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Archive for financial services Perth

What Falling Oil Prices Could Mean to Your Investments

We provide a full menu of financial services in Perth. While we can only provide specific information and recommendations during an individual consult, we do have access to a lot of information we can pass on to consumers. We came across some information we think is relevant to a lot of Perth households: the effects of falling oil prices.

Financial Services Provider Discuss Failling Oil Prices

Recently, in his column “Oliver’s Insights,” Dr Shane Oliver covered the effect of falling oil prices. Dr Oliver is the Chief Economist for our parent company, AMP Capital. He is also the AMP Capital Head of Investment Strategy and Economics. His article was called, “The plunging oil price – why and what it means.” We would like to pass on some of the information to you.*

In two years, oil prices have gone down 70%. This is because supply has surged in comparison to demand and because the US dollar is high. The price could fall as low as $20 per barrel, but Dr Oliver believes the supply will decrease soon.*

Dr Oliver feels that oil producers have suffered from the fall in prices, but that the situation will eventually foster growth. Currently, the average Australian household is spending $14 per week less on petrol than it did two years ago.*

Why Have Oil Prices Fallen?

Dr Oliver attributes falling oil prices to four main factors. Emerging world growth is beginning to level off, lowering demand for oil. Middle East politics also play a role. The re-emergence of Iran has increased supply. Other political factors are more complicated.*

Technology has also played a role as many producers have been able to maintain production even in the face of low oil prices. The rising US dollar has also affected commodities worldwide.*

What Does It Mean to Investors?

Dr Oliver feels that “the negative effects on producers is likely to predominate the positive impact on consumers” in the share markets.

Call Approved Financial Planners in Perth Today

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

*AMP Capital, Dr Shane Oliver. “The plunging oil price – why and what it means.” 28 January 2016.

Do You Need Steady Capital or Sustainable Income?

As providers of a wide range of financial services in Perth, we have helped a lot of your neighbours achieve their financial goals. However, there is no such thing as a “one size fits all” investment because everyone’s individual situation is different.

Steady Capital or Sustainable Income

One of the basic questions we like to ask our clients is whether they are looking for steady capital or sustainable income. Recently, our parent company, AMP Capital, addressed the effects of the low cash interest rate on cash investments. While a low cash interest rate is good for the economy, it tends to reduce the value of cash investments such as term deposits.*

As you probably know, the cash interest rate is still at a record 2.0%. For comparison, it was at 7.25% in August 2008 and 4.75% in November 2011. *

Cash Investments

Term deposits and other cash investments have traditionally been regarded as “safe” investments because the value of those investments is usually stable. Historically, interest rates have been enough, even when in a “low” cycle, to provide adequate return on investment (ROI). However, interest rates are now at record low levels.*

Consequently, cash investments are now providing returns that are barely more than the current inflation rate. In other words, they provide steady capital for the short term, but not sustainable income over the long term. *

Investment Portfolios

Investment portfolios that are diverse and well-managed, containing infrastructure, properties, equities and corporate bonds, are now able to provide an income stream that is reasonably predictable and attractive to investors.*

However, investors have to understand that portfolios such as those mentioned above are subject to short-term volatility.*

Call Approved Financial Planners Today

Everyone’s financial situation is different. The information we provided in this piece is good general information. However, we can’t give individual financial advice until we talk to you about your individual finances. To learn more, call 08 6462 0888 today.

*AMP Capital, “Is sustainable income or steady capital your goal in a low interest rate environment?”
https://www.ampcapital.com.au/article-detail?alias=/site-assets/articles/media-releases/2015/2015-05/is-sustainable-income-or-steady-capital-your-goal

Techniques for Building a Solid Financial Foundation

We offer a full menu of financial services from our Perth office. We have financial planners and financial advisors who can help you plan your financial life from now through retirement. We can’t give any specific advice on this blog, but we would like to give you a general idea of what it takes to build a solid financial foundation.

The more solid your foundation, the easier it is for us to help you attain your financial goals. Here are some of the fundamental techniques that we can help you execute.

