Archive for financial advisors Perth

The Evolution of Chinese Spending Habits and How it Could Affect Investments

It may not seem important right now but the financial advisors in our Perth office are keeping an eye on Chinese spending habits. Change in Chinese spending habits are affecting a diverse lot of Western companies. Last year, Volkswagen, Nestle, Yum and Proctor & Gamble underperformed due to sales in China being weaker than expected. Meanwhile, Mercedes, Starbucks, Adidas and Nike had sales in China that were stronger than expected.*

Recently, Andy Gardner, who is the Portfolio Manager/Analyst of Fundamental Equities for our parent company, AMP Capital, covered the evolution of Chinese spending on the AMP Capital blog. The article, called “The evolution of the Chinese consumer,” explored the recent change in spending habits among Chinese consumers. We would like to provide an analysis for you.*

Chinese Spending Habits by Financial Advisors

According to Mr Gardner, China is shifting from being a “developing market” to a “mature emerging market” or a “developed market.” In a developing market, good brands that differentiate themselves tend to perform better than brands that don’t differentiate themselves. Due to the mathematics of its massive size, performance in China can have a huge effect on earnings. As Mr Gardner says, “…if your brand starts to perform badly in China, you can expect (it) to be reflected in stock performance.*

What’s Happening in China

Consumers in China have learned how to more accurately assess brand quality, identity and value for their money. The proliferation of smartphones has provided the Chinese consumer with more information. They are now looking for a better quality of life.

Assets that focus on health and wellness continue to exhibit strong growth, while products perceived as “unhealthy” are seeing decreased growth. While bottled water, diapers and yogurt grew, instant noodles, sugary tea and carbonated drinks showed decreased growth.

Call One of Our Financial Advisors in Perth

To learn more or for an individual consult, call us today: 1300 787 274.

*AMP Capital, 19 February 2016. Andy Gardner: “The evolution of the Chinese Consumer.”

Do You Fear a Recession in 2016?

If you fear that there will be a recession in 2016, the financial advisors in our Perth office would like to give you some information that may help allay your fears.

This information comes from Dr Shane Oliver, the Chief Economist for AMP Capital, our parent company. Dr Oliver also serves as AMP Capital’s Head of Investment Strategy and Economics. Recently, Dr Oliver provided an extensive document on the AMP Capital website, filled with predictions and projections for 2016.*

Fear a Recession in 2016 By Financial Advisors

In that article, he covered the chances of recession, both global and in Australia. He rated the chances of global recession in 2016 unlikely, while saying that there will not be a recession in Australia in 2016. We would like to provide you with the points made by Dr Oliver.*

Why Dr Oliver Believes a US or Global Recession is “Unlikely”

According to Dr Oliver, the normal excesses that usually precede recessions, such as overinvestment, massive debt growth or inflation, are not currently present. Another precedent that Dr Oliver hasn’t seen: multiple interest rate hikes or other forms of monetary tightening. Dr Oliver also believes that reduced oil prices “suggest” a “big boost to consumers” during 2016.*

Why Dr Oliver Believes There Will Be No Recession in Australia in 2016

Dr Oliver has observed that low petrol prices and low interest rates are providing household budgets with more money. He has also observed that what he terms the “fall of the Australian Dollar” is removing what he considers to be a “major drag on growth.”*

Dr Oliver is also encouraged that non-mining sectors of the Australian economy are beginning to perform at a higher level. He specified tourism, retailing and higher education as doing well and manufacturing as “likely to see a boost.”*

Talk to One of Our Financial Advisors in Perth Today

To learn more or for an individual consult, call us today: 08 6462 0888.

*AMP Capital, Dr Shane Oliver. “2016 – a list of lists regarding the macro investment outlook.” 21 January 2016.

Financial Advisors in Perth: Do Emerging Markets Present Opportunities or Threats?

