Wealth

Insights on wealth management, investments, and personal finance.

Wealth
Pension giant fined, slammed for inexcusable behaviour
Australia’s largest superannuation fund, AustralianSuper, has been fined A$27 million and criticised for “inexcusable” behaviour and betraying the trust of its 3.5 million-plus members. The penalty was imposed by the Federal Court which found the $365 billion fund failed to merge the accounts of 90,700 members, in accordance with section 108A of the Superannuation Industry Act, costing $69 million in multiple administration fees, insurance premiums and lost investment earnings, which has been remediated. “The Court held this to be a breach of the fundamental duties and obligations AustralianSuper owed to its members, and that it was inexcusable for Australian Super not to have had the processes and systems in place to ensure compliance,” the Australian Securities and Investments Commission (ASIC) said in a media release. Justice Lisa Hespe said AustralianSuper’s failures to comply with s108A for almost nine years after the section came into effect, identify its non-compliance and remedy it were systemic failings and the result of failing to have appropriate systems and processes. “The failures should not have happened. The failures are serious and highly concerning,” Hespe said in her judgement. ASIC Deputy Chair Sa
Wealth
Govt denies decision on retirement income solution
The Australian Government has hosed down speculation that superannuation funds would be required to offer annuity-style products to guarantee income in retirement and ensure Australians spend and do not hoard their retirement savings. This comes as Australia’s $4.1 trillion super industry prepares for a major structural shift over the next decade as more than 2.5 million people leave the workforce and move from the accumulation phase to the retirement phase of super. A spokesman for Treasurer Jim Chalmers said no decisions had been made on draft principles the Government was developing to guide the industry in delivering high-quality income products that enhance financial security in retirement. He commented on a report in the Australian Financial Review newspaper that major superannuation funds would guarantee an annual income for millions of retirees under a confidential proposal from the Government. The AFR wrote Treasury officials had circulated proposed standards that would set a draw-down rate for retirees with more than $200,000 in their account to ensure a regular income for a fixed term or the rest of their life, including regular payments indexed to inflation or the financial performance of a pool of assets.
Wealth
Cashing in: How to capitalise on a low Australian dollar
The flip side of cheaper home loans, assuming the Reserve Bank (RBA) continues to cut the official cash rate later this year, is a falling Australian dollar (A$) which has been under pressure for some time. Admittedly, predicting the dollar’s fortunes is something of a weird science, but generally, if the RBA cuts rates, the A$ comes under pressure with lower interest rates discouraging foreign investment. While the rate cut will likely weaken the A$, making imports more expensive, hopes for less aggressive US tariffs saw the US$ fall and in turn helped the $A get back above US$0.63 after falling to around US$.60 earlier this month. Mixed blessings for the A$ However, the $A is likely to be buffeted between changing perceptions as to how much the Federal Reserve (the Fed) will cut relative to the RBA, the negative impact of US tariffs, a potential global trade war and the potential positive of more decisive stimulus in China. As a result, AMP chief economist Shane Oliver suspects the A$ could be stuck between $US0.60 and $US0.70. However, Oliver reminds the market that the risk is skewed to the downside if Trump ramps up tariffs more than expected. With a moving dollar heralding mixed blessings, you need to work
Wealth
Slowest quarterly wage growth since March 2022, now 0.7%
Australian Bureau of Statistics (ABS) data shows wage growth in Australia has decelerated to 3.2% over the past year. Wage growth slowed to just 0.7% in the December quarter, the slowest quarter since March 2022. This deceleration was forecast by the Reserve Bank of Australia (RBA), and the latest data confirms their prediction.Credit: ABC / ABS"The outlook for wages growth and inflation is sensitive to our assessments of the degree of balance between aggregate demand and supply in the economy and in the labour market; however, these assessments are subject to considerable uncertainty. Our central assessment is that the labour market is still tight, while the broader economy is estimated to be closer to balance," the RBA said in a release. Based on the latest RBA forecast, published earlier this month, the Wage Price Index (WPI) growth in December is expected to slow to 3.2%. Michelle Marquardt, ABS head of prices statistics said: “The 0.7% rise this quarter was the equal lowest growth since March quarter 2022. At 3.2%, the annual increase in wages was down from 4.2% in December quarter 2023 and is equal to the lowest increase since September quarter 2022.” Earlier this week, the RBA cut interest rates for the first
Wealth
Life, funds management drive strong Challenger result
Challenger has announced a 28% jump in statutory net profit after tax to A$72 million for the first half of the 2025 financial year (H1 FY25). The investment management and financial services company said normalised net profit after tax (NPAT) increased 12% to $225 million on revenue which rose 4.4% to $1.569 billion in the six months to 31 December 2024. The company said the increase in normalised NPAT was driven by higher earnings from the life and funds management businesses and action to structurally reduce the expense base. The statutory net profit includes the impact of commercial office property revaluations and accounting valuation changes on life risk liabilities. Challenger said normalised NPAT was its preferred measure of profit because it removed the effects of changes in the value of assets and liabilities supporting its life business and one-off and non-recurring significant items. Challenger, which offers retirement income products like annuities, declared a fully franked 14.5 cents per share interim dividend, up 12% on the previous corresponding period, to be paid on 18 March to shareholders on record on 26 February. The company also reaffirmed its FY25 normalised net profit after tax guidance of

