Some need to know, with a bit of WealthDesign nice to know thrown in.

Where the rubber meets the road

What a week! It’s been ‘claim time’ at WealthDesign this week it seems. We’ve been helping our clients out, at the most important end of the insurance puzzle – when they most need it.

As much as I would prefer my clients weren’t having to claim on their insurance, because they were healthy and happy, I feel privileged to be able to help them in their hour of need. It reinforces why I’m a firm believer in insurance, and why we always work backwards, from a claim stance. We want to know that if one of our clients needs to claim, we can hand-on-heart know that they will be looked after, both by us, and by the insurance company.

This is why we are very careful around the process of putting cover in place, and with who we trust to look after our clients. In the past few weeks, two of the larger insurers have been bought out by third parties. What impact this has on their claim handling process is still to be seen. When people say “oh it’s business as usual” I don’t quite believe them as all culture flows from the top down. If you change the focus from partnerships between the client and the insurer and if the company starts to look more at profits than providing quality outcomes – things can get slippery. Often people don’t believe insurance companies work to pay out claims, but we know some of them do. The companies we work with have a clear client focus and pride themselves in paying claims – so don’t be put off!

This week at WealthDesign we’ve been working with a guy on an income protection case (he received his first cheque this week), a lady with a crippling lung disease (hopefully this will be sorted early next week) and a guy with a heart problem. That’s not to mention two or three hospitalisation cases ranging from a specialist test to a hip replacement.

Today there are over 60,000 people on waiting list for operations alone. The stress and heart ache this causes is unimaginable. I know why I carry medical insurance personally – I see the impact of people not having it, every second day.

I see cases where people put off buying insurance or just don’t get around to the paper work,  and the result can be financially disastrous, causing much stress to the client and their family.

So after a week like this has been, I wonder why buying insurance is such a grudge purchase – why do people put off this very important part of their financial lives? But then they’re not in my shoes, dealing with the fall out of not being insured. Perhaps they should be, just for a while, to see what can happen when you’re not covered.

Give me a call, email me, whatever it takes to make sure that you and your family are covered. Expect the best, but have a plan in place for the worst – just in case.

John Barber
WealthDesign – a life well planned

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I might sound like a broken record, but I love the KiwiSaver scheme. It has helped thousands of people into their first home and is starting to make meaningful impacts on investors’ retirement lifestyles.

There is now a staggering $46.5 billion saved in KiwiSaver schemes. 83% of this is managed by just six managers, dominated by ANZ, ASB and Westpac. These banks don’t offer any advice and their value proposition up until now has been “join us and you can see your KiwiSaver scheme balance on your phone!”

Unfortunately from my experience, some investors don’t really understand the scheme they are in, or how the markets that drive the returns of KiwiSaver plans work.  I often ask people who their KiwiSaver is with and they pull out their phone and show me the balance. When I ask what fund they are in or what their PIR rate is, oops, that doesn’t show up.  I’m concerned that if we see markets fall, many investors will not understand why they have suddenly lost thousands of dollars on paper (or worse still on their cell phones) and they won’t have anyone to talk to. It will be too late to have a meaningful discussion other than to say “tough it out, you’ve already taken the financial hit.” The cynic in me knows that the banks will roll out the graphs of old to show people its okay, but the truth is for some people it won’t be. The media will blame the adviser (yes, me) and yet the main culprits will once again, hide from sight. The banks have promised to manage your money but in truth, they don’t want you to take independent advice, preferring you take their in-house advice.

An example today is that ASB has over $3,668 million of investor’s funds sitting in their default cash fund. This is three times more than any other KiwiSaver provider.  You could argue that for some, this is correctly invested but when you consider this fund has only produced a 5.5% return over the past five years (and an average balanced fund returned 8.3% for the same period), this misplaced use of the default scheme could be costing investors thousands of lost potential returns.  Just think, an investor with a $40,000 balance, missing out on 2.8% each year, is worth $1,120 in lost return or $11,200 over ten years!

As our KiwiSaver balances increase, we need to get advice. Having the ability to see you balance on your phone is not advice, and KiwiSaver schemes are not just another cheque account.

I’m a financial planner and I’ve been doing this for almost 30 years.  Experience tells me we are getting close to a market change. When life is good, people think it will always be the same. Unfortunately this isn’t the case and behind every wave there is a dip. My advice is to have a meaningful discussion before the event, and have a plan of action.

I’m always happy to spend time with investors. We have independent Morningstar research that tracks the performance of most of the KiwiSaver funds. We give quality, impartial advice.

If you’re interested in being an informed investor, give me a call.

John Barber
WealthDesign – a life well planned

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Thinking of starting a business?

Going into business is like a marriage – sunshine, lollipops and roses …. at the start. But as we know, humans are all weird, strange and difficult characters – just ask anyone who’s been married for a while! There is always some level of conflict and business is no different, hence the need for rules – I’m talking about ‘shareholder and partnership agreements’. These agreements need to set out the rules of engagement. They need to cover the rules around set up, effective running and how to blow the business to bits (if things go pear-shaped).

The agreement should cover:

  • How the business was funded and how much each shareholder’s capital is at risk
  • The number of shares held
  • How shares are valued, transferred or sold
  • The rules around the board meetings
  • How directors are appointed and removed
  • What decisions the directors can make and what needs shareholders’ sign off
  • How profits are distributed
  • How disputes are resolved
  • What happens if someone becomes disabled or dies.

Lots of people go into business with only stars in their eyes – life often throws a curve ball and things don’t always go according to plan. Being in love is great, but getting divorce sucks, and business is no different. Having spent the time getting the rules set in stone, is prudent. It will make a bust up so much easier and cheaper – expect the best, and plan for the worst!

A good legal firm will have a standard framework to follow and you can then personalise this document to suit your individual circumstances.

As a side thought, even if you work for your own company, have a job description and employment contract. If you have an income insurance claim, it just makes things so much easier!

My advice is, get advice! Ideally, have a financial round table, with you at the top of the table, and your advisers around the table. Think lawyer, accountant and financial planner (someone who actually runs a real business and who has been around a while); they are handling these situations all the time.

And I know it’s tempting, but don’t write your own agreement – an unfortunate problem we see far too often, which can end in tears.

I’m only a phone call away, and am happy to help – don’t hesitate to reach out.

Remember if it isn’t written down – it doesn’t exist.

John Barber
WealthDesign – a life well planned

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The price of razor blades – extreme!

As most of you either know, or can tell from my mugshot, I have little use for shampoo; yes – I shave my head to give an aesthetically pleasing appearance for those who are looking my way!

 

So if you have a full head of hair, along with a gargantuan meaty beard, this blog post will probably be irrelevant to you! Good for you – some of us don’t have the luxury of choice on this one.

I go through razor blades rapidly. I don’t know about you, but I wonder what has happened, relatively speaking, to the price of quality razor blades?

Anyway, recently my interest was piqued when the Dollar Shave Club company appeared front and centre of my computer screen. I couldn’t resist trying them out, and as assured, my $11 razor kit turned up. For $11 per month, the Dollar Shave Club will send me a month’s supply of razors – and what I love is that I didn’t even need to leave my desk.

Again, another way businesses are innovating to create value to their customers – and anything that makes life easier (in a world that has upped the intensity on everything), is surely going to fill a gap in the market.

Early days yet, as I see how the service plays out of the Dollar Shave Club, but so far I’m eagerly trying out my new blades!

 

John Barber
WealthDesign – a life well planned (and a head well shaved)

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