Thursday, 14 January 2016
My girlfriends and I were recently discussing who we consider to be on our A team. By this, I mean who we turn to in our hour of need. My own team includes my hairstylist, doctor, dentist, child minder and travel agent. Certainly a diverse bunch, yet all experienced professionals in their own right – and for all of whom I am extremely grateful.
My friends and I unanimously agree that the guiding principle for choosing our respective A teams is basically trust.
Trust can take years to build, but one bad haircut or overpriced filling and that trust is gone faster than my ten-year-old son can run from the dentist’s chair.
One of my friends made an interesting comment regarding her husband. She said that he’s happy to hire a professional to mow, but when it comes to something like financial planning – which has a big impact on your life – he prefers to do it himself.
And here’s the irony: Now, more than ever, when the economy is tight and high-yielding investments are few and far between, the skills of budgeting, smart investing and big-picture financial planning can make a significant difference to the quality of your lifestyle in later years.
If my girlfriend’s husband’s reluctant response sounds familiar, it’s time to tackle some of those common excuses.
All questions are valid.
Should they be saving for the kids’ university fees or paying off the mortgage first? Can they afford a new kitchen, or should the money go towards the retirement fund?
The answers, though, are different for everyone.
Details on fees, including how much AFAs expect to receive, are outlined in the disclosure statement to you.
It is law that an AFA puts your interests first, acts with integrity, abides by a code of conduct set by the Financial Markets Authority and undergos a raft of stringent checks, exams and a formal complaints process. For more information visit www.fspr.govt.nz.
A gentleman I know, who is in his late 60s, is a financial DIYer. When he sold a handful of rental properties, he invested most of his money into a couple of finance companies that were promising fantastic returns.
He didn’t seek expert advice, and sadly, he lost his retirement savings. Now he puts everything into low-risk (and therefore low-return) term deposits. But that’s not smart either in this low interest world we are living in.
If he was my client, I would recommend that he diversify across a range of asset classes, which would almost guarantee a better return in the long run and still keep his risk low.
I’m working with two couples through this process who couldn’t be more different. Brent and Sara are both in their late 40s and together earn more than $250,000 a year. They enjoy life’s luxuries – champagne, regular holidays and nice cars. Their two teenage children have expensive tastes too.
Brent and Sara prefer to rent rather than own their home. However, they have diverted part of their salaries into savings so that they will have a lump sum to draw on for income in retirement – and they’re in line to receive inheritances too.
David and Leanne, are also in their late 40s, but with a combined annual income of $90,000. They’ve been paying off their $200,000 mortgage for the past 20 years. Their kids have left the nest, but Leanne still drives the old people carrier, and she’s quite happy with an $8 bottle of wine and fish and chips on the beach.
As a result, they have paid off their mortgage five years earlier than expected and are now looking to invest.
These two examples show that everyone’s lifestyle priorities are different. None are necessarily right or wrong. The role of a good financial adviser is not to judge, but to help you decide your financial priorites and then set a roadmap; allocating best budgets and investments to achieve your aims. It’s not scary or boring and most people enjoy the process.
Disclosure Statement: Lynette Ball has a disclosure document that is available on request and is free of charge. The information in this article is of a general nature only and is no substitute for personalised advice. To the extent that any of the above content constitutes financial advice, it is class advice only. If you would like advice that takes into account your particular financial situation or goals, please contact your Financial Adviser. The information has been published in good faith and has been obtained from sources believed to be reliable and accurate at the time of publication (January 2016). The opinions contained in this document reflect a judgment at the date of publication by Spicers Portfolio Management Limited and are subject to change without notice. Past performance is not indicative of future performance and is not guaranteed by any party.
The content on this website is for information only. The information is of a general nature and does not constitute financial advice or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. While care has been taken to supply information on this website that is accurate, no entity or person gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way including from any error or omission. A disclosure statement is available from your adviser on request and free of charge.
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