Financial advice: to seek, or not to seek? 

we just read this post by another planner also named McAuliffe

we agree with all that Ash has said & hence we include the link to what he wrote

as a summary for you
 
Finally, it was a batch of bills they didn't know how they'd pay that pushed the couple to see a financial planner.

The decision changed their lives.

"I'd always wanted to get financial advice but it's one of those things we'd put on hold, we didn't have the money to go and pay somebody to give us the advice," Mr Doherty said.

"As soon as we walked out of our first appointment, we both had big smiles on our faces and a weight off our shoulders," Ms Doherty said.

"It makes your life so much happier."

and also

 "It's not about having huge amounts of money and getting advice on how to invest it, financial advice is about achieving your lifestyle goals, whether that's retiring at 55 instead of 65 or buying your first house or your tenth house."

the link again  with the full article

 

You are  welcome to call us on 07 3848 1088 or contact us via our websites. 

We advise you what we would do if we were in your position so that you are in a better position in 3 years time.

John McAuliffe 

Jettison mortgage

We had ‘David & Margaret’ call us after they had been to their bank. Thanx Geoff for the referral to us.

David & Margaret weren’t happy  with the bank’s Statement of Advice’ that ‘all of the products were the bank’s & there was too much insurance.’    

    

At our initial lunch here we listened to this & as we summarised later to them

Lets also remember that the bank considers your ‘liability’ as their asset. Why would they suggest reducing it?

When Margaret corrected David in that the mortgage wasn’t 500,000 ‘it is 498,000 as I looked at it today’ then it suggests to us that the mortgage is a stress to her.

If the bank had read what we read on the completion of David & Margaret’s ‘HW’ then here is what they might have read.

Goals and Objectives

Short Term Goals

1.       You wish to halve your mortgage over the next three years.

2.       ….

Medium Term Goals

1.         Jettison mortgage

2.         ……..

Long Term Goals

1.       Put ‘mortgage money’ into interest bearing investments/equities

2.       ….

 At our age it is great having no debt & when you are in the ‘fatigued fifties’ as they are then debt reduction becomes a priority.

At the lunch we made this suggestion but the bank had run the numbers & they were arguably better off building their supers up. If you have a ‘growth’ profile then earning a higher gross return would show this. However what if another GFC or another 'third in a century' flood .

 Guess where their super were to go.

 Lets allow for some comfort & listen to Margaret.

Margaret & David will be impressed what we project for them as their debt is zero in 2016. 

We also did allow for their Europe trip next July  to see their children doing their OE.

Yes they do have some factors going for them to accelerate the debt reduction

·         They are both over 55

·         They have [almost] sizeable superannuation that could be maximised. Remember that as your super doesn’t pay you an income it is not an asset.

·         The youngest child has just left home & the food bill has reduced significantly.

·         David is on a high salary although there is a whack of wasted taxx to come out to feed the Zombies.

We also allowed for possible mooted Centrelink changes in a year’s time.

We did if only for big brother compliance & to save us from the ‘crows’ recommend some insurance to complete some gaps in case of a stroke or trauma. We will tailor & reduce as the debt goes down & this allows for accelerated debt reduction than our model.

Insurance only gets dearer. Who wants to collect it. We did comment to Stephen who is 60 today that claims are on average 2 years after you drop your insurance. Hence tailoring & reducing but not zero  makes sense.

 Would the bank do that?

Our 1^st cousin said of the health system recently ‘they don’t know’.  Hence a preventive health story is an essential part of our holistic planning. We noted their advt whilst watching the WTA tennis.

As we state to all ‘ our mission is we would do for them what we would do ourselves if we were in their position.’

This week ‘Warren’ went to the net asking for some income protection. As he has 3 children, a mortgage & only earns 90K then he can’t afford what he should have. 

We await his call on 07 3848 1088 or email for lunch here. Warren will need a different strategy.

John McAuliffe

What’s the best use of your Super?

What’s the best use of your Super?

Yes that is a question that depends on your age & often on the size of your debts?

Certainly at our age most but certainly not all have insufficient super. Remember if you can earn 5% & you want a comfortable lifestyle then $1,000,000 will provide an income of 5%.

Who has that?

If that capital amount is within super then currently it will be taxx free. But for how long as it is suggested that Centrelink or the government will factor the income under deeming rules from January 2015.

I.e. the income & asset tests for your portfolio will count as they would if they are outside super if you qualify for government pension.

1.  This is one reason why we suggested to ‘David’ on Saturday to maximise his super. David has a Qsuper balance that over the years has performed @ 4.6%p.a.  compound. He is being charged a higher interest rate on his mortgage. At 55 he doesn’t have enough time or spare income to pay down his Debt before he may have to retire.

Remember the biggest fee on your super is in fact the government 15% taxx on the earnings of your super fund.

 Doesn’t it make sense to you that if you could minimise that Government fee to zero that you would.

