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

Mummy’s phone!

“Mummy’s phone!”  cried the little boy in the stroller… he might have been two years old, but could’ve been younger.  “No Honey, Mummy only has 1% charge left; you can’t have Mummy’s phone.”  He struggled and cried despairingly as he wriggled around, trying courageously to reach his mum’s cell phone as she held it out of his reach, swooping it into her purse – gone, but not forgotten.

I was shopping in Spotlight, looking for inspiration for Santa’s upcoming visit, when I witnessed this unfold before me.  Whoa – screens have taken over the world! And it disturbed me, so much so, that next time I was in front of mine, I googled it. 

It’s been bugging me on and off, as John and I grapple with screens and their importance in our day to day lives.  So just what is it doing to family life and relationships?

So Catherine Steiner-Adair EdD, a really smart lady who’s recently written a book discussing just this issue, was interviewed by the Huffington Post.  She has a thing or two to say on the matter.

Let’s use technology for what it’s intended for, but be super aware that it does need to be managed.  The tendency is for screens to manage us.  This is a new phenomenon which, if we totally ignore, we may do so at the peril of the relationships with those we hold the most dear.  And you just can’t take the time back once it’s gone (spoken by a true empty nester!).

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Kristine Barber
WealthDesign – a life well planned

 

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Mixed messages we receive

Kiwis are in love with owning their own piece of paradise. We like to own our own homes. We’re a nation of number eight wire, DIYers, that love to take on a project. Property is also a robust pillar of a smart retirement plan.

Owning your own home teamed with having a healthy KiwiSaver balance, means you will increase the chance of living the life you are planning for, after 65.

The Retirement Commissioner (and everyone else who thinks we should know) is telling us we are going to live longer, plus we’re having smaller families, so we can’t rely on government super to live on, in our old age.

The government recognises this and has put in a pretty good plan to help. You now can access your KiwiSaver balance and get a free grant to help buy your first home.

Yet the Reserve Bank have forced banks to increase the deposits people need to buy their first home. Who does this hurt? Mainly 20 and 30 year olds as they’re in that first home buying space. Who does this protect? Mainly the banks from themselves. Deposit restrictions mean the banks have more fat if a person defaults on a loan lending. Does this help the borrower? Not really, but it’s great for the banks (and their thriving profits).

Silver suits will appear on TV to tell us all what a great thing they are doing on our behalf. Hmm – I must be starting to become a cynic!

Just one of the mixed messages we receive on a daily basis.

Stay current with what’s having an impact on your financial health. Call us. No question is a silly one.

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John Barber
WealthDesign – a life well planned

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Ethical KiwiSaver Investments

It has been interesting to watch the debate around ethical investing within KiwiSaver. I am a believer in investors knowing where their money is, and unfortunately most managed funds don’t allow any real knowledge of where the funds eventually get invested. They will spin the line about more governance and how they are different/ better than the other bloke. The truth is, unless you can see for yourself, it’s all just marketing.

At WealthDesign we have investment clients who wouldn’t own shares in gambling or industries such as arms or tobacco or industries they believe are damaging our environment. I respect that, and am happy to design options that exclude.

You can be an ethical investor and still save for your retirement effectively. For example, you could have invested in Australasian Listed Property over the past five years and done very well. According to Morningstar, investors would have received a 16% return over this time.

Like most New Zealanders, I like property. The rent gives a stable income flow, and property tends to follow inflation. If commercial property inflation averages 3.5% for 10 years, the asset value will normally increase by 50%. Not a bad way of ethical investing in my opinion.

At WealthDesign we see there’s a need to audit investors’ KiwiSaver accounts.  So we’ve created KiwCheck. This service is independent of any KiwiSaver manager and is designed to provide personalised advice based on independent research. We believe the banks and fund managers are conflicted as they have a vested interest in keeping people paying into their schemes (and keep getting their share of the $132 million paid in fees). Our service isn’t about moving investors from one provider to another, but is about checking that KiwiSaver is working optimally for you.

We believe transparency and knowledge is vital, plus we are all about making the complicated simple.  KiwiCheck is just another way we can help our clients to live their life, on their terms.

