Confidence in your portfolio outcomes

Are you confident your portfolio will produce the outcomes you want long term?

How are you invested?

Do you have My Super ? Do you think your My Super Super account is invested with your thoughts and dreams in mind? When did you discuss with your superannuation fund how you wanted your My Super portfolio invested?

What are you trying to achieve?

We spend a lot of time with clients explaining why their portfolio will produce the outcomes they want in all investment markets. People say you cannot predict things like Covid 19, the GFC or World Trade Centre disaster. That is true however whatever the cause, Share market falls of 20-30% happen all the time and you can prepare for that.

You know it will happen, you dont know when, you dont know the trigger you just know it will happen. The longer it has been since a big fall the closer the next one is.

If you know there will be a heavy share market falls then the only relevant question is what happens to you when it happens? If you cannot answer that question now, you need to get the answer before it happens otherwise you could be jeopardizing your financial future.

You need confidence that your money will look after you in all economic environments. To have that confidence you need to be engaged in how your portfolio is set up. That is what your financial planner can assist you with. Ensuring you have the cashflow to maintain your lifestyle long term is what your adviser is working with you to achieve and reliable investment returns are part of that process.

Active or Passive Managers
There is a lot of debate about Active Managers and Passive Managers and what is better. For the record we use Active and Passive mangers to achieve the clients objectives. What rate of return are you happy with ? That comes from Asset Allocation. How volatile do you want your portfolio ? That also comes from asset allocation. Do you want high return and high volatility or more steady return and stable asset values. That also is asset allocation. Some assets like cash earning 0.5% dont look that attractive when other assets are earning 20%+ pa. They look very attractive when shares are falling 20%. The key always is what is your exposure level. Eg what is your Asset Allocation

The cost of your portfolio comes from a combination of factors that can include passive managers, active managers. You could even hold a portfolio of shares yourself and dont pay any fee for that. It depends on what involvement you want and what other outcomes you are trying to achieve.

Interesting article

This article is from Perpetual who are an active manager who have people travelling the country and the world speaking with companies about what they are doing, how they see the prospects for their business against competitors. Perpetual use that research to work our how well a company is performing, is it expensive to buy at its current share price based on how we see its profits growing. They then have to decide if they want to include that company in the portfolio compared to 100’s of others that they have researched. In the end they will only have between 50-70 companies in a portfolio and will review 200-400 companies to arrive at their preferred portfolio.

This is an article about the Australian Company Boral and the research Perpetual did before buying a share holding in Boral.

If you would like to have a discussion with us about your portfolio and what outcomes you are hoping to get we are a fee for service business and are happy to speak with new clients if you are looking to work with an adviser over the longer term.


The power of long term investing

I saw this short video from Vanguard The Power of Perspective that highlights the power and long term benefits of regular investing.

It is never too early to start planning your future and certainly never to early to plan your retirement. Watching this video will give you a lot of confidence that time is your friend so use it wisely. Your strategy will work if you put it in place.

If you are looking for a financial planner for any reason we are able to assist you. A lot of Financial Planners have retired recently so if you are looking for a new Financial Planner then give ONeil Financial Planning some consideration.

Enjoy the video and thank you to Vanguard for such a good tool.

Help for the sandwich generation

We all lead busy lives so juggling family, work and personal responsibilities can be complicated – particularly when people we love need increasing levels of care and support. This article takes a look at what to consider and where to start when you have older parents.

Encouraging older parents to accept help, can be difficult. But when help is accepted, as a member of the “sandwich generation” you may find yourself sandwiched between obligations to help with care of older parents and young grandchildren – and just when you were thinking about your own retirement.

Life might feel a bit overwhelming. Knowing where and how to access support for your parents and yourself may make all the difference.

Helping you – the carer
A good place to start your research is the Carer Gateway ( This website can help you to identify and connect with available support services.

As a carer, your physical and emotional well-being is vital. So don’t feel that you need to do it all and don’t feel guilty about taking some time out for yourself. This is where respite care can step in. Respite provides short-term temporary care when you need some time out for several hours, overnight, days or even weeks.

The government subsidises respite care to make it affordable, but you may first need to arrange an Aged Care Assessment Team/Service (ACAT/ACAS) – so plan ahead.

If your care duties prevent you from being able to work you might qualify for a Carer Payment from Centrelink to provide you with income support. If you are not eligible for this payment, you might be eligible for a Carer Allowance of $131.90 per fortnight to help with some of the costs you are likely to incur.

Helping your parent
Depending on how much help is needed by your parents, you may want to look at support in the home or in residential care. These services may be government-subsidised, with the starting point through MyAgedCare ( Home care can help with needs such as house cleaning, personal care (such as bathing), social support and even some home modifications to adapt to your parent’s care needs. Even if your parent is living with you, they may still be eligible for subsidised home care.