David as we all do who live in Australia also has the challenge of replacing his car. Yes a depreciating ‘asset’ that will be ½ as much in 3 years time. 

How does he fund that?

David does Not have any spare cash to purchase a car.

Does he refinance the house or does he use an expensive personal loan?

Yes maybe another reason to tap your super if you qualify.

Of course as we all know there are plenty of restrictions on doing so.

2.  We had Henry & Ann here recently who due to past unemployment & a daughter with family have scary debts.  At the age of 62 then they may have to work for ever. 

How many are like them?

The finances may get to them as the debt mountain is scary & very similar to others in our neighbourhood. No light at the end of the tunnel.

Hence our suggestion for Taxx Free income will certainly help. It has to be better that the compound p.a.  that their super has achieved.

3.  James who has followed up on a roof inspection for us said today  ‘ his company doesn’t do band aid solutions’.

As we do & as we should  we asked James ‘how many children does he have? He has three aged 4, 6, & 11.

How much life Insurance do you have?

Don’t Know.

We suggest 1.5 million if you have a mortgage.

How does James fund that need?

If James’s financial situation is like most then he won’t be able to afford a $. 

Yes there are 2 simple solutions.

James suggested that  ‘he has a personal super & he might consider a SMSF’.

We commented that ‘we don’t as we don’t want to be a trustee at our age or 70+. Our platforms have all the 300 shares & fund options we need. Also the accountant only wants another set of fees’.

We liked James’s answer &  ‘we don’t do Band aid solutions either’.

4.  Brian who is a construction foreman has just asked us for a quote on insurance. Just like James we need to do more than a band aid.  Builders need architects & quotes need some parameters so they make sense. Brian can go direct & pay 40% more if he wishes. Good luck at claim time.

5.  Thanx Geoff for your referral just now to help your clients who needed more than a bank option. We suspect we have another option for them.  Their ages suggest so & we have helped Paul recently who had the same bank experience.

We intended since the 1^st cricket test to ask & comment on ‘Should Stuart have walked’  as it was one of the talking points of the 1^st test.

Stuart didn’t as either he has ‘broad’ shoulders or he is a team man or he is constricted & restricted to the rules & regulations & law.

The  law for us now for us has a ‘best interest’  section. 

We didn’t & don’t need that law as it has always been our philosophy to do for you what we would do for ourselves if we were in your position.

Law in our opinion is the escape clause that allows personal integrity a fall back. This didn’t work @ Nuremberg. 

We would have walked as we all have to live with our decisions. Our name is important to us.

We understand The Don didn’t  & understand he did Not have too many friends  in Adelaide. Maybe his average would only have been average.

You are welcome to call us on 07 3848 1088 or email us or visit our websites. 

Today is the time to remove the band aid & financially progress.  Let compound interest & good advice help you & not restrict you.

John McAuliffe

Andy & Ivan & Robbie & Warren & Darren

Yes, some names from the weekends sport’s results.

Andy wins Wimbledon at which he had been runner up previously. To use rugby’s weekend’s phrase as it is the ‘pinnacle of our sport’ then Andy & his mum had two years ago searched for a coach.

They ‘encouraged’ Ivan Lendl out of hibernation to coach & help them. If you recall Ivan won everything some 20 years ago but not Wimbledon. Hence they both had  a common goal which they achieved last night.  Andy would have been unlikely to achieve it certainly by himself & maybe with any other coach. Well done Andy.

‘Lions ,lions, Lions’ were all in Sydney on Saturday & yes they roared & at the end ‘grinned’.  Let’s just say the Wallabies ‘dropped the ball’ & they never recovered’.  Although we could all go through an analysis the easy answer is ‘Robbie it is now time to pack the bags’. Robbie the coach did take the Wallabies to 2^nd on the ladder but 2^nd isn’t good enough & as he himself says ‘it is an industry’.

Of course on the other hand Warren the coach of the Lions is now a hero. He did make some tuff calls in the last selection & ‘Warrenball’ delivered.

So it is all up to Darren to work with his captain Michael to win the Ashes. We read ‘THE uncertainty swirling around Australia's XI two days from the first Test is matched by the mixed messages about who is setting the batting order.’ Cricket was always political & still appears to be so.

Darren , Australia needs you. However your nickname isn’t encouraging.

We observe that to reach the ‘pinnacle of our sport’ the constant in all this change is a coach.

 A 3^rd party who is not obscured by ‘the fog of war’. Who is far enough away & experienced & qualified  to offer in most cases the big picture when all are to close to see clearly.

 To use another word we shared with Adrian ‘inertia’ needs to be overcome.

Let’s also note that the coach also has a staff to help him help his team or player.

 On Saturday before all this we saw two who had put their hands up for some financial tune up.