Wealth
Secret sauce behind the fine art of dividend stripping
With reporting season now in full swing, now’s a good time to contemplate the future opportunities for dividend stripping that come around twice annually when companies reward shareholders with surplus cash during dividend season. While the art of dividend stripping - which involves buying a stock before it becomes ex-dividend and selling it after - can be fiddly and potentially dangerous if you get it wrong, those who get it right can receive a nice little earner for their efforts. Contrary to popular opinion, there’s a lot more upside to dividend stripping than picking up the dividend and in most cases swapping it for the capital loss, which typically occurs due to shares falling ex-dividend by a corresponding amount. Blue chip stocks are safer bets Everything being equal, well-regarded blue-chip stocks paying regular (fully franked) dividends often receive sufficient support in rising markets to ensure the capital loss is actually smaller than the dividend gain – and this can be used to offset gains elsewhere. However, be careful as some stocks can fall further than the dividend and then add insult to injury by underperforming ex-dividend, and this typically happens when stocks pay big one-off dividends. In th
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Perpetual says it is weighing up new bid from KKR
Takeover target Perpetual has confirmed it has received a revised offer from private equity giant Kohlberg Kravis Roberts & Co (KKR) for its wealth management and corporate trust businesses. The Australian Financial Review reported KKR had returned to the table with an offer of A$8 cash per share which valued the two business at $916 million and which, when franking credits were included, would be worth $11 per share ($1.3 billion). Perpetual said the revised proposal and its quantum were not accurately described in the media and the outstanding commercial terms that would need to be agreed and the net proceeds that shareholders would receive were “uncertain at this stage”. “The Perpetual Board is assessing the Revised Proposal and associated terms and will update shareholders on its engagement with KKR as soon as possible,” the company said in an announcement to the Australian Securities Exchange. Perpetual announced in May 2024 that KKR would buy the two businesses via a scheme of arrangement for $2.175 billion in cash but an adverse tax ruling reduced the value of the offer to between $5.74 and A$6.42 per share from between $8.38 and A$9.82. Perpetual, a 139-year-old company, was put into play in December 2023 wh
Wealth
AMP focuses on growth as half-year profits dive
Struggling Australian financial services company AMP has emphasised a focus on growth as it announced a 43% slump in statutory net profit to $150 million for the 12 months ended 31 December 2024. The company, which conducts insurance, wealth management and banking operations, said this reflected business simplification spending and a loss on the sale of the Advice business to Entireti for $10.2 million in December. AMP said underlying net profit after tax (NPAT) grew 15.1% to $236 million on revenue which rose 5% to $2.869 billion in the 2024 financial year (FY24). Platforms underlying NPAT grew 18.9% to $107 million and Superannuation & Investments underlying NPAT jumped 26.4% to $67 million but AMP Bank underlying NPAT reduced 22.6% to $72 million. Directors declared a final dividend of 1.0 cent per share, 20% franked, to be paid on 3 April to shareholders on record on 3 March, taking the full year dividend to 3 cents per share, compared with 4.5 cents in 2023.Source: AMP“2024 was another year of strategic delivery for AMP as we build positive performance momentum and focus firmly on growth,” Chief Executive Alexis George said in a statement. She said AMP sold and transitioned the Advice business, hit cost targets
Wealth
What you need to know about franking credits this season
With reporting season now in full swing, now’s a good time to get your head around franking credits, why they exist and how they work. With that in mind Azzet searched for some answers. Here's what we found. Despite vague attempts by the Labor government to tamper with them, franking credits are regarded as a big deal for a lot of Australians investing in shares with many retirees relying on them for a sizable chunk of their annual income. Along with the 50% capital gains tax holiday available to anyone who owns stock for more than one year, franking credits are another reason why many investors have traditionally favoured local shares over their global counterparts. Based on Treasury analysis, around $50 billion worth of franking credits get returned to shareholders annually. So what exactly are franking credits and how do they work? Franking credits, or imputation credits as they’re otherwise known, are based on the premise that no Australian should be expected to pay tax on the same income twice. Here in Australia, franking credits compensate for double taxation by returning the taxes that a business has already paid on income earned. For example, a franking credit simply returns to shareholders a portion of t