Managing Wealth
We all have an idea of what we want to achieve, but sometimes don’t have the time, understanding or the confidence to make it all happen. Working with an Invest Blue Financial Adviser is the perfect partnership to ensure that you have the understanding, time and confidence to build your wealth and achieve your short, medium & long term dreams and goals.
We focus on three key areas in developing your financial plan, built around your goals, objectives and vision of your best possible life.
Strategy
After taking time to understand and define your best possible life, we determine the right strategy for you to maximise your chance of achieving your goals.
Structure
We work with you to structure your affairs in the most effective way to meet your goals. This includes consideration of different tax environments to hold your wealth, loan structures, investment structures, estate planning structure and the like to ensure you have the best chance of achieving your goals.
Product
Where we identify that a product is required, we investigate the right products for you to maximise your chance of achieving your goals across all areas of your situation, including consideration of lending products, wealth protection products and investment products to meet your needs.
Our Wealth Management approach is focused on selecting the most appropriate investments for the enhancement and protection of your wealth, based on your personal needs.
If you want to lose weight, you need an exercise plan, diet and ultimately a fitness coach. If you have an investment property you seek the services of a property manager. Likewise, if you have financial goals, then Wealth Management is a simple way of ensuring your investment needs are being looked after and monitored on a regular basis.
We believe that putting in place a plan to live your best possible life is not a ‘set and forget’ action, but something that needs to be nurtured, monitored and regularly reviewed. Wealth Management is like running a marathon, just because you have trained and completed a marathon once before does not mean you will be in shape to do it for the rest of your life.
Our approach to investment
At Invest Blue we take very seriously the responsibility and trust given to us by our clients in helping them to manage their wealth. Our clients give us the responsibility of protecting and enhancing their wealth and as such, we take a risk-based approach to the way we manage money. We aim to maximise the probability of our clients meeting their goals, whilst ensuring we implement a strategy that is consistent with their tolerance towards risk.
Our Wealth Management Philosophy is driven to maximise the probability of you achieving your dreams and goals and living your best possible life and is underpinned by six core beliefs.
- Understanding your vision for your best possible life with a clear definition of your goals and tolerance to risk is the first step in building a robust Wealth Management strategy.
- Both components of performance, risk and return, are equally important considerations.
- Transparency is critical to managing risk and return in your portfolios, whilst ensuring you have all of the relevant information to make the right decisions at the right time.
- High-quality research provided by independent experts, regularly monitored and reviewed is more likely to lead to better results.
- Taking an active approach to portfolio construction, asset allocation and stock selection can add value in managing risk and return, where there is clear evidence that the benefit outweighs the cost.
- Once a WM strategy is implemented, it is not a set-and-forget proposition. To live your best possible life, your Wealth Management strategy will require ongoing monitoring and review, in partnership with you and your adviser.
How do we measure success?
Ultimately the success of your Wealth Management Strategy is best exhibited when it allows you to achieve your goals and dreams so that you can live your best possible life.
However, we believe it is also important to track and measure the risk and return outcomes of your investment portfolio against independent benchmarks to ensure it is achieving the risk and return objectives of your portfolios and make proactive adjustments as necessary. At Invest Blue we do this by assessing the returns generated by our portfolios, against the risk taken to earn those returns, and we benchmark ourselves against the returns generated for each unit of risk taken on, rather than just comparing on returns alone.
Your wealth management journey
As a client of Invest Blue, we will always start with getting to know you well before we recommend a Wealth Management Strategy. This important foundation helps us both to clarify what is most important to you, your dreams and goals, your current situation and what your best possible life might look like. We will also undertake a risk preference analysis so we can understand your tolerances.
From there, we need to take you on a journey to understand your options and be aware of the trade-offs each choice inherently holds. To do this we will explain your options, outline our beliefs about Wealth Management, discuss your preferences, and then make recommendations that we believe best suit your needs.
Working with an Invest Blue Financial Adviser is the perfect partnership to ensure that you have the understanding, time and confidence to build wealth and achieve your short, medium & long term goals and objectives. We focus on three key areas when developing your financial plan, built around your goals, objectives and vision of your best possible life: strategy, structure and product. Let us explore these areas a little further now.
