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Disclaimer
 Macquarie Investment Management Ltd ABN 66 002 867 003 (MIML) is
not an authorised deposit-taking institution for the purposes of the
Banking Act (Cth) 1959 and MIML’s obligations do not represent deposits
or other liabilities of Macquarie Bank Limited ABN 46 008 583 542.
Macquarie Bank Limited does not guarantee or otherwise provide
assurance in respect of the obligations of MIML.
 The Macquarie Cash Management Trust is offered by MIML. In deciding
whether to acquire or continue to hold an investment, you should
consider the current Product Disclosure Statement (PDS) which is
available from us.
 This information is provided for the use of licensed financial advisers only.
Financial advisers are prohibited from passing on this information to any
retail client. In no circumstances is it to be used by a potential client for
the purposes of making a decision about a financial product or class of
products.
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Agenda
 Australia’s cashflow quandary
 Your clients – the need for cashflow management
 Your business – the benefits of a cashflow management strategy
 Why Macquarie? And how we can help you
 A word from your peers – advice to advisers
 Questions
 Close
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Why Cashflow Matters
Damian Craven
Business Development Manager
Macquarie Adviser Services
Living longer, working shorter
Grandad
16
65
72
Dad
18
60
78
Me
21
55
83
My kids
?
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10
Working years
6
20
30
40
Retirement years
50
60
70
80
90
Figures are for illustrative purposes only
Our ageing population
Source: ABS
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Real net national disposable income per capita
Real household final consumption per capita
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Financial independence =
Building personal cashflow
to replace
employment cashflow
to meet
cost of living cashflow
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In summary
We have…
 An ageing population
 Strong economic growth in the past 14 years
 Real net income growth
Which means…
 Making money is not our problem
But…
 Consumption has increased
 No real wealth is achieved
… Managing cashflow is our problem
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Your Clients
The need for cashflow management
Think like a business
Income Statement
Income
vs
Expenses
vs
Liabilities
Balance Sheet
Assets
How healthy is your cost to income ratio?
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Asset or liability?
Cashflow patterns of assets and liabilities
Assets pay
Assets
income e.g.
shares;
investment
property; etc
Liabilities
Liabilities cost
money e.g.
home; boat;
car; etc
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Safe hands – handling the cash
Cashflow pattern No.1: Hand to mouth
Salary
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Income
Expenses
Assets
Liabilities
Safe hands – handling the cash
Cashflow pattern No.2: Hand to bank
Salary
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Income
Expenses
Assets
Liabilities
Focus on looking rich
Safe hands – handling the cash
Cashflow pattern No.3: Handled for growth
Salary
Positive cashflow
management
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Income
Expenses
Assets
Liabilities
Focus on looking rich
The options
• Automatic
•Third party access
•Access to managed
payments to other
•Informative
funds at lower price
statements
•Consolidated
•Downloads
reporting
accounts
•Account fees
dependent on
account type and
•Superior service
usage
•Fee deduction service
•No interest
•Competitive interest
Wrap account
rate
Bank account
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•Asset Allocation
Cash
Cash
management
management
account
account
Implementing the system
$6,000
$3,000
Expenses
$500
$2,000
$1,500
Assets
$200,000
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Liabilities
$300,000
Chart to financial independence
Passive income
Financial independence
$
New car purchase
Home renovations
Years to financial independence
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Cost of living
In summary
Clients need to….
 Think like a business
 Understand their cashflow patterns
Advisers can help by…
 Developing a cashflow strategy
 Implementing a cashflow system
 Tracking progress to strategy
To…
 Work together towards achieving financial independence
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Your Business
The benefits of a cashflow management strategy
Adding real value
Point of retirement
Value $
Cashflow planning is
the fundamental base to
enable you to offer
clients comprehensive
Strategic advice
strategic advice
Asset allocation
Investment selection
Years
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The business revenue search engine
Adviser 1
Adviser 2
Adviser 3
Cash
management
system
$300k
$400k
$20m
$5,250
$7,000
$350,000
Amount invested
Revenue
$15m additional FUA
Figures are for illustrative purposes only. Revenue payment is based on 1.75% to adviser.
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What is the opportunity?
At-call deposits with Australian Banks, June 1989 - June 2005
800,000
$720,660,000
700,000
Deposits ($ Million)
600,000
500,000
400,000
300,000
200,000
100,000
0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: www.rba.gov.au/Statistics/Bulletin/B03hist.xls
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In summary
Advisers will…
 Deliver greater strategic value
 Achieve longer term sustainable client relationships
Delivering…
 An integrated system to track all clients investible cashflows
 Increased efficiency to your business model
Resulting in…
 Greater results for your clients
 Greater results for your business
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Why Macquarie?
Your reputation is important to us
“It takes 20 years to build a
reputation and five minutes to ruin it.
If you think about that, you’ll do
things differently”
Warren Buffett
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What we stand for
 Award-winning Service
No. 1 Best fund Manager 2003, 2004, 2005
 Reputation and Experience
The first and largest CMT with a history of 25 years experience
 Market-leading technology and development
Significant leading and evolving online enhancements.
The MCMT has in excess of 300,000 clients
 Built for Intermediaries
Specifically built for adviser-client relationships
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Industry reputation is core to our values
2003, 2004 and 2005 ASSIRT Awards for best Fund Manager.
No. 1 Fund Manager in:
 Administration support
 Usefulness of product brochures

Staff professionalism and
competence

IT services

Well integrated IT systems.