Helping to understand the finances
Subsidised care can help to make care more affordable. But be warned, there might be a long wait for a home care package, so don’t wait until the need is urgent before applying. You might also need to find cashflow to contribute towards the cost or fund additional care.

We have helped many clients to navigate through the aged care system, providing our clients with peace of mind and a clearer direction on the potential options for structuring finances. Call us today on 9240 5370 and arrange an appointment to discuss how we can help you and your family.

Age Care – What is your plan ?

When it comes to age care and the frail phase of life everyone generally has the perfect ending in mind. I am going to be fit and healthy all my life, go to sleep one night and wake up in heaven or at the funeral directors and that will be it. Life will be peachy it will be lights out quickly and easily.

Sadly that is not normally what happens. You wake up in emergency, you may not be able to speak perhaps not move or something else bad has happened and then what do you do? Just because you can leave hospital does not always mean you can go home.

Age Care Homes
How can i get an age care place ? Is there a process to get into an age care home ? Who can help me get a place in an age care home ? What does it cost to get into an age care room ? How long will it take to get a place in a care facility ? These are all very good questions however you need answers.

Are the children expecting you to come to them whilst you recuperate ? Do you fit into their house. What care do you require and will it be the children or the grandchildren doing that for you ?

What are Age Care Services
Showering, cooking meals, toileting, dressing these are not always things that you want your children or even your partner to be doing for you. Can i get carers to the house so that i can go home ? Who will pay for those services ? These government home care packages i have heard about, do they really take 12 months to get funded ? What am i supposed to do in the mean time.

If these are questions that are running through your mind be that for yourself, your partner or your parents then you need to start getting some answers by preparing a plan your your loved ones Frail stage of life. You may not need it today, you may be the lucky one that has perfect health up until death. That is not most people and when disaster strikes it is all hands on deck until an accommodation plan can be sorted out.

Legal Documents

You go to an Age Care Facility and “What do you mean you need an Enduring Power of Guardianship before you will speak to me ? i need a solution now.” You stop arguing and head to the lawyer to be faced with “What do you mean it is too late to get an Enduring Power of Guardianship? The Age Care place just told me i need one!! ” What does Testamentary Capacity even mean? This is a nightmare. My Mum is stuck in hospital, the hospital wants them out and they have nowhere to go. Dad is freaking out.

Make an Age Care Plan
Like everything else in finance you are better to have a plan so you know what to do in case you are required to do it. A little bit of time and money spent now researching options available and what your loved ones would actually like to have happen should something happen to them. These are good discussions to have now whilst you can have them. There is never anything wrong with having a good plan in place.

The Family home and Age Care places
Do you really need to sell the house to fund age care accommodation ? Will i lose the age pension if i do that ? How is that fair ? What other options are there ?

Make a plan
Age care is complex so it is best to start early and long before you need it. Make plans so that when you need assistance you know where to find it and how long it will take to get help or accommodation. Whilst home care packages may take 12 months to come through most people start thinking about it when they have 12 days to come up with a solution and that is being generous. It doesn’t have to be like that, you can make a plan today so you know what to do for your loved ones.

Who Should be making a plan
Anyone in the 75-80 age range and older. Anyone with a parent or a grand parent in that age range as the likelihood is that the children will be looking after the parents. That is what normally happens. Are you prepared ? Who will you call ? What will you do ? If in doubt, call your financial planner. If you dont have a Financial Planner, Find one or contact us.

Coronavirus: the investment impact in seven charts

This is an update from Schroders that you may enjoy.

At this time I feel it is good to point out that less than 15 months ago the Australian share market closed at 5533 points on Dec 17 2018. Today it closed at 5370 points so a little lower but not much lower.

It was uncomfortable on that day in December 2018 and that was due to USA China impending trade wars. No one seemed to worry as much as we were preparing for Christmas pandemonium rather than Corona Pandemic. Supplies of toilet paper and hand sanitiser were plentiful and not in too many peoples shopping baskets at that time.

The severity of this downturn has been rapid however we always think about your portfolio on the basis that what happens to you if the share markets fall by 20-30% as that happens all the time and it has happened in the past two weeks. It is uncomfortable to look at your portfolio however falls like this have happened before, they will happen again, they are not a surprise or unexpected and we will always be working with you to ensure that your portfolio is appropriate at all times to reduce the impact to you of these sharp falls.

Whilst they are not a surprise or unexpected you never know when they will actually happen or what the trigger will be and that is the case here as Covid19 was unheard off 4 months ago.

The economic slowdown from sickness and quarantine is not able to be quantified as yet and that will take time to work through however if we can all do our little bit to avoid unnecessary contact with too many others and that may include playing more golf, taking a walk in the park or along the beach with perhaps a swim in the ocean, inside the shark net and between the flags of course.

These things will contribute to good health whilst helping to avoiding Covid 19.

