Q1. Broadly, what are the key trends for funds businesses in New Zealand?

New Zealand's investment market is becoming increasingly sophisticated, driven by:

• supportive regulatory reforms,
• rising retirement savings,
• expanding retail participation, and
• growing interest in passive and private market investments.

We should note that although regulatory reforms have been supportive, the regulatory burden has increased.

Generally, our experience is that investors in wholesale mandates, KiwiSaver schemes, and retail managed funds are seeking more diversified, transparent, and cost-effective investment options.

For example, total funds under management (FUM) in New Zealand reached NZ$369 billion as of December 2025, with KiwiSaver assets specifically accounting for NZ$145 billion by the same period, according to Reserve Bank of New Zealand (RBNZ) and Morningstar data. Although still a relatively small share of portfolios, the Financial Markets Authority (FMA) has observed that alternative and private market exposures-such as private equity, private debt, and unlisted infrastructure-are being increasingly added to KiwiSaver schemes to drive diversification.

Institutional leaders like the NZ Super Fund have projected these allocations to grow significantly, with strategic targets for alternatives recently shifting from 20% to as high as 35% of total assets.

This trend is expected to continue over the next five years among New Zealand institutional and high-net-worth investors for many of the same reasons as in Australia, as they seek yield and uncorrelated returns in volatile public markets.

Access to private market investments typically occurs via local feeder funds or limited partnerships managed by domestic firms, global funds distributed through wholesale channels, and certain KiwiSaver and retail managed funds that include small allocations to private assets.

The use of exchange-traded funds (ETFs) among New Zealand investors has also grown steadily over the past five years where assets in leading domestic ETFs such as the Smartshares NZ Top 50 (NZX code: FNZ) exceed NZ$600-700 million.

ETF use is expanding within KiwiSaver schemes, which increasingly use passive building blocks to reduce fees and improve transparency. While smaller in scale than Australia, the combination of locally domiciled ETF providers, platform accessibility, and cost advantages suggests continued secular growth in passive investing.

The commercial viability of entering the New Zealand market for fund managers is closely linked to how efficiently they can access priority channels such as institutional and wholesale mandates, KiwiSaver platforms, or retail managed fund investors-without over-investing in infrastructure that may not be immediately scalable. The challenges are similar to Australia but with some important nuances.

Q2. What are the main regulatory policies and developments impacting fund managers engaging with New Zealand investors?

The FMA, Treasury, and the Ministry of Business, Innovation & Employment (MBIE) are coordinating to refine the country's savings and investment policy architecture to boost retirement savings and enhance transparency and fairness.

KiwiSaver, which is broadly analogous to Australia's superannuation system and familiar to many fund managers operating in the region, remains the core focus of reform. From 2026, KiwiSaver contribution rates will gradually rise while the government matching incentive has been reduced, with higher-income earners no longer eligible.

Beyond KiwiSaver, the regulators are reinforcing the Portfolio Investment Entity (PIE) framework, which in turn is tightening fee and disclosure oversight.

Q3. What are PIE funds and what benefits do they provide over other fund structures in New Zealand?

The PIE regime sits at the core of New Zealand's managed funds industry. PIE funds offer capped tax rates of up to 28% and simplified administration for investors, potentially providing an advantage over direct holdings or offshore ETFs that are taxed under the more complex Foreign Investment Fund (FIF) regime.

Most domestic investment vehicles, including KiwiSaver schemes and managed funds, are structured as PIEs, helping to enhance tax efficiency and competitiveness. This has encouraged the growth of New Zealand-domiciled ETFs and other index fund offerings, such as Smartshares, which deliver low-cost passive asset class exposure while retaining their PIE status.

The tax benefits of the PIE structure help explain the slower uptake of other fund structures including Australian managed investment schemes (MIS). We should also point out that New Zealand investors cannot use the franking credits that are often included in the distribution income of Australian MIS. This has important implications for fund managers seeking to grow their business in New Zealand as they must carefully consider the cost-benefit of establishing a PIE structure compared to other potentially lower cost options, but which are likely to reduce their total addressable market.

Q4. What are the key regulatory and licensing requirements for investment managers seeking to initially market their funds in New Zealand?

For fund managers looking to access New Zealand investors, the starting point is understanding the regulatory framework overseen by the FMA. The requirements differ significantly depending on whether the manager is targeting retail or wholesale investors.

For example, a first time visit by a fund manager seeking to market to wholesale investors can proceed without a licence if the investor qualifies for one of the wholesale exemptions under the relevant legislation. These exemptions typically apply to institutional investors, high-net-worth individuals, and professional investors. While wholesale activities attract limited FMA oversight, fund managers must still ensure that all exemption conditions are strictly met. Therefore, relationship-building meetings, investor presentations, and preliminary discussions with wholesale investors are generally permissible if all exemptions are met.

Although no licensing is required for wholesale offers, 'fair dealing' provisions under the Financial Markets Conduct Act 2013 (FMC Act), must be adhered to.

They relate to the prohibition of:

• misleading or deceptive conduct, and
• false/unsubstantiated representations.

In some cases, a prescribed warning statement and investor acknowledgements may also be required for offering documentation to wholesale investors.

In practice, many offshore fund managers begin their New Zealand engagement through a small number of introductory meetings with institutional or wholesale investors, often coordinated alongside Australian visits. These initial discussions are typically limited to high-level strategy and capability introductions, with care taken to ensure no formal offer is made unless a wholesale exemption clearly applies. This approach typically allows managers to test investor appetite, build relationships, and assess allocation potential without incurring the upfront costs associated with licensing, onshore governance, and retail disclosure. However, while wholesale distribution offers speed and flexibility, it also limits access to the largest pools of long term capital-particularly, KiwiSaver schemes, which increasingly dominate flows.

We should highlight that under the FMC Act a 'wholesale investor' is someone who meets one of several statutory tests indicating sufficient scale or sophistication. This includes investment businesses (such as fund managers and institutions), large investors with at least NZ$5 million in assets or turnover, investors committing NZ$750,000 or more to an offer, or individuals certified as 'eligible investors' based on their experience. For example, a New Zealand family office committing NZ$1 million to a private fund would typically qualify as a wholesale investor under the minimum investment test, provided the statutory conditions are met.

By contrast, marketing to retail investors requires full licensing and registration under the FMC Act, with strict compliance obligations relating to disclosure, governance, and investor protection.

Consequently, initial roadshows or marketing activities to retail investors are not permitted until appropriate regulatory approval is in place.

Q5. If that same fund manager is planning to conduct repeat visits and is endeavouring to build a fund business in New Zealand, does that change their licensing requirements?

Conducting repeat visits and systematically endeavouring to build a fund business in New Zealand increases regulatory obligations significantly, especially if it involves retail investors or establishing a local presence. Any entity that offers, deals in, or advises on financial products to retail clients on a repeatable basis should consider New Zealand's licensing requirements and typically requires a licence issued by the FMA. Of course, we would recommend fund managers thoroughly investigate what would be considered 'repeat' and 'systematic' and what would be considered a permanent or semi-permanent 'local presence'.

Q6. Are there any limitations on the type of underlying asset classes of a product that can be marketed in New Zealand? For example, do the same laws apply to a public equity, private equity, or a hedge fund manager?

There are generally no asset-class-specific restrictions for wholesale offerings, (public equity, private equity, hedge funds, private credit, infrastructure, etc.) in New Zealand, provided disclosure and exemption conditions are met. While asset class is rarely determinative in New Zealand, the wholesale/retail distinction has practical consequences for fund structure, licensing, and ongoing compliance obligations.

For wholesale investors almost any asset class can be marketed, and no product registration is required. However, for retail investors products must be offered through a registered MIS such as a PIE, a licensed manager and licensed supervisor are required, liquidity management, and valuation rules apply. These rules can pose practical challenges for offerings of illiquid alternative investment strategies to retail investors through a MIS structure-especially for KiwiSaver.

Q7. If an investment manager plans to launch a managed investment scheme, unregistered or registered in New Zealand, does that change the licensing requirements? Are there limitations regarding fund structure (open /closed end)?

Licensing requirements depend on whether the fund is offered to retail investors. When a fund is offered to retail investors, it must be registered under the FMC Act, the manager must hold an appropriate FMA-issued licence, and a licensed supervisor must oversee the scheme. These requirements apply regardless of whether the fund is open-ended or closed-ended, although the structure will influence disclosure, liquidity expectations, and operational processes.

When a fund is intended only for wholesale investors, offshore structures such as Cayman limited partnerships, Luxembourg funds, or Australian MIS and Corporate Collective Investment Vehicles [a CCIV is a specialised corporate structure used specifically for funds management which allows investors to pool their money into a registered company and have it managed by a professional fund manager], can be marketed in New Zealand without local registration. New Zealand recognises a wide variety of legal forms, including unit trusts, limited partnerships, and registered MIS vehicles. In these cases, neither an MIS licence nor a supervisor is required.

Australia-New Zealand cross-border frameworks also provide additional pathways for fund managers entering the market. Under the Trans-Tasman Mutual Recognition scheme, Australian retail funds can extend offers into New Zealand using their existing Australian disclosure documents with only limited additional requirements, avoiding the need to build a new Product Disclosure Statement and local framework from scratch.

Similarly, the Asia Region Funds Passport (ARFP) offers a regulated mechanism for certain qualifying funds to be marketed across participating jurisdictions, including New Zealand, subject to meeting home-country eligibility and host-country notification rules.

From a distribution standpoint, fund legal structure is less about regulatory permissibility and more about investor accessibility and scalability. While offshore structures are widely accepted by wholesale investors, they can present barriers when engaging with platforms, consultants, and fiduciaries that favour local governance, tax efficiency, and operational familiarity. As a result, managers with long-term ambitions in New Zealand often view onshore structuring as a strategic investment.

Q8. What are the differences for an investment manager establishing a direct onshore master fund or relying on a feeder fund into an offshore vehicle?

An onshore New Zealand master fund may qualify as a PIE, delivering meaningful tax advantages for New Zealand investors and making the structure more attractive to retail and KiwiSaver allocators. Establishing an onshore fund also brings the product within New Zealand's retail managed investment scheme regime, requiring a licensed manager, a licensed supervisor, and locally based service providers, reflecting the higher governance and disclosure standards applied to domestic retail products.

A New Zealand-domiciled feeder fund into an offshore master can also achieve PIE status and therefore access the same tax benefits, but offshore master or feeder structures are most commonly used for wholesale distribution, as they can avoid the registration, supervision, and licensing requirements that apply to retail offers.

In practice, the choice between an onshore master structure and an offshore feeder typically depends on the target investor base, tax efficiency objectives, and the fund manager's desired level of operational and regulatory presence in New Zealand. Fund managers seeking access to KiwiSaver schemes or retail platforms generally favour a PIE-qualified onshore master or feeder structure, while those focused exclusively on institutional or HNW wholesale investors often rely on offshore feeder arrangements to minimise establishment costs and ongoing compliance obligations.

Q9. We hear the concept of a 'trustee' and a 'responsible entity' in Australia. Are those concepts relevant in the New Zealand context?

In New Zealand, the structure and oversight of MIS differ from the Australian model, although the objectives-investor protection, governance, and accountability-are broadly similar.

In Australia, a responsible entity combines the functions of both trustee and fund manager. It is a single licensed entity legally responsible for operating the scheme, holding the assets on trust, and ensuring compliance with the Corporations Act 2001 and the scheme's constitution.

By contrast, New Zealand operates a two-entity model under the FMC Act. A licensed manager is responsible for the day-to-day operation and investment management of the scheme, while a licensed supervisor-effectively the trustee-provides independent oversight on behalf of investors. The supervisor holds the scheme property on trust, monitors the manager's performance and compliance, and reports any material breaches to the FMA.

This separation of roles strengthens governance and reduces potential conflicts of interest. The supervisor must remain independent of the manager and is usually a professional trustee company licensed by the FMA, such as Public Trust, Trustees Executors (recently sold to Perpetual Guardian), Covenant Trustee Services or the Guardian Trust. The supervisor also has a direct reporting obligation to the FMA in the event of breaches or concerns.

Overall, New Zealand's model arguably provides an additional layer of investor protection by embedding an independent fiduciary to oversee fund operations. Australia's responsible entity structure centralises these responsibilities within a single licensed entity.

Q10. What are the trends in sustainable and responsible investment reporting and other regulatory requirements?

Sustainability and ESG integration are now mainstream across KiwiSaver and retail managed funds, and large fund managers have formalised ESG frameworks or exclusions. The FMA is enforcing clearer disclosure and anti-greenwashing standards, helping investors to gradually differentiate between genuine sustainability integration and simple 'ESG branding.' However, disappointingly for many advocates in the sector, mandatory climate related disclosures for large financial institutions have now been scaled back and licensed fund managers have been excluded from the regime entirely (although some reporting is expected to be conducted on a voluntary basis, for the time being at least).

