Financial PlannersNews Reform of Educational Requirements for Financial Planners

FPA Proposes Reform of Educational Requirements for Financial Planners to Parliamentary Joint Committee

If the Financial Planning Association of Australia (FPA) has anything to say about it, the educational standards for financial planners and advisers, in Perth and across Australia, are about to receive a boost. As far as we are concerned, it can’t happen fast enough.

Approved Financial Planners and AMP

We would like to give a little background. Approved Financial Planners and our parent company, AMP, are on the record as being in favour of educational reform for the financial services industry. We have felt for a long time that the standards for entering the industry, both in Perth and nationally, are not stringent enough.

AMP has internal standards that are far more stringent than industry minimums. That is one of the main reasons we decided to partner with them. We feel that it is our responsibility to educate ourselves fully about the products we offer and about how our decisions affect our clients’ well-being.

One of the sadder parts of being a financial adviser in Perth is listening to clients tell us how other financial advisers had mismanaged their funds, either out of ignorance or out of a lack of ethics. We find both of these situations to be unacceptable.

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Financial PlannersNewsSuperannuation Fund High Superannuation Fees

Are Your Superannuation Fees Too High?

One of the advantages to hiring a financial advisor is that they can take a complete look at your finances and find out if you are “leaking” anywhere. If you are in a city like Perth, with a high cost of living, your margin for financial error is smaller and you may benefit greatly from getting sound financial advice.

While the superannuation contribution freeze is taking up a lot of news space, recently published a report in which it said that Australians currently pay an average of $1300 in superannuation fees per year, for a national total of $20 billion.

This works out to 1.2% per year of total balancers. According to a report by the Grattan Institute called “Super Sting,” the average 50 year-old in a high-cost fund will lose $80,000 to superannuation fees by retirement day when compared to a lower cost fund. The same report said a thirty year old will lose $250,000 by the time they retire compared to a lower cost fund.

The Australian Superannuation Funds Association currently estimates that singles who retire at 65 and die at 85 will need to retire with a balance of $544,000 to provide $57,195 per year to live on. They recommend that couples have a balance of $744,000, providing $41,830 each.

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NewsSuperannuation Fund Freeze Employers’ Contributions To Superannuation Funds

What Does the Superannuation Freeze Mean to You?

Competent, professional financial planning has just become more important for our Perth clients and across Australia. The recent decision by the Government to freeze employers’ contributions to superannuation funds until 2021 is going to cost the average worker a lot of money. Most of all, though, it is going to reduce the “margin for error” that Australians had for managing their super investments.

The current compulsory contribution by employers is 9.5%. It was scheduled to rise to 12% in 2019-20 via yearly increases. Now, it is scheduled to stay at 9.5% until 2021, when it will be raised 0.5% to 10%. Then, it will continue to rise 0.5% each year until it finally reaches 12% in 2025.*

According to John Brogden, chief of Financial Services Council, the freeze will cost Australians $128 billion in superannuation contributions. In other words, Australians will have $128 billion less to retire on than they would have without the freeze.

What it Means to You

First of all, we can’t give advice on a blog because everyone’s situation is different. Consequently, what we are going to say will be general in nature and can’t be interpreted as individual advice.

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Financial PlannersNews Developing a Financial Plan for Your Family

Developing a Financial Plan for Your Family

If you are new to financial planning, don’t feel bad; you have company. There are plenty of people in WA who haven’t taken control of their finances yet. Luckily, Approved Financial Planners can get you started on the right path.

Recently, the Financial Planners Association of Australia published a blog post discussing how to develop a financial plan and what factors should be taken into consideration. All of the factors they cited are factors that we like to take into consideration when helping a family develop a financial plan. Here are five crucial factors that we consider.

Your Priorities

Everyone’s situation is different. Everyone has different dreams and goals. Everyone is starting from a different position. Some people want to create more family time now. Some want to ensure their family’s future. Many figure out a way to carve out a good future without sacrificing their entire present.

Your Cash Flow

Since it is called “financial” planning, your financial position will mean a lot concerning the direction and scope of your plan. How much money do you currently make? How much can you afford to invest? Do you have a “buffer” in case something forced you to go without income?

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Financial PlannersNews Financial Strategies For People in Their 20's and 30's

3 Strategies People in their 20s and 30s can Use to Get Ahead Financially

In Perth, it seems like clients asking about financial planning are getting younger and younger. Many Australians in their twenties and thirties are already solidly on the way to retiring at the ages they choose to retire. We can’t give any specific financial advice without an individual consultation, but here are three strategies that can help a younger person get ahead.

Setting Financial Goals

The foundation of any financial plan is the goals. Once a person knows where they want to go, it is a lot easier to start taking steps to get there. We usually have our clients set short term goals, mid term goals and long term goals with the option of evolving them at any time.

The short term goal could be to start a savings account or purchase a first home. Mid term goals could be to own an investment property or pay for children’s college educations. The ultimate goal usually to retire at a specified age with a specified income.

