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

Confused about financial advice?

Often people are confused about what a financial planner really does. They think it’s all about investing money and only the wealthy should talk to us. They think it is about getting the latest shiny investment.  This is miles from the truth. We are here to help people achieve their goals in life. This means looking at their individual situation and making suggestions of how they can make changes to create a better future, for them and their families.

Sometimes I feel that as an adviser, independent advice seems to be marginalised and the institutions want to reduce the options for the public to find good advice. Their idea of quality advice is a teller that can only sell their products, and that advice is a commodity like a cheque account, a cookie-cutter process that treats every person the same.

I believe our generation has been hoodwinked by the banks. For example we often find people in their mid fifties with large mortgages and little savings for retirement. Yes, they may be in KiwiSaver but they don’t have time to save enough to really support themselves in retirement.  Financially these people need to make some hard decisions. They may need to down size, repay debt and start serious saving for retirement.   The strategy may even include planning to work until age 70. It will often include making sure there is a back up plan if one’s health declines. It is vital to set out a strategy and stick to it and this is where having a qualified experienced adviser is vital, someone who has your back and is here for you for the long haul.

It’s not about shiny investments or selling a product. It’s not about trying to get the last inch of performance out of your money, it is about working out what is right for you and helping you taking action, over your lifetime.

Bankers are great at banking.  Financial advisers are great at giving financial advice.  Horses for courses.

John Barber

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 Recently in the NZ Herald, some top financial commentators have highlighted five common misunderstandings held by New Zealanders. Here’s our bite-sized overview:

To join KiwiSaver you have to have a job

No!  KiwiSaver isn’t just limited to the employed.  Anyone under 65 can join KiwiSaver – employees, self-employed, stay-at-home carers, beneficiaries, and kids.  As long as you have permanent residency in New Zealand you qualify. 

The government has your money in an account

Again – no!  It’s your money.  There are many KiwiSaver funds, operated by fund managers who are investing the funds for the members.  Only the individual members can access their funds (for first home purchase, or once they have reached 65), as the accounts are held in the members’ names only.  In essence it’s like your money in your bank account – the only difference is, you can’t take out money, you can only put it in.

Golden egg image

You have to get out at 65

Yes it’s true that if you remain working after 65, your employer doesn’t have to contribute any longer, and you also won’t receive member tax credits from the government. However, you don’t have to shut up your KiwiSaver account, you can use it as a tool to manage your finances.

It’s a savings account

No, you can’t withdraw funds whenever you want.  You can use the money for a first home deposit, or under hardship circumstances, although neither is a guarantee that you can withdraw funds; there is fine print. If you join between the ages of 60 and 64, you need to leave your money in KiwiSaver for five years.

You get the best return in default funds

Your KiwiSaver needs managing, pure and simple.  Funds can fall in value and it’s important to seek out professional advice from a reputable, authorised financial adviser.  Once a member of KiwiSaver, you essentially become an investor.  Investors get financial advice to maximise their investments.  This isn’t an expensive process (which is perhaps another common myth held by many New Zealanders!).

We can explain KiwiSaver in a way that it’s simple and relevant to your personal situation.  Also, we believe no question is a silly question.  Give us a call!

 

 

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Wealthy people use financial advisers

Australian research shows that 89% of people that use a qualified financial adviser said the advice was good value and helped them select the right product for their individual circumstances.  Although common for households earning over $160,000, only 15% of all Australians use a financial adviser.

This is ironic as you don’t need to be wealthy to make informed decisions, however informed decisions will definitely move you towards your wealth.  Every life stage requires you make appropriate financial choices and it pays to get good advice. Often this doesn’t cost, and can be invaluable.

If you want to be put on the right financial path, knowing you have peace of mind and that you are aligned with your own personal goals and desires, contact us now and make a positive start to 2014.

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Hands up who wants independent financial advice?

Actually, who wants independent financial advice, from an adviser who has experience plus the appropriate qualifications?  

There are some startling statistics coming to light.  Recently financial commentator David Chaplin found that independent financial advice is a ‘rare commodity.’  According to Chaplin’s research, only 325 Authorised Financial Advisers (AFAs), who are not owned by or affiliated to a financial institution, are left operating in New Zealand today.  

The belief that people need impartial advice is WealthDesign’s core philosophy.  We’ve turned down offers to be affiliated or linked to any one organisation in the past and will continue to do so, as we don’t believe that would be in our clients’ best interests.  We recommend the optimal product that will do the best job for our clients – end of story.

When you work alongside us, you’re in a ‘safe pair of hands.’  Phone for an appointment and we’ll show you how we can help.

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The paradox of investing

Research shows that human behaviour and investing mistakes are closely linked.

  • Investors like to chase high past returns.
  • Fund management companies love to advertise strong past performance.
  • High past returns are often poor predictors of future returns.

Fund managers get paid on the amount of money they manage. In fact some even go so far as to pay themselves a bonus when the market goes up. As advisers we want our clients to take the least amount of capital risk, while still allowing them to reach their financial goals.

The paradox is that financial advisers are here to advise and to help people avoid the pitfalls of investing, yet two thirds of KiwiSaver fund managers don’t want financial advisers involved in the retirement planning process, and will not deal with anyone unless they are tied and bound to their company.

The next time you see a well dressed fund manager telling you what great returns they achieved last year – don’t fall for the spin.  Go find an adviser who can provide you with truly independent research. Be an informed investor, not a cash cow for the fund management industry.

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