Generally, ESG integration is becoming a baseline expectation rather than a differentiator. The next phase will likely involve credible impact reporting, private-market sustainability metrics, and transition-aligned portfolio strategies.

Q11. What are some other important considerations for marketing funds in New Zealand?

Generally, before entering the New Zealand market, investment managers should ensure a comprehensive understanding of the country's legal and regulatory environment. As outlined previously, the level of oversight applied by the FMA depends on the nature of the activities undertaken, the types of clients targeted, and to a lesser extent, the financial products offered. Fund managers should remain alert to evolving policy and legislative changes, potentially engaging proactively with regulators to seek clarification or exemptions where necessary.

In recent years, fund-hosting providers have begun operating in New Zealand. Fund-hosting providers are generally licensed managers which, through investment management arrangements, effectively allow offshore fund managers to create and offer PIE funds to New Zealand investors without being licensed themselves.

These arrangements can also involve the outsourcing of back-office and administrative functions to the fund-hosting provider. This may appeal to offshore fund managers who do not wish to establish full-service operational capability in New Zealand at the outset. In order for a fund to qualify as a PIE it must be a New Zealand tax resident and not treated as a non-resident under a double tax agreement with New Zealand, which generally requires key management decisions for the fund to be made in New Zealand.

Successful market entry requires a well-developed strategy that integrates regulatory compliance and supports both initial approval and long-term growth. It also requires assessing the cost-benefit of different pathways to New Zealand investors and their evolving asset class and legal structure preferences.

In practice, offshore fund managers typically pursue one of three strategic pathways when entering the New Zealand market:

• wholesale-only distribution,
• platform-led access via KiwiSaver schemes or retail managed fund platforms, and
• hybrid approaches combining wholesale engagement with selective onshore structuring and engagement with platforms over time.

Each pathway carries different implications for cost, regulatory complexity, speed to market, and addressable capital, and should be assessed in the context of the manager's broader regional strategy rather than New Zealand in isolation.

Infrastructure debt funds continue to represent a relatively small portion of the market, accounting for just 8.1% of total infrastructure assets under management as at Q1 2025. This dynamic is expected to create attractive opportunities for dedicated credit managers, particularly given that approximately US$322 billion of infrastructure equity dry powder remained as at the end of 2025. Ongoing public infrastructure funding deficits, combined with elevated levels of private equity dry powder, point to continued high levels of activity in 2026 across both private infrastructure equity and debt markets.

Key themes

Several structural themes are expected to underpin investment momentum,

• Sustained demand for artificial intelligence (AI) capacity is expected to continue to drive growth in data centres, power supply, and fibre.
• Acceleration of capital deployment driven by grid modernisation, energy security, and industrial onshoring.
• Urbanisation driving the need for social infrastructure investment in developed and emerging markets.
• Continued growth of private capital and the emergence of asset backed finance as a receptive market for infrastructure execution.

Observations and outlook

• 2025 proved a strong year for private infrastructure, with around $1.56 trillion in global activity, driven by sustained momentum in the power and digital sectors. Investment increased across all major sectors on a year-on-year basis.
• Global infrastructure debt volumes reached approximately $1.05 trillion in 2025, with funding shifting modestly toward capital markets to an estimated 80/20 split between bank lending and capital markets (compared with roughly 85/15 in 2024).
• Investment grade (IG) opportunities continued to see significant activity while attractive high yield (HY) opportunities continued to expand for institutional investors. Infrastructure debt maintained a strong premium to public comparables while offering spreads of +200-250 bps for IG issuances, +325-400 bps for BB issuances, and +425-650 bps in low BB and single B issuances.
• Infrastructure equity investment continued to see high volumes; approximately $510bn (33%) of total global volumes.
• Infrastructure equity deal flow was largest in core and core-plus strategies, while fundraising was most successful in opportunistic strategics - showing investor appetite for different types of risk-return profiles across the asset class.

The wrong diagnosis

The industry has settled on a familiar diagnosis. Founder dependency is the problem. Corporatisation is the cure. Add structure, document processes, bring in professional management, and layer in technology. Growth follows.

That logic is neat, but it does not tell the whole story.

What actually breaks as firms grow is not execution. It is judgment. In practice, execution failures are often how judgment failures first appear.

Why judgment fails at scale

In a founder-led business, decisions are fast and coherent because they sit with someone who has earned pattern recognition the hard way. Pricing, client selection, risk tolerance and trade-offs are handled with context that no playbook fully captures. Remove that person or dilute their involvement, and performance does not hold. Not because the founder was irreplaceable, but because the business never translated how those decisions were being made.

So the firm scales activity, but not capability.

This is where most scaling efforts quietly fail. They document what to do, but not how to think. They build workflows, but not decision rules. They distribute tasks, but leave judgment implicit. The result is predictable. Work gets done, but inconsistently. Margins compress. Clients feel the variation. Leadership responds by adding more oversight, which slows everything down.

You end up with structure without clarity, which is just bureaucracy with better branding.

From dependency to translation

The push to eliminate principal dependency often makes this worse. Dependency is treated as a flaw to be removed when it is an asset that has not yet been systematised. The real task is not elimination.

It is translation.

High-performing firms take the instincts of their best operators and force them into the open. But the mistake is to reduce those instincts into rigid rules. That is where most firms lose traction. A better approach is layered translation: principles, boundaries, and judgment aids.

A layered decision model

Three layers: principles, boundaries, and decision aids.

At the top level sit principles - non-negotiable statements about how the firm creates value and manages risk (for example what constitutes a suitable client, or when to walk away).

Beneath that sit boundaries - explicit thresholds, ranges, and escalation triggers that constrain decisions without pretending to eliminate context.

Only at the lowest level do you introduce decision aids - examples, case patterns, and worked scenarios that show how experienced operators think in practice.

This preserves nuance while still making judgment transferable. The goal is not to eliminate discretion, but to make it legible, testable, and challengeable. Delegation works not because decisions are pre-made, but because the person taking on the task is guided by a shared logic rather than guesswork.

Governance makes judgment defensible

But this only holds if governance keeps pace with translation. Without it, principles decay into slogans and boundaries drift under commercial pressure.

Firms that do this well treat decision frameworks as governed assets embedded within their compliance infrastructure, not static documents. They assign clear ownership for each principle and boundary, define review cadences, and test decisions against real outcomes - including complaints, file reviews, and near misses. When a decision fails, the question is not just who made it, but whether the underlying logic was flawed, incomplete, or ignored.

This creates a feedback loop between advice, risk, and compliance. Breaches and AFCA complaints are not handled as isolated events but as inputs into refining the decision system itself. Over time, this is what turns judgment into something that can withstand scrutiny - not because it is perfect, but because it is continuously challenged, evidenced, and improved.

Without that loop, what looks like a scalable model will fail the first time it is tested externally.

Example: Client selection

Before translation, client selection relies on instinct. A founder might reject a prospect who appears profitable on paper but shows signs of complexity, indecision, or unrealistic expectations. Across a team, that instinct becomes inconsistent.

After translation, the firm defines:

• principles (we prioritise clients we can serve with clarity and long-term alignment)
• boundaries (for example multiple strategy changes pre-engagement triggers escalation)
• decision aids (examples of past clients who became unprofitable or high-risk)

The outcome is not uniform decisions, but consistent reasoning.

Incentives break systems

There is a further constraint most firms avoid confronting: remuneration design. You can define principles, boundaries, and decision frameworks with precision, but if advisers are rewarded primarily on revenue, asset growth, or client retention, those incentives will quietly override the system.

In many firms, the highest-performing advisers by revenue are also the most frequent boundary-breakers. Unless that tension is addressed explicitly, no decision framework will hold.

This is where many well-designed operating models collapse. The formal logic says one thing; the economic logic says another. In practice, staff learn quickly which one matters.

Firms that sustain decision quality at scale align incentives with the behaviour they claim to value. That means introducing metrics tied to decision quality - file review outcomes, client complaints, adherence to escalation triggers, and long-term client retention adjusted for suitability - not just volume or revenue. It also means making trade-offs explicit: accepting lower short-term growth in exchange for consistency and defensibility of advice.

In practice, this means scheduled decision reviews, documented rationale for edge cases, and formal escalation logs. Governance is not periodic oversight - it is continuous interrogation of how decisions are actually being made.

Without that alignment, governance becomes performative. Principles exist, but are selectively applied. Boundaries are documented, but regularly stretched. Decision frameworks become artefacts of compliance rather than tools of operation.

In that environment, scale does not just amplify inefficiency. It amplifies misconduct risk, because the system is effectively rewarding people for bypassing the very constraints it claims to enforce.

Technology magnifies issues

Most firms avoid codifying judgment into principles, boundaries, and decision aids because it exposes inconsistency, challenges high-revenue behaviour, and forces trade-offs they would rather ignore. What felt like a repeatable business is often held together by individual judgment calls that no one has written down.

Technology does not solve this. It magnifies it.

For regulated advice businesses, this is not just an efficiency issue. Under section 912A of the Corporations Act 2001 (Corporations Act), licensees are responsible for the systems they rely on. That means automated or AI-supported decisions must be explainable, monitored, and subject to oversight. If a firm cannot demonstrate how an outcome was reached, or detect when it starts drifting, it has introduced not just operational risk, but systemic compliance exposure.

There is a growing tendency to treat AI and automation as the next lever for scale. In reality, they are multipliers. If your data is messy, your processes are loosely defined, and your decisions are subjective, automation does not create efficiency. It accelerates confusion. Errors happen faster. Inconsistencies scale. The business becomes harder to manage, not easier.

The firms getting real value from technology are not the most enthusiastic adopters. They are the most disciplined operators. Their data is clean because they had to make it so. Their workflows are clear because ambiguity was already costing them money. Their decisions are structured because they learned, often painfully, that intuition does not scale across a team.

By the time they introduce automation, they are not searching for use cases. They are targeting specific failure points - reducing rework, tightening margin leakage, and improving consistency in how advice is delivered.

The myth of scale

There is also an assumption running through much of the scaling conversation that bigger is inherently better. It is not. Scale introduces its own friction. Decisions take longer. Coordination costs increase. Culture becomes harder to maintain. The transition period is rarely smooth, and margins often dip before they recover.

For some firms, especially those built on deep, high-trust relationships, remaining deliberately small is not a failure to scale. It is a strategic choice to protect a model that works. The question that rarely gets asked with enough rigour is: why is scale required in the first place?

If the answer is vague, centred on growth for its own sake, or a general sense that the industry is moving in that direction, the business is not ready. Scale should solve a specific problem. Without that clarity, it simply introduces new ones.

What actually scales

What separates the firms that do scale successfully is not that they have more systems or better technology. It is that they achieve operational precision before they pursue growth. They understand, in measurable terms, how they make money, where margins are won or lost, how workflows break down, and how decisions are made when trade-offs arise. That precision allows them to expand without increasing complaints, rework, or margin volatility.

This approach is not costless. Most firms should expect 6-12 months of disruption as decision rights are clarified, inconsistencies are exposed, and new behaviours take hold. It initially slows decision-making, exposes internal inconsistencies, and often results in rejecting revenue that would previously have been accepted. But without those trade-offs, consistency and defensibility are an illusion.

Conclusion

The end state is not a business that runs without people. It is a business that does not rely on individual interpretation to function well. People still matter, but they operate within a set of explicit, shared, and consistently applied principles.

That is a much higher bar than most scaling conversations acknowledge.

Until firms shift their focus from doing more work to making better decisions at scale, they will keep hitting the same ceiling. They will just arrive there with more staff, more software and more complexity underneath them.

That is not progress. It is an amplification of the original constraint.

And if incentives remain misaligned, the system will not just drift. It will optimise for the wrong outcomes, with governance reduced to explanation after the fact.

The total portfolio approach represents a more holistic and dynamic approach to investing, one that considers a broader range of factors and allows for more flexible decision making. Despite the initial reluctance, more and more asset allocators are recognising the benefits of TPA and are beginning to adopt this framework. In the following Q&A, this paper delves into the journey from an SAA-dominated landscape to a more dynamic, TPA-driven future, and discuss steps necessary to make this transition.

Q1: Why was SAA (the board-led approach) considered the 'gold standard' for so long, before TPA's emergence?

From the 1980s through the 2010s, asset owners were primarily governed by boards. The investment world was simpler, and boards were comfortable setting an 'asset allocation' -beta, while delegating investment selection and performance-alpha-to managers. SAA worked efficiently for this type of governance.

Here are the reasons why SAA was seen as the 'gold standard' for so long:

Board-driven governance: Most investment decisions are overseen by boards operating on a calendar-based schedule. These boards preferred long-term policy targets and rebalancing rules that could be reviewed at regular intervals. SAA aligned well with this governance model by offering a structured approach to portfolio oversight.

Prevailing investment philosophy: The investment world was anchored to modern portfolio theory, which included the efficient frontier and mean-variance, which fed into SAA structure. This was the backbone of investment philosophy at the time.