Our Strategy
What is the right strategy for you to maximise your chance of achieving your goals?
Once we understand clearly your goals and vision for your best possible life, we will work with you to define a strategy that holistically maximises your chance of achieving this. Our preference is to provide a solution focusing on ALL aspects of your financial situation so that we can have confidence we can assist you to live your best possible life.
As part of this we consider strategies to maximise outcomes in relation to your personal needs from the following key advice areas, asking a range of questions:
Our Structure
How do we work with you to structure your wealth in the most effective way to meet your goals?
This includes consideration of:
- The different tax environments and ownership structures to hold your wealth, including the benefits of superannuation vs holding your assets outside of the superannuation environment.
- Your wealth protection needs and the most effective structure to hold your insurances from a tax, cash flow and cover perspective.
- Your lending and banking needs and the best way to structure your day to day banking arrangements for cash flow management and the best way to structure your loans to manage your interest payments and maximise tax-deductibility of any investment loans.
- Your estate planning needs and the best way to structure how your wealth flows from you to your dependents and beneficiaries.
- Budgeting and Cashflow Management: How do we maximise your free cash flow to be able to direct to your short, medium- and long-term savings goals?
- Debt Management: How do we help you manage your debt in the most effective way possible to meet your debt, wealth creation and other objectives?
- Wealth Protection: What is the right amount of Wealth protection (either through Insurance, Self-Insurance or savings) to ensure the achievement of your goals and objectives aren’t jeopardised in the event of the unforeseen?
- Wealth Management (pre-retirement): How do we build and protect your wealth in the most tax-effective manner during your working life to ensure it grows over time to be able to meet your needs now and in the future?
- Retirement Planning: What is the best strategy to ensure you have sufficient funds to maximise the chance of you achieving your retirement and estate planning objectives?
- Maximisation of Government Benefits: What is the most effective strategy to ensure you maximise your entitlement to any government support payments, in order to help you achieve your goals?
- Estate Planning: How do we ensure your assets go to the right people at the right time?
Our Product
Where we identify that a product solution is required, what are the right products for you to maximise your chance of achieving your goals across all areas of your situation, including consideration of lending products, wealth protection products and investment products to meet your needs?
Our Wealth Management approach is focused on determining the right investment solution for you and your needs.
For information on our approach to other elements mentioned, please see the relevant philosophy documents for those services here:
Our philosophy on debt and lending
Our philosophy on wealth protection
Our philosophy on Self-Managed Super Funds
The facilitation of the above financial advice process is conducted via our Invest Blue Advice Process.
Selecting a product for your Wealth Management strategy
Once we have determined the right strategy and structure to meet your Wealth Management needs, via our Wealth Management approach, we will work with you to select the most appropriate platforms, investment structures and investments to manage your wealth in a manner that maximises your chance of achieving your Wealth Management objectives.
What is an investment platform and what does it do?
In simple terms, a platform is an administration service for your investments.
Platforms (also labelled as ‘wraps’), master trusts or investor directed portfolio services (IDPSs) are all designed for one purpose: to simplify the administration, management and reporting of the increasingly complex portfolios investors are accumulating. Essentially, platforms are administration facilities for investment and superannuation money and in the case of superannuation they also allow you to co-ordinate your wealth protection needs within the fund. When you are ready to start to draw an income from your superannuation, platforms allow for the administration and payment of your income streams.
They simplify the investment process because they consolidate all the investment reporting and administration for you and send you regular portfolio valuations and tax statements.
Benefits of the platforms
Essentially, platforms are administration facilities for investment and superannuation money and in the case of superannuation they also allow you to co-ordinate your wealth protection needs within the fund. When you are ready to start to draw an income from your superannuation, platforms allow for the administration and payment of your income streams.
They simplify the investment process because they consolidate all the investment reporting and administration for you and send you regular portfolio valuations and tax statements.