Paying Off Personal Debt

Personal debt, such as store cards and credit cards, is expensive. The sooner expensive debt is paid off, the sooner a person’s money can start working for them as investment capital.

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Financial PlannersNews Diversification to Reduce Risk and Volatility

Diversification to Reduce Risk and Volatility

One of the fundamentals of good financial planning is diversification. Even in a market like Perth, which remained somewhat insulated from the worst of the Global Financial Crisis, all segments and sectors are subject to ups and downs. When a portfolio is subject to the ups and downs of any particular market, the dynamic is referred to as “volatility.”

While most markets are subject to ups and downs, it is a rare occurrence when every single market goes down at the same time. In a diversified investment portfolio, the investor isn’t affected as badly by one particular market going down, because the others usually don’t. Occasionally, when one market falls, another rises.

Diversification can provide a form of protection for investors and usually allows them to wait for any particular market to go back up.

How it Works

The popular way to diversify is to invest across asset classes. Examples: cash, fixed-interest bonds or securities, properties, shares and precious metals. Each class has its own risk to reward profile. Those with low risk and low reward, such as cash, are the least volatile. Those with the highest risk and reward potential, such as shares, are considered to be the most volatile.

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Insurance ProtectionNews How to Afford Insurance for the Long Term

How to Afford Insurance for the Long Term

We currently provide life insurance and disability insurance to many of our Perth area clients. They are two popular forms of wealth protection. Many people think they “can’t afford insurance,” but it is possible to afford it now and later, depending upon how you choose to pay your premiums.

There are two basic ways to pay for insurance: a stepped premium and a level premium. Here’s how they work.

Stepped Premium

A stepped premium starts out low and increases as you age. It is most often chosen by those who expect to make more money in the future than they do now. Ideally, younger clients on a career path find their income rising as their premiums rise. If their careers go as planned, the stepped premium can work out very well for all parties.

Level Premium

A level premium is higher at first, but tend to remain stable over the years. The premium is calculated each year, based on the age when you first took out the policy, no matter how old you are. This avoids the sharp rise that often happens with a stepped premium.

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Financial PlannersInvestment PlanningNews Risk Vs Return

Managing Risk vs Return

Those who are looking for financial planning help in Perth are bombarded with unsolicited advice on a daily basis. At Approved Financial Planners, we don’t give advice on our blog, but we can educate consumers about their choices and what they may want to consider when looking for a financial advisor.

When we have an individual consultation with an investor, one of the most important considerations is their risk tolerance. We find out how comfortable a client is with risk so that we can create a financial plan that they can live with. A client who is uncomfortable with risk is going to be steered towards a more conservative approach. A client who is comfortable with risk will be steered into a more aggressive approach.

Generally, the higher the risk of an investment, the higher the potential reward. This is a fundamental of investment. However, some strategies are commonly used to shield even an aggressive investor from undue risk.

Long-Term Timeframe

Long term investments carry less risk because fluctuations in any market tend to even out if one waits long enough. This doesn’t work 100% of the time, but time can be considered to be a valuable asset in investing.

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Financial PlannersNews Where to Get Financial Advice

Where are You Getting Your Financial Advice?

We have provided financial services in Perth for nine years. In that time, we have built a track record based on honesty, integrity and results. When we get to know a client through an introductory consultation, one of the things we start out with is asking if they have done any investing yet.

Sometimes, we hear stories about how they got “advice” online or from well-meaning friends and it didn’t work out. We also hear stories about how they were “sold a bill of goods” by various financial advisors who provided “advice” that was just a cleverly-disguised sales pitch and was in their own self-interest.

Recently, a study led by Susan Thorp, Professor of Finance and Superannuation at the University of Technology, Sydney, indicated that financial advisors who give solid advice on the first issue are usually trusted, even if their later advice turns out to be bad. The study goes on to mention that there is potential for abuse by unscrupulous advisers who manipulate the process by providing easy, obvious advice to gain a client’s trust.*

Ms Thorp goes on to concluded that consumers “need more assistance in choosing advisers.” She also advocates tougher tests for certification as a financial advisor. Those who are interested in the full report can click the link at the bottom of the page.*

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Mortgage BrokingNews Ready to Buy Your First Home

Are You Ready to Buy Your First Home?

One of the least-rewarding duties of mortgage broking, especially in a market like that of Perth, is informing a would-be client that they have been turned down by the lenders. We can’t give specific advice, but we can provide some general reasons why would-be homeowners may want to reconsider their decision to purchase their first home.

Insufficient Funding

Purchasing a home requires a substantial financial outlay. The first obstacle is finding ten percent for the deposit. After the deposit, it is then necessary to sustain a lifestyle that allows finding the capital to make mortgage repayments on a regular basis.


Sometimes, a person’s lifestyle isn’t amenable to purchasing a home. Someone who is single and on the road for work most of the time may have a hard time keeping up with maintenance concerns. In addition, those who need the flexibility to transfer or relocate may have a harder time doing either when they own a home.

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