Data and operational practicality: In the late 20th century, technology was limited, and reliable financial data were constrained. Making dynamic, real-time portfolio decisions, as required under TPA, simply was not possible. The SAA's periodic rebalancing and long-term orientation were more operationally realistic.

Stakeholder communication: Stakeholders-sponsors, regulators, committees-can easily understand an SAA portfolio and relate it to expected long-term outcomes.

Q2: How has the market environment changed since SAA was developed?

The investment landscape has evolved significantly since the 1980's, creating conditions more conducive to the adoption of TPA.

Key changes include:

Rise of alternatives: There were less available asset classes and alternative investments in the SAA era. Investing in alternatives like hedge funds, private equity and real assets were seen as niche and not easily accessible.

Technology advances: There have been huge technological advancements since the SAA era, with financial data and systems improving tremendously. TPA requires a better ability to access financial data to make more complicated and live decisions.

Market environment changes: Globalisation has led to asset classes having higher correlations.

Rise of investment expertise: Expertise within the investment world whose job is to build portfolios based on clients' overall goals has improved considerably. This has afforded the ability to make real-time decisions and less calendar-based decisions.

Mission-oriented objectives: Pension or superannuation funds became more liability-driven and mission-oriented. Objectives became outcome-focused and less focused on performance relative to an SAA benchmark.

Q3: What is the decision-making process in TPA and how does it differ from SAA?

An early step that asset owners should consider in their transition from SAA to TPA relates to team and governance structures. Creating executive teams or sub-committees with clear goals can be a simple, effective way to free up time for the board or committee. It can also help the committee think more strategically. However, organizational change and a shift in cultural thinking can involve significant disruption and effort to break the inertia and get the buy-in of all stakeholders.

A board-executive governance model with a main committee and one or several sub-committees can greatly improve the investment decision-making process. The board's job is to define and set the goals for the portfolio and assign a reference portfolio that matches the goals. Then, the board delegates specific investment decisions-allocations to risk factors, asset classes, dynamic positions-to the executive team(s). The executive team(s) are better able to make those decisions by having more capacity and expertise. All investment decisions with TPA should be made on the basis of whether they improve the portfolio's ability to meet its objectives or outperform its reference portfolio. The executive team reports regularly to the board.

Under an SAA framework, committees often retain ownership for strategic and specific investment decisions. The drawback is that committees may be slower moving, constrained by time, resources and expertise, ultimately leading to sub-optimal portfolios.

Family offices are not your typical institutional investors. They often have more flexibility in their investment decisions, longer investment horizons, and a broader range of objectives beyond mere financial returns. Despite the potential, connecting with family offices can be daunting. Unlike publicly traded companies or wellknown investment firms, information about family offices can be scarce, making it difficult to research and approach them effectively. Moreover, family offices are inundated with pitches, making it essential to stand out from the crowd.

Success in this arena requires a deep understanding of the specific family office you are targeting, their investment philosophy, and their broader objectives. This paper provides a walk-through of the strategies necessary to effectively research, approach, and email pitches to family offices, so as to help navigate this complex but potentially rewarding landscape.

The family office mindset

Before crafting a pitch, it is crucial to understand the unique characteristics and motivations of family offices. This knowledge will help you tailor your approach and increase your chances of a positive interaction.

Family office investment objectives

Understanding the investment objectives of family offices is key to aligning your pitch with their goals. Here are the main areas to consider:

• Wealth preservation versus growth: Family offices often walk a tightrope between preserving wealth and seeking growth. Some prioritise maintaining the family's assets for future generations, while others pursue more aggressive growth strategies.
• The generational perspective: Many family offices think in terms of decades, not quarters. They are concerned with passing wealth and values to future generations. This long-term outlook can influence their investment time horizons and risk tolerance.
• Impact and values: Increasingly, family offices are looking for investments that align with their history, values, or contribute to a legacy. This might include impact investing, philanthropic tie-ins, or investments in specific industries

Navigating the decision-making process

Family offices often have unique decision-making structures that differ from traditional institutional investors. Understanding these processes can help you prepare your pitch more effectively:

• Key decision-makers and influencers: Identify the primary decision-makers, whether they are family members, professional managers, or external advisers. Each may have different priorities and levels of influence.
• Investment committees: Many family offices have formal investment committees that review and approve investment decisions. Understanding the composition and dynamics of these committees can be crucial.
• The due diligence deep dive: Family offices are known for their rigorous due diligence processes. They often have sophisticated financial teams that will scrutinise opportunities presented. Be prepared for this level of examination and have comprehensive documentation ready.

Investment preferences: One size doesn't fit all

Family offices may specialise in certain asset classes or industries based on their expertise or interests. Some prefer direct investments for greater control, while others opt for the diversification of fund investments. Understanding these preferences, along with their risk appetite and investment timeframes, can help position an opportunity appropriately.

Crafting an effective approach

Once the family office mindset is understood, the next step is to prepare a pitch. A well-crafted approach can make the difference between capturing interest and being overlooked.

Research is the key

Before even thinking about crafting a pitch, thorough research is essential. Family offices appreciate it when you have done your homework:

• Uncover the family's story: Dive into the family's history, values, and the source of their wealth.
• Analyse past investment patterns: Look for trends in their previous investments. Do they favour certain industries or types of deals?
• Understand current portfolio and goals: Try to get a sense of their current investment portfolio and strategic objectives.

Tailoring a value proposition

With your research in hand, it is time to craft a value proposition that resonates with the specific family office being targeted. The key is to align your opportunity with their investment objectives, whether that is wealth preservation, growth, or impact investing.

Clearly articulate what makes your opportunity special. At the same time, anticipate potential concerns or objections and address them proactively in your pitch. This demonstrates foresight and thorough planning, qualities that family offices value highly. Tailoring a value proposition in this way significantly increases the chances of capturing a family office's interest and standing out from the crowd.

The High Court, in February 2022, handed down two decisions concerning whether workers were employees or independent contractors: Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel) and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (Jamsek).

In March 2023, the Full Federal Court considered the extended meaning of 'employee' under section 12(3) of the Superannuation Guarantee (Administration) Act 1992 (SGAA), as this issue was remitted by the High Court to the Full Federal Court in relation to the Jamsek decision in Jamsek v ZG Operations Australia Pty Ltd (No 3) [2023] FCAFC 48 (Jamsek No. 3). In May 2023, the Full Federal Court considered whether the right to subcontract or assign, and the right of control, are indicative of an independent contracting relationship in JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76 (JMC).

These decisions are important as employees are entitled to leave, redundancy pay, and superannuation-among other employee entitlements, while independent contractors are not entitled to these benefits.

In deciding Personnel and Jamsek, the High Court applied a new approach to determining whether workers are employees or independent contractors for common law purposes, which emphasised the primacy of the contractual relationship between the parties. This new approach was adopted by the Full Federal Court in deciding JMC.

In deciding Jamsek No. 3, the Full Federal Court confirmed the existing ATO guidance on the status of individuals as independent contractors if they perform work for another party in a capacity other than their individual capacity.

This paper sets out a revised approach for business to consider when determining whether workers are employees or independent
contractors for superannuation law purposes by:

• summarising the key changes to the approach to categorising workers as employees or independent contractors, arising from the High Court and Full Federal Court decisions and the latest draft guidance from the ATO
• summarising relevant considerations when classifying workers as employees or independent contractors for superannuation law purposes
• noting the circumstances under which superannuation is not payable, even if a worker is considered an employee

Key changes to the approach to categorising workers

Workers may be classified as either employees or independent contractors. Workers are only entitled to superannuation if they:

• are an employee under common law, the determination of which requires a characterisation of the relationship, determined with reference to the "totality of the relationship between the parties", identifying the legalrights and obligations which constitute the relationship
• meet the extended definition of 'employee' under section 12(3) of the SGAA, which notably includes persons who "work under a contract that is wholly or principally for the labour of the person".

Other persons who are deemed employees under the SGAA, include persons who:

- are members of a company's executive body
- work for various state or federal governments
- work in creative or performing industries, such
musicians, athletes, or who work in other activities
involving the exercise of intellectual, artistic, musical,
physical or other personal skills.

Previous approach
Historically, courts have determined whether workers were employees or independent contractors by taking a very broad view of the relationship between the parties, known as the 'multifactorial approach'. In applying the multifactorial approach, the courts looked to postcontractual conduct such as the day-to-day relationship between the parties and gave weight to factors that go towards (or against) a finding that a worker is employee
or independent contractor. Under the multi-factorial approach, the written contract between the parties was just one of a variety of factors which determined whether a worker was an employee or independent contractor.

New approach
In deciding Personnel and Jamsek, the High Court adopted a new approach in determining whether a worker is an employee under common law. The High Court emphasised the primacy of the contractual relationship in characterising the relationship between the parties as one of employment or otherwise, where the contract is not challenged as a sham, varied or otherwise displaced by the conduct of the parties. Therefore, an analysis of the incidia of employment should generally proceed by reference to the rights and duties established under the parties' contract. In Jamsek No. 3, the Full Federal Court confirmed the ATO guidance that a worker is not an employee within its common law meaning and under the extended definition of 'employee' where an individual performs work for another party through an entity such as a company, trust or partnership.

What has changed is the pace and accessibility. AI is now good enough, cheap enough, and built into everyday tools, so it has moved from a 'nice experiment' to baseline capability. In practical terms, that means firms that are not adopting it deliberately are starting to fall behind.

What once required specialist software and deep technical expertise is now embedded into platforms advisers use daily like CRM systems, document management tools and communication platforms. This shift has democratised access to advanced capabilities, allowing firms of all sizes to benefit from automation, predictive insights, and workflow optimisation. The result is a more competitive landscape where efficiency is an expectation, no longer a differentiator.

From experiment to expectation

The language around AI has changed in boardrooms globally. According to PwC's Global CEO Survey 2026, 45% of CEOs expect generative AI to increase profitability within the next 12 months. More than 60% believe it will significantly improve employee productivity, and over two-thirds say AI will fundamentally change how their organisation creates value within three years.

That shift matters.

AI is no longer being discussed as innovation theatre or digital curiosity. It is being measured against margin, productivity and enterprise value. When industry leaders are tying AI to profitability and structural transformation, advice firms cannot afford to treat it as a side project delegated to the 'tech curious' person in the office.

The competitive gap is not theoretical. It is forming now between firms that are embedding AI into structured workflows and those still experimenting in isolation without redesigning how work moves through the business.

It is also worth being clear about what AI will not change-advice remains human work. Judgement, accountability, empathy, and the ability to guide clients through uncertainty cannot be automated. Clients do not stay because a workflow was efficient, they stay because they feel understood, reassured and confident in the direction being set.

What AI is reshaping is everything around that core human interaction. It influences the operating rhythm of a practice, the flow of work from scoping to implementation to review, and the consistency of follow-through. It shapes how quickly documents move, how accurately data is recorded, how reliably tasks are completed and how visible progress becomes inside the firm.

In today's environment, that operational layer matters more than ever. Clients are more anxious and more informed. They expect faster turnaround, clearer communication, and an experience that feels proactive rather than reactive. They compare service levels not just to other advice firms, but to banks, fintech platforms and digitally enabled businesses that move quickly and communicate clearly.

At the same time, firms are dealing with tighter margins, rising costs, higher expectations around documentation and consistency, and a talent market that makes it difficult to simply recruit your way out of a bottleneck. Efficiency is no longer an internal project-it is a commercial imperative.

The constraint is capacity, not ambition

This is why the conversation keeps coming back to capacity. Many advisers are not short on ambition-they are short on time. Days are absorbed by delivery work-meeting preparation, CRM updates, document chasing, follow-ups, provider liaison, implementation coordination, and the constant back-and-forth required to keep clients progressing.

Across the profession, advisers are still spending 15 to 20 hours a week on administrative work which equates to more than 1,000 hours a year that could otherwise be directed toward client relationships, strategic planning, referral development or business growth.

When advisers become the default owners of momentum, the firm can feel flat-out while work still moves too slowly. Work circulates rather than advances. Emails are answered, but outcomes stall. In a market where clients are looking for reassurance and responsiveness, that gap shows up quickly.

AI can help, if it is applied to the right problem. It can summarise notes into structured actions, draft routine communications, generate checklists, pre-fill templates and prompt the next step. Used properly, it reduces friction and removes repetition.

But the real opportunity is not just speed. It is flow.

When AI reduces the administrative drag inside a business, it allows work to move predictably which in turn improves turnaround and client confidence-and confidence improves retention and referrals.

That is where technology becomes commercial.

Workflow design comes first

The mistake is assuming that productivity gains automatically convert into capacity. If the operating model still relies on advisers to catch gaps, push tasks along and stitch the process together, the constraint does not disappear. The firm ends up with better tools and the same bottleneck.

The next phase of AI in advice will not be defined by who has the newest tool. It will be defined by who builds the better operating system. The question should not be 'what AI can we add?' but 'how should work flow through this business?' When workflows are standardised, roles are clear and quality is built into the process, AI becomes a multiplier rather than another thing to manage.