Building a Solid Financial Foundation

Budgeting

If you aren’t satisfied with your budget or your ability to create one and stick to it, we can help. If you have a consistent income and can stick to a consistent budget, it allows you to know exactly how much you can afford to invest every month. Once we know that, we can offer further assistance.

Managing Cash Flow

This is tied into budget, but also into your investment strategy. For many, budgeting and cash flow are a constant tug-of-war between enjoying life now and having enough for retirement later. Our financial advisors can take a look at your finances and help you come up with a plan that is comfortable for you.

Your Emergency Fund

You never know when an emergency is going to drain your resources. While each financial situation is different, an emergency fund with enough money to cover your expenses for between three and six months can bring you peace of mind, knowing you are prepared in the case of a financial emergency.

Increasing Income

Our financial planners can suggest financial strategies that can help you increase your income. This can be through passive and portfolio income, reducing spending that gives you nothing in return in favour of spending that produces a return on your investment, finding ways to provide more net income from your business and reducing your expenses and taxes.

Call Approved Financial Planners to learn more: 08 6462 0888.

What the Government Says about Finding a Financial Advisor

Financial advisors have become ubiquitous in Perth and for good reason. The current financial climate can be confusing with so many options and variables. More and more people are turning to professionals for help in managing their money. There are a lot of financial advisors out there and we are constantly asked how clients know they are choosing the “right” financial advisor.

We thought it might be productive to provide you with what the government has to say about finding a financial advisor. Remember that all information here is general and that none of it should be taken as specific financial advice or as a substitute for a personal, one on one meeting with a financial planner.

What the Government Says about Finding a Financial Advisor

Referrals

The Australian Securities and Investments Commission (ASIC) notes what they feel are the two best places to find referrals: The first is professional associations. They mention the Financial Planning Association and The Association of Financial Planners, for example. Their second choice is to ask people you know if they are satisfied with their financial planner. When you find one who is happy with theirs, you can ask for the planner’s name.*

Financial Services Guide (FSG)

Each financial advisor will have a financial services guide. This guide will contain information such as a list of services, how much those services cost and if the advisors receive any benefits or payments such as commission for their work. It will also tell you who owns the company the advisor is working for. Some will have links to companies with which they work, which can affect the number of services they are able to offer.*

Only Hire Licensed Advisors

Perth financial advisors, as must those anywhere in Australia, must either have an Australian Financial Services Licence (AFSL) or be an authorised representative of a company that has an AFSL.

The business the financial advisor represents is also required to either have an AFSL or be an authorised representative. ASIC Connect has a list of all licensed Financial Advisors and authorised representatives in their professional registers.*

If an advisor is an “employee representative,” their employer will hold the AFSL and they will not show up on the professional registers. ASIC recommends that you always make sure that your financial advisor is licensed to do the work you need.*

Lawyers can often Provide Financial Services

Some lawyers are registered and licensed to offer both legal and financial services. Any lawyer who provides personal or general financial advice must hold an AFSL, work for a business with an AFSL or represent a business with an AFSL. This can be verified in the professional registers. Lawyers who are providing financial advice without an AFSL can be reported to ASIC.*

Experience and Qualifications

ASIC feels that it is essential to check any prospective financial advisor’s experience and qualifications. They recommend that you make them focus on strategies and services they can provide for you as opposed to merely suggesting products. They also suggest that you prepare yourself with a list of questions to ask your prospective financial advisor. You may find a list of those questions here: https://www.moneysmart.gov.au/investing/financial-advice/choosing-a-financial-adviser/questions-to-ask-a-financial-adviser*

Current Products

ASIC also recommends that you make sure your financial advisor is able to provide advice on current financial products. This can be especially relevant for any superannuation advice. They also recommend that you steer clear of any financial advisor who only has one product or solution.*

Estimate of Fees

ASIC recommends that you ask for an estimate of fees to give you an idea of how much you will be paying for your advice.*

Why so Many People in Perth Call Approved Financial Planners

At Approved Financial Planners, we make it a point of pride to deliver the finest customer service and financial services in Perth. We have more than 40 years combined experience in the financial sector.