Financial Planner Education Requirements – Andrew ONeil

There has been a lot said about the new Financial Planner Education Requirements including the compulsory Financial Adviser exam.

All new Financial Planners need to complete this exam before they can start their professional year. All existing Financial Planners need to complete the exam before 1 January 2022 otherwise they will no longer be able to practice.

The good news for me, Andrew ONeil, is that i passed the compulsory exam in Sept 2019.

My 30 year career as an adviser will continue. That is not the case for a lot of current advisers.

If you are looking for a well educated Financial Planner with 30 years experience improving clients lives then contact us today. Remember Improving your Lifestyle is our Business.

Please note, the new education standards and operating environment for Financial Planners is seeing a sharp reduction in the amount of planners available. If you are thinking of using a financial planner in the future dont delay in making contact. Financial Planners will get harder to find in the next 5 -10 years however i will still be here to assist.

It is never too early to Start Planning.

Compare the Pair Financial Services Royal Commission Superannuation

The Financial Services Royal Commission will investigate superannuation funds next week. The usual large groups will appear, Bank owned funds, life office funds and others.

It would be fair to say anyone appearing at the Royal Commission has been savaged by Council investigating for the commission so it will be interesting to see what happens given the “Good Guys of Super” the Industry Funds will be appearing.

Is Commissioner Hayne getting the Industry funds to appear to show the others how they should be operating or will there be shocking revelations out of the Industry Fund camp as there has been from virtually every other person that has attended the Commission so far ?

Imagine the Commission doing there own Compare the Pair! Comparing one industry funds Balanced Pension fund with another Industry Fund Balanced pension? Imagine if one of the fund fees was 60% higher than the other fund. How would the Industry funds explain that, especially when they all piggy back off the one advertising campaign spruiking low fees. The community expectation would be that the fees of the Industry funds would be largely the same given the one generic advertising campaign.

Given 2 of the largest Industry funds are appearing imagine if the Commission lined up two Industry Fund Balanced pension funds with a Bank owned Balanced Pension Fund and the Bank owned fund had a lower cost than both of them and was nearly half the price of one of them.

Imagine if you were in a Pension fund and the most expensive investment option is the balanced fund. Given the balanced fund is generally the largest fund would the community expectation be that the balanced fund is the most expensive choice ?

I dont know what the commission will ask the super funds however i do hope they investigate some of the pricing of the Industry funds given the advertising campaign that the Industry fund network has been pursuing for a number of years.

One Editor of a financial publication wrote about how a financial planner was destroyed at the Royal Commission and one of the largest dealer groups has been shut down however the Super investigation should not become a Tit for Tat where Financial Planners may be hoping the Industry Funds get a touch up.

As a 30 year participant in this sector I am certainly hopeful that the Royal Commission will investigate without fear or favour and will bring light on any area that needs light shone on it no matter where the darkness is.

I have no doubt if there are bad things in a bank owned super fund then there will be big publicity and furore. I would expect the exact same thing to occur no matter where inappropriate behaviour may have occurred.

I would also like the Commission to investigate the profitability of the Industry Fund network given the Media constantly refer to the Industry Fund Network as the “Not for Profit” funds. The same media never referred to the pre listing AMP, National Mutual or Colonial as Not for Profit so why are the Industry Funds referred to as that? That is a media thing not an Industry Fund thing

With $600m in assets and over 5 million members i certainly hope the Industry Funds are making a very good profit so they can ensure they can maintain and improve their systems to manage their business and safely look after their customers.

I cannot wait for the hearings to begin.

The debate about Active Vs Passive investing

The Media debate about Active Vs Passive investing always revolves around the fees paid vs the returns generated however is the choice as simple as that today ? Passive investing has worked really well in the past however does that mean it will continue to do so in the future.

Passive investing strategies have been a huge beneficiaries of a comment attributed to Warren Buffett that if he was to give advice to others he would recommend investing in a S&P 500 ETF rather than have an active fund manager. This has given huge horsepower to the flow of funds to passive investing strategies based on a the comments of arguably the worlds greatest active investor and someone one that is very likely to have $0 of his own funds invested passively.

Read on;

The US share markets are at or close to record highs depending on what days you are looking at them. There are economic issues world wide be that slowly growing economies such as US, Aust and others, recessed economies through Europe or economies that were growing strongly and are now slowing eg China. There are geopolitical factors happening in the world. Brexit, Sabre rattling amongst some world leaders and outright war and skirmishes around the world.

That being the case why is the Vix index so low ? The Vix measures the volatility in the US share markets and it is telling us that today more than anytime in the past the investors are more confident or less worried about the future than ever before. Does that really make sense or are there other factors at play ? Perhaps investors are thinking there is no where else to invest that will give you the risk adjusted rates of return compared to equities. Surely Equity markets still have some risk involved ?  You don’t get that impression looking at the Vix as there is very little volatility on a historic basis which could be interpreted as very little concern about risk.

