WealthDesign

It is a sad fact that we often see the impact of people opting for Plan A, which is no insurance,  rather than Plan B, which is a prudent, well structured insurance portfolio. We hear the stories of families put into financial difficulty due to a death or disability within a family.

Unfortunately disasters do happen and a decision not to have insurance is a decision to take Plan A. The unintended consequence of this decision is far reaching. Yes, simple in the short term, but often devastating in the long term.  The last thing a widower wants is financial pressure after the loss of their loved one; but it happens far too often. In the first two months of this year, I have come across two such cases.

Our clients have had the benefit of the hard conversations. We have had a look at the “what if” questions and put in strategies to cover these potential disasters. This gives our clients peace of mind, and the ability to get on with life, knowing if the worst should happen, at least financial woes won’t be part of the equation.

Talk to your family (immediate and extended) and ask the question – have they had the discussion around risk?  If not, please let us know.  We are happy to sit down and have a conversation around this thorny issue.  We have answers; ones that won’t break the bank and will bring you peace of mind – Plan B, in other words.

John Barber

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There are a lot of people out there who are uninsured, and new approaches aimed at reaching them are welcome, as we all too often see the disastrous results of underinsurance, or no insurance.

There are companies launching online-only life insurance products, which appear to be aimed at people who are time poor, DIY-ers.  Great idea in theory, as they are trying to be simple, easy, and quick. However, trying to simplify an often comprehensive concept doesn’t always give the client the best outcome.  The fine print all of a sudden becomes much larger at claim time, and what seemed like a simple, easy and quick buying decision can end up costing – both in time and money!

Most non-adviser products advertise along similar themes, sometimes claiming to be cheaper because they don’t have to pay commissions (they instead spend a fortune on expensive advertising). The reality is these are generally highly limited insurance policies, filled with draconian exclusions that are often priced higher than adviser-based products.

Many people have complex business or family affairs, legal structures, or health issues that need to be understood. Most would appreciate some help working out what type of cover, and how much of it, to buy.  All appreciate having assistance preparing the documentation for a claim and dealing with the aftermath.

For most people, advised insurance ends up costing less than online or direct products.  After comparing several insurers, an adviser will select a policy that is suited to you, and will not sell a policy that has unusual exclusions, wide reaching ‘anti-claim’ criteria and contentious wordings etc. 

So it turns out that using a good adviser will mean you get a good policy that will work when you need it.  Someone to help choose, obtain, maintain and claim on the policy, and it will cost less than doing all the work yourself. Plus, you’ll have the support of an adviser who has your back, and who wants the best outcome for you.

Regan Thomas

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There is an old saying if you don’t know where you are going, how you will ever know when you get there? In investments this is very true. Last week we had our annual external audit for WealthDesign and one thing that was drummed into me was the need to always have clearly defined goals (defined in a clear and measurable way) on file, for our clients. These goals should always be the benchmark that every investment decision is weighed against. In truth this is easier said than done, and takes discipline and thought to achieve.  Which got me thinking … this applies in all of our lives, not just our businesses.

For example, say you are a trustee of a family trust or you hold a power of attorney for your aging mother.  Having the basics right from the start, is vital.  You have to know what you are trying to achieve.  So work backwards.  What does the family member or beneficiary require to live comfortably and without stress?  This involves numbers!  You can’t just be airy fairy and say I want my mum to be happy and comfortable.  What will that look like? Discuss this with family.  Communication is vital.   You need to be able to formulate how much money your investment needs to provide to have the outcome desired. 

This is where we help you.  It’s often new territory you’re treading, so having the support at hand, with an expert on your team, is invaluable.  We care!  Call us!

John Barber

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I can understand If you feel a bit over the government selling state assets.  But the fact that the government has put assets on the market in a variety of ways has been good timing and a boost for the New Zealand stock exchange. This has created a win for the New Zealand tax payer and a win for potential investors.

Genesis Energy  is a solid business. It supplies 26.8% of the total New Zealand electricity market and 43.8% of the gas market. It pays strong dividends of around 13.5%.  In my opinion this share is worth having as part of a share portfolio.

Power Companies are great assets to have in a long term ‘buy and hold’ share portfolio.  The industry has high barrier to entry, tend to be inflation proof and recession proof and pays high dividends. 

The trick is not to be over weight in any one share. Today we have an abundance of power companies. Treat them as part of the portfolio. Don’t try and pick the “winner” but hold a percentage in each.  In ten years’ time, you will look back and think the price you paid was relatively cheap, and you will have had the benefit of strong cash flows from dividends.

If you want to talk about creating a New Zealand share portfolio, please do not hesitate to give me a call.

John Barber

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Lots of parents want to give their kids what they never had.  But where do you draw the line?  I recently came across Mr Money Mustache’s website, and he makes a good point not just about lavishing your kids with all the gadgets, toys and technology available, but also in regards to paying for weddings, gifting house deposits and paying for university.  You could well choose to do all these things, but how can you do so while making sure they learn how to make good financial decisions, and also learn to appreciate the gifts, rather than learn to expect them?

As Mr M says, “It’s all noble and generous-sounding on the surface. As a parent, you want to give your kids all the advantages you didn’t have when growing up yourself. You earn much more than your parents did at this age, and so it is appropriate for a person of your economic standing to splash it out onto your offspring. Isn’t it?

The only thing is, in most cases you’re creating a double whammy of wrongness. Wrong because you’re spending more money than necessary, which means incurring more debt, working longer, and having less time to live your own life. And more importantly, you are probably programming your kids to expect handouts, and displacing their own healthy learning, effort, and growth with the leather-upholstered La-Z-Boy of your easy flowing cash.”

Makes you think really. 

Regan Thomas

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