Insight

Autumn 2017

65 or 67, EARLY RETIREMENT PLANNING IS ESSENTIAL

Prime Minister Bill English has announced the Government aims to move the retirement age from 65 to 67 years by 2040.

Aucklander Charles* turned 65 in 2016 and owns his own home. However he still works almost full-time to supplement his current fortnightly NZ Superannuation income. Charles and his wife receive the current pension rate of $295.97 each per week but still struggle to get by on this.

Charles says: “I don’t see what all the fuss is about moving the retirement age to 67 in 2040, because even today I know I’m going to be working well into my seventies. Selling the house isn’t really an option because we have to live somewhere, and we’ve probably still got a couple of decades of supporting ourselves ahead of us.”

Effective and early planning, and investing for your retirement can lead to a work-free or better than average retirement.

It can put you in a place of relative strength and independence from political decisions. It gives you choices now and in 2040, compared to those who haven’t planned for their retirement and who may be limited in their retirement lifestyle options.

If you’d like to talk to one of our Authorised Financial Advisers about your long-term financial goals or retirement contact us today.

* Name has been changed.
Source: www.workandincome.govt.nz

INVEST TIME WITH AN INVESTMENT SPECIALIST

Your financial adviser is more than an expert who understands the difference between stocks and bonds, or how to create an investment diversification strategy. They are experienced financial practitioners with access to the latest industry data and information.

The combination of expertise, experience and information means your financial adviser is well equipped to:

  • Help you develop a financial roadmap that helps achieve your short, medium and long-term goals 
  • Understand your risk profile and ensure your investment portfolio is compatible with your personal appetite for risk 
  • Advise you on your diversified portfolio and the financial products which best suit your personal circumstances 
  • Guide you on your investments and asset allocation 
  • Educate you on how to make sound financial decisions

A good financial adviser is more focused on matching strategy and services to your personal needs, than on selling you products.

Enjoy the benefits of our financial health check service to help you get financially on track and call us today on 0800 438 238 or click here to send our team an email.

 

A BANK* OF BLACK SWANS

A “black swan event” isn’t a ballet. It is an unpredictable or unforeseen event, and in 2017 there may be plenty:

Election year in New Zealand. Donald Trump in America. Disruptive innovators (like Uber) in most sectors. Brexit. Interest rates rising.

We can’t predict with any certainty how things will unfold, but a good plan can help see you through most eventualities. Here are two ways that can help you prepare:

  1. Expect the unexpected: Markets will predict one outcome and then react with volatility when surprised by the result. Plan with a long-term view in mind, and diversify your portfolio.
  2. Protect your assets: Make sure your insurances are up-to-date and be decisive, make sure you’re properly covered for possible eventualities.

If you would like to discuss your investment options or how you can protect your assets with an adviser please click here or contact us on 0800 438 238.

*One of several collective nouns for swans.
Source: www.abc.net.au

LOOKING OUT FOR MUM AND DAD

walking forward on path

The United Nations predicts that by 2050, life expectancy will increase on average by 22 years in developed countries like New Zealand.

Living longer is good news, however as a result, children and grandchildren may need to help out with the cost of looking after ageing parents and other relatives.

The International Monetary Fund says longevity could pose something of a financial risk to individuals, who could possibly find themselves a little short on retirement resources.

“If individuals live three years longer than expected – in line with underestimations in the past – the already large costs of ageing could increase by another 50%, representing an additional cost of 50% of 2010 GDP in advanced economies…” says an IMF report titled ‘The Financial Impact of Longevity Risk’.

As a caring child you may need to factor in looking after your parents, it’s important to take action now, here’s how:

  • Consult an expert on what eventualities your planning may need to anticipate
  • Cultivate savings over spending 
  • Take advice on the best investments needed to help you achieve your long-term goals, according to your risk profile
  • Insure yourself against risks that could potentially set you back in your financial progress

Plan for the future you want! Contact our team today on 0800 438 238 or click here to send an email.

Sources: www.un.org & www.imf.org

ENSURE YOU TALK TO AN INSURANCE EXPERT

Most of us know insurance is a smart idea, but there are many that still take a DIY approach instead of engaging the services of a financial adviser.

A good insurance adviser considers your specific circumstances and helps you choose the best insurance policy for your needs, at a fair and reasonable price. They also help make to make the claims process as smooth as possible.

Insurance advisers, who specialise in personal insurance have the expertise and access to product information to be able to:

  • Assess your personal circumstances, including dependants, and liabilities and advise you on the best insurance products for your situation 
  • Understand what risks you may be exposed to, and advise you accordingly 
  • Help you to choose insurance products that are a right fit. For example, a premium may be lower on one policy, but there may be an excess to consider. Your adviser shows you what to look for before you sign on the dotted line
  • Help you liaise with the insurer if the unexpected happens and you need to claim under your policy

Enjoy the benefits of our financial health check to help you get financially on track and call us today on 0800 438 238 or click here to send our team an email.

HIP, HIP, HOORAY!