High performing firms are approaching this deliberately by scaling sustainably. They design the process before automating it, define ownership before introducing efficiency, and they embed quality into the workflow instead of checking it afterwards. AI works best in structured environments and so do people.

The stronger model is straightforward-keep advisers in the work only they can do, and build a delivery engine that handles everything else with discipline. Work is initiated the same way each time. Tasks are assigned cleanly. Follow-ups are tracked. Quality checks are routine. Records are maintained as part of the workflow, not after the fact.

That is not glamorous, but it is commercially important and it is what makes service consistent at scale.

Consider two advice firms with similar client bases and revenue. Firm A introduces AI tools but keeps the same operating structure where advisers still review every draft, chase every follow-up and act as the safety net for workflow progression.

Firm B standardises its review process, embeds structured support, cleans its CRM data and assigns clear administrative ownership. AI is used to draft and summarise, but support staff own progression.

Both firms adopt AI but only one experiences cultural capacity growth. That difference is not about technology-it is about design. Technology alone does not create leverage. Execution does.

Turning effort into progress

Without clean CRM data, automation becomes unreliable. Without clear task ownership, AI outputs still need manual intervention. Without workflow discipline, even the best tools create noise.

This is where trained operational support becomes critical. Financial planning assistants and digital marketing assistants can be embedded directly into advice firms' workflows as accountable execution owners, operating within the day-to-day rhythm of the business rather than sitting outside it.

AI can draft quickly, but someone still needs to ensure accuracy, appropriateness and proper recording. AI can summarise a meeting, but actions still need to be created, delegated, tracked and closed. AI can assist with forms and documents, but the collection, checking, liaison and follow-through still needs ownership. That combination turns temporary efficiency into structural capacity.

Firms that integrate support properly report reclaiming more than 20 hours per week. This is not because advisers are working less, but because they stop being the default owners of every administrative touchpoint.

Two foundations matter most. The first is standardisation-a consistent review cycle, repeatable meeting preparation, clear handoffs between roles, templates for recurring client communications, and defined service timelines. When processes are predictable, both AI and support teams perform at a higher level.

The second is CRM discipline. Without clean and current data, automation becomes unreliable and reporting becomes guesswork. AI performs best where patterns are stable and inputs are consistent. The same is true for trained financial services support.

Role clarity is the next lever. Too many firms chase 'more efficient advisers' instead of 'fewer adviser touchpoints'. AI can draft quickly, but someone still needs to validate appropriateness and compliance. AI can summarise meetings, but actions still need to be created, delegated, monitored, and closed. AI can assist with document preparation, but collection, checking and follow-through still require ownership.

Execution does not disappear, if anything, it becomes the differentiator, because speed without follow-through is just activity.

Governance and scale

Governance must evolve alongside capability. According to the Deloitte 2026 State of Generative AI Survey, over 70% of organisations say governance and risk management are now their top barriers to scaling AI initiatives. That matters for advice firms operating in a regulated environment.

Advice is a trust business. AI introduces questions around data handling, access, oversight and quality control. Firms that want to move confidently are putting guardrails in place-clear rules on what information can be used with which tools, consistent training so usage is not ad hoc, and review steps embedded into the workflow.

Done properly, governance does not slow progress, it makes progress repeatable. And repeatability is what allows firms to scale without compromising compliance or client experience.

The upside is bigger than time saved. When rework falls and handoffs improve, clients feel the difference: faster follow-through, clearer communication, fewer delays and a more proactive experience. Internally, the impact is equally significant. It reduces stress, decreases the risk of burnout and supports growth without relying on a handful of people holding the firm together by force of will.

Firms that combine AI with structured execution are not just improving efficiency; they are increasing client capacity without increasing adviser hours. That is the commercial shift. It allows firms to deepen relationships, expand service offerings and pursue strategic opportunities without stretching their teams beyond sustainability.

Where firms should focus first

For principals thinking where to begin, do not start with a technology shortlist. Start with an operational audit. Where does work stall? Where does it bounce back to advisers? Where does rework creep in? Which processes rely on habit rather than documented standards? Standardise the workflow, clean the CRM, build templates, then apply AI where it reliably reduces effort and improves consistency.

At the same time, build the delivery engine around the adviser so workflow progression does not depend on adviser touchpoints.

AI in advice is not a brand-new idea. But the market has shifted to the point where dabbling is no longer enough. The firms that move from isolated experimentation to operating model redesign, building discipline, clarity, and a delivery engine that can scale will be the ones that turn AI from a productivity tool into a genuine competitive advantage.

The gap is not about who has access to AI. Most firms already do. The gap is about who has built the structure to turn it into leverage.

This article moves to the next challenge-retention. We examine how AI helps wealth managers identify disengagement early, understand member sentiment and strengthen relationships after onboarding.

While attracting new members is difficult, retaining them can be even more challenging. In the superannuation market, where many new members come from switching rather than first-time investment, long-term engagement is essential.

Retention depends on understanding how members behave after onboarding. Changes in contribution patterns, reduced platform activity or unanswered communications can all signal declining engagement. Historically, these signals have been difficult for organisations to detect early enough to respond effectively.

Artificial intelligence changes that dynamic. By continuously analysing behavioural and communication data, AI systems can highlight emerging risks and recommend actions to strengthen member relationships before problems escalate.

Predicting churn before it happens

One of the most valuable applications of AI in wealth management is churn prediction.

Machine learning models can analyse patterns such as login frequency, contribution behaviour and adviser interactions to identify members who may be considering a switch.

An example comes from a large wealth manager that used predictive analytics to monitor engagement signals across its member base. The organisation built models using everyday behavioural data and made the results visible to front-line staff. Advisers could see which members were at risk and what factors contributed to that risk.

Within months, churn fell by approximately 15%. The organisation also gained a clearer understanding of which member behaviours indicated long-term loyalty and which suggested potential disengagement.

These types of insights allow providers to intervene early. Instead of waiting until a member decides to leave, teams can initiate conversations, provide education or review investment strategies at the right moment.

Understanding member sentiment

Predictive models are most effective when combined with insights into member sentiment. AI systems can analyse written messages, service transcripts and customer feedback to identify emerging themes or dissatisfaction.

UK digital bank Atom demonstrated the value of this approach by using AI to analyse thousands of customer interactions across multiple service channels. The analysis revealed specific issues causing frustration, allowing the organisation to address operational problems quickly. As a result, calls about device issues fell by 40%, and enquiries about rejected mortgage applications dropped by 69%.

For wealth managers, sentiment analysis can reveal the reasons behind declining engagement. When members repeatedly ask questions about withdrawals, performance or fees, these signals may indicate uncertainty or dissatisfaction that requires attention.

Understanding these patterns helps organisations improve communication, refine products and respond to member concerns before they lead to attrition.

Strengthening relationships from the start

Retention begins at the moment a member joins. Early interactions shape how individuals perceive their provider and influence whether they remain engaged.

Artificial intelligence can improve this early experience by making onboarding simpler and more responsive. Conversational chatbots provide instant answers to common questions, while adviser-facing AI assistants give staff quick access to relevant information and research.

Digital banks have demonstrated how reducing friction during onboarding improves long-term engagement. UK digital, app-based bank Monzo redesigned its account opening process by simplifying forms and improving identity verification. As a result, the number of screens users had to navigate dropped significantly and the average signup time fell from seventeen minutes to four. Completion rates doubled and customers began using their accounts sooner.

When onboarding is efficient and transparent, members develop confidence in the organisation and are more likely to remain engaged.

Turning service into a growth channel

Most member interactions occur after onboarding through customer service channels. Traditionally, these interactions have been treated as operational tasks rather than opportunities to strengthen relationships.

AI changes that perspective. By analysing service conversations and requests, systems can identify moments when members may benefit from additional advice or support. Questions about fund performance, contribution levels or withdrawals can trigger suggestions for follow-up conversations with advisers.

Bank of America's virtual assistant Erica illustrates this potential. The AI system handles millions of interactions each month, answering routine questions and connecting customers with advisers when more complex support is required. By automating everyday tasks, advisers gain more time to focus on the more meaningful financial interactions that clients value.

For wealth managers, this approach turns service interactions into opportunities to deepen engagement and increase long-term contribution levels.

Building organisational capability

Technology alone does not create transformation. The organisations that benefit most from AI are those that prepare their people and processes to work effectively with it.

Leadership alignment is essential. Teams need to understand how AI-driven acquisition and retention support the organisation's mission and member outcomes. When leaders communicate this purpose clearly, adoption becomes easier.

Data literacy also plays a critical role. Employees must understand how predictive models work and how to interpret the insights they produce. Training programmes and practical workshops help teams build confidence and use AI outputs in everyday decision-making.

Swiss Re, one the world's largest reinsurance providers, exemplifies this approach. The company introduced a generative AI training programme covering safe prompting 2, model limitations 3 and output verification4. Employees reported productivity gains of around 20% as they shifted from repetitive tasks to higher-value work.

These cultural changes make it possible for AI to become part of daily operations rather than a separate technical project.

In this article, we will look at the assessment of the former home and the calculation of ongoing costs. We will use case studies to demonstrate the impact on cash flow for a client keeping and renting-or selling their former home.

Assessment of the former home

Centrelink

For Centrelink purposes, the former home will be exempt under the Assets Test assessment for two years from the date the person leaves. Where the person is a member of a couple, the former home will be exempt for as long as their spouse continues to live there. If their spouse leaves the former home, it will be exempt for two years from the date the spouse leaves. While the former home is exempt, the person and their spouse will be considered homeowners.

Aged care

For aged care purposes, the value of the former home will be exempt where it is occupied by a 'protected person'. Where the former home is not occupied by a protected person, the home will be assessed up to the home exemption cap (currently $210,5551).

A protected person includes:

· spouse or dependent child

· carer eligible for an income support payment living in the home for the past two years, or

· close relative eligible for an income support payment living in the home for the past five years.

For Centrelink and aged care purposes, where the former home is rented out the rental income will be assessed. Assessable income for Centrelink and aged care purposes is the same as assessable income for tax purposes with some exceptions. Certain tax deductions are not allowed for Centrelink and aged care purposes-these include capital depreciation, construction costs and borrowing costs.

Calculation of ongoing costs

The hotelling contribution (HC) and non-clinical care contribution (NCCC) replaced the means-tested care fee (MTCF) under the new aged care rules. The hotelling contribution is subject to a daily cap of $22.15. The non-clinical care contribution is subject to a daily cap of $105.30 and a lifetime cap of $135,318.69.

The means-tested amount (MTA) continues to be compared to the maximum accommodation supplement (MAS) to determine the hotelling contribution and non-clinical care contribution. The assessment of assets and income remains the same however, the calculation of the means-tested amount has changed.

As the industry evolves, much of today's growth is driven less by new members and more by fund switching, account consolidation and contribution uplift. At the same time, member expectations are changing rapidly. Digital onboarding, real-time communication and personalised engagement are increasingly seen as the standard rather than a differentiator.

For superannuation funds and wealth managers, this creates a new challenge. Acquisition and retention must become more precise, more data-driven and more efficient, while still meeting rising regulatory expectations and operational complexity.

Artificial intelligence (AI) is emerging as one of the most powerful tools to support that shift. By helping organisations understand member behaviour, personalise engagement and automate key processes, AI enables funds to scale growth while improving the member experience.

This article explores how AI can reshape member acquisition and retention across the superannuation lifecycle, from the first interaction through to long-term engagement.

Why AI matters for member acquisition

AI changes acquisition from a broad marketing exercise into a series of targeted conversations. Instead of relying on general campaigns, providers can analyse data to identify which individuals are most likely to join, switch funds or consolidate accounts.

Research from EY's Global Wealth and Asset Management Survey shows that the majority of firms now use generative AI across several business functions, with marketing and client engagement delivering some of the strongest results. In parallel, marketing studies consistently show that organisations using AI see measurable improvements in campaign performance and efficiency.

For wealth managers, the implications are significant. AI enables analysis of large volumes of behavioural and demographic data to determine when a person is most likely to make a financial decision. Campaigns can then be timed and tailored to that moment, increasing both relevance and conversion.

The result is a shift from generic marketing to more personalised engagement, where messages are designed around individual needs and behaviours rather than broad audience segments.

Building the data foundations

Before AI can improve acquisition outcomes, organisations need the right data foundations. Many wealth managers still operate with fragmented systems in which marketing platforms, onboarding tools, and CRM systems maintain separate records for the same member. When this happens, insights arrive slowly, and decision-making becomes inconsistent.

A unified data layer solves this problem by connecting the systems that track the member journey. When marketing platforms, onboarding systems and registry records share the same identifiers and data structures, every team can access a consistent view of the member.

The importance of this approach can be seen in the experience of AIA Singapore. The insurer established an analytics centre of excellence to integrate policy, service and marketing data into a single environment. Previously, teams often waited days for insights. After integration, dashboards delivered answers within minutes, enabling faster decisions across the organisation.

