Its that time of the year when we dust off our work in progress lists and become productive again!
After the whirlwind of 2017 we look to the year ahead and map out our plans.
In this newsletter we cover:
- READING INVESTMENT TEA LEAVES – WHAT’S IN STORE FOR 2018
- STRATEGIC ADVICE THEMES FOR 2018
- TRANSITION WEALTH EXPANDS
- OUR VISION
- A WARM WELCOME TO CLIENTS
Reading investment tea leaves – what’s in store for 2018
2017 was an interesting year. It was profitable for most investors and it was common for us to report double digit performance figures. But should we expect another good year?
Worrying is an important job we perform on behalf of clients. We worry about the safety of their money, where to get the best returns and how to protect their financial wellbeing.
The good news is that 2018 appears to be a year in which global economic growth will continue.
Global investment giants Blackrock, believe that people are underestimating the strength of the global economy and that investors will be best rewarded in equities, with a preference for Europe and Asia rather than the US.
This perspective on growth is supported by the International Monetary Fund (IMF) who, in their World Economic Outlook statement published in October 17, forecast world growth strengthening to 3.7% pa. Again they believe Europe and Asia will be stronger than the US.
A quick survey of financial markets also supports the growth story with positive yield curves in Germany, the US, Japan and Australia. This is a sign that people believe economies will improve (and that inflation may retum). It is worth noting however that short term negative interest rates still exist in Germany and Japan . A negative interest rate means the borrower actually gets paid interest for borrowing money rather than paying, This type of radical monetary policy highlights risk in these areas and should not be taken lightly.
The above views need to be tempered with acknowledgement that geopolitical risks are high. Whether it be Trump, North Korea, China or domestic politics, We can rely on the press having a field day and trying to unsettle us: the hardest part will be looking through this to determine whether events are sideshows or worth worrying about.
Economic growth is one thing but investment performance is another. As portfolio architects we put the microscope over the various exposures held by private investors. Super funds and Pension funds. We believe that 2018 will be constructive for investors who tread carefully and approach investment risk with their eyes wide open. That is to say it is important to review portfolios and not be complacent.
Strategic advice themes for 2018 – what we look at in your personal financial review
Strategic advice is all about anticipating the changes you are planning personally to ensure that your financial arrangements are optimised to meet these changes. Personal change might include business retirement, the kids leaving home (or reappearing), changes to your family or relocation.
In addition to planning for “life” changes, we expect to address the following in 2018:
Review whether you can benefit from lower fees
There is a huge amount of competition across the financial services industry at present and new products come to market regularly. Last year we completed a survey comparing fees for portfolios of $500k – $2m set up 5 years ago with newer options. Fee savings ranged from $1,000pa to $7,600pa.
Improving investment portfolios through enhanced risk management
Further to the discussion regarding markets, we will look to adjust portfolios in order to better manage risk. This is all in the name of protecting and enhancing lifestyles.
Leverage the windfalls from strong property markets
Many people have seen the value of their properties increase significantly. For some this is an opportunity to take the next step with their wealth and create a nest egg that will underwrite their future lifestyle. Understanding and managing risk is key.
Navigate super & pension rules to create a low-tax future
Rules change regularly here and our job is to help people get the best advantages out of the “system” so they can enjoy all the benefits of this highly attractive low tax environment.
Encouraging retirees to spend more money!!
There are two key benefits of working with a good financial adviser. The first is we help you make more money through better financial decision making (Vanguard calculate this to be 3%pa). The second is that we help identify whether spending habits are sustainable thereby encouraging people to live.
Insuring families against illness and injury
Most people with young families would find themselves in hot water if their household income was disturbed by illness or injury of either parent. In addition to helping these families capture their incomes and convert them into wealth, we also help protect against life’s risks by putting in place insurance plans that provide cover that truly protects.
Encouraging discussion and action around intergenerational wealth transfer
Almost everybody we speak to can recount a story where a member of their family is remembered for poor financial decisions rather than the person they were. Quite simply, we believe it best to discuss & plan how you will transfer wealth between generations whilst you are alive to ensure your loved ones, and your legacy are looked after.
Transition Wealth expands
We are pleased to announce an important development within Transition Wealth. We have built on our “family owned” foundations and have expanded to become a cooperative.
January sees us welcome Andrew Quoyle and Simson Jingga.
Andrew & Simson bring many years of experience to Transition Wealth with Andrew having a unique background in financial markets and Simson being an expert in operations. Most importantly they share our passion for good advice and are their client’s greatest advocates.
This development is great news for clients as well as the business. The cooperative expands the collective intellectual capital, capability, resources and will enable us to unlock additional opportunities for clients such as preferential pricing of insurance and access to specialist investments. At the same time, the fact that the business remains family owned ensures that the client’s agenda is the only thing that matters.
The International cooperative alliance defines a cooperative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise”.
The vision for the Transition Wealth cooperative is therefore to meet the full spectrum of client & adviser needs in an ever changing world.
Together we will navigate changes in technology, the corporate environment, social & political paradigms, globalisation and the resulting environment. Put simply, the cooperative will help people make good financial decisions and provide support and assistance to help our community thrive.
A warm welcome to clients
I would like to close with a big thank you & welcome to all the clients who have joined or are joining us. Transition Wealth exists for your benefit and would not exist without your custom.
On behalf of the team, we are humbled by the responsibility and energised to deliver value to you throughout 2018 and beyond.
In addition to value, we’d like to 2018 to be fun and meaningful. With the new year upon us, we happily open the doors and declare ourselves open for business!
Scott Hammond, CFP, JP
Director & Financial Adviser