Over the last five years, Australian investors have seen a significant fall in the returns on their cash and term deposit holdings, and in many cases are experiencing negative real returns for the first time. This has created financial stress for many clients, especially retirees who may need to draw on their capital in the short term to maintain their lifestyle.
Floating rate deposit products are new to the financial advice segment and their appeal is becoming apparent, enabling clients to automatically take advantage of interest rate rises, without having to roll over every 90 days.
As advisers, we know how important it is to stay on top of our client’s day-to-day cashflow.
Having a clear understanding of a client’s cashflow not only provides a snapshot of how they’re tracking against their financial goals right now, but also highlights their ability to take advantage of different strategies to grow their wealth into the future.
The web, regulation and our increasingly self-directed consumer market have forced the advice industry to evolve or die. As a result, the quintessential “risky” or risk adviser is being replaced by a new, savvier species – the Risk Professional. And they know that a risk discussion that goes deeper than just insurance is key to their survival.
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood… Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
Inflation is always a potential threat and can make a drastic difference to investors’ outcomes. Its ‘real’, ie after-inflation, returns that matter to investors. Real returns are particularly important for retirees, as they don’t have a rising income to provide protection against inflation and must rely on their investments’ performance.
With uncertainty over the prospects for global equity and fixed income markets, many advisers are considering how they go about constructing portfolios to meet the new investment environment.
In an investment world that is no longer ‘vanilla’, neither should the solutions be, writes Chad Padowitz, Chief Investment Officer, Wingate Asset Management. Here are three ways to combat retirement’s big issues.
Prepare your clients and yourself for reporting season by reviewing the cash position of the companies in their portfolios, says Skaffold’s general manager, Chris Batchelor.
The ability to manage cash flow, tax effectiveness, interest rate movements and plan for the unexpected are critical factors to business success explains Daniel Lowinger.
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