WealthDesign

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 Thomas
WealthDesign – a life well planned

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Yesterday I arrived at the service station all excited to pay just 71 cents per litre of diesel, because I’d scored myself a 10 cent per litre discount. But I was severely disappointed – I couldn’t get the minimum $40 into the car tank to get the discount, no matter how I tried! It got me thinking – in 2012, crude oil was $115 US a barrel. Today, for the same barrel it’s $26.21 US.

Cheap oil is a double-edged sword. It has a strong disinflationary impact on everything we buy. Lower transport costs should reduce the cost of just about everything we buy. And what people do is stop spending today, and wait for things to get cheaper, as the reduced transport costs start to flow through. This is great for the individual, but not so good for the economy.

Cheap oil makes it easier for our dairy competitors to produce a cheaper product, as the cost of grain goes down – so not great for our exports or economy.

You may have noticed, cheap oil doesn’t help the world stock exchanges either. Basic economics of supply and demand states that if price falls and demand stays constant, then supply will fall. When that happens, prices will start to increase again. So don’t rush out and buy a V8 just yet, as my pick is that fuel will not be at these prices in 12 months’ time.

In the meantime, enjoy the extra $20 – $40 a week these lower fuel prices are saving you. Here is a crazy thought – rather than spend the extra $40 a week, put it in a separate bank account and in 12 months’ time, you will have saved $2,080!

We love to talk about tips and smart tricks around money. Give us a call – let’s talk about how to improve your balance sheet.

John Barber
WealthDesign – a life well planned

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So here’s the deal.  People who get financial advice for their investments, make smart financial decisions more often than those who don’t get advice.

Proof?  The number of investors who switch KiwiSaver funds because the markets are volatile has increase 500% on the back of increased market uncertainty.  Why is this not so smart? Because these investors have sold out of assets at a discount, and have missed the opportunity to buy assets cheaply.

It is understandable though when you can see your KiwiSaver balance gong down on your iPhone, plus you don’t have the insight of sound financial advice.  Losing money is never fun but investors need to remember, they don’t get the money today, they may have 25 years to go!   If you understand dollar cost averaging and how KiwiSaver makes money for you in tough times, switching to a conservative fund isn’t going to be in your best interests in the long term.

Advice counts! Talk to a Certified Financial Planner today about your KiwiSaver and make some smart decisions around your investment.  Remember, we’re here for the long haul, to help navigate the obstacle course that is life.

John Barber
WealthDesign – a life well planned

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Recently I had a client in my office who has given up smoking. The great news is, it keeps him healthy and saves him money.

Not only is he saving money on the smokes he was buying, but after 12 months, his insurance bill has dropped by 50% – no medicals, no questions. As long as he can honestly say he hasn’t smoked a cigarette for 12 months, the monthly life insurance bill is halved.

He showed me the app on his iPhone that tracked his savings – over $6,000 in 12 months! It’s a neat little reminder that helped him beat an unhealthy habit. This wasn’t the only thing he used to support him on his journey, he also used nicotine patches and other tools.  But hey, technology can definitely help along the way!

If you are a smoker and need a little financial prompt, check out the website below – lots of help at a time when you need all the help you can get!

Quit smoking with healthline.com

John Barber
WealthDesign – a life well planned

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Welcome to the first instalment of ‘Budgeting with Wilson – advice from an ex-uni student’ (insert theme tune). Today’s topic?  Sky TV, and how to get more TV for less.

The rise of the internet has 100% led to the death of Sky TV. It’s now expensive and can be a bit of a money pit. When you consider other options out there, Sky TV probably ranks right down near the bottom in terms of value for money, and content.

So what does the ex-uni student recommend? The answer is one that has come off the back of illegal streaming and downloads. It’s on demand tailored content that gives you exactly what you want, and lots of it, for nowhere near the hundreds of dollars you would spend on Sky TV.

In terms of that on demand content, there is a plethora of options in the New Zealand market with Netflix being king. Watch it on your TV, your phone, your laptop, or tablet, there are literally thousands of movies and TV shows to watch, with more being added weekly. Netflix will cost you $10 a month. Cheap, right?

But you what about sport, I hear you ask? Once again on demand streaming has options. Whether its golf though PGA Tour Live, basketball through NBA TV, baseball on MLB TV, or the football though Premier league Pass, there are a crazy amount of options, for a ridiculously low price.

The only stumbling block to my amazing budgetary advice surrounding your TV viewing habits is the rugby. World rugby hasn’t quite caught up to the revolution. However, I have a solution, and that’s going to the pub and having a few pints with your mates instead – problem solved (and much more social)!

Compared to Sky TV at over $120 a month, any streaming option or options will cost you far less. That means more money for you to spend on beer, holidays, or more sensibly, building your savings. Plus your family will think you’re so technologically savvy when you bust out Netflix, and work it like a pro.

Wilson O’Fee
Your friendly WealthDesign, financially savvy, ex-uni student!

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