Give us a call if you want to know more about ethical investing or KiwiCheck on 
06 3555844.  

 john copy

John Barber
WealthDesign – a life well planned

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Fun with words

If you watch the Big Bang Theory, my favourite programme ever (apart from Dukes of Hazzard –  nothing is better than that!), you’ll know about Sheldon’s cable show ‘fun with flags’.

Well recently some people have been having ‘fun with words’.  People have been talking about ‘putting clients’ interests first’.  That this was even a discussion was a bit of a revelation for the team at WealthDesign, because we never realised it was a new thing.

The basic idea is that where the outcome for the adviser and the client are in conflict, the right thing to do is ensure the outcome favours the client.  Do the right thing and so on.  Rob Everett from the FMA recently said that ‘clients’ interests first’ “can mean different things to different people, in different situations”.

No, it doesn’t.

I prefer a higher standard – ‘clients’ best interests first’.  This one can be much harder to meet if you can only sell one or two product lines, rather than compare and choose from a wide range of providers and products.

For example, if you go into a bank that sells its own KiwiSaver, and the teller suggests you change to that KiwiSaver, they are considered to be putting your interests first, because they don’t receive a commission for making that sale.  The bank product is not being chosen by the teller over another product, because they can’t sell any other product, so there is no conflict.

What if that bank’s KiwiSaver has much higher fees than the one it replaced?  It might have much poorer returns (we know which KiwiSaver schemes have consistently underperformed) than the one it replaced.  The bank teller doesn’t compare the old scheme to their one.  They won’t give a written statement of advice outlining the pros and cons of switching.  They won’t tell you that their salary-not-commission job is tied to targets, bonuses and KPIs that require them to sell things. They are having ‘fun with words’, at your expense.  That sale would not meet the standard of ‘clients’ best interests’. 

And this is the problem.

If you go to a doctor or a lawyer, and they said to you “just so we’re clear – my duty is to put your interests first, but I won’t necessarily be acting in your best interests”, would you take their advice?

At WealthDesign when we say we put our clients’ best interests first, we think it means what you think it means.

regan 

Regan Thomas
WealthDesign – a life well planned

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Ignore your KiwiSaver at your peril!

Which fund is your KiwiSaver in?  If it’s in a conservative fund, it’s averaged 6.6% over the past five years.  In a growth fund?  Return has been more like 9.5%.  Today there is $33.4 billion of New Zealanders’ money invested into KiwiSaver schemes. The largest amount is in ANZ ($8.67 billion) followed by ASB ($6.226 billion).  ASB has 50% of their clients in their conservative fund where as ANZ only 11 % are in the conservative fund.

Here’s the problem – if you’re a long term investor (in KiwiSaver), you’re missing out on the true return you should be getting. For example, the conservative funds have averaged 6.6% for the past five years against the growth fund, that has returned 9.5% for the same period. The result could cost some investors thousands in lost gains.

We often hear of investors being told by bank tellers to move from one provider to another “so you can see your daily balance of your KiwiSaver”. What many people don’t know is that the tellers have targets and Key Performance Indicators (KPIs) to meet. If they get bonuses or any other incentives, under the FMA rules today (unlike non-bank advisers), they don’t need to disclose these benefits.

We often see people being moved from a top performing fund to a fund with a dubious performance history. For example, if you moved to the Kiwibank balanced fund last year, your return would have been 3.1% – the worst performer of all 18 funds. To make it even more disappointing, this fund has $1.064 billion invested, yet has continuously performed at the bottom of the pack.

My question is, who is benefiting from this? It seems every time I visit a Post Shop to buy mileage for my car, I’m urged to move my KiwiSaver to Kiwibank.

At WealthDesign, we buy independent KiwiSaver research, each quarter, that compares all the KiwiSaver managers and the individual fund performances. We analyse the performance of the various fund managers and help our clients make informed decisions. It isn’t about moving from one fund to another to meet targets or KPIs. It is about providing our clients with the right information, so they can make informed decisions.

KiwiSaver will eventually become one of the largest assets most of us own. How quick and how well your asset grows, will depend on how well it is managed.  There’s more to your KiwiSaver fund than just being in it.

Check your KiwiSaver – give us a call today.

 

Source: Morningstar Research 260716

 

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John Barber
WealthDesign – a life well planned

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