q&a with fiducian

The Q&A

FUMAA - refers to the question how exactly Fiducian measure its FuM FuA and so on.
Ø Funds under Management, Administration & Advice (Around $3.5Bln) takes into consideration that Fiducian is an integrated model that generates revenues within each segment of the value chain. The difference in reporting plus perceived underperformance relative index ( I refer to your questions 1,2 & data) appears linked to the reclassification of a wholesale investment management contract (around $100Mln initially brought on around 2008) from Funds under Administration to Funds under Management. Revenue impact from the reclassification is nil. In summary, around 1.1Bln in Funds under Advice, 1Bln in Platform Administration and 1.4Bln in Fiducian Funds.
Revenue, Net margin and working capital

Revenue - How Fuducian generates its revenue
Ø Fees are extracted from the clients portfolio balance. This is performed by the platform which acts as the hub for collecting fees from the consolidated portfolio and pays the adviser and the fund managers their share. Net margin is the total fees less adviser share. The platform always retains minimum 3% in cash. This is where the fees are extracted from. Hence no bad debts and minimal working capital requirements
SMSF Admin

The economics of its recent SMSF offering
Ø Charges fixed dollar fees that average 2K per Fund. These are like annual fees charged by accountant for lodging your tax return

FOFA - refers to the incoming reforms on the financial planning industry. I would not say the impact is minimal.
Ø Relates more to corporate superannuation funds. Advisers signed on corporate superannuation clients where they advise employees on their employer??s mandated 9% of salary contributions. The issue is not many employees obtained proper advice but on going commissions were paid to the advisers by the corporate superannuation segment of the platforms. As such it appears the left of centre Government is seeking to rectify this issue. Around 8% of assets at Fiducian are in the corporate superannuation segment of the platform. Fiducian restricts advisers servicing employer plans with around more than 30 employees to ensure every employee obtained proper advice. In summary we are personal superannuation and investment specialists where each client receives appropriate advice, a properly documented financial plan and where the fees are agreed to by each client face to face. As such net impact - probably minimal.

FBS - Fiducian Business Service. This is not the core business, but a leverage on the existing software platform
Ø Is the Business Services division ?C it is a new venture. It has recently obtained a tax agent license. To date it has utilised staff in India to cost effectively process tax return work for suburban accounting practices that service local businesses. It seeks to leverage its low cost processing advantage to possibly develop its own national network of profitable accounting practices. Some of this development will be through acquisition of existing small practices. Each acquired practice will also offer financial planning services the Fiducian way.