The financial advisors for our clients in the Perth area would like to discuss emerging markets with you. Recently, our parent company AMP Capital covered this on their website. We would like to provide you with some highlights from the article, written by AMP Capital Investment Strategist Callum Thomas. *

Emerging Markets For Financial Planners in Perth

According to Mr Thomas, investor sentiment in emerging markets is deteriorating, due to somewhat softer growth in those markets. Mr Thomas questions whether or not those fears are warranted. *

A recent survey of AMP Capital fund managers determined that 75% of them perceive the possibility of an emerging market debt crisis or a recession in China to be the tail risk that causes them the most concern. *

According to Mr Thomas, there are four main reasons that emerging markets have “come under pressure”: *

Growth in China is slowing. *

Commodity prices have “collapsed,” affecting the earnings of those who produce commodities. *

Trade has declined, especially in places such as Taiwan and Korea, who are “particularly reliant on trade.” *

Countries such as Russia and Brazil have been forced to raise interest rates due to a “collapse” in their currencies. *

Mr Thomas cites “weakening economic prospects” and “financial vulnerabilities” in emerging markets such as Malaysia, Turkey, Russia, South Africa and Brazil as “fueling fears” concerning emerging markets. He sees asset allocations in those markets as “significantly underweight” and thinks they may get worse. However, he does see them rallying eventually. At this point in time, though, developed economies in general are “faring better” than emerging markets. *

Ultimately, Mr Thomas urges caution and selectivity when investing in shares from emerging markets. *

Call the Professional Financial Advisors in Our Perth Office

At Approved Financial Planners, we offer a full slate of financial services. We have more than 40 years combined experience providing financial services to the Perth market. To learn more or for an individual consult, call us today: 08 6462 0888.

*Callum Thomas, AMP Capital. Emerging markets – threats and opportunities. 13 October 2015.

Why Active Asset Allocation Must Be Done Correctly

Financial planning, in Perth and across Australia, is a field that is constantly evolving. Recently, Dr Shane Oliver, Chief Economist and Head of Investment Strategy and Economics at our parent company, AMP Capital, published a wealth of information on active asset allocation.*

We would like to share some of the information with you to help you understand the importance of allocating your assets correctly.

Active Asset Allocation Must Be Done Correctl


In the long term, growth assets such as shares can provide huge returns due to compound interest. However, growth assets regularly go through periods of high volatility. This causes some investors to react to periods of low value by selling these assets off and resorting to cash investments, which don’t often produce losses but don’t produce long term returns, either.*

The key, according to Dr Oliver, is to use one of two strategies. The preferred strategy is to stick with assets for the long term and take advantage of the growth. However, Dr Oliver also recommends what he calls a “rigorous approach to dynamically varying the asset mix” if one can’t hold onto an investment long term or wants to take advantage of cyclical swings in the markets.*


In Australia, from 1982 until the Global Financial Crisis (GFC) in 2007, shares were in what Dr Oliver calls a “bull market.” Most classes of assets produced ample returns, so the asset mix wasn’t seen as important. Many didn’t want the hassle of actively managing their portfolios, so they didn’t pay attention to the asset mix. However, the GFC forced investors to look at the asset mix as an integral part of an investment portfolio.*

Dr Oliver recommends the long-term approach because so many investors don’t have the time it takes to actively manage asset allocation. However, he does believe that a “rigorous approach” will allow investors to profit from changing their asset mixes to react to and anticipate market cycles.*

Investing: Some Surprising Numbers

Dr Oliver provided a graph showing what $1 invested in 1900 would be worth now if all interest and returns were reinvested the same way. The numbers provide a “graphic” understanding of the power of compounding when added to the returns of the markets. They also show just how badly cash investments “perform.”*

Shares Vs Bonds & Cash Over Very Long Term - Australia

Source: Global Financial Data, AMP Capital

$1 invested in Australian cash and put in a bank in 1900 would have compounded to $224 with an average return of 4.8% per annum. $1 invested in bonds would be worth $802 today at 6% per annum. Those numbers sound pretty good, right? If that $1 had been invested in Australian shares, it would be worth $438,844 at 11.9% per annum.*

Does this give you a grasp of just how powerful long-term compounding is? According to Dr Oliver, “Over all rolling 40 year periods and virtually all 20 year periods, shares trump bonds and cash.”*

It’s all Cyclical

We won’t begin to try and explain it all here, but we want to give you a few highlights. The markets go through cycles. They tend to crash during times of extreme stress, such as world wars, the oil crisis of 1972-74 and the GFC. Many investors convert to cash in times of duress and then back to shares when the crises pass. While this sounds like a great investment, Dr Oliver compares a balanced fund to a fund which reallocates assets to cash.*