Thanks to our association with AMP, we are able to offer a full menu of financial services, including wealth protection, superannuation, self managed superannuation, retirement planning and estate planning, all from our office in Perth.

To learn more about the services we offer and what we can do for you, call Approved Financial Planners today: 08 6462 0888.

*ASIC, MoneySmart. “Choosing a Financial Advisor.”

AMP Chief Questions Industry Definition of “Financial Advice”

At Approved Financial Planners, we offer financial planning and other services to residents in the Perth area and across WA. We now have the benefit of having AMP Australia as a parent company. We chose to partner with AMP because they embody the same commitment to professional, ethical service that we do.

Industry Definition of Financial Advice

We are on the side of high standards for the entire financial planning and financial advising industry, making AMP the perfect parent company for us. Consequently, we were proud to hear of remarks made by AMP Limited CEO Craig Meller recently, addressing what our industry currently defines as “financial advice.”

Mr Meller was speaking about vertical integration, a model practised by AMP. During the speech, the subject of financial advice arose. He questioned the nature of financial advice as practised by many in the industry. According to Mr Meller, “Too many…self-interested parties…dumb down the definition of financial advice to (only include) product selection.” *

Mr Meller would go on to opine that this kind of “advice” was usually meant to “justify a certain position” and that it is “a million miles away from where the true value of advice lies.” *

Mr Meller stressed the point that vertical integration was a business model that had enabled AMP to not only provide more services, but to raise standards as well. Using the vertical integration model, AMP has been able to invest more money in financial advice and bring more financial advisors into the industry than any other financial services organisation. *

Mr Meller also remarked that the business model of vertical integration enabled AMP to train financial advisors to higher standards than industry norms and then stand behind that advice. He would go on to mention that AMP supports higher standards for the financial services industry, especially pertaining to entry-level standards. *

To learn more about Approved Financial Planners and AMP, call 08 6462 0888.

*Money Management, 30 September 2014. “Advice about more than product selection.”

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.

Reform of Educational Requirements for Financial Planners

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.

We have long felt that the solution is to require more field-specific education to become a financial planner or adviser. We don’t like the perception that a person can take a weekend course and become a “financial planner.” We don’t like it when uninformed or misinformed “financial advisers” make recommendations or take actions that reflect poorly upon our industry.

We feel that stronger educational requirements are the best way to increase the level of service and commitment to excellence in our chosen field.

The Proposal

Here are the basics of the proposal.

Approved Degree: By 1 January of 2018, entry level financial advisers and planners will be subject to a minimum educational standard of an AQF7 level degree for eligibility to dispense tier 1 financial advice. In addition, they must prove that they have one full-time year of “relevant experience” within the previous three years.*

Existing Financial Planners not grandfathered: Those who are already financial planners have until 1 January 2019 to become compliant with the new educational standards.*

New Curriculum: Financial adviser education within a holistic framework will replace the current RG146 curriculum. In addition, the Financial Planning Education Council (FPEC) will approve a new AQF7 level curriculum.*

CPD Requirements: 90 points or hours of continuing professional development (CPD) courses will be required for all financial planners every three-year period.*

No National Exam: Those who successfully complete the new requirements for certification will not be required to take the national exam.*

Implementation of Co-Regulation Design: A framework will be developed by which “recognised” regulatory bodies can play a major role in helping to regulate and achieve consumer confidence and consumer protection requirements.*

Professional Bodies: Qualifying criteria such as those from the Professional Standards Council will be used to recognise professional bodies.*

Certification Required: The terms “financial adviser” and “financial planner” will only be allowed to be used by certified members of recognised professional bodies.*

Redefinition of General Advice: General advice will be known as “general or product information” and will only include factual explanations and/or information pertinent to financial products.*

What We Think

This proposal would provide a great service to the industry. We are firmly committed to supporting the strengthening of professional standards.

