For super funds and their advisers

ARRIA targets IFAs interested in outcomes investing

Matthew Walker

(Pictured: Matthew Walker)

The new Association of Real Return Investment Advisers (ARRIA) is targeting the “top 20 per cent” of IFAs as members, according to the inaugural chair, financial planner Matthew Walker, in order to provide practical content, tools and discussion opportunities to promote outcomes-oriented strategies in the advice community.

Walker, a director of independent advisory practice WLM Financial in Sydney, helped form ARRIA in March with a number of other like-minded advisors and already has about two dozen members  and industry associates – who are service provider companies – and is building interest among financial planners, who have full membership rights, including voting rights.

“It’s a financial advisor-led body,” Walker said last week. “It’s for advisors by advisors. The aim is to have quarterly roundtables of 20-30 people in each of the main cities, half-yearly “meet-the-managers” day-long seminars and an annual conference. In addition to that, ARRIA will provide content and tools to help advisers implement their chosen investment philosophy.

Service providers are not permitted to engage in any overt selling but rather can help with educational sessions and thought-leadership papers.

ARRIA has put in place an experienced team to work with practitioner planners to develop the ‘right’ content and deliver it in a practical way so it is useful on a day-to-day basis for advisers. A new website (www.arria.com.au), with greater functionality and more sophisticated content and tools, is near completion.

Walker says that the definition the association is employing for ‘real return investment’ is the construction of  portfolios designed to deliver a pre-set outcome focused on real and positive returns, as opposed to relative to a market-orientated benchmark that has little connection to a client’s actual needs. This helps advisers increase the certainty of actually meeting client goals and objectives, with as little risk as possible. He says they can include traditional long-only investments alongside alternatives, such as hedge funds, private equity, property and infrastructure.

“We are not going to continue to follow the mantra of strategic asset allocation in blind faith,” he says. “A lot comes back to portfolio construction rather than product selection. The question is how to deliver it and there are many ways to do it.”

In his own practice, for instance, WLM has various model portfolios for clients which are outcomes based. One of them has about 50 per cent in alternatives but it has delivered returns of CPI plus 5 per cent, with a volatility score as low as 2 per cent. “We do, however, find it challenging to find good alternatives managers outside the institutional space, so it’s good to talk to other advisors and find out what they’re doing,” he says.

The association would limit the number of associate, or corporate, members he said. He expected about 200-300 advisors to sign up for membership over time. He would also like ARRIA to work with other associations in the industry to pool educational resources.

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