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

Only 1% of advisers are non- aligned

When analysing the 32,759 financial advisers in New Zealand, only 325 are Authorised Financial Advisers (AFA) who could be classed as non-aligned or independent (even though they aren’t legally allowed to say they’re independent!).  Don’t get us wrong, we aren’t saying 99% of the market are incompetent or giving poor advice, it’s just they have split loyalty.

If you are getting advice, you want to see a written report. This should include what the product is and why it is suitable for you. If the adviser is tied to a provider or has a conflict of interest, it should be clearly stated in their disclosure statement.

Even in the new world of regulation, it pays to know who is giving you advice.  Do some research, and ask some questions.

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Fees matter

It amazes me how many people invest using expensive reporting platforms where the adviser fee is linked to the size of the portfolios. Even worse, these advisers then invest into managed funds that add another layer of fees.  If the investment market goes up by 15%, should the adviser get a 15% pay rise? Even worse is where the fund manager charges a performance fee!  The market does what the market does.  Advisers and fund managers promising alpha (to beat the market) may be telling tall stories. And as far as paying themselves a performance fee benchmarked off cash returns –  in this market – words fail me.

 Fees do matter because at the end of the day, what is left is the return to the investor.

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A number of clients have asked my opinion on this share offer.  Here’s my take:

Z Energy Limited is a fuel retailer operating multiple stores under a franchise arrangement.  The company is very profitable and is projected to provide a cash dividend of around 5.9% per share (gross).

Z Energy Limited is floating shares on the NZX.  They have given an indicative price range for the shares of $3.25 to $3.75 per share.  Z Energy Limited is looking to raise between $780-$900 million.

The promoters and the present owners, Infratil and the New Zealand Superannuation Fund, will continue to hold between 40-50% of Z Energy Limited once this initial public offer has been completed.

The prospectus/offer document can be viewed at

As with any share investment, there are specific risks attached to the individual company.  The prospectus has a full section on these risks and I suggest you read this carefully before investing.

My concern is the high level of debt that this company holds.  As we have seen in the past, this can cripple even the best organisations in adverse environments.

On the positive side, the company has been well run, is profitable and has a strong brand and market share in core industry.

I believe the institutions will support this stock and it may be oversubscribed. 

If you choose to buy these shares, I would add these to a buy and hold portfolio.  The strong dividend flows will underpin the share value going forward.

The company could also be thought of as a part property, part retail and part infrastructure stock.


DISCLAIMER – These are my personal views based on publically available information.  I am not employed or contracted to an issuer.

Any choice you make to invest or not to invest in Z Energy Limited, is yours alone. 

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Interest rates – up – up and away

One of the weird things about being human is that when things are good, we think things will always be good, but when things are bad, we seem to think things will stay pear shaped.

Interest rates are at an all time low. The base official cash rate (OCR) is at 2.5% and you can get a floating mortgage at rates below 5%. For a borrower, the past few years have been great but don’t think life is going to stay this way forever. The wind of change is blowing and borrowers and investors need to take heed.

Researchers are highlighting a move back to higher interest rates in New Zealand.  In particular, analyst’s expectations that the Reserve Bank of New Zealand (RBNZ) will initiate an increase in the OCR of 0.25% to 2.75% in March 2014. This is then expected to be followed by two additional 0.25% increases over the course of 2014, with the OCR ending the year around the 3.25% level.

 In contrast, the expectation is that the Reserve Bank of Australia (RBA) will undertake an additional 0.25% cut to their OCR in August this year and for their cash rate to remain unchanged at a historic low of 2.5% until the December 2014.


The impact of this will be increasing interest rates in New Zealand and a probability of a stronger New Zealand dollar against our major trading partners.

Forward planning is vital. If you have a mortgage and you want to take out a bit of the interest rate risk, now is the time to be getting advice. If you are investing in Australia, you need to understand the likely impact of these economic drivers.

Check out the market mortgage rates or the currency charts on the homepage of our website at  Then give us a call to help guide you through the changes.

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