Choice: A platform will give you access to a range of investments across all the major asset classes – shares, property, cash and fixed interest. Depending on the product you choose, you may have anything from a limited choice of managed funds, right up to a choice of hundreds of managed funds, exchange traded funds (ETFs) shares and cash options.
Your investments are in one place without compromising on diversity: platforms can combine your investments under a single administration facility. You receive consolidated reports (simplifying your tax reporting), regular updates, and often 24-hour online access to your portfolio. In addition, the use of a consistent reporting style enables you to compare ‘apples with apples’ when analyzing the performance of your investments.
Access to specialist and/or wholesale funds which may otherwise be outside your reach. For example, many wholesale funds have lower management fees but higher entry levels, such as a minimum investment of $500,000. While this puts the fund out of the reach for most individual investors, by using a platform, the minimum investment amount is generally a lot lower.
Reporting: One major difference between investing through a platform and investing directly is the comprehensive and consolidated reporting provided. You can have 20 managed funds and 15 share investments yet receive just one regular report detailing and summarising all your financial information. This is particularly useful when it comes to calculating your tax. Your capital gains tax liabilities and your franking credits will be consolidated and calculated for you.
Online access: Most platforms give you online access to your account, so you can see how your portfolio is performing and access other information 24/7.
Flexible fees: some platforms provide flexible fee structures and certain fees may even be tax-deductible.
Platforms in Australia tend to be offered by two distinct providers;
- Industry based or Union provided Not for Profit Investment Managers, known as Industry funds
- Banks and Professional Wealth Management firms known as Retail funds.
Things to consider
If your money remains invested through the platform, you can instruct your adviser to switch investments or change your strategy at any time, online or over the telephone. As a result of these added services and functionalities, however, you may incur an administration fee for using the platform.
A Platform is suitable for those investors looking for a cost-effective, comprehensive all in one solution wanting to hold all their investments in one place. The responsibility for compliance, administration and reporting is outsourced to a third party as they are not prepared to take on the legal liability and accountability for compliance with the regulatory framework and relevant penalties for non-compliance.
If you’re thinking about investing through a platform, it’s important to consider your circumstances. In terms of the fees/benefits trade‑off, you should consider whether you will be better off using a platform or investing directly in the individual funds.
How we select the most appropriate platform
When reviewing the type of platform that would work best for your personal circumstances, there are a range of considerations that factor into our decision. Questions such as, will your current platform provide you with an outcome that will support your overarching goals? Is there another platform on the market that would be more beneficial to your situation? Do we need to use a range of platforms in order to deliver the best possible outcome for you?
Generally speaking, our process to guide these considerations are noted below:
Review and compare your existing platform. During this process, we engage in several tools and resources to assist us to complete an analysis of your situation. If we deem that your current platform is suitable, appropriate and is benefiting your position, there may not be a reason to change.
Where we believe that a change in platform is the best thing for you to achieve your wealth management goals, we will consider alternative platforms and compare their functionality, performance, accessibility, and cost, to determine the best solution for you.
We will continue to monitor and assess your Platform’s appropriateness, where you have engaged in an ongoing relationship with an Adviser.
Directly held investments
An alternate to holding your investments through a platform, you also have the ability to hold Investments directly, though it can often be difficult to attain significant diversification cost-effectively by doing this. Direct investment would usually suit those that either has significant wealth, (greater than $1,000,000), those that have the time and inclination to co-ordinate and manage their affairs, conducting their own reporting and analysis or those that would prefer to invest in single large assets, like a direct property, rather than a diversified portfolio.
When investing your superannuation monies, if you wish to hold your assets directly, this needs to be done via an SMSF. Under an SMSF you take on the administration, auditing, tax management and reporting obligations. Whilst you are able outsource these tasks to accountants and other professionals, the cost means that unless you have a significant amount to invest, this can be expensive.
Additionally, under an SMSF you take full legal liability for the compliance of your funds with relevant tax and legislative requirements. An SMSF suits those who wish to invest in direct assets, business premises, or assets not usually held on platforms like artwork and other collectables. Additionally, it would suit those with unique estate planning needs or those that want to manage their own affairs and are willing to take on the legal accountability to manage compliance or are prepared to outsource this and willing to pay the cost of doing so.
