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3. 3 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.

4. 4 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

5. Why Cashflow Matters Damian Craven Business Development Manager Macquarie Adviser Services

6. 6 Living longer, working shorter 10 20 30 40 50 60 70 80 90 166572 Grandad 186078 Dad 215583 Me Working years Retirement years Figures are for illustrative purposes only 23 ? My kids

7. 7 Our ageing population Source: ABS

8. 8 Real net national disposable income per capita Real household final consumption per capita

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10. 10 Financial independence = Building personal cashflow to replace employment cashflow cost of living cashflow to meet

11. 11 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

12. Your Clients The need for cashflow management

13. 13 Think like a business Income Statement Balance Sheet Expenses Income Assets Liabilities How healthy is your cost to income ratio? vs

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

15. 15 Safe hands – handling the cash Cashflow pattern No.1: Hand to mouth Income Expenses Liabilities Assets Salary

16. 16 Safe hands – handling the cash Cashflow pattern No.2: Hand to bank Income Expenses Assets Salary Focus on looking rich Liabilities

17. 17 Safe hands – handling the cash Cashflow pattern No.3: Handled for growth Income Expenses Liabilities Assets Salary Focus on looking rich Positive cashflow management

18. 18 Bank account Automatic payments to other accounts Account fees dependent on account type and usage No interest 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 The options

19. 19 Implementing the system Expenses Liabilities $300,000 Assets $200,000 $6,000$3,000 $2,000 $1,500 $500

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

21. 21 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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23. Your Business The benefits of a cashflow management strategy

24. 24 Adding real value Years Value $ Cashflow planning is the fundamental base to enable you to offer clients comprehensive strategic advice Strategic advice Asset allocation Investment selection Point of retirement

25. 25 Cash management system Adviser 1 The business revenue search engine Adviser 2Adviser 3 $300k $5,250 $400k $7,000 $20m $350,000 Figures are for illustrative purposes only. Revenue payment is based on 1.75% to adviser. Amount invested Revenue $15m additional FUA

26. 26 What is the opportunity? $720,660,000 Source: www.rba.gov.au/Statistics/Bulletin/B03hist.xls

27. 27 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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30. Why Macquarie?

31. 31 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

32. 32 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

33. 33 Industry reputation is core to our values  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. 2003, 2004 and 2005 ASSIRT Awards for best Fund Manager. No. 1 Fund Manager in:

34. 34 Strong growth in service and development CMT FUND SIZE ($Billion)

35. 35 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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37. Workshop A cashflow case study

38. 38 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

39. 39 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

40. 40 Step 2

41. 41 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

42. 42 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?

43. 43 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

44. 44 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. Implementing a cashflow plan for your clients also has clear benefits for your business. Cost to incomeFunds RetainedRevenue 100%$0 90%$500,000$1,375 80%$1,000,000$2,750 70%$1,500,000$4,125

45. 45 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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47. Consultum PD Day Macquarie Wrap Solutions Damian Soraghan – Strategic Business Manager

48. 48 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

49. 49 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

50. 50 Transparent pricing and flexible fees Adviser: Establishment fee Ongoing fee (% and $) Transaction fee Establishment FeeNil Administration fee per investment 0.67% pa for the first $50,000 0.10% pa for amounts above $50,000 Transferring assets in$51.25 each time Transaction fees$20.50 per transaction Macquarie’s competitive fee structure

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

52. 52 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