This type of unified data environment allows wealth managers to move from reactive reporting to predictive analysis. Instead of simply reviewing what happened in the past, providers can

anticipate which prospects are most likely to convert and focus resources where they will have the greatest impact.

Technology architecture also plays an important role. Modern AI systems rely on modular platforms connected through application programming interfaces (APIs) rather than isolated legacy systems. Cloud-based infrastructure and real-time data flows enable marketing, service, and onboarding platforms to interact continuously, allowing organisations to respond to member behaviour as it happens.

For social security income support-Centrelink and the Department of Veterans' Affairs (DVA)-and calculation of aged care fees, assets are generally valued at net market value.

Market value

Market value is defined as the value at which a willing purchaser and a willing, but not anxious, vendor would reach agreement. However, the market value is not reduced by any costs that would be incurred if sold.

Net market value

Net market value allows the market value to be reduced by a loan secured against that asset. Any outstanding loan can only reduce the value of the asset to zero-that is, it cannot be a negative value. A person is not expected to obtain a professional valuation for any asset. However, any estimate should be appropriate and reasonable to ensure the most accurate calculation of their entitlement.

If the relevant government department considers that a valuation is necessary, it will undertake a valuation at its own cost.

Home contents and personal assets

Home contents and personal assets should be valued at the amount that a person would reasonably expect to receive if the asset was sold on the open market, for example, at a garage sale. This could be different to the insured value.

As a general guide, $10,000 is accepted as the value of home contents for a single person or couple. However, a client should report a higher or lower figure to reflect the true value of their personal assets. For example, if a client has valuable antiques or artwork then it is appropriate to disclose a higher value that reflects the value of home contents. Alternatively, if the value is significantly less, then it is possible to provide a lower valuation.

Motor vehicles and similar assets (for example, caravan, boat or motorcycle) are disclosed at market value.

Generally, the value provided by a client is accepted unless there is a concern that the asset is significantly over or undervalued resulting in an impact to the client's entitlement.

Listed securities and managed funds

There is no need for a client to state the value of listed securities or managed fund. However, the number of shares or units owned is disclosed as part of the application process. For example, if a client holds listed securities, details of the name of the company (or ASX code) and number of shares held is disclosed as part of income and assets.

When a client first applies for a benefit, Centrelink uses the latest unit price information available. The values are automatically updated with the latest unit price information on 20 March and 20 September.

Listed securities and managed funds are updated:

• if requested by the client
• after a notifiable event that affects a listed security or managed fund.

As a general guide, a notifiable event is anything that is likely to impact a client's entitlement. Examples of notifiable events include:

• change in income or assets
• change in partner's income or assets
• gifting income or assets
• change in relationship status, and
• selling your home.

Most income support recipients have 14 days to notify Centrelink/DVA of relevant events.

It is important to ensure assets are valued correctly across all advice areas.

The approach to valuation may differ depending on the advice being provided. In some cases, guidance is provided by the relevant department, or that department may undertake the valuation at its own expense.

In this article, we explore common areas of advice and the valuation considerations.

Division 296 taxation

The Division 296 tax, enacted as Division 296 of the Income Tax Assessment Act 1997 (Cth) through the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026, has passed both Houses of Parliament. The tax will apply from 1 July 2026, with the first balance test date 30 June 2027.

Division 296 introduces new mechanisms for valuing assets and calculating member-level earnings for individuals with a total super balance (TSB) above $3 million, with an additional tier above $10 million.

TSB requirements

TSB will be assessed at the start and end of the financial year when determining a Division 296 liability, except in the first year, where 30 June 2027 only will be used.

TSB must incorporate contributions, withdrawals, market movements and fund reported values.

Funds must record accurate market valuations of all assets at 30 June each year, including:

• listed assets, marked-to-market, and
• unlisted assets, to be revalued in accordance with the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA) valuation standards (already required for existing TSB calculations).

Special requirements for self-managed super funds (SMSFs)

SMSFs are required to apply a formula to attribute fund earnings to in-scope members. This will require small funds to determine the fund's average total net asset value and the average value of their members' superannuation interests, over the course of the year.

An actuarial certificate is required to perform the relevant calculations and provide the attribution share. SMSFs with in-scope members who have members in accumulation phase only will need to engage an actuary for the first time. Those with existing pensions will already be using actuaries to calculate exempt current pension income each year.

Capital gains tax (CGT) relief for SMSFs

SMSFs may opt in for CGT relief by determining the cost base for all assets at 30 June 2026 (for Division 296 purposes only). This will exclude capital gains accrued on fund assets prior to 30 June 2026 from Division 296 tax. The opt-in is at the fund level-not asset or member level. This means the cost base of all assets is reset when making the election.

The reduced (adjusted) capital gain is also eligible for the one-third CGT discount.

The relief is not automatic. SMSFs will need to submit the approved form by the due date of the fund's 2026/27 annual tax return. To enable this, funds will need to revalue all assets effective 30 June 2026. Given the high anticipated demand for valuation services, it is recommended that fund trustees consider booking in the valuation as soon as possible.

Even SMSFs without in-scope members may consider making this election for Division 296 purposes as their members may become in-scope members in the future.

Special rules for defined benefit pensions

Division 296 requires a different valuation basis for defined benefit (DB) pensions than the one used for standard TSB purposes. This method is to take into account the pension amount, expected life expectancy and actuarial assumptions.

Monitoring your service providers becomes challenging when you do not have the right agreements in place.

Now is really the perfect time for you to think about what to look out for when negotiating these kinds of arrangements.

What are services agreements?

If you are looking for a legal definition as such, a services agreement is really a legally binding contract between two or more parties, where one party agrees to provide a specific service in return for compensation.

In the highly-regulated financial services industry, services agreements are more than just formalities. They are legally binding contracts which define the rights, responsibilities, and expectations between the parties to the agreement.

Within the financial services industry, services agreements are frequently the appropriate type of agreement to govern the relationship between AFSL and their authorised representatives, where those authorised representatives are not employees of the AFSL.*

Services agreements can also be the appropriate type of agreement for other contractor or consultant style relationships, such as the relationship between a financial services business and compliance consultants and auditors. The agreement between client and financial services provider is also typically a type of services agreement.

As we have seen again recently, services agreements are extremely important when supervising your service providers.

Why do I need one?

A typical services agreement sets out the scope of services, fees, service standards, timelines, and legal protections for all parties. A services agreement defines what is expected from each party to reduce misunderstandings and should ensure that both parties know what services will be delivered, when and how. The services agreement thereby serves as a framework for the relationship, helps to prevent disputes and offers recourse if things go wrong.

In terms of a rule to live by, you need to ensure that your services agreement is drafted in such a way so that anybody who picks up the agreement, years from now, with no background on your transaction, will be able to understand exactly what is expected of each party, without any misunderstanding.

It is therefore important that you go into the right level of detail and make sure you do not introduce any ambiguities. Sometimes, the best way to make sure of this is to ask a colleague with no background on the transaction to consider your draft agreement for you.

In highly-regulated industries like financial services, these agreements also play a critical role in ensuring regulatory compliance-for example, with anti-money laundering (AML) related rules and obligations, duties advisers owe to clients, and setting out how highly-prescriptive and highly-regulated services will be provided.

They are also essential to manage and allocate risk between the parties to the professional relationship, and to ensure that the professional relationship is conducted in a manner which is consistent with the financial services law.

What should a services agreement include?

The content of a services agreement chiefly depends on the nature of the relationship that it relates to, the nature of the services being provided, and the regulatory environment.

As a bare minimum, services agreements should typically cover the following.

a) Scope of services

A detailed description of the services to be provided, including deliverables, timelines, and, if relevant and appropriate, service level agreements (SLAs). As noted above, ambiguity in the scope and nature of the services and their delivery are a common cause of disputes and, so, clarity here is key.

b) Fees and payment terms

The services agreement should specify what fees are payable in exchange for the provision of the services, how they are calculated (for example, flat fee, hourly, performance-based), when they are due, how payment must be made and any other conditions for payment.

c) Term and termination

How long the agreement lasts (and whether it should have a fixed term, renewal or extension periods, or whether the agreement should simply continue until it is terminated) and under what conditions it can be terminated early, should be addressed.

d) Consequences of termination

In certain cases, it is important to one or both of the parties to specify certain things that must happen after the services agreement terminates.

e) Regulatory obligations

Clauses specifying certain laws and regulations that one or both parties will comply with, can in some circumstances be appropriate to include in a services agreement.

f) Confidentiality and data ownership, protection and privacy

These provisions are especially important where personal or financial data is involved. It may be appropriate to address how data is stored, processed, protected and who owns it, in the services agreement.

g) Limitation of liability

It may be appropriate to include caps on damages and exclusions for indirect or consequential losses. Whether these inclusions are appropriate and lawful depends on the nature of the services agreement, the characteristics of the parties to the agreement and the circumstances of the agreement.

h) Dispute resolution

If a dispute arises, the agreement provides a legal foundation to resolve it-ideally without litigation. Well-drafted contracts may include dispute resolution clauses-for example, arbitration or mediation.

i) Nature of the relationship

Frequently a services agreement should articulate the nature of the relationship between the parties, including the type of relationship that the agreement does not create. It may be appropriate to expressly state that the agreement does not give rise to an employment relationship, a joint venture, a partnership, or an agency relationship.

For these types of provisions to carry any weight, the services agreement as a whole must be consistent with the nature of the relationship as specified. For example, a provision that states the services agreement does not give rise to an employment relationship, may count for very little if in substance the rest of the services agreement reflects an employment relationship.

Can I just use a template, or use ChatGPT to write the services agreement?

ChatGPT can produce what might look and feel like a first draft of an agreement on first glance, but doing so can be incredibly risky. Large language models (LLMs) and untrained AI can be helpful for understanding general legal concepts or exploring what is typically included in a services agreement, but it is important to understand their limitations-especially when it comes to legal documents in a highly-regulated space, such as the financial services industry.

LLMs cannot tell you exactly what should be included in a services agreement that is specific to your business, services, risks, and regulatory environment. Every business is different, and those differences bring their own legal, operational, and regulatory risks.

* https://www.asic.gov.au/regulatory-resources/financial-services/

Scammers are stepping up their game with crafty tricks like spoofed SMS messages, deepfake voices that sound just like your mate, and clever social engineering to play on our natural sense of trust.

While in the past, it was the customers' fault if they fell victim to a scam, this is no longer always the case. Recent decisions from the Australian Financial Complaints Authority (AFCA) and the impending rollout of the Scams Prevention Framework have significant implications for financial institutions, making it clear that businesses must take proactive steps to prevent and respond to scams.

The current landscape

Scams are no longer a 'fringe issue' - they have become a significant compliance and reputational threat for financial services businesses across Australia. Criminals are getting sneakier, targeting individuals rather than just systems, and their tactics are costing Australians billions every year.

Recent AFCA data highlights the scale of the problem. In the 2023/24 financial year, AFCA received 10,440 scam-related complaints, with personal transaction accounts and credit cards most commonly involved. Although there was a slight drop in scam-related complaints for the 2024/25 financial year, AFCA continues to receive on average nearly 500 complaints each month. It is likely these figures underestimate the true size of the issue, as many victims never formally report their losses.

AFCA's 2024/25 Annual Review identified several common scam types:

• Buying and selling scams on platforms like Facebook Marketplace
• Impersonation scams where fraudsters pretend to be from banks, government agencies, telcos, or online services, and
• Business email compromise scams involving large payments.

These email scams are particularly damaging, with criminals intercepting genuine communications to alter payment details or using near-identical email addresses to divert funds.

While most scam-related complaints centre around traditional financial products, the risk landscape is rapidly shifting. Many digital asset service providers-an industry especially vulnerable to scams-are not currently required to become AFCA members. However, recent updates to the Australian Securities and Investments Commission (ASIC) Information Sheet 225, Digital assets: Financial products and services, along with proposed Treasury reforms, mean more digital asset businesses will soon need an Australian Financial Services (AFS) licence, which for retail service providers also means becoming an AFCA member.

As a result, scam-related complaint numbers are expected to climb.

AFCA's expanding role under the Scams Prevention Framework

The regulatory landscape shifted dramatically with the passing of the Scams Prevention Framework in February 2025. This legislation is intended to make AFCA the single external dispute resolution scheme for scam-related complaints, covering telecommunications and digital platforms providers, in addition to financial firms that are already AFCA members.

Importantly, the Scams Prevention Framework will establish clear obligations for banks, telecommunications providers and digital platforms to prevent, detect, disrupt, report and respond to scams.

Following consultation in May and June 2025, AFCA will have an expanded jurisdiction from 12 March 2026 allowing it to consider complaints lodged against receiving banks in a scam-related complaint, as well as scam-related complaints lodged in relation to the opening of an account in a person's name without their consent.

This expansion of AFCA's jurisdiction seeks to increase receiving banks' accountability, enhancing transparency in tracking scammed funds.

