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GST provides a boon for financial advisers: Deutsche

PROVIDING taxation advice to clients has been a real boon for financial advisers, particularly in light of the tax changes that are currently underway.

Deutsche Bank’s Sydney-based head of private banking in Australia Michael Monaghan said those who had more complicated financial affairs all needed advice.

He said the new tax regime created a huge demand for advice because of its complexity.

The reduction in capital gains tax would mean that banks would need to help re-evaluate their portfolios, possibly moving from income investments to growth investments, he said.

Demand for investment advice following the changing tax structure was not all that was driving business at Deutsche.

The growing number of wealthy Australian families was also creating opportunities.

Mr Monaghan said succession planning, or estate planning, was growing by 150 per cent per annum – the fastest sector of Deutsche’s private banking business.

Deutsche’s Perth senior associate director Greg Devine said that as Australia got older, the amount of accumulated family wealth would become a big source of investment money.

Deutsche Bank estimates there are about 10,000 people in Australia worth more than $50 million and about 200,000 millionaires.

For families, and the established rich, stability was particularly important because wealth preservation rather than wealth creation was the issue, Mr Devine said.

“They want to know that they will be dealing with the same adviser for a long period of time, rather than chopping and changing,” he said.

However, whereas in Europe people would often have brand loyalty to a bank, in Australia people were more concerned with track records and knowing what returns are going to be like, Mr Devine said.

It had become increasingly important to spread the risk.

With people living longer, it would no longer do to rely simply on putting the money into the bank and hoping there would be enough come retirement, he said.

Non-traditional investments such as hedging in commodities and currencies also were beginning to feature in client portfolios, Mr Devine said.

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