Perhaps the issue is that no one is thinking anymore in global share markets.
I was at a PD day recently where one of the global research houses where discussing Passive Funds management vs Active Funds management. They stated that in the US Passive investing through index funds and ETF’s accounted for nearly 50% of funds invested. Further they said of the 50% of actively managed funds 15% were invested so close to index weightings that it is hard to argue that the fund manager had any active position.

Given these numbers it could be said that up to 65% of the US market has funds that are being invested without any thought process behind what is being purchased. Perhaps the Vix is telling us not that the markets are not volatile anymore perhaps the Vix is saying that the passive investment strategy by sheer weight of numbers has over powered the active managers.

The volatility has gone as the underlying trend is up. New money is invested in equities due to the returns of shares compared to other asset classes such as cash and bonds and no one is thinking about how that new money is invested.
The Passive process is “More money to invest, the computer places the trades to purchase the shares according to the index weightings”  The profitability and growth of that profit in company X is one factor that is not considered in the Passive investment process and that is apparently now how the majority of money is being invested in the US share market.

Passive investing may be healthy and efficient as it is cost effective and technology has taken over from brains as has been the case in a lot of other industries. Interestingly though in times of extreme market volatility the regulator has mandated that computer trading must stop and brains must be engaged to make decisions.

If the weight of approx 65% of investment mandates are done on a passive basis no one is actually asking is company X really worth that ?

Indexing works very effectively when you have active managers and hedge funds taking active positions and arguing the point about what company X is worth. In that environment the index is the outcome of that price discovery debate and passive index strategies work really well and cost effectively. This has been outstandingly successful over many many years to the extent that indexing and ETF investing to track indexes has seen very strong inflow.
The key question is, “Now that the Passive Management fund flow has overwhelmed the Active management flow, can passive investing work as well now as the price maker due to their trading volume rather than passively following the market cost effectively?


Need for SMSF Specialist Advisers Growing Financial Standard

Jamie Williamson in the May 1st 2017 Edition of Financial Standard referenced research from the Comm Bank SMSF Report that the Need for SMSF specialist advisers is growing.

The research broke the SMSF investors/trustees into 4 sectors

The Outsourcer was one sector at 13% of SMSF’s and they are generally people that have low confidence in their own ability to make financial decisions and are willing to spend more on advice. It would have been good of the survey could have asked the obvious next questions. Why do you have a SMSF in the first place ? What was your key factor in the decision to set it up ?

It is certainly true that a lot of people are setting up SMSF and it would be interesting to see any published stats as to how many are being closed down on an annual basis.

The 3 other sectors of SMSF investor were

Coach Seekers (22%) who want to learn and are happy to pay to have someone teach them, the self directed investor (30%) and the Controller (35%)

The Controller is not going to engage an adviser as they want to do what they want which could be quite different to what an adviser recommends.

The self directed investor wants to do what they want eg self directed. What if they have an idea about buying a country property for the family holiday each year ? Will they respond favourably when the adviser counsels against that strategy ? What level of fee can an adviser charge to take the risk of potentially defending an action if the ATO makes a fund non compliant when the trustee acted against the advice of an adviser ?

At that point the Trustee will claim that the adviser should have advised them better and MADE them do the right thing.

There is plenty of consumers wanting advice and recent law changes mean advisers will see less clients. Why would an adviser choose to specialize in an area where the consumers by their actions have told you they dont want an adviser as a starting point? While things are going well in the SMSF the consumer will continue doing what they are doing blissfully unaware of any contraventions of the law that they are committing. When the brown stuff hits the air conditioning they will want someone to clean up the mess,  the tax penalties could be high and they will be sensitive to the adviser fees then just as they have been before.

The survey is correct. There will be growing issues in the SMSF sector and people will be required to assist.

It does not follow that it will make good business sense for a financial planning business to specialise in the SMSF sector when you consider the risks involved.

Under the law the Trustee of the fund is responsible for the fund. There would be less than 5% of Trustees of SMSF’s that fully understands their responsibilities and obligations to the members of their fund. They normally dont care saying we are the members and we wont complain however that is not how the law sees it.

When a Trustees become aware of an obligation that has been breached they then try to pass that responsibility to the adviser and the advisers best defence is not to get involved in the first place.

I can see that a lot more advisers will be needed to assist in this huge area in the future. I know a lot of advisers will enter this space due to the lure of the billions of dollars invested however i dont know how many will remain in the area long term when you allow for the risk reward of the sector.

The clients have all the reward in the SMSF sector which is how it should be however in relation to the risks they are taking, with the strong assistance of the regulators, the risks are being passed from the Trustees to the advisers which will not be a sustainable business proposition for most advice businesses long term.