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

Warning – shoddy terms of engagement

Beware the insurance agent with shoddy terms of engagement. There are firms encouraging their clients to sign terms of engagement that allows them to bill anyone who changes their insurance policy in the first 24 months. The worst thing is this is a charge to cover the commission claw-back that the advisor receives when a policy is changed.  It’s a way of passing it onto the client. Sometimes your circumstances change and you may need to review your insurance costs. Or, you may not agree with what advice you received, or you could possibly find a better solution.  Don’t sign any legal document without legal advice.  If offered a shoddy terms of engagement, show them the door and look for a qualified certified financial planner.

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Many kiwis are in the bond market and just don’t realise it.  Of the $15.167 billion in KiwiSaver, $10 billion is in either a default fund or conservative funds.  Of this, 79% of these funds are invested in fixed interest assets.  The result being these KiwiSaver funds are going to perform below average in a rising interest rate environment.

When interest rates increase, the bond market falls.  Bonds, unlike shares don’t rally again, so you end up with lower returns. 

Talk to us now BEFORE interest rates rise, to ensure your KiwiSaver is working optimally for you.

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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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Transfer your super fund from Australia

Did you know you can transfer your Australian super fund to New Zealand?

If you have worked in Australia, you can search for your super balance by going to  You will need your name, date of birth and your tax file number.

Transfers became possible from July 1st 2013, but make sure you get qualified advice before you sign up for anything.

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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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