A self-employed Wellington man who needed a hip replacement operation demonstrates the value of consulting his adviser.

AdviceFirst adviser, William Moala takes up the story. “My client discovered he needed a hip replacement operation before he had completed the waiting period on his income protection policy.

“Surgeons said he would go on the hospital waiting list for up to 8 months. After the operation he would still need to go through a recovery period. For a self-employed person to be away from his business for that length of time is both psychologically and physically difficult.”

William worked it out. He says: “I showed the insurance company that it would likely cost them less if they paid for the client to get the procedure done as soon as possible through the private healthcare system.”

“Even though it was well outside the scope of the policy, they agreed with the business logic for this particular case. My client had the operation done privately and he’ll be back in his business even before the waiting time for the public healthcare system is over.”

So even if your circumstances fall outside the terms and conditions of your policy, contact your adviser as early as possible if you think you may have a claim. “Put your adviser to work and let them ask the questions. You might be pleasantly surprised,” says William.

Click here to email our team about your insurance policy or contact us on 0800 438 238.

ARE YOU OVER BEING UNDERINSURED?

 Quote image

We know we need insurance but we may be tempted to go with what looks good – we may put price and convenience ahead of choosing the right insurance product that gives us the cover we need when the unexpected happens.

We avoid the paperwork, don’t read the terms and conditions and skip the small print. We also avoid advisers because they want to talk about difficult topics when we’d rather be doing something else.

According to a report commissioned by the Financial Services Council – the People Insurance Gap – Exploring Underinsurance in New Zealand – there is evidence of widespread inadequate insurance, with 54% of Kiwi main income earners being more than 20% underinsured for life insurance and 43% being over 40% underinsured.

Additionally, people are not reviewing their insurance when their personal circumstances change.

Prepare now for the unexpected. Talk to us today about how we can assist you with planning for the future.

When life changes it may need to be reflected in your cover. Call us now on 0800 438 238 or click here to send an email and find out how to get the cover you need.

Source: Exploring Underinsurance within New Zealand, Massey University study for the Financial Services Council. FSC Underinsurance Project 2011. Michael Naylor, Dr Claire Matthews, Dr Stuart Birks, School of Economics and Finance, Massey University of New Zealand

SHAKEN NOT STIRRED

The 7.8 magnitude earthquake that hit in November last year has thrown up some red flags that business owners with business interruption insurance need to know.

AdviceFirst commercial insurance specialist Shona Pope says many business owners were not aware of the natural disaster excesses introduced as a result of the earlier Christchurch earthquake.

For example, a commercial building with a sum insured of $1M could have an excess of between 2.5% and 10% depending on age and location.

Shona explains: “If your office is intact, but you are unable to get into the building to run your business due to earthquake damage in the surrounding area, an insurance business interruption policy may have a ‘prevention of access clause’ that allows you to make a claim. However it’s important to note that any ‘prevention of access’ caused by a natural disaster can have an excess stand down (not covered) period, depending on who the insurer is. Generally, it is between 21 to 24 days.

“For instance, the Wellington premises of one of my clients was not damaged in the earthquake, but were are unable to conduct business from the premises because the neighbouring building had been earmarked for demolition.”

“As a result, while they don’t have a claim under business interruption, because they didn’t suffer any physical damage, they can claim under the business interruption contingency, which is an option that could pay them out between 5 – 10% of the sum insured on their property,” says Shona.

The same issues of not having a claim under business interruption insurance occurs when, for instance, an earthquake stops customers coming to you.

For business interruption to be activated, you have to suffer material damage to your property. If you haven’t suffered material damage, then the contingent business interruption could kick in, but it is a relatively low sum based on a percentage of your sum insured.

Shona says it’s vital to make sure you have the right numbers for your sum insured and gross profit figures: “Don’t rely on estimates. Instead, I recommend you get accurate figures from a professional valuer and your accountant,” says Shona.

It is imperative that you read the policy document to understand the terms and conditions of your policy and talk to your adviser if you are unclear on the scope of cover under your policy. Click here to email our team about your commercial insurance needs.

Your Adviser has a disclosure statement that is available on request and is free of charge. The information in this article is of a general nature only and is no substitute for personalised advice. If you would like advice that takes into account your particular financial situation or goals, please contact your Financial Adviser. The information has been published in good faith and has been obtained from sources believed to be reliable and accurate at the time of publication (March 2017).

Your Adviser has a disclosure statement that is available on request and is free of charge. The information in this publication is of a general nature only and is no substitute for personalised advice. If you would like advice that takes into account your particular financial situation or goals, please contact your Financial Adviser. The information has been published in good faith and has been obtained from sources believed to be reliable and accurate at the time of publication (March 2017). The opinions contained in this document reflect a judgment at the date of publication by AdviceFirst Limited and are subject to change without notice. Past performance is not indicative of future performance and is not guaranteed by any party. While care has been taken to supply information in these articles that is accurate, no entity or person gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way including from any error or omission.

Let's talk