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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 4

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 Working years

23 ?

10 20 30 40 50 60 70 80 90 Retirement years Figures are for illustrative purposes only 6

Our ageing population

7 Source: ABS

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

Balance Sheet

Assets vs Liabilities How healthy is your cost to income ratio?

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Asset or liability?

Cashflow patterns of assets and liabilities Assets pay income e.g. shares; investment property; etc Assets Liabilities Liabilities cost money e.g. home; boat; car; etc 14

Salary

Safe hands – handling the cash

Cashflow pattern No.1: Hand to mouth Income Expenses Assets Liabilities 15

Salary

Safe hands – handling the cash

Cashflow pattern No.2: Hand to bank Income Expenses 16 Assets Liabilities

Focus on looking rich

Salary

Safe hands – handling the cash

Cashflow pattern No.3: Handled for growth Income Expenses

Positive cashflow management

Assets 17 Liabilities

Focus on looking rich

The options

• Automatic payments to other accounts •Account fees dependent on account type and usage •No interest

Bank account

18 •Third party access •Informative statements •Downloads •Superior service •Fee deduction service •Competitive interest rate

Cash management account

•Access to managed funds at lower price •Consolidated reporting •Asset Allocation

Wrap account Cash management account

Implementing the system

$6,000 $500 $3,000 $2,000 $1,500

Expenses Assets $200,000 Liabilities $300,000 19

$

Chart to financial independence

Financial independence New car purchase Home renovations Passive income Cost of living 20 Years to financial independence

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 21

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Your Business

The benefits of a cashflow management strategy

Adding real value

Point of retirement Value $

Strategic advice Asset allocation Investment selection

24 Years

Cashflow planning

is the fundamental base to enable you to offer clients comprehensive strategic advice

The business revenue search engine

Adviser 1 Adviser 2 Adviser 3 Cash management system

Amount invested Revenue $300k

$5,250

$400k

$7,000

$20m

$350,000 $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 800,000 700,000 600,000 $720,660,000 500,000 400,000 300,000 200,000 100,000 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 27

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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 31

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 32

Industry reputation is core to our values

2003, 2004 and 2005 ASSIRT Awards for best Fund Manager.

No. 1 Fund Manager in:        Administration support Staff professionalism and competence Administration efficiency Timeliness of investor redemptions Ease of amendments Call centre efficiency and competence Quality of transaction and valuation reports        Usefulness of product brochures IT services Well integrated IT systems. Website content Usability of website Ability to transact online Client access to info online.

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Strong growth in service and development

CMT FUND SIZE ($Billion) 34

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 35

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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 invest each year have to 38

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 39

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 41

Step 3



1,000,000 = 80,000 (1.10) 20 + A [(1.10) 19 – 1 / 0.10]



1,000,000 = 538,200 + A(51.16)



1,000,000 - 538,199 = 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 43

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

100% 90% 80% 70%

Funds Retained

$0 $500,000 $1,000,000 $1,500,000

Revenue

$0 $1,375 $2,750 $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 45

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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 48

Macquarie Wrap’s product range…

Full client management Segmented client management Investment Manager Super Manager Pension Manager Investment Accumulator Super 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 Transferring assets in Transaction fees  Adviser: 0.10% pa for amounts above $50,000 $51.25 each time $20.50 per transaction  Establishment fee  Ongoing fee (% and $)  Transaction fee 50

Transparent Pricing and flexible fees

 Macquarie’s competitive fee structure Establishment Fee Administration fee per investment Nil 0.77% pa for the first $50,000 0.10% pa for amounts above $50,000 Transferring assets in Transaction fees $51.25 each time $20.50 per transaction  Adviser:  Establishment fee   Ongoing fee (% and $) Transaction fee 51

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 52