Comparison Of Constant Strategy Versus Switching To Cash After Bad Times

Source: Global Financial Data, AMP Capital

If $100 was invested in July 1928, a balanced fund consisting of 75% Australian Equities, 20% bonds and 5% cash, and left intact no matter what the crisis, it would be worth $518,009 today. If that same fund used conventional “switching” according to calendar year, meaning it was flipped to solely cash after any negative year and back to a balanced fund after the next positive year, it would be worth $173,656.*

This illustrates how accurate and adept an investor must be to profit from asset allocation.*

Obtain Expert Financial Advice

At Approved Financial Planners, we not only have more than 40 years of financial planning experience in the Perth area, we also have the resources of AMP Capital behind us. To learn more or for an individual consult, call us today: 08 6462 0888.

AMP Capital. “The perils of switching–why active asset allocation makes sense but why it needs to be done properly.” Dr Shane Oliver.

The Current Financial Year: 3 Tips for Investing Now

One of our more popular financial services is investment planning. We know people in Perth work hard and expect life to repay them in kind. One of the best ways to ensure that you are able to enjoy the fruits of your labours is to invest your money wisely.

Recently, Dr Shane Oliver, Chief Economist and Head of Investment Strategy at AMP Capital, published a blog piece called, “3 tips for investing in the new financial year.” The piece consisted of a short video with three investment tips for the current economy. We would like to tell you about them.*

Investing In Current Financial Year

Turn Down the Noise

Dr Oliver expects plenty of volatility in the coming financial year. However, he also sees the “noise” surrounding volatility as a distraction that can “knock you off your strategy.” In other words, Dr Oliver warns that the “noise” of short term losses can cause an investor to abandon an asset due to short term losses instead of waiting for the asset to rebound in the long term.*

Diversify Your Portfolio

Dr Oliver warns against becoming too “confident in one particular asset” because it can make you too dependent upon the performance of that asset. He prefers a diversified approach that offers protection in case one asset performs poorly.*

Take an Active Approach

Dr Oliver believes that an active approach to investment management, paying close attention to the “asset mix.” *

Call Approved Financial Planners Today

Remember: these tips are general in nature and do not constitute individual advice. We will be happy to provide individual advice, but we aren’t allowed to do so in a blog post because everyone’s financial situation is different.

We can help you strike a balance between the flexibility of an active approach and the stability of “turning down the noise.”

To learn more or for a consult and individual advice, call Approved Financial Planners today: 08 6462 0888.

*AMP Capital: “3 tips for investing in the new financial year.” Dr Shane Oliver.

Getting Divorced? This Information Could be Valuable to Your Financial Future.

We are biased, but we think Perth is the best place to live in Australia. However, even Perth isn’t immune to marriages ending in divorce. While it is important to have the right divorce lawyer, it is also important to have the right financial planner.

Financial Information If Getting A Divorce

According to a recent blog post by the Financial Planning Association of Australia (FPA), one out of three marriages will end in divorce, after an average period of 12.2 years. The average age of divorce for men is 44.1 years, while the average age for women is 41.5 years.*

The FPA notes that in the absence of a prenuptial agreement, known as a BFA or binding financial agreement, the distribution of assets is negotiated. The longer and more deeply lawyers are involved, the more of your assets end up being paid as legal fees. The FPA recommends an “amicable asset split agreement” whenever possible.*

Assessing Assets

The first step, according to the FPA, is to identify and value all assets, income, debts and expenses as individuals and as a couple. It is the nature of divorce cases for everything to be subject to negotiation. A good financial advisor can help you maximise your returns.*

House or Super?

Often, one partner takes the house and the other takes the superannuation fund. According to the FPA, your decision on house or super should be contingent on what you plan to do financially after the divorce is final. That, of course, means you actually have to have some idea of how you want your future to play out. Luckily, a good financial planner can help you out with that.*

Seek Professional Advice ASAP

According to the FPA, the sooner you get professional advice, the better. It is common for a client who hires a financial planner late in the process to wish they had hired one sooner.

To learn more or to hire a professional financial planner, call Approved Financial Planners today: 08 6462 0888.

*Financial Planning Association of Australia: “How to Manage the Financial Fallout from a Divorce or Separation.”

