Our Approach

We want to give you the best chance of achieving the financial future you want. And we believe that an integral part of doing that is for you to consistently make smart financial decisions.

But what does that mean?

The financial future you want

Clearly, to help you achieve the financial future you want requires us to have:

  • A detailed understanding of where you are now, in financial terms; and
  • A well considered view of how you would like to spend the rest of your life, so that together we can place some reasonable cost estimates on that desired lifestyle.

Should there be a gap between where you are now and where you want to be, we can then jointly explore how to bridge that gap in ways that are most likely to achieve the desired outcome with a level of risk that is acceptable to you.

This "discovery" process requires clients to share information and aspirations with us that previously may have been kept private or may not have even been considered. For many couples, it is often the first time they have shared their dreams for the future in such detail, even with each other.

While the process may sound intimidating, it effectively provides an opportunity to take a journey into your financial future and, if you do not like what you see, to do something about it now when time is on your side.

It’s fair to say there is almost always a gap between new clients’ desired financial futures and their best guesses of what is most likely to happen. Either more wealth is being accumulated than required to meet a desired future lifestyle (most see this as a good problem to have).

Or, as is more usual, there is a shortfall of investment wealth to support a desired lifestyle. Many people prefer not to confront this possibility – they keep their head in the sand, living for today and hoping the future will look after itself. It will, but usually not in the way they have in mind.

But neither gap – too much wealth or too little wealth – is inherently good or bad. They both suggest some changes need to be made so that, based on the best assumptions we both can make, your projected and desired financial future are brought into balance.

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Smart financial decisions...

"Smart financial decisions" cover a wide field. But a decision making characteristic that we wish to highlight here is that you should focus on things that can be controlled or influenced rather than those that can’t. In the context of your financial planning, this suggests a focus on:

  1. Costs – these include all cash outflows over which you have control, including personal expenditure and investment costs. The long term pay-off from eliminating or reducing outgoings that offer little or inadequate expected benefit can be substantial;
  2. Taxes – through careful structuring and planning ahead, together with taking advantage of government incentives, particularly through the tax favourable superannuation environment, significant personal tax can either be deferred or avoided entirely. In addition, a focus on after-tax investment returns rather than headline pre-tax returns is likely to enhance investment decision making;
  3. Risk – although the impact of risk, particularly the risk of personal catastrophe and investment risk, cannot be completely eliminated, it needs to be carefully analysed in view of your long term financial objectives. Sensible decisions can then be made with regard to:
    • how much identified risk you are prepared to accept; and
    • how much you are prepared to forego (in terms of insurance costs or potential investment returns) in order to reduce risk.

With regard to things that you cannot control or influence, the stand-out in a financial planning context is short term investment returns. While many planners consider it is their reason for being, we do not waste either our clients’ or our time trying to predict investment returns or economic conditions – it is not an area where we consider there is any value to add (see "Foundations of Financial Economics").

It is investment risk that drives your long term returns. We therefore focus our efforts on the investment risk exposure you should have. This requires:

  1. Obtaining a consensus on both your attitude to and need for risk;
  2. Once obtained, choosing an appropriate asset allocation; and
  3. Implementing a long term investment approach that:
    • the research of the world’s leading financial economists indicates has provided a reliable return for risk in the past and is expected to do so in the future; and
    • Is consistent with achievement of your lifestyle objectives.

See Foundations of Financial Economics for a more complete explanation of our investment approach. To obtain a better understanding of how we help you plan your financial future, see our Case Study.

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