In general, our view is that the minimum requirement for an SMSF to be cost-effective is $500,000 of investable assets.
Selecting the structure to hold your investment products
An asset is ‘direct’ when you transact directly and therefore hold either shares or property title.
Investor Suitability
This suits a highly engaged and educated investor who wants more control over the asset they are purchasing and is prepared to do the research to understand the value of their investment opportunities and ongoing performance.
A managed asset or fund involves pooling together money from different investors into one fund that is invested by the fund manager. These funds allow an investor to participate in a diversified way, but do not offer a great deal of control over specific investment selection. They often have low minimum investment requirements which means they are accessible to many investors. When you use a professional you will benefit from their knowledge and skills to make informed investment decisions but you will incur costs including entry and exit fees, as well as management and administration fees. Additionally, in a managed fund, you share the costs and tax consequences of the entire pool of investors and often have limited transparency as to the underlying holdings.
Investor Suitability
This suits an investor who wants to participate in a broad range of investment opportunities and who values the expertise of a professional Fund Manager who does the research into what to buy or sell and is prepared to pay for that.
https://www.canstar.com.au/managed-funds/what-are-managed-investments/
A model portfolio is a group of investments or funds that are designed to meet expected returns within corresponding amounts of risk. A Model Portfolio will blend a combination of asset classes, investment managers and investment strategies to achieve a rich level of diversification. As values in particular asset classes increase or decrease, a rebalance will ensure that the overall portfolio remains within its designated asset allocation. An investor using this strategy will pay more for the research and management of their portfolio.
Investor Suitability
This suits an investor who wants to participate in a broad range of investment opportunities and is prepared to invest in professional expertise to participate. These investors don’t have control over underlying investment selection and are comfortable allowing Qualified Investment Professionals to make those decisions on their behalf, within the predefined asset allocation mix.
A Separately Managed Account (SMA) is a unique investment structure. While it comprises of shares, bonds, cash or other individual securities and is overseen by a professional money manager, it is flexible enough to be customised to our personal preferences and goals.
The SMA structure provides some significant benefits compared to managed funds. It is more transparent, which helps manage risk and it is also more tax effective, which leads to higher return then a managed fund portfolio via a range of tax methodologies (to be expanded on) and minimisation of Buy-sell spreads and transaction costs. Thus, the SMA structure given it can help minimise risk, tax and transaction costs will provide a better risk/return outcome than the equivalent portfolio built in a model or in a diversified fund, again meaning the clients chances of achieving their goals are higher under this approach.
Benefits of an SMA
- Allows you to invest and hold your asset directly rather than be in a pool of other investors
- Combines the benefits of direct and managed
- But still take advantage of professional management
- In equities or other assets
- You can then control your tax benefits
- https://www.ppmfunds.com/imas-and-smas-explained/
Comparison of Investment Structures
| Feature | Managed Funds | ETFs | SMAs | Directly Held |
| Tax Efficiency | Poor | Good | Good | Good |
| Portability | None | None | Good | None |
| Managed to Particular Tax Outcome | No | No | No | Yes |
| Transparency | Poor-Moderate | Good | Excellent | Excellent |
| Direct Ownership | No | No | Yes | Yes |
| Embedded Tax Liability | Often | Sometimes | No | No |
| Capital Losses can be applied to: | Future gains within the structure | Future gains within the structure | Any current or future gains | Any current or future gains |
| Access to Diversification and professional Management | Excellent | Excellent | Excellent | Limited |
| Variety of Investment Options | Excellent | Moderate | Excellent | Limited by capital |
| Portfolio Construction | Manager’s discretion | Manager’s discretion | Model portfolio | Done by the investor |
| Tailored Management | No | No | No | No |
| Management Fee Tax Deductibility | No | No | No | No |
Fees
Initial Portfolio selection
We offer a number of portfolio selection options to suit your needs and preferences. Ranging from low cost and low intervention through to options that come with management fees but offer active solutions, there is something for most investor types. The Foundation, Comprehensive, Dynamic and Bespoke options are described below.