1.       ‘Jill’ who was introduced to us by a very happy client wanted to know where to go next so as she could have more capital for retirement & yet still be able to obtain government benefits. Her House is  debt free & her four children are off her hands. She is placing the maximum into super.

What does she need to do? We await the results of her ‘financial X-ray’ before we can provide any advice. Do we add to her super when government legislation is always a risk?

2.       We had called ‘Ann & Henry’ who last year wanted ‘a cheaper insurance.’ As we only provided what they wanted  we had not been provided with the full picture of their challenges. Hence when we asked on Friday if they ‘would like taxx free income ‘then yes. They were here on Saturday @ 2pm.  We found out why later in the conversation. Ann had told us a year ago that buying ‘an investment property’ was ‘the worst decision’ she had made. The negative cashflow was killing them with horrendous debts 40K on credit cards. No wonder Henry  recently took his first days off with illness. The taxx free income we will access for them will be a start to some progress.

 Again we now need all details before we detail our advice.

 We had a call from an operator in mining in WA. He is earning money & does he buy ‘an investment property’ ? We will quote Ann & suggested to him 2 of our parameters for doing so. There are other options to build wealth & reduce government waste.

 

There are a few hundred on our mailing lists who like Ann & Henry have wanted cheaper insurance as that is all they think or will admit to needing.

 Cheaper insurance suggests to us that like Ann & Henry their cashflow is tight or negative. Hence there is a need to overcome your inertia & make the effort to call or reply.

 We made the effort to call Ann & Henry because at his age we saw a possibility. Henry had actually heard from work colleagues but how do you do it? The canvasser for roofing who knocked today here just now  may well have helped his employer.

 As you expect us to advise you to do what we would do if we were in your financial position then why not overcome your inertia & call us on 3848 1088 or email us or visit our websites.

 Lets also congratulate Marion on her Wimbledon win. Dad was her first coach.

  

John McAuliffe

Yes, that was the question during the school drop off run

Yes, that was the question during the school drop off run.

We all know what it means. If you have an accident at work or on the roads or maybe the shopping mall then you need to blame someone.

What was that phone number & yes it’s on the TV so let’s call them.

“crows on a wire’ was a term Andrew used on Sky Business today.

No doubt they do a ‘fact find’ to ascertain whether they are a chance of winning a lump sum probably from an insurance company.

Our answer as we do ½ hour maths every night included ‘what is 30% of say 50,000 = ?’

The challenge is how to you meet your commitments before the payout?

As clients have told us they had to wait eight years.

Where to you get those funds in the meantime & the stress & no doubt the medical bills that go with it.

Let’s remember these claims are for accidents only.

What happens if you have a stroke?

What happens to your future credit rating if you are unable due to disability meet your Commitments?

We heard at our latest Professional development day that it is the stroke or the cancer or the trauma or the critical illness that the insurance companies make the least on.

i.e. they pay out most in trauma claims &  hence you might consider such cover first.

What is the solution?

It is to have your plan for the downside.

Remember as our Young travel agent said ‘if you can’t afford the insurance you can’t afford the trip’.

A premium is always less than the alternatives which could be the loss of your current lifestyle or your assets & certainly your ‘peace of mind’

 

Where do you go?

Yes you can shop online & go directly to the insurance company & not even get off the couch.

Then what happens?

Here is what a company that does both direct & also uses advisers had to say at our PD day.

·         Rates for Direct i.e. directly to a company, life insurance can be up to 200% more & on average 40% more.

·         Direct is designed to accept the easy ‘clean skin’ applications & decline most others.

·         Suicide & other pre-existing conditions have exclusions for up to 5 years.

·         Dangerous pastimes & occupations are excluded for the life of the policy.

·         It is at claim time that the 40 questions which weren’t asked on application are now asked.

·         Claim payments are less than 50%.

·         45% of income & trauma covers are underwritten at claim time.

·         Higher nondisclosure by applicants. What does that mean?

·         Limited cover & reduces with age. When are you more likely if not probably going to need the cover?

Good luck.

But with a non aligned  adviser you get

o   Help during the claims process

o   The adviser knows what cover you have

o   The adviser know the client & hence goes the extra mile

o   The adviser is on your case if you change bank accounts, change address or miss a premium.

o   He wants that cover in force when you need it.

o   We provide the help you want when you want it

o   When do you want to answer the 40 questions? Now or at claim time?

o   We provide a tailor plan within your agreed budget for your needs.

o   We probably do it for less.

 

Let us think about that.

We do have also some ideas on estate planning that a contemporary wrote due to his own personal tragedy.

You can Call on 3848 1088 or Email is for those ideas as it could help those who you care for & who care for you. Discover our website.

We will have other ideas for you when we lunch here.

Remember it takes 20,000 hours to master your trade.

As we said to Mary today ‘we do for you what we would do for ourselves if we were in your financial & personal position.’

Isn’t that what you would want us to do for you?

John McAuliffe