Administration efficiency

Website content

Timeliness of investor
redemptions

Usability of website

Ability to transact online

Client access to info online.

Ease of amendments

Call centre efficiency and
competence
 Quality of transaction and
valuation reports
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Strong growth in service and development
CMT FUND SIZE ($Billion)
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How we can help
 Cashflow







Client presentations
Client newsletter articles
Educational guide
Client workbook
Support staff training
Targeted client campaigns
Online toolkit
 SMSFs






Educational guide
Client presentations
Targeted client campaigns
Accountant and support staff training
Client newsletter articles
Online toolkit
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Workshop
A cashflow case study
Step 1
 Enter the client data into the Cashflow Plan(figures are monthly)
 Complete the monthly cashflow chart to determine your clients
cashflow position
 Based on this, what is your client’s actual cost to income ratio
 Calculate how much free cashflow your clients really have to
invest each year
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Step 1 outcomes
 CI Ratio = 95%
 Surplus cash: (6,200 – 5,870) x 12 = $3,960
 A detailed cashflow analysis is needed to determine how much
money your clients are currently consuming vs. how much they
have to invest
 Need a visible cashflow system to do this
 Cost of living needs to be kept separate from the cashflow system
 Most bank accounts aren’t set up as cashflow systems
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Step 2
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Step 2 outcomes
 X = $740,790 (approx)
 If your clients aren’t on track to meet their goals, they can:
 Re-think their desired retirement lifestyle
 Re-think their retirement age
 Work with you to develop a cashflow management plan so they can
reach their retirement goals
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Step 3
 1,000,000 = 80,000 (1.10)20 + A [(1.10)19 – 1 / 0.10]
 1,000,000 = 538,200
 1,000,000 - 538,199
+ A(51.16)
=
A
51.16
 A = $9027 invested p.a. to reach goal of $1,000,000
How much extra Cashflow do they need to find?(per month)
Where will your clients find extra Cashflow?
What is their new Cost/Income Ratio?
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Step 3 outcomes
 A= $9,027p.a., that’s an extra $422.25/month
 No definitive answer to finding the extra cashflow
 New CI Ratio = 88% (assuming you are targeting $1,000,000)
 Looking at your client’s cashflow pattern will give you a strong base to
work with them, to protect and grow their wealth
 Small changes can make a big difference when you are working with
clients who have a longer time frame.
 The tighter the cashflow framework the more defined the results
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Step 4 outcomes
 Increase business efficiency; Increase revenue; Increase client
value proposition; Develop long-term sustainable client
relationships; Increase client satisfaction and get your clients
actively participating in their financial strategy.
Cost to income
Funds Retained
Revenue
100%
$0
$0
90%
$500,000
$1,375
80%
$1,000,000
$2,750
70%
$1,500,000
$4,125
 Implementing a cashflow plan for your clients also has clear benefits for
your business.
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In summary
 Clients need a central cashflow system to monitor all of their
income and expenses
 You need to know your client’s true free cashflow position
 Many of your clients may not be on track to reach their retirement
goals, however they may not know this until it’s too late
 You need to track progress against cashflow strategy in every
client review
 Cashflow Management is Fundamental to protecting & growing
your business
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Consultum PD Day
Macquarie Wrap Solutions
Damian Soraghan – Strategic Business Manager
Macquarie Wrap is …
Smart portfolio solutions made simple
 320 registered dealer groups and 2000 advisers
 Over 55,000 accounts
 Current FUA $22.5b
 Supported by dedicated professionals
 Assirt award winner – 2003,2004, 2005
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Macquarie Wrap’s product range…
Full client management
Segmented
client management
Investment
Super
Pension
Investment
Super
Manager
Manager
Manager
Accumulator
Accumulator
…offering you service choice and flexibility
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Transparent pricing and flexible fees
 Macquarie’s competitive fee structure
Establishment Fee
Nil
0.67% pa for the first $50,000
Administration fee per
investment
0.10% pa for amounts above
$50,000
Transferring assets in
$51.25 each time
Transaction fees
$20.50 per transaction
 Adviser:

Establishment fee
 Ongoing fee (% and $)
 Transaction fee
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Transparent Pricing and flexible fees
 Macquarie’s competitive fee structure
Establishment Fee
Nil
0.77% pa for the first $50,000
Administration fee per
investment
0.10% pa for amounts above
$50,000
Transferring assets in
$51.25 each time
Transaction fees
$20.50 per transaction
 Adviser:
Establishment fee
 Ongoing fee (% and $)
 Transaction fee

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Consultum rebate
 22 basis points (inc GST) rebate (where we charge 0.67%
or .077%)
 Example:
$300k portfolio – all holdings less than $50k
 Client pays $2,010 ($300k x 0.67%)
 Rebate to Consultum - $660 ($300k x 0.22%)
 $300k portfolio – 3 x $100k investments
 Client pays - $1155
 Rebate to Consultum - $330 ($150k x 0.22%)

 Paid monthly
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