Raising standards would remove a lot of risk for the consumer. At this point, minimal industry standards are so minimal that many people calling themselves “financial planners” or “financial advisers” are not qualified to give high-quality advice to consumers. This creates too much risk and uncertainty for consumers because they don’t know if their financial planner is going to help them or lead them astray. Higher standards will eliminate those who don’t know what they are doing.

Second, as educational standards are raised, performance rises. When performance rises, the customer wins.

Call 08 6462 0888 today.

*Financial Planning: “PJC submission calls for a lift in standards.”

The Government Wants to Make Us Smarter About Money

Those who offer financial services in Perth and across Australia are applauding an ongoing government effort. Courtesy of the Australian Securities and Investments Commission (ASIC), Australians are going to continue to become smarter about money. ASIC plans to enhance their website called “Money Smarts” and extend the reach of its Money Smarts program to more schools than it currently reaches.

Financial Literacy in Australia

The changes are part of a three year program that is designed to help raise financial literacy in Australia. The Organisation for Economic Co-operation and Development (OECD) is teaming up with ASIC to provide a national framework that encourages the government, business and education sectors to cooperate and help improve financial literacy.

This news comes on the heels of a recent OECD survey in which 15 year-olds across the globe participated in testing to determine their financial literacy. Australians came in fourth, only to China, Belgium and Estonia, out of 18 highly-developed countries. The baseline or average was 500. Australia scored 526 while China scored 603, beating second place Belgium by 62 points.

These changes are going to happen, even though funding for the program was cut 12% in the May 2014 budget.

Financialisation

There is a new term called “financialisation.” It refers to a trend towards people having to make far more financial decisions now than they did in past eras. Modern consumers now have to choose how much to borrow to buy a home, where to borrow it from and whether the fixed or variable rate is a better deal. There are now internet plans, mobile phone plans and retirement plans.

Financial products such as insurance are also becoming more complicated. Retirement is more complicated because of superannuation, in which one can choose what fund they want, or if they want to create their own Self Managed Superannuation Fund (SMSF).

Don’t Go it Alone

While we encourage financial literacy, we strongly encourage that you call a professional financial planner today. 08 6462 0888.

Comparing Income Protection Quotes: Know the Pitfalls

Many Australians purchase income protection insurance and think they are fully covered, only to find out that their policy only provided partial protection and that they don’t have enough to cover all of their expenses. While it’s great to compare policies, a lot of people look for the wrong things and end up making bad choices.

Here are some pitfalls of comparing insurance protection quotes.

Comparing Income Protection Quotes: Know the Pitfalls

Limited Payment Periods

If one is permanently disabled and can no longer produce income, they would expect to be paid for the rest of their lives. However, many policies cap payments to periods of one or two years. We won’t recommend any particular length here, but be sure that you know exactly how long you will be paid in the event that something terrible does happen to you and you can no longer work.

Note that payment is often capped depending upon occupation.

Payment Period Differentials

This is a partial version of limited payment periods. The company pays different lengths of time for different conditions. An example would be paying lifetime benefits on accidents but only two years on illness. If your policy has differentials, make sure that you know exactly what is defined as “illness” and what is defined as an “accident.”

Also, beware of “secondary disabilities” which are caused as a consequence of the original problem. This may not be included in your cover.

Non-Renewable Policies

Imagine paying premiums for years, only to be told you are no longer eligible for insurance. This can happen with some policies. Some plans are renewable and some are not. It is helpful to know the difference.

Non-Indexed Plans

Some plans are indexed to inflation, while some are not. Inflation has historically happened nearly every year; there is no reason to believe that it won’t continue to be an issue.

Limiting Definitions

Many policies limit the definition of disability by excluding those who can physically work in their profession but only on a part time basis. If your policy has an income-based definition, you can be compensated based on your ability to earn.

Call the Professionals

At Approved Financial Planners, we make sure that you know exactly what you are getting, no matter what cover you choose. Save the “surprises” for Christmas and birthdays. Call us today: (08) 6462 0888.