Expanding transaction activity, supported by the lower rate environment and clarity on economic and regulatory conditions, gave way to a new uncertainty and middle market direct lending deal flow slowed considerably. Sellers had been actively seeking transactions with expectations for somewhat higher enterprise values (EV), but buyers pulled back with the newfound uncertainty while sellers continued to hold out for their 'right' price.

Throughout much of 2025, the clouds of policy uncertainty slowly cleared, which led to a notable resumption of US middle market deal flow from September 2025.

The transaction environment is now back to the favourable setting experienced at the beginning of 2025, and there is even more reason to believe that growth will continue.

We believe the improving and supportive market and economic backdrop, coupled with appealing credit structures, should create an environment ripe with attractive investment opportunities in 2026.

Increased transaction activity expected

Our belief that growth of transaction activity is likely to continue is based on the improved clarity regarding market and economic conditions, along with significant deal flow momentum and pipeline. After a couple of years of slower investment realisations, private equity (PE) sponsors are eager to deliver returns and recycle capital.

Another key factor is the secular pent-up demand for PE sponsors to deploy capital into attractive investments. That 'dry powder' [that is unspent capital] for private equity far exceeds the dry powder of committed capital for private credit, but nonetheless the capital to be deployed is expansive.

Business and economic conditions are now becoming clearer with reasonable economic growth and steady to declining inflation levels. Tariff policy has been applied in a manner that is more bilateral than macro, and implementation is generally more gradual than stark.

Tariff policy has proven to have little impact to ongoing inflation or inflation expectations, so the Federal Reserve (Fed) not only began the shift to easing policy but should also have runway to continue to ease in a gradual manner. In addition, market participants gained clarity that tariff policy was not significantly impacting the economic environment or expected to have long lasting negative ramifications.

This is especially true for middle market companies that are more oriented to US customers and suppliers, and those in focus by direct lenders also tend to be more service-oriented. This backdrop is supportive of increased transaction activity for both PE sponsored and non-sponsored deals.

Fed support should fuel deal making momentum

Accommodative Fed policy also supports a significant increase in leveraged buyout (LBO) and mergers and acquisitions (M&A) activity, as more business owners look to sell with improved valuations and buyers seek to deploy capital with greater confidence in economic conditions and lower cost of capital. With the lower rates and improved clarity, we expect enterprise values to expand for private companies and most notably for companies in the service-based industries benefitting from positive secular trends in the US economy.

Our focus is on lending to lower and core middle market companies in these industries, so an increase in enterprise valuation provides additional support for our first lien senior secured loans. With that increase in enterprise valuations, some PE sponsors and borrowers may seek additional debt.

For now, leverage requests remain quite reasonable given middle market company enterprise valuations and cash flow generation.

Blended families, where one or both partners bring children from previous relationships, are becoming increasingly common. They frequently arise following a divorce or the loss of a partner - circumstances that can create emotional strain and even tension between family members. Differences in opinions can complicate decisions about money and inheritance. Blended families share many of the same goals as other households, such as building and protecting wealth during their lifetime and ensuring a smooth transfer of assets after they are gone. However, the complexity of working to achieve these goals often increases significantly where multiple households and relationships are involved.

What is a blended family?

A stepfamily is formed by two people and the child or children of one or both from a previous relationship. A blended family consists of a couple, the child or children that they have had together, and one or more children that they have had with previous partners. In this article we will refer to both as 'blended family', as the issues and potential solutions discussed will be relevant to both.

Unique financial challenges in blended families

Managing finances in a blended family can be both emotional and complex. Beyond everyday budgeting, couples often face decisions affected by previous relationships, sometimes governed by court orders, which require careful consideration.

Key issues include:

• how property and assets should now be owned, and what assets were acquired before the relationship
• managing wealth disparities between spouses
• addressing outstanding debts from previous relationships
• child support arrangements and balancing financial priorities between a spouse and biological children
• protecting assets from former spouses and ensuring fair treatment of all children, past and present, and
• planning for estate division and navigating the dynamics of multiple households.

As every family's circumstances are unique, there is no one-size-fits-all solution. When creating a financial plan, it's essential to understand the family's dynamics to prevent anyone from feeling unheard or left out.

Specifically, we have seen questions of best use, appropriate reliance on AI-driven models, evolving risk management frameworks, data breaches, scams and increased regulatory scrutiny. In this article, we recap some key AI moments in 2025 and take a deep dive into the intersection between AI, data breaches and scams, including steps you can take to protect your business and your clients.

Key messages from regulators and government

It seems that everyone was talking about AI during 2025. We have set out some of the key messages from the Australian Securities and Investments Commission (ASIC) and the government that relate to financial services to help you cut through the noise.

AI, data breaches and scams

The National AI Plan suggests that sweeping AI-specific legislation will not be introduced any time soon. However, as noted by the various stakeholders throughout 2025, there are numerous obligations under existing laws that intersect with licensees' usage of AI. Indeed, the challenges raised by the use of AI are complex and inherently linked with other considerations, such as data governance, cybersecurity, privacy and ethics practices. We have considered developments during 2025 in relation to AI-related data breaches and scams below.

Protecting against data breaches

AI's growing role can and should be considered when taking steps to protect against potential data breaches. In its May 2025 report, the Office of the Australian Information Commissioner (OAIC) highlighted that the number of data breaches reported in the July to December 2024 period represented a 25% increase from reports in 2023.

This is important because AI systems are being used by businesses and across supply chains in ways that are often not fully visible and to collect, use and disclose increasing amounts of personal and sensitive data. An individual's valuable or essential data can be accessed, extracted, altered or restricted by unauthorised third parties due to, for example, inadequate cybersecurity measures of an AI system. Researchers have highlighted that third parties routinely seek to hack or compromise the integrity of the AI system's decision-making process.

Given the strong run-up in the Magnificent 7, finding an entry point at reasonable valuations has become increasingly challenging. These companies continue to deliver strong earnings quarter after quarter, and a favourable macro backdrop is likely to persist through 2026, intensifying the entry-point challenge. Therefore, sector diversification and strategies aimed at identifying segments with lower valuations, but supportive tailwinds, could be prudent.

AI infrastructure

AI's growing infrastructure demands, specifically data centre buildouts, create investment opportunities beyond tech. Industrial companies in the construction & engineering, electrical equipment, and construction machinery equipment industries (~22% of the sector) supply critical components for data centres, from electrical design to cooling systems and battery storage.

Some estimates suggest that global data centre investment could reach $7 trillion by 2030 to meet surging power needs, largely driven by AI workloads. Supply constraints, such as reliable power availability and skilled labour shortages, are slowing data centre buildouts, reducing the risk of overcapacity and supporting pricing power. Although it is also worth considering that generative AI training buildouts are more speculative and, in some markets, contribute to near-term oversupply. As a result, the sustainability of the buildout also hinges on where the spending is directed.

Companies within these industries also stand to benefit from investments in and upgrades to the power grid. Roughly half of US active transformers are reaching the end of their useful life, adding indirect exposure to AI infrastructure demand.

China recently held its Fourth Plenum (a formal assembly of the Chinese Communist Party Central Committee), which saw the draft for the 15th FYP approved. The 15th FYP, which sets the direction for China's economic and social development for 2026-2030 is not merely aspirational. It contains binding directives that cascade down through all levels of government and the state-owned enterprises.

When Beijing identifies a priority sector, capital flows are channelled with remarkable speed and scale. Conversely, sectors that fall out of favour tend to face regulatory headwinds - the ability to correctly interpret these signals can lead to significant investment opportunities.

What is the significance of China's 15th FYP

To properly understand the 15th FYP, it is important to compare it with previous FYPs - many seemingly familiar aims and expressions have been subject to subtle changes in wording, order of importance, and tone. Moreover, unlike previous FYPs that occurred during the periods of robust growth, the 15th FYP arrives at a critical juncture - China's GDP growth has structurally downshifted from double-digit rates to a more modest 4-5% range.

The property sector is undergoing painful deleveraging; youth unemployment remains elevated, all the white geopolitical tensions with the US remain intense. For investors, the 15th FYP is key to understanding future trends and opportunities.

Global shares delivered strong returns in the past year. Optimism on artificial intelligence (AI) and lower interest rate settings in Europe and the United States were the key drivers for rising share prices. These strong share gains come despite the tragic Russia-Ukraine war as well as the ongoing conflicts in the Middle East.

Global shares (hedged) recorded a remarkable 19.7% return for the year. Notably, the highest performing share indices were not based on Wall Street hype but were in Asia. Korean shares with a 95.6% return led the charge while Hong Kong (35.1%), Taiwan (33.3%) and China (30.5%) also delivered impressive gains in local currency terms.

European shares also managed to outperform Wall Street with a 20.6% gain compared to the S&P 500 17.4% annual return. The returns from Australian shares at 10.7% (ASX 300) were solid but trailed the rest of the world.

Global shares total returns in 2025

Despite strong performance, 2025 proved to be a rollercoaster ride for global share markets. From threatening Canada and Mexico on his first day in the White House - to the imposition of a 145% tariff on China, 20% on Europe and 10% on Australia - President Trump has been influential. Initially global share markets went into a tailspin in March and April 2025, however a pause on tariffs announced on April 9 proved to be a turning point, allowing for a global share recovery.

Enthusiasm for technology has been the key positive driver of 2025 returns for global shares. The largest AI chipmaker, NVIDIA, delivered a 39% annual price increase and ended the year as the world's most valuable company. Korea's Samsung Electronics' 125% annual price gain, along with a 44% price surge for Taiwan Semiconductor, and a 36% gain for Europe's ASML [Advanced Semiconductor Materials Lithography], illustrate that the exuberance for technology is a global mania and not just a US fad.

Background

When a client is permanently incapacitated, they may be eligible for a tax-free uplift that increases the tax-free component of the 'disability super benefit'.

While the tax-free uplift can provide some powerful tax and estate planning opportunities, it is often misunderstood and underutilised.

In this article, we explain:

▪ when and how clients can access a disability super benefit and the associated tax savings

▪ how the tax-free uplift is calculated

▪ ways to enhance the tax-free uplift, and

▪ key advice tips and traps.

Key take-outs

Here is a summary of the key take-outs.

Tax-free uplift is also available with disability rollovers

The tax-free uplift is not just applied when clients under age 65 receive one or more disability lump sums. It may also be available when making full or partial rollovers. This may include rollovers to commence a disability income stream or to retain the money in the accumulation phase of super for accessing at a later date.

An SMSF audit consists of two parts:

•a financial audit (Part A)

•a compliance audit (Part B)

The financial reports generally include the fund's statement of financial position as at June 30, the operating statement, a summary of significant accounting policies and other explanatory notes.

The Australian Taxation Office (ATO) regulates SMSFs to ensure the financial reports are presented fairly in all material respects, in accordance with the accounting policies described in the notes to the financial report -  financial audit, and to ensure compliance with the SIS Act and SIS Reg - compliance audit.

An SMSF auditor must be registered as an approved self-managed superannuation fund auditor.

The Australian Securities & Investment Commission (ASIC) is the body which regulates registration of a person wanting to be registered as an 'approved SMSF auditor'.

The auditor must also comply with the auditing standards made by the Auditing and Assurance Standards Board

In the first part of this series, we looked at the enforcement landscape and types of breaches regulators have been pursuing. In this installment we further examine regulator priorities and emerging risks - such as cyber and AI - that are set to shape the year ahead.

Enforcement against insurers remains one of the Australian Securities and Investments Commission's (ASIC) core 2025 enforcement priorities and specifically calls out "failures by insurers to deal fairly and in good faith with customers".

This is a broader statement of purpose than in previous years - in which ASIC had called out specific issues such as "claims handling" in 2024 and "failures by providers of general insurance to deliver on pricing promises to consumers" in 2023.

Rather than expecting any of these topics to come 'off the boil', we interpret ASIC's statement to signal focus on all of these areas and more.

Regulatory priorities throughout 2023 and 2024 have been defined by a focus on protecting consumers from harm - particularly following significant events such as natural disasters and large-scale data breaches.

We expect to see this continue as associated proceedings progress through the courts.

In this article, we give an overview of the key developments across the past two years, In the following instalment we will examine regulators' current priorities and what insurers should expect in the year ahead.

Key trends in 2025

Regulatory action against insurers in 2025 has focused on several key areas, outlined below.

Regulatory enforcement action continues apace

Regulatory enforcement activity against insurers remains robust and continues to operate at the elevated 'new normal' we have observed since the Financial Services Royal Commission [Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry] (FSRC).

This extends across the data we have collected from the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Competition & Consumer Commission (ACCC) filings, as well as criminal referrals to the Commonwealth Director of Public Prosecutions (Commonwealth DPP).

Reports of the death of US exceptionalism, at least those relating to its markets, would appear to be exaggerated.

High-profile economist and commentator, Nouriel Roubini, for one, asserts that the US leads in 10 of the 12 sectors poised to shape the next economic era, including artificial intelligence, robotics, quantum computing, biotechnology, aerospace, and space exploration.

