Why is taking Advice so important

As financial advisers we monitor not only the markets and research investment opportunities, but we also monitor geo-political events to evaluate threats to our clients investments.
For example did you know that the US Congress has not yet passed any of the 12 appropriation bills before it right now. If these bills are not passed by the end of this month, they will need a continuing resolution to avoid a government shutdown.
October is the month of the year, that markets are at their most volatile, and September is a very good month to take some profits while you still have them.
By the end of September, all of our clients, will have 20% of the portfolio in cash and ready to take advantage of this volatility which will enhance their portfolio's over the Christmas period which is a good time to invest.
Remember when Trump had difficulties in getting his appropriations bills passed by the Democrats and the difficulties he had in paying US federal government employees, well the tide has turned and this time the boot is on the other foot and its the Republicans that are refusing to pass the appropriation bills. Some say this is payback.
Why are Americans so concerned about the appropriation bills?
US National debt over the last 9 months has grown from $24 Trillion Dollars to $28 Trillion dollars every man, women and child in America currently owes $86,030 as their share of US government debt. They are currently paying $1 Billion Dollars a day in interest. That is food for thought....

 

Seeking advice without the ability to discern between good advice and bad advice can be very detrimental to your wealth.

Exhibit A:

 

Providing advice is more about listening and then responding. We interact with our clients on all types of investments including property investments. It is our role to assist our clients in meeting their goals. By understanding the rules you are in the best place to make an investment that is likely to achieve the outcome you are seeking.
Diversity and adopting a financial plan is always the best way to achieve financial success.
You know you are getting good advice when you are achieving your goals and that is not rocket science.
It is so important to complete a regular review of your investment strategy including taking profit and getting rid of the mistakes offsetting gains and losses to minimise any capital gains tax. This refreshes your portfolio and providing you have retained your investment for 12 months, then 50% of your gains are tax free. We will often contribute our profits to our self-managed super fund to minimise any tax payable. I would rather pay 15% tax than at my marginal tax rate.
This then allows you to reinvest in accordance with changes to market conditions.
If you achieve an 80% success rate, you are doing very well and the review process enables you to look at the reasons why you invested in the first place and then assess the progress to the original goal.
Investing is as much about the person behind the investment and I often listen to CEO before I invest because if they are not passionate about their business, then I will not invest in it.

 

@William@PFI was this a tip to move to more cash in September ?

Needed it on Friday and not Saturday morning. Too late for today ?

Perhaps the paying customer got the tip earlier !

Anyway - I’ll have to watch your posts from now on.

 

There is a benefit from getting advice and yes we have already moved some of our clients funds into investments that will pay at least 2 dividends and at the same time they will not be impacted by this anticipated market volatility.

 

So just to clarify, you regularly shift your clients asset allocation by up to 20%? What if there is no correction? Moving to cash can be an aggressive move.

I would have thought once a clients asset allocation was set, the role of an adviser would be to maintain this unless circumstances changed for the client.

 

There is always movement with allocations as stocks reach their potential and it is time to sell and take a profit. There are opportunities in the market and when these opportunities reach their target price they are sold and we move onto other opportunities.
There are some investments that we hold as long term investments as they are producing above market returns. Every client is different as some clients need stable monthly income and other clients are seeking capital growth.
We have one point of difference from other advisers, we offer client directed portfolio's in retail super where clients can select their own investments from a wide range of ASX approved stocks including Listed Investment Companies/Trusts and Exchange Traded Funds.
When they have grown the super to a point when they have sufficient funds to establish an SMSF, they can invest in an investment property as part of their strategy.
This biggest mistake most investors make is to hold onto stocks indefinitely.
A new client in June this year invested $450,000 in 2013 and after 8 years he had both profits and losses, however he only made $6,500 across his entire portfolio. He should have at least doubled his money over this period.

 

Gee that is a tough run to only make 1.44% profit during that time period, sounds like they invested in direct stocks which certainly ups the risk profile! Any generic index tracking investment would have doubled like you mentioned.
Can't say I've heard of that business model before, where you provide advice yet the client leads the portfolio decisions, I must say it is interesting.

 

We have a number of clients that want input into the stock selection process as they are learning about how to make good selections. We provide the research on stocks they may be interested in selecting for their portfolio. We provide the pros & cons and we review the portfolio every 3 months to assess its performance.
We often suggest stocks that they should be looking at and the reasons why. They like the ability to select their own investments.

 

Can you do us a favour and sign our petition on reducing the cost of financial advice..
Click on the link below

e-petitions – Parliament of Australia

Scroll to the bottom of the page and select “Sign this petition”

Enter you first name, your surname, your email address & confirm email address

Then tick the box to agree with the terms and conditions

You will then receive an email to your email address and all you need to do is to verify your signature.

Next and most importantly

Ask your family and friends to do the same thing and sign our petition, because numbers count, and we need as many people as possible to sign and get our message across to our government.

 

Yep and seems none of them must have paid a distribution/dividend either. Or has that aspect been ignored in the numbers?

 

I agree that is a good point, and you must also consider tax advantages, franked dividends etc, however their dividends were also below average. We often find portfolio's never change and they are simply not reviewed objectively. For example in June each year you should offset any capital losses with capital profits just to maintain the health of your portfolio. If this creates a tax issue consider contributing to superannuation as this provides a tax deduction to offset this capital gain. With a client directed portfolio, you can repurchase the profitable stock in your super.
This is what we do and its called strategy.

 

We work with a number of clients using our client directed portfolio's where we use our skills and they in turn research various stocks to come up with suitable investments for inclusion into their portfolio's.
As our clients are involved in the process, they have the satisfaction of enjoying a successful investment and we provide the discipline on buying and selling. It is important to set a set price when you buy a security, otherwise you end up holing on and over time you may or may not achieve your goal. Remember a bird in the hand is better than a bird in the bush.....

 

US National Debt now near $30 Trillion



Over $800 billion in national debt added in less than 2 months

What You Should Know about America's Deficit and Its Debt

 

Getting financial advise is good.
My own take is to make sure it is a fee-for-service financial adviser with no commissions at all.

Pay per hour, get my questions answered and life's good.

 

Commissions were banned about 10 years ago.

 

I belive a small outfit called Storm Financial had something to do with that.

 

Personal case of reviewing a family member's financial plans.

1. Family member was asked to open a SMSF.
2. 3 insurances were to be taken out.
3. Stepped cost insurance plan, by the 3rd year his in-super insurances would exceed 27,500, net negative super contribution. Financial plan clearly states X% is commission, so I guess if its declared, that's the legal side of it.
4. Borrowing cash for investments. No disclosure if interest rates. Kept 80% of borrowed money as cash. Why would anyone be paying premium for holding cash?
5.SMSF costs 1% of AUM, stated in the document.
6. Part of his super is to be invested in a growth fund where I could not find the PDS online. What is the fee for this fund?
7. Projection of Super in 15 years, without stating what the assumptions were. I did some calculations, and he would need 15% gains P.A to achieve that. Is this reasonable?

I don't blame him for not being able to decipher the whole document. I do this as a hobby and even I found it difficult to sift through 100 pages. But I did it because I did not want to see him losing a big chunk of his super savings. I did not give financial advice, but I basically laid out the questions to him in this format, so he can clearly see how there were so many unanswered questions.

This post is definitely not a post to disparage financial advisers/planners. But more to point out that we need to be vigilant and make sure we understand the reasoning behind the decisions.

 

There are certainly some bad ones out there