At last, a “good news” financial planning story

170418.Good News

Our clients respond to an online “Client experience” survey

In late February-early March 2017, a representative group of our clients was asked to participate in a confidential on-line “Client Experience” survey. The survey aimed to help us, among other things, better understand:

• what our clients look for in their relationship with us;
• how they measure the value of our service;
• their greatest personal finance fears; and
• how they felt we were doing.

We were pleased with the 70% response rate we received and thank those clients who participated.

The same survey was simultaneously offered to clients of other financial advisers that choose to use the services of global fund manager, Dimensional Funds Advisors, both in Australia and internationally. The results provide us with the opportunity to compare our clients’ feedback with that of almost 19,000 other respondents.

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What is “wealthcheck”?

What is wealthcheck?

What does financial independence look like, for you?

Our previous six Blog articles examined the rationale for each of the charts that comprise the “Personal Financial Dashboard”, a succinct graphical format we have developed to record a client’s progress and current position on some key indicators of personal financial independence.

Benchmarks to be achieved, or surpassed, are provided for each of the indicators. The Dashboard starkly reveals any gaps between where a client is currently positioned and each benchmark. It’s clear what needs to change to achieve financial independence and guides future financial planning action.

While there are no cast iron guarantees in finance, clients that sit at or above each of the benchmarks are considered to be in very good financial shape. They are well placed to cope with adverse financial market conditions and will further consolidate their position in the event of favourable conditions.

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A new era for personal financial advice?

A new era for personal financial advice?The Future of Financial Advice (FOFA) reforms ban “conflicted remuneration” … in the future

Many people will be unfamiliar with the new FOFA reforms that came into effect on 1 July 2013. In this article, we look at one of the key changes: the banning of “conflicted remuneration”.

The intent of the FOFA reforms is to improve the quality of financial advice in Australia. One of the key elements of the reforms is to ban “conflicted remuneration” i.e. the payment of commissions and rebates by financial product issuers to advisers who recommend their product to a client. This reform is not peculiar to Australia – there has been a worldwide push to remove commission based financial products.

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Financial planning as lifetime wealth management

Financial planning as lifetime wealth management“Living for today” has future consequences

We often hear people say that they don’t plan too much for the future. They’d rather live for today, as they argue you don’t know what’s going to happen tomorrow. And many of these people spend today as if there isn’t going to be a tomorrow.

Also, it’s not unusual for parents of Gen Y children, who are in their late 20’s or even early thirties, still living at home or travelling the world, saving very little, to suggest that times are different now. They are unconcerned that their adult children aren’t settling down and focusing on their desired futures, because that’s the “new normal”.

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Wealth management is much more than investment

Wealth management is much more than investmentInvestment is only a piece in the “puzzle”

The terms “wealth management” or “financial planning” are seen as synonymous with investment advice and investments by most people. This is not surprising given that much of the financial planning industry also thinks this way: the primary reason why the major financial institutions employ financial advisers is to sell their investment (and insurance) products.

But, in our view, wealth management should be much more than giving investment advice and promoting investment products. Its purpose should be to help you maximise the chances that you achieve your desired financial future.

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How does your “Personal Financial Scorecard” look?

How does your “Personal Financial Scorecard” look?

A picture paints a thousand words…

Our recent article, “What is “The Value of Financial Planning”?”, introduced a number of key metrics that we monitor to assess clients’ progress toward meeting their financial objectives. Together with some additional important measures, a “Personal Financial Scorecard” can be created for each client.

This Scorecard succinctly captures financial progress and highlights strengths and weaknesses in a client’s current situation. It’s easy to see whether a client is on track to achieve their desired financial future and what steps they need to take to enhance their financial position.

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Why are most millionaire doctors and lawyers Income Statement Affluent?

Why are most millionaire doctors and lawyers Income Statement Affluent?
Doctors and lawyers are inefficient at turning high incomes into wealth

In both his most recent book, “Stop Acting Rich”, and his previous best selling books, “The Millionaire Mind” and “The Millionaire Next Door”, Dr Thomas Stanley, US researcher of the behaviours of wealthy people, distinguishes between millionaire households that he calls Income Statement Affluent (“IA”) and Balance Sheet Affluent (“BA”).

Stanley defines millionaires as those holding more than $1 million in net investment assets. The family home and other lifestyle assets are excluded from this measurement, as they are seen primarily as sources of consumption rather than avenues to true financial independence1.
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Is the nation’s financial planning on track?

Is the nation’s financial planning on track?What trends in key financial planning indicators should we expect?

As wealth managers, we spend a lot of time working with our clients to structure their affairs to give them the best chance of achieving their desired financial futures. And we’re not just talking about structuring in terms of setting up self managed super funds, family trusts and the like. We’re talking about the structure and composition of their personal balance sheets. To us, this is the foundation of good financial planning.

We thought it would be interesting to look at the change in the financial position of the average Australian household over the past 20 years. Given the aging of the baby boomers over these two decades and their growing need to prepare for imminent retirement, we were surprised with what we found.
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What is “The Value of Financial Planning”?

What is “The Value of Financial Planning”?

Financial planning continues to get a bad rap …

Financial planning continues to get a bad rap. The Global Financial Crisis, poor investment returns, the failure of various financial planning firms and investment schemes, threats of further government regulation of the industry and a media that is all too willing to focus on the negative are contributing factors. As a result, many people that should under no circumstances attempt to look after their personal financial affairs have been convinced that this is the best way to go.

And for those that continue to seek financial advice, too many decisions are being made on the basis of immediate cost rather than an assessment of value. This is often because it is difficult to judge the value ahead of making the decision to appoint a financial planner. But cost may be a very poor guide to quality. And, unfortunately, it will not reflect missed opportunities, mistakes and poor decisions. 

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DIY Financial Planning – The real costs may not be evident

DIY Financial Planning – The real costs may not be evidentDIY Financial Planning appears to be a low cost alternative

There are a lot of smart people who make some rather dumb choices with respect to their finances. More often than not this is driven by short term thinking and the desire to save an immediate out of pocket expense. There is often a failure to lift the eyes and see the bigger picture.

An example that highlights this is the use of superannuation. We’ve talked previously about the significant benefits of making pre-tax contributions to super. However, in this article we look at the benefits of making post-tax contributions to super.
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