Investing in Infrastructure: Key Drivers

The financial advisors in our Perth office are often asked for recommendations on what companies are the best or most reliable investments. Since everyone’s financial situation is different, we can’t really give any specific advice on this blog or over the phone until we have had an individual consult.

All information on our website is general by law, but we are allowed to provide some insight for you from our parent company, AMP Capital. We would like to tell you about infrastructure investment and why it can sometimes make a lot of sense for those trying to maximise their incomes.

What is Infrastructure Investment?

Investing in Infrastructure

Infrastructure investment means investing in companies that build, operate or supply what is considered to be infrastructure. This includes distributors of gas, water, electricity and oil. It also includes communications, roads, airports, ports and toll roads. *

Many companies involved in infrastructure have long-term contracts, monopolies and built-in protection against inflation and other market characteristics.*

Why is it Seen as a “Good Investment?”

Infrastructure has a self-perpetuating growth cycle. The more infrastructure, the more people; the more people, the more infrastructure is needed. Infrastructure helps grow the economy and the economy helps grow infrastructure.*

There are four main sectors that are considered “infrastructure:” water, energy, transport and communication. Water is expected to see a continuation of demand being higher than supply. Energy will continue to be important. The demand for some forms of transport could increase by 200-300%. By 2019, mobile communication is expected to increase by 1000%. *

Government and Infrastructure

Governments used to provide most infrastructure, but the trend is more and more towards privatising infrastructure. As governments become increasingly cash-strapped, they will continue to be less and less able to provide infrastructure on their own. *

Call Approved Financial Planners Today

To learn more about infrastructure investment, call us today for a free consult. Our number is 08 6462 0888.

*AMP Capital, 12 May 2015. “4 Drivers for Infrastructure Investment.”

7 Reasons Why the Chief Economist of AMP Capital is Optimistic about the Economy

As financial advisors in Perth, it is our job to know everything we can about the economy. At Approved Financial Planners, we spend a lot of time talking to clients and peers about minute details of events affecting the economy.

As you may have guessed, it hasn’t always been fun and games, starting with the end of the mining boom in WA. Even though the economy has been doing much better as of late, there is still no shortage of naysayers predicting doom and gloom for the Australian economy.

Optimistic About The Economy

Recently, Dr Shane Oliver, the Chief Economist of AMP Capital, our parent company, published a piece on the “Oliver’s Insights” section of the company blog called, “The Australian economy – seven reasons not to be too gloomy.” The piece provided contextual background for why the naysayers are so persistent, then gave seven reasons why the economy is in better shape than the naysayers think. We would like to provide a summary for you.*

Frustrated with Slow Growth?

While the March quarter showed a 0.9% growth in the Gross Domestic Product (GDP), annual growth is stuck at 2.3% where economists would rather see it between 3% and 3.25%. If one takes into consideration that net exports were responsible for 0.4% and inventories were responsible for 0.3%, domestic final demand was nearly flat for the March quarter and only 1.1% year to year.*

Home construction is up 9.2% year to year and consumer spending is up 2.6%, but consumer demand is in the red at -0.2% year to year and business investment is at -6.2% year to year, mostly due to the mining industry’s continuing contraction.*

But is it really that bad? Here are seven reasons to be optimistic.

Record Low Interest Rates

Four years ago, it would have cost roughly $750 more per month more to pay a home loan on $350,000. Those who rely on higher interest rates from their bank deposits are losing revenue, but the deficit between what Australians owe banks and what banks owe Australians is approximately $1.2 trillion. That means a lot more in low interest is benefiting consumers than hurting them. Better yet, much of the revenue not going towards interest is being cycled back into the economy.*

Rising Wealth Levels

For the year ending May 2015, housing prices are up 9%. Balanced growth superannuation funds are showing return rates of 14%. The Australian share market is providing returns of 10%. This all benefits spending.*

Petrol Prices Remain Low

Petrol prices are lower than at their peak. While they aren’t as low as they were at the beginning of the year, they are still not as high as they were. This helps households and businesses save money.*

Household Savings

The rate of household savings is currently at 8.3%. This can often support spending.*

Lower Australian Dollar ($A)

This may seem counterintuitive, but when the $A is worth less, it is a boon for market segments such as tourism, mining, farming, manufacturing, education and services. Our tourism and education exports took a bath when the $A was higher than parity, but both have reached record high levels since the $A has gone down. *