Review frequency
Once we’ve worked with you to understand your dreams and goals, and the ways in which we can support you to meet your objectives, we will provide you with our recommendation as to how frequently we should meet to track the progression of your goals and adjust for changes as they arise.
The complexity of your situation and your desire to meet to discuss your financial goals will be factored in determining how often we come together to undertake a formal review. Generally, we like to meet with you at least once per year.
Fees
When you first meet with an adviser, there are upfront fees charged to do the initial work and get your financial plans built and implemented. These fees range from $3,000 to $10,000. There is no cost for our first meeting. Generally, there is a $500 fee for the second meeting when research is undertaken, and that fee will be deducted from your total upfront fee. These are separate to the fee schedule below.
As an ongoing client, there is a base amount we charge to cover working with a Financial Adviser or Advisers and the broader team that supports them. This price ranges from $1,200 to $6,600 per year.
We have three ongoing support packages based on complexity. These packages are not selected by you – they will be determined by your situation and preferences. These are as follows:
| Enhance |
| This is an entry level package that suits clients who have relatively simple financial affairs and less than $500,000 to invest. Often our families in this package are just starting out on their financial journey or are later in their retirement years. This package includes one formal meeting with your adviser per year. |
| Elevate |
| Our standard package suits the majority of the families that we work with. You may have a slightly more complex financial situation, multiple goals and a combined wealth of more than $500,000 to be managed. This package includes one formal meeting with your adviser per year. |
| Exceed |
| Our exceed package suits our families with more complex situations and needs who, due to that complexity, require more support to manage their strategies and advice. |
Your Adviser will recommend the most suitable ongoing package for your based on the complexity of your situation, the amount of support required and your stage in life.
Additionally, if you undertake one of our active Wealth Management solutions, you will be charged a fee based on the amount you have invested. This means that when you undertake an active Wealth Management solution with us, we also charge a percentage-based fee that is applied to the balance of your investment. The more you have invested, the lower the percentage applied; these fees range from 0.80% to 0.65%.
Our range of portfolio solutions are designed to meet the unique needs of our clients.
Foundation: Passive or Active | Dynamic | Bespoke |
|---|---|---|
| Where you want a financial adviser to review your financial situation and help you plan for your future, but want your Wealth Management solution to be held outside of that arrangement utilising a set and forget Strategic Asset Allocation approach, managed in a single fund, that can be either Passive (Foundation) or Active (Comprehensive). This suits if you are a DIY investor or have another investment arrangement that you are already happy with. It also suits those that are cost conscious and/or who do not see the benefit of having an Adviser actively involved in co-ordinating the management of their portfolio. It would also suit those who do not philosophically believe or don’t accept that Additional Risk and Return benefits over and above the market can be achieved via an Active, Tactical an or Dynamic Approach. | Where you want to work with a financial adviser to review your financial situation and help plan for your future and our Wealth Management solution suits your needs. This suits you if you can see the benefits outlined in this document around transparency, High quality research, a more defined approach to risk and return, would like to take a Tactical and Dynamic approach to Asset Allocation, managed by a 3rd party Investment manager to enhance efficiency, monitored by an adviser. Part of dynamic, if you choose to terminate our services, we will provide a final piece of advice at no cost to move to a more appropriate portfolio. | Where you want a financial adviser to review your financial situation and help you plan for your future and build a Wealth Management solution in a bespoke fashion, tailored only for you with no consideration of cost. You are interested in some, or all of the benefits outlined in this document and would like to define the elements you are interested in with your adviser and then engage your adviser to work with a research specialist to create a highly tailored and bespoke portfolio for you. Because this requires bespoke research and support, the annual fee is significantly higher and would typically suit a sophisticated investor, someone with investible assets over $2m or someone who is not interested in the efficiency and cost savings of an all in one solution. Part of Bespoke, if you choose to terminate our services, we will provide a final piece of advice at no cost to move to a more appropriate portfolio. |
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