China, by contrast, is deemed to lead only in electric vehicles and some segments of clean energy technology.

The US remains a hub of innovation, drawing investors desiring exposure to cutting-edge industries.

The critical question is not whether to invest in the US-its appeal is undeniable-but how much to allocate and what value to place on its industries, companies, and asset classes.

While we continue to view the US as a compelling destination for client capital, we are increasingly identifying attractive opportunities elsewhere, particularly in emerging markets, as discussed later in this article.

From 1 July 2026, employers will need to pay superannuation guarantee (SG) contributions on payday, with contributions reaching the employee's fund within seven business days.

The government first announced payday super in the 2023/24 Federal Budget, followed by design rules, a consultation paper and then draft legislation.

The Bill formalised these proposals and set the framework for implementation.

The Australian Taxation Office (ATO) released Practical Compliance Guideline (PCG) Draft PCG 2025/D5 alongside the Bill, outlining its compliance approach for the first year of payday super.

The PCG was open for consultation through November 2025. In its guidance, the PCG acknowledged industry concerns that employers may not have sufficient time to deploy, test and embed changes before commencement. This recognition is important, but the timeline remains tight and key difficulties raised during the consultation process remain unaddressed in the new law.

For financial advisers in Australia, it plays a critical role in developing long-term wealth creation and navigating the external financial environment, to help set clients up for success.

Over the past two decades, Australia's private wealth management industry has undergone a quiet revolution in terms of how advisers construct and manage portfolios.

Once dominated by traditional 60/40 equity-bond splits, asset allocation has evolved to reflect a more dynamic, diversified, and risk-aware approach.

Looking ahead, with shifting geopolitical and economic paradigms, we believe asset allocation strategy will play an increasing role in navigating current and future environments.

Why asset allocation matters

Academic research and decades of empirical evidence show that asset allocation, rather than security selection or market timing, is the primary determinant of long-term investment portfolio performance.

Indeed, it is widely accepted in academic literature and across the adviser community, that asset allocation can account for approximately 80% of the overall investment performance of a portfolio, over the long term.

In this article we discuss why tailored programs and independent reviews are essential.

Recent civil proceedings launched by AUSTRAC for serious and systemic breaches of Australia's anti-money laundering and counter-terrorism financing (AML/CTF) laws highlight the strict approach taken by the regulator in enforcing compliance.

The case centres on failures to monitor high-risk customers and maintain a compliant AML/CTF program, despite the entity leveraging the services of an outsourced third-party provider used widely across the sector. This oversight serves as a valuable lesson for all entities captured by the legislated requirements.

The action was the first AUSTRAC civil penalty case to target pubs and clubs following years of regulatory warnings across the sector.

The club in question operated more than 1400 poker machines across ten venues and generated hundreds of millions in revenue. That scale demands robust AML controls.

AUSTRAC raised concerns that the large volume of cash moving through poker machines in pubs and clubs makes them potentially attractive for laundering the proceeds of crime, placing the sector under increased regulatory scrutiny.

As casinos have become more tightly regulated, there is an increasing risk that criminals may shift more laundering activity to smaller venues like pubs and clubs.

The Supreme Court's recent decision in Estate of Chaddock (Deceased) [2025] NSWSC 463 delivers timely and helpful guidance to trustees faced with the administration of life interests under aging testamentary instruments.

The judgment is notable not only for its careful construction of the will but also for its pragmatic engagement with statutory trustee powers, particularly section 14DA of the Trustee Act 1925 (NSW) (Trustee Act), in the context of modern residential aged care arrangements

Background

Dorothy Chaddock died in 1996, leaving a will dated 10 July 1989. The primary asset was the deceased's home at Merrylands (the Merrylands Property). The operative clauses of the will were clauses 3(a) and 4.

Key clauses

Clause 3(a) provided that the Merrylands Property was to be held:

...for my daughter AUDREY FLORENCE CHADDOCK for and during her lifetime she maintaining the premises in tenantable repair keeping the same insured to the full insurable value paying all rates taxes and other outgoings affecting the same...and from and after her death UPON TRUST for such of my daughters as shall survive me and Audrey Florence Chaddock if more than one as tenants in common in equal shares PROVIDED ALWAYS AND I DECLARE that if any of my daughters shall have died in my lifetime or the lifetime of the said Audrey Florence Chaddock leaving a child or children surviving me and the said Audrey Florence Chaddock such child or children shall take and if more than one equally between them the share which his her or their deceased parent would have taken under this my Will had she so survived me and attained a vested interest.

Our latest research report, conducted with market intelligence firm CoreData, reveals that only 39% of small business owners expect their children to take the reins - a seismic shift from the succession ambitions that once defined business ownership.

This is not merely statistically significant. With small businesses - defined as those employing fewer than 20 people accounting for a third of national GDP and employing over 5.3 million people, we are witnessing a reimagining of how wealth, purpose and legacy intersect in modern life. The implications go beyond balance sheets into how we define and conceive success, retirement and family prosperity.

Becoming unanchored

Within the wealth management sector, conversations are evolving. Where we once discussed tax structures and asset allocation, we now find ourselves grappling with questions of identity, purpose and fulfilment.

One client recently described selling their business to a US private equity firm as "like winning the lottery", but that excitement was overshadowed by disorientation and a peculiar sense of mourning. After two decades building a 12-person operation into a thriving global enterprise with more than 120 employees, they found themselves untethered.

The business was not just their wealth creator - it was their daily driver and social ecosystem. While these discussions consume our advisory sessions, the policy response remains behind the curve.

It is a tool that the Australian Securities and Investments Commission (ASIC) has created in its guidance to explain how it believes a licensee can demonstrate that it has the organisational competence to provide the financial services under its licence.

Accordingly, RMs can often be in the dark as to what their role entails and whether they can be held personally liable for breaches of the licensee.

A common myth is that an RM can only get in trouble for contraventions of the law by the licensee when they are a director. This is not the case.

We have reviewed recent stories involving disciplinary actions taken against RMs and one thing is clear - the position of an RM is not one without risk and there are certain expectations that come with the role that ASIC is prepared to enforce.

What is a Responsible Manager?

If you are an RM, you would have been appointed because you have direct responsibility for day-to-day decisions about the ongoing provision of financial services.

Further, you would have been found by ASIC to possess appropriate knowledge and skills for some or all of the licensee's financial services and products.

Accordingly, if you are an RM, this means you have a reasonable degree of seniority in the licensee's business.

Lives, homes and businesses are swallowed up. The media descends, and we hear the same questions on a loop - "Why do people still build here?" or "Why do businesses stay?" and inevitably, "Don't they know it's a flood zone?"

The question that is often overlooked and the one that truly matters is, 'What happens when you become uninsurable?

The uncomfortable truth about uninsurability

We acknowledge this uncomfortable reality and understand almost instinctively, that a postcode can become uninsurable.

A line is drawn on a map, and suddenly, the risk to insure is too great. The safety net is gone.

However, we rarely talk about how this same crisis affects not only postcodes, but also people. You can have your own personal flood zone, and you won't hear a weather warning. You will just feel the water rising around your ankles when it's already too late.

Think of it as a ticking clock in your own biology. One unexpected medical diagnosis. One shift in your family's medical history and the alarm goes off. Suddenly the line is not on a map, it is drawn around you. The door slams shut. Factors concerning your health have made you uninsurable.

And if that happens the day after you've signed the mortgage, launched the business, entered the partnership, purchased the franchise or guaranteed that loan-it is too late. You have locked yourself into a risk you can no longer transfer.

With other tax reforms now anticipated following the government's recent Productivity Roundtable discussions, advisers who rely on 'business as usual' to deal with the financial regulatory environment may risk overlooking one of the most tax-effective and flexible structures available-investment bonds.

At the recent Productivity Roundtable discussions, the government reinforced its commitment to reshaping Australia's tax system to ensure sustainability and equity, with wealth taxes still one of the areas of focus.

Over the past decade, there have been constant changes to superannuation-from the introduction of Division 293 in 2012, to the legislated objective of super in 2024.

The government's proposed Division 296 Bill, to impose additional tax on earnings of super accounts with balances above $3 million, lapsed at the end of the July 2025 parliamentary sitting, but has yet to be confirmed as abandoned.

Financial advisers are exploring strategies as tax and regulatory reforms increasingly constrain wealth structures.

With clients seeking alternative solutions for wealth accumulation and intergenerational transfers, investment bonds continue to gain strong momentum as one of the most flexible and tax-effective options.

Let me explain why these are not as 'niche' or 'old-fashioned' as you may think.

There has been an increasing focus by many of these investors over recent years to diversify away from corporate exposure to boost the resilience and diversification of their overall portfolios.

For the mid-risk parts of portfolios, investors have looked to diversify their yield-based exposures away from corporate credit risk to other sectors and security types, which give them similar yield-based returns, but which are driven by different risk premiums.

Whilst 'corporate credit' is an enormous and broad asset class, it is principally made up of investments that involve direct lending to businesses.

It therefore carries exposure to corporate default risks. The excess yield (over risk free rates) is mainly driven by exposure to this default risk of the ultimate borrowers.

Securitised credit is another very large yield-based asset class, made up of various sub-sectors such as non-agency residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), and various other sectors generically known as asset backed securities (ABS).

These are securities backed by various forms of collateral.

The letter notes that life companies have improved their practices since ASIC's last major review of the sector in 2018, leading to lower lapse rates and claim withdrawals. But there remain areas of concern which are resulting in increasing claims dispute rates.

These include failure to integrate feedback into product design and distribution, persistence of pressure sales and retention tactics, lack of comprehensive response to complaints and inadequate governance of AI tools that are increasingly being used for quality assurance of customer contacts.

ASIC warns life companies to brief their boards and take action to implement improvements where relevant, and notes that steps life companies take in response to issues raised in the letter will inform its approach to future investigations and enforcement action.

In this article, we set out the key issues raised by ASIC and assess their future implications.

ASIC's observations

Observations made by ASIC are outlined below.

Product design and distribution

ASIC found that some life companies continue to rely heavily on sales data rather than customer feedback in product design and flagged weak monitoring systems and lack of escalation processes for frontline staff to raise concerns.

ASIC also found that some life companies' product teams lacked the authority and resources to quickly address problems that their internal reviews identified.

Life companies with better practices tested products with real customers before launching them and used insights from complaints, claims and customer surveys to monitor suitability of products for customer needs.

They are documents that families can use to help them with building guideposts, decision-making rules, and codifying a family's values, mission, and vision.

Family charters can also help define the relationship between critical resources of a family such as the family office.

This paper looks at several key areas that families should consider when developing or stress-testing a family charter.

What is a family charter?

A 'family charter' is a written statement that serves as a record of a family's heritage, culture, ambitions for future success, conflict resolution guide, ambitions for future success, and its culture.

Many families, particularly those with family offices, will be familiar with the concept (also known as a 'family constitution' or 'family protocol').

By whatever name, this document, at its core, will be the family's mission statement, providing some clearly stated aspirations for current and future generations.

A family charter also typically sets out broad principles around governance management, and the use of family assets and profits. It might also include specific policies on things such as investment, education, the family business and the resolution of conflict within the family.

This article builds on the foundational concepts covered in the first installment and provides a practical, structured response model for financial advisers.

It outlines specific steps-recognition, response, referral, and reform-designed to help advisers uphold ethical and legal obligations while supporting vulnerable clients.

Whether facing suspected elder abuse, coercive control, or complex family dynamics, this guide equips advisers with the tools to respond professionally and compassionately.

Responding to suspected abuse

What to do when abuse is identified or suspected

When a financial adviser suspects or identifies elder or domestic financial abuse, they have a professional, ethical, and regulatory obligation to act.

The following structured approach reflects the best practices recommended in the Law Council of Australia's 2023 publication, Best Practice Guide for Legal Practitioners About Elder Financial Abuse and various NSW Government sources and is adapted to the financial services context.

But when done without a strategy, it can lead to unintended outcomes: missed tax opportunities, confused beneficiaries, and in some cases, unfulfilled wishes.

For most people, the largest gift they'll ever make is in their Will.

But is waiting until after death always the best approach?

Philanthropy is growing, but planning is lagging

Australia is a generous country. Our culture of helping others shows up in times of crisis-when bushfires rage or floods displace communities, people give.

In my two decades in philanthropy, this pattern has held true.

The numbers reflect it: Australians gave more than $13.9 billion in donations and bequests in 2022-23, according to the Australian Charities and Not-for-Profits Commission.

This fascinating exploration can help you discover how to harness your unique strengths for success.

Knowing if you are introverted or extroverted, or sensing versus intuitive, are just some of the characteristics that can be defined via personality profiling.

There are at least 2000 different personality profiling tests, and their use is rife in the business world.

In this article, we explore what personality profiling is, its history, some of the most well-known models, and some of the drawbacks to be aware of. We leave you with some tips on how to use personality profiling in your business.