Export Volumes

Our export volumes are up 8.1% year on year. The main driver is more completed resource projects and the lower $A making the prices more competitive on the international market. The GDP’s account deficit share is at a 30 year record low. *

Boom Management

We managed the mining boom much better than previous generations managed other booms. Previous booms led to deficit blow-ours, runaway inflation or both. This created an imbalance where all market segments boomed together and subsequently busted together. During the mining boom, there was no imbalance. This has made the economy more stable in the wake of the mining contraction.*

Call Approved Financial Planners Today

Now that you know it isn’t all gloom and doom, call Approved Financial Planners for a free consult. It’s never too early to start planning your finances or your retirement.

Call 08 6462 0888 to learn more.

*AMP Capital, 3 June 2015, Oliver’s Insights. “The Australian economy–seven reasons not to be too gloomy.”

Does Your Financial Advisor Understand Duty of Care?

If you are looking for a financial advisor in Perth, you have probably noticed that there are a lot of choices out there. Financial advisors are bound by a concept called “duty of care.” The concept of having a “duty of care” is communicated in many different ways by statutes involving the provision of financial advice.

Financial Advisor's Duty Of Care

What is “Duty of Care”?

“Duty of care” basically means that your financial advisor is required to look out for your best interests and inform you of developments that may increase the risk of any investment they have recommended to you.*

Swan and Baker Pty Limited vs. Marando

It is best illustrated by a decision which was upheld by the NSW court of appeal last year: Swan and Baker Pty Limited vs. Marando. A financial advisor and the firm he worked for were accused of misleading and deceptive conduct by two investors. They were also accused of a breach of professional duty because they had provided negligent advice.*

In 2008, Mr and Mrs Marando invested $500,000 in the City Pacific Ltd Mortgage Fund on the advice of accounting firm Swan & Baker. The funds were to be invested for 90 days and available for reinvestment after the term had elapsed. Swan & Baker gave the Marandos a copy of a document called the Fund Product Disclosure Statement. Within the statement was a 14-day “cooling off” period that applied to new investments.*

During the cooling off period, the local media published articles questioning the financial security of the company. Immediately, investors wanted their money back. City Pacific Ltd barred investors from withdrawing their funds, but the cooling off period was still in effect. Because Swan & Baker had failed to notify the Marandos of the cooling off period, they didn’t request to withdraw their capital in time and were prevented from doing so.*

The Marandos were awarded $377,390 in damages.*

Contact Approved Financial Planners

At Approved Financial Planners, we take our duty of care seriously. Cases like Swan & Baker vs Marando simply don’t happen with us. To learn more, call 08 6462 0888.

*Sparke Helmore Lawyers, 24 March 2014: “Beyond advice–the financial advisor’s extended duty of care.”

Too Busy to Invest? We can Help.

Financial advisors in Perth are nearly ubiquitous. There are seemingly so many financial planners around that we can get “placed on the back burner” by many. As a result, people who have worked hard to make a good amount of money may just be letting their money sit in bank accounts and making a minimal amount of passive income.

Our Process

At Approved Financial Planners, we make it easy for you to invest. We require an individual consultation and some basic information. We will assess your risk tolerance. When we have taken all of your individual factors into consideration, we will devise a financial plan that makes sense for you.

We will present that plan and with your permission, execute it for you. You spend minimal time and effort but are able to reap the benefits of our financial planning. After we know what you want, we can research investments for you and do all of the paperwork. That means all you have to do is sign the documents.

Too Busy to Invest? We can Help.

At Approved Financial Planners, we help minimise your market risk by diversifying your investment portfolio. We do check in on a regular basis so that we can adjust your investment strategy to fit your goals, current lifestyle and financial situation.

While we make it easy for you, remember that it is always you who has ultimate control over your investments. We are here to advise and put a program together for you, but you are always welcome to tell us if you are uncomfortable with any investment or if you are really interested in an opportunity we may not have mentioned to you.

If you want to start growing your money but think you don’t have the time, one of our financial advisors can help you.

Call Our Perth Office Today

For an individual consult, call Approved Financial Planners today. We can do the work behind the scenes and help you come up with an investment plan that requires minimal time and effort on your part: 08 6462 0888.