1. Macquarie Adviser Services SMSF trends in cash and lending Insights from the SPAA SMSF Generations Report and the 2012 Macquarie Mortgages Roadshow Prepared for Premium Wealth Management November 2012

2. Macquarie Adviser Services The SMSF Market

3. Macquarie Adviser Services Who is in the market for an SMSF? Small business owners Younger peopleHighly educated Families with school age and pre-school children White collar professionals People from Asian backgrounds

4. Macquarie Adviser Services We need to understand confidence Totally confidentLittle or no confidence Plan to set up SMSF Plan to invest in property Plan to buy a house Have set up SMSF Have invested in property Have bought a house If they’ve done it before they will be full of confidence but if not you’ll need to support them. Women are often less confident

5. Macquarie Adviser Services What gives them confidence? All this before they get to you

6. Macquarie Adviser Services No such thing as a typical SMSF investor Choice and control drive sector growth Source: Macquarie – Mood, Life and Money survey, 2011 9% of Australians surveyed have established an SMSF 14% likely to in future Extract from: SPAA SMSF Generations Report

7. Macquarie Adviser Services Cash and the SMSF investor

8. Macquarie Adviser Services Cash: the asset allocation decision Last five years have seen an increase in the proportion of SMSF assets held in direct shares, cash investments and geared property. *Based on Macquarie Cash Management Account and Macquarie Cash Management Trust data. Cash investments Managed funds Direct shares Geared property 20062011 Extract from: SPAA SMSF Generations Report

9. Macquarie Adviser Services Seasonality of deposits: a movable feast Noticeable peak of deposits each June Hands on approach taken Preference for funds transfer, cheques in decline No such thing as a typical investor, except when it comes to transacting. *Based on Macquarie Cash Management Account and Macquarie Cash Management Trust data. Simple super Extract from: SPAA SMSF Generations Report

10. Macquarie Adviser Services Wrap portfolios: a focus on equities Gen Y SMSF investors – highest allocation to equities at 48% *Based on Macquarie Wrap data. Extract from: SPAA SMSF Generations Report

11. Macquarie Adviser Services Generations: at a glance * Investment Trends, April 2012 Self Managed Super Fund: Investor Report, additional analysis commissioned by Macquarie Bank. ^ Macquarie Bank. Based on Macquarie Cash Management Account data. † Mood, Life and Money – Macquarie Insights. Extract from: SPAA SMSF Generations Report ⌂ ⌂ Caution- based on very small sample

12. Macquarie Adviser Services Gen Y 50% prefer set fee for advice – more than any other age group Gen X Income rich & time poor – 46% say life is “busy” so be punchy Baby Boomers It’s all about trust – 70% prefer face-to- face communication Silent Generation Budget for specific things – 86% check balances frequently Tailoring advice is key Source: Macquarie – Mood, Life and Money survey, 2011 Extract from: SPAA SMSF Generations Report

13. Macquarie Adviser Services Role of advice: never more important Information hungry and knowledgeable Number one preference on receiving advice is face-to-face meeting with an expert, followed by a written recommendation. Source: Macquarie – Mood, Life and Money survey, 2011 Extract from: SPAA SMSF Generations Report

14. Macquarie Adviser Services The Property Story

15. Macquarie Adviser Services SMSF growth 1994-2011 % of super industry assets Money in corporate super funds Money in public sector funds Money in industry super funds Money in retail super funds Money in self managed funds $54 billion $205 billion $247 billion $358 billion $400 billion

16. Macquarie Adviser Services Property slice of SMSFs currently ‘small’ 14.5% in property made up of 4.5% direct residential, 6.3% direct commercial and the remainder in property trusts There is $58 billion invested in property in self managed super funds

17. Macquarie Adviser Services What does $58 billion buy? 58 times the amount spent by tourists to see koalas every year 116 years supply of bottled water purchased in Australia The amount of debt Generation Y have racked up on credit cards The entire currency reserves of Iraq The cost of actually paying for all of the pirated music each year

18. Macquarie Adviser Services Mean balance of SMSFs Median balance of SMSFs $525,000 Average value of property in SMSFs $76,125 100% of this block in St Arnaud Victoria 50% of this house in Tailem Bend SA 25% of this house in Dawesville WA 60% of this unit in Ayr Queensland 10% of this house in Bayview Heights Sydney

19. Macquarie Adviser Services Will property play a role in SMSF growth? Nic Ellis, CEO of SuperShift, a SMSF property specialist SMH March 24 th 2012...one of the real headline grabbers that should be in the eye of the public is the rise of SMSFs and just how property as the new preferred asset class, is guiding average Australians out of the quagmire of the GFC...but the current appetite for borrowing particularly within SMSFs is low

20. Macquarie Adviser Services …and things can go wrong 24% 26% 50% One of the worst decisions I’ve made OK but could have been better One of the best decisions I’ve made  I lost money  It was too complicated  It was too much hard work  I’ve downsized  I’ve delayed having a family

21. Macquarie Adviser Services In conclusion

22. Macquarie Adviser Services What can you do to make the most of the SMSF trend? Study the SMSF rule book1 Introduce SMSF language with clients and suppliers 2 Add value through knowledge enhancement 3