Our EM experts draw on deep experience to tackle five persistent myths and advocate a recalibration of perspectives.

Myth 1: Emerging markets is a riskier asset class

While emerging markets are certainly not risk-free, the difference between emerging market (EM) and developed market (DM) assets is often overestimated.

Recent dynamics are putting that perception to the test. EM economies' credible monetary and fiscal policy of recent years (that is driving positive credit-rating momentum, now the post-COVID default cycle is over) stands in stark contrast to what is going on in some of the world's most 'developed' economies-unpredictable policymaking and unsustainable public finances.

Crucially, this has shifted DM debt into a more volatile regime, blurring the traditional EM/DM divide, according to Grant Webster - co-head of EM sovereign & FX.

For fixed income investors, this matters-at current yields, DM debt would need to make significant capital gains to deliver the risk/return outcomes investors have come to expect. By contrast, in EM debt markets, elevated yields provide most of what is needed to match historical experience. Combine this with a more balanced global growth outlook and easing US dollar strength, and the case for an updated view on EM is even stronger.

Turning to the corporate sector, with an overall rating of BBB-, the EM credit market is substantially higher in quality than the US high-yield market, to which it is often compared.

Yet the compensation for risk is notably higher in EM.

The market is not homogenous-bonds come in a variety of differing guises; there are fixed income assets that mostly reflect the interest rate outlook; there are others that are more correlated with equity markets.

Key points

• Fixed income remains one of the most useful and flexible asset classes, especially during uncertain times.
• Higher income has become a much more prevalent component of fixed income returns in recent years.
• Short-term, assets may re-price to reflect the uncertainty, but medium-term returns will potentially be more attractive given current yield levels.

There are also assets of varying maturity, allowing participants to use fixed income to hedge liabilities and manage required future cash flows. Bond interest payments are either linked to short-term floating rates or are fixed for varying periods. And fixed income derivatives (contracts) allow hedging of interest rates, credit, and foreign exchange risk to provide more confidence of return for a core portfolio.

There is also the ability to access cash-flow returns from credit activities like mortgages, automobile and consumer loans, and bank lending through structured credit instruments such as asset-backed securities and leveraged loans. In short, the fixed income markets have something for everyone.

This is largely due to conservative management styles, sector exclusions, and structural biases that have limited their returns-leading many investors to rethink their role in credit portfolios.

In this article, we take a deep dive into the convertibles market, looking at the different types of convertibles and their use in credit portfolios-and the potential reasons why convertibles, and particularly the active managers that use them, have underperformed expectations.

What are convertible bonds?
Convertible bonds are a type of debt issued by companies as an alternate form of financing to the typical issuance of debt or equity, with characteristics somewhere in between the two.

A convertible bond is structured as a fixed rate bond, with a call option embedded within, allowing the bondholder to convert the security into equity of the issuing company, once the company's stock price moves above a certain threshold (known as the option's strike price).

Convertible bonds may be either mandatory or non-mandatory; that is conversion to stock is forced or optional once the equity price reaches the strike price.

To compensate for this added benefit within the bond, the fixed yield of the bond component is typically lower than that of an otherwise comparable fixed rate bond issued by the same or similar entity.

This is clearly beneficial for those able to issue convertible bonds, as the lower coupon to the investor means a lower cost of capital for the issuer.

What's happened? Investors are concerned about a severe growth shock

The global outlook is subject to major risks. In particular, policy uncertainty remains elevated while the trade war is ongoing, with little visibility about when the situation will normalise.

In addition, global investors have grown concerned about policy risks, especially rising fiscal deficits and larger government debt burdens.

Government debt projections across many countries are not encouraging amid the risk that market rates may stay higher for longer, with potentially adverse repercussions for global demand. In the face of these major risks, a single economic actor holds the key to the global macro outlook-the consumer.

The global consumer appears to be coming to the rescue-allaying concerns that the global economy may suffer a major slowdown

Given severe policy uncertainty and the ongoing trade war, it is understandable to fear a considerable worsening of the global outlook. But the health of the global consumer has given us comfort that the prospects for the global economy remain robust.

In the US, the consumer remains resilient

This mainly reflects the strong labour market, which shows no signs of dramatic deterioration. In addition, the consumer balance sheet is particularly robust, best illustrated by the ratio of household net worth to disposable income, which stands near its historical high at 760%.

The changes apply immediately, and licensees should review and update their internal systems for dealing with incidents and reportable situations to reflect the new relief.

This is the third tranche of relief ASIC has provided since the new reportable situations regime commenced on 1 October 2021.

The latest changes follow ASIC's consultation with industry in early 2025 and it appears unlikely to broaden the relief further without legislative amendment.

In this article, we provide an overview of the relief and what licensees need to do to comply.

The changes should reduce the number of incidents that need to be notified to ASIC, but the regime will continue to capture many immaterial breaches which need to be investigated and reported.

I am cognisant that research into this area often focuses on the business, but not the owner.

With this in mind, I am pleased to present this research into how business owners can take charge of their future and be successful when seeking to transition their business, plan for retirement, and manage and preserve their wealth.

Small business owners are more than just entrepreneurs-they are visionaries, job creators and key contributors to economic growth, accounting for approximately a third of national GDP.

Despite their success in building and sustaining businesses, many face significant challenges when it comes to wealth planning.

Too often the focus on this is overlooked or addressed too late, putting both their business and personal wealth at risk.

Rethinking retirement and wealth planning

For many, the concept of retirement looks vastly different from traditional expectations.

Small business owners often have their wealth tied up in their businesses, making wealth planning essential so they can achieve financial security when they initiate plans to start stepping back from business ownership.

In May 2025, the credit ratings agency Moody's downgraded the US government's credit rating from AAA to AA1.

Moody's was alarmed about whether the US government has sufficient budget discipline. According to Moody's, rising budget deficits given higher spending commitments and "broadly flat" revenue are likely to see the US debt performance "deteriorate".

History supports Moody's assessment that "successive US administrations and Congress have failed to agree on measures to reverse the trend" of large US budget deficits and rising debt obligations.

Since January 1981 when Ronald Reagan began his first term in the White House, US government debt has been heading higher.

In the past 54 years, there has only been one brief window with President Bill Clinton (1993-2001) where federal public debt as a percentage of US nominal gross domestic product (GDP) actually declined given the benefit of budget surpluses.

The latest available data for 2024 suggest that US public debt now stands at 96% of GDP.

Hence for every US$100 of national income as measured by GDP, America's government debt obligations amount to US$96.2.

It can show up in small, easy-to-miss ways-a partner answering all the questions, a son managing Mum's finances but refusing her a debit card, or a long-term client suddenly unsure about decisions they once made confidently.

As a financial adviser or AFS licensee, you are not just offering strategies and products. You are building relationships. You are in a position of trust. And that means you are also in a position to notice when something does not feel right.

You might be the only professional in that person's life who sees the signs.

Noticing matters. Knowing how to respond matters even more.

Elder financial abuse and domestic financial abuse are not fringe issues-they are mainstream, growing, and increasingly recognised as part of your duty of care. Beyond your legal and compliance obligations, this is about being the kind of adviser people can rely on when it really counts.

This article (in two parts) is here to help you recognise the signs, ask the right questions, and respond in a way that is informed, appropriate, and supported by best practice.

Because protecting someone's financial wellbeing often means protecting more than just their money.

At the risk of raising the ire of both the Australian Financial Complaints Authority (AFCA) and the Financial Advice Association Australia (FAAA), and being accused of over-reach, what follows is a comprehensive roadmap for advisers and licensees to identify, respond to, and mitigate elder and domestic financial abuse.

We will focus on Australian laws, regulations, and expectations-including obligations under the Corporations Act 2001 (Corporations Act), Australian Securities & Investments Commission (ASIC) regulatory guidance (for example, RG 271 on complaints, RG 263 on the Financial Services and Credit Panel), the Financial Planners and Advisers Code of Ethics 2019, and relevant decisions and commentary from AFCA.

We will also reference other industry codes-such as the Australian Banking Association (ABA) Banking Code of Practice-and expectations of duty of care from banks and aged care providers.

Practical tools, templates, and checklists are provided to help you take action. Throughout, we contrast Australian approaches with international best practices (like the UK and US) to highlight opportunities for improvement.

After two decades of legislative change, margin squeeze and demographic disruption, Australian advisers can no longer treat retirement as a one off transaction or an exercise in product selection. The Retirement Philosophy provides a roadmap for tailored retirement income strategies that incorporate a mix of income streams- such as account-based pensions, annuities and other investment vehicles-and provides more robust and personalised advice solutions. In other words, the philosophy you adopt-rather than the product you recommend-now determines your relevance, your compliance posture and your commercial edge.

Why a retirement philosophy matters

A well-documented philosophy delivers far more than warm and fuzzy aspiration. It establishes the intellectual backbone for your advice process, clarifies expectations, and embeds discipline across every interaction.

Enhanced client trust

Clients instinctively trust advisers who can translate complexity into a coherent roadmap. When people see the logic that connects their goals to your recommendations, anxiety evaporates and engagement soars. A published philosophy proves that recommendations flow from principle, not product sales, fostering transparency and long-term loyalty.

Improved client outcomes

A philosophy calibrated to longevity and decumulation risks helps retirees avoid the nightmare of outliving their savings. By articulating parameters for safe withdrawal rates, sequencing risk mitigation and contingency buffers, advisers move beyond best guess projections to deliver evidence based, scenario tested strategies that adapt to life's volatility.

Regulatory alignment

Documenting the 'how' and 'why' behind advice embeds the best interests duty, provides contemporaneous evidence for Standard 9 of the Code of Ethics, and streamlines file review and audit. Philosophy is the fastest way to turn compliance from a box ticking chore into a value proposition, because reviewers can instantly see the pedigree of each recommendation.

Commercial advantage

A distinctive philosophy is also a marketing differentiator. A clearly defined retirement philosophy provides several commercial and strategic benefits beyond delivering better client outcomes. It points to higher conversion rates, stronger referral flows and premium pricing power for firms that can articulate their intellectual property.

Big picture year-end tax considerations

Year-end tax planning is a crucial time for evaluating whether the current structure is fit for purpose both now and into the future. This includes looking at the interaction of trusts, companies, self managed super funds (SMSFs), Private Ancillary Funds, and other entities.

It is also important to consider any changes in your personal life during the year. Perhaps life is largely status quo or perhaps there has been a realisation of a significant family asset that requires additional tax planning. This additional planning might involve Small Business Capital Gains Tax concessions, donations, superannuation contributions and other actions that need to be completed before 30 June.

Stepping away from tax considerations, it is also beneficial to review personal insurance and estate plans. Ensuring that personal insurance is up to date and adequately covers current needs is crucial for financial security. Similarly, reviewing and updating estate plans can provide peace of mind that assets will be distributed according to the client's wishes and in the most taxefficient manner.

Businesses-what should you be taking into consideration?

Key year-end revenue-related tax planning considerations for businesses include reviewing contracts to determine if income invoiced may be considered revenue in advance for income tax purposes.

From a deduction perspective:

• Review the accounts receivable ledger to follow up any outstanding debts and to formally write off any debts that are not collectable.

• Make sure all capital assets have been included on the asset depreciation schedule, consideration has been given to the instant asset write off and all depreciated assets are still held by the business.

• Review your inventory listing to ensure obsolete and damaged stock has been properly accounted for.

• Any superannuation payable by the business is paid prior to 30 June, as superannuation payments are deductible based on cash payment and not accruals.

Although not 30 June time-sensitive, have the various government grants including Research & Development concessions been considered?

From a business owner perspective, has consideration been given to the remuneration strategy of salaries versus dividends as well as the impact of any funds withdrawn from the business that may be subject to Division 7A provisions1 , [which prevents private companies from making tax-free distributions of profits to shareholders or their associates through payments, loans or forgiven debts].

It is also important to consider if the SMSF Airbnb activities constitute a business and if so, check the trust deed to ensure it is allowed to carry on a business.

Purchasing a property by my SMSF for Airbnb rental purposes

Airbnb property may be regarded as business real property under certain circumstances.

When the property is used in this way by a member it can be purchased from a member and used by a SMSF to undertake rental activities using an Airbnb platform. Given the complexity of the superannuation legislation, and severe outcome if the SMSF trustee gets it wrong, it is always precautionary to obtain an Australian Taxation Office (ATO) private ruling to ensure the member is carrying on a business to avoid legal and compliance issues.

Of course, the SMSF must also consider other compliance issues such as:

• The sole purpose test
• Arms-length transactions including purchasing the property at market value
• Transparency of the rental operations
• Evidence of rental income and expenses for audit purposes.

Purchasing a property from members of my SMSF or other related parties

An SMSF trustee is prohibited from acquiring residential property from a member or related party. The one exception being residential property which is business real property as defined by the superannuation legislation. Business real property includes land and buildings used wholly and exclusively in one or more businesses.