Articles

Donating for maximum impact

The summer holidays bring out the best in Australians. Each year, supporters give generously to the McGrath Foundation at Sydney’s Pink New Year’s test, while over $12b was donated by Australians in the most recent year tracked by Philanthropy Australia. With devastating bushfires raging around Australia, this holiday period has seen countless stories of generosity emerging, from people giving their time, effort and support, to significant acts of financial generosity. At such a time of need, and given the wide range of ways in which people can donate, it is important to consider the role financial advisers play in ensuring the effect of clients’ philanthropy is in line with their aims. In most cases, the donor wants to see the maximum amount of their gift make it to their desired charity. Navigating how this can be achieved is tricky, and donors can benefit greatly from regular help from a trusted adviser....

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Code of Ethics commenced 1 January 2020

The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 established the Financial Adviser Standards and Ethics Authority (FASEA) in April 2017, to set the education, training and ethical standards of licensed financial advisers in Australia. FASEA was required to issue standards and a Code of Ethics, with which all financial advisers must comply, outlining their ethical obligations to their clients and educational standards or pathways that new and existing advisers must meet in order to comply with the requirements in the Act. Compliance with the Code of Ethics is a requirement for all financial advisers from 1 January 2020. The Code brings together expectations of the Australian community for the provision of professional financial advice. It comprises five (5) values and twelve (12) standards. The Code issued by FASEA is a set of principles...

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We must all be responsible for ourselves

This article was originally published in July 2018   In a previous article I was critical of financial institutions not being very considerate of their own customers. But this time, I am on the banks’ side. A bank’s job is to get money in from depositors so it can lend money out to borrowers. They make a profit from the difference in the deposit rate they offer and the rate they lend at. It is a pretty simple business really, except when borrowers cannot repay. I know all businesses need to be responsible in how they engage with customers — anyone in business “should” be considerate of a customers needs, wants, and capacity to consume the goods or services on offer. But just because businesses are selling something, people still need to be responsible for using their own judgement before committing. Here is a picture of me on that responsible/irresponsible...

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Are we just a set of numbers?

This article was first published in March 2016 You may recognise the above image from the film The Matrix. While not the easiest film to explain, it depicts a future where humans do not live in the real world, but rather experience a simulated reality created by machines. The world that people see is just computer code fed into their brains. For those humans not “plugged into The Matrix”, they view the simulated world by reading the code, which is what this image shows. I was thinking about this recently when talking about my practice with another financial planner. We discussed numbers such as ages of clients, average funds under advice per client, amounts in particular investments, insurance covers and premiums in force. It may seem cold to think...

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Being small is fine with me and my clients

This article was originally published in August 2017 Counterpoint Private Wealth is a small business looking after a small number of clients. And that is just fine with my clients and I. While there are many service providers behind the scenes (e.g. investment researchers, asset consultants, software providers, compliance experts), the business itself is just myself and one support person. I often joke that if all goes to plan, I will retire from the same office. And given the size of the office, at best I could employ one more person. This physical restriction is an important consideration.   All clients are equal In my industry, there is always discussion about what an “ideal” client is. I can define this pretty easily: They must be prepared to take advice. While the client clearly has the final say, they must be open to accepting that the advice I give usually comes...

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Financial planning explained in 30 minutes

This article was originally published in August 2017 Well that was the plan at least, when I recently presented to Year 12 Accounting students for a personal finance and investment subject. Goals Everything starts with the question of “what are you saving for?” and the two most common answers would be to buy a house and to save for retirement (yes, I am generalising). I do realise that these goals would be at the bottom of the list for any 18 year old, but let’s assume they’ve made it through Schoolies, and have some form of employment and dealings in the grown-up world. These goals need to be articulated with a time frame and amount. Unless you start with “I need to save $X in Y years”, it will be hard to achieve. Then there is only one more variable needed to work out the answer — the expected return...

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Great Expectations

This article was originally published February 2019 Here is a great article by Miles Staude from Staude Capital Limited which I thought was interesting and relevant considering current markets…     Sadly, investors lost one of their greatest advocates last week, Jack Bogle, the founder of Vanguard and a pioneer of the index investing movement passed away. Jack’s legacy will be that he created a practical real-world application for a well-established academic idea. The efficient market hypothesis holds that the current price of an asset should already fully reflect all available information. Given this, it should be impossible to outperform the market by actively picking stocks or bonds. While in the real world the idea of efficient markets is more a useful framework than an established investing law, it is true to say that over the long-run, market returns dominate the outcomes of most traditional buy and hold...

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How to find a financial planner who passes the ‘nana test’

  I normally like to write my own articles, but when someone else has already done the job better than I would myself, I am happy to give credit and save some time! The following piece was written by a friend of mine, Anne Fuchs, Head of Advice and Retirement at Sunsuper. The original article can be found here and it is reproduced in full below. I haven’t edited it to change the Sunsuper references, as the point of the article is the same — there are many different types of advice needed (one-off to ongoing comprehensive advice) and investment options available (industry funds to self manage super funds), but finding the right financial planner is essential starting point.     As someone who has been in the financial services industry for more than 20 years, I have seen the best and the worst when it comes to financial advice and...

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I make mistakes, I am human

This article was originally published June 2016 I am sure we have all come across “motivational” sayings about learning from our mistakes. And there are many out there that would say how we go about dealing with them makes a huge difference to the end result, for both the person who made the mistake and the person who was wronged (for lack of a better word). So what I am about to say is certainly not my original thinking, but is a comment on what happens in my world. What mistakes can I make? I see two main types of mistakes that are possible.   1. Incorrectly buying or selling an investment. This has happened on several occasions (maybe 5 over 15 years that I can recall) and can be summed up as “admin errors”. Actions like buying something twice because the first transaction was not recorded in my database...

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Making Superannuation more super

This article was originally published January 2019 The Productivity Commission recently released their inquiry report into the Australian superannuation system. The report can be accessed here. I am not going to go into any deep comments on the report’s finding as there are plenty of commentaries around the recommendations. Here is one. But I do have a few comments about the typical criticisms of the superannuation system and the people that are tasked with helping people save for their retirement (i.e. my industry friends and I). The key theme — we all need to be more responsible for ourselves.   Clipping the ticket There is often a reference to superannuation funds “clipping the ticket”, that is, charging members for being a member. And so what? They are a business, have costs to cover, and despite the “for members’ benefits” taglines of industry funds, all superannuation funds...

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