My job as a ‘cycling financial adviser’ is a bit like a dietitian for an athlete or like being a quality chef – I account for my client’s changing tastes and needs, and I move the ingredients on and off the menu as the seasons change. You don’t eat the same meal day after day, year after year, or let others set your meals without involving you in the choices, so why do it with the biggest asset you’ll ever own outside the family home then? Setting-and-forgetting doesn’t seem so smart after all does it?
At KOM Financial Advice, we do a lot more than ‘Income Protection For Cyclists. I am constantly assessing the economy and formulating a view on how it’s performing, and what I think it may do in the short, medium and long-term. I am constantly assessing how Australian and International shares, term deposits, and other investments, and fund managers that invest in them, are performing against the way the economy is moving, and then make suggestions on how we should respond. Now, that doesn’t mean I call my clients every day, or every week, because I don’t. But it does mean that in our regular reviews my clients and I will talk about what their view of the economy is, the political landscape, their family needs and anything else that may relate to money and investing. We then talk about my views of the same. Sometimes clients just do as I suggest and sometimes it’s a to-and-fro conversation but it’s always a genuine conversation.
So, what do most Super funds actually do with your money? They prepare a structured, fairly consistent set of investments for the benefit of their clients. Sounds pretty good, but is it? A lot of funds benchmark (compare) themselves against CPI plus x% ‘over the cycle’. What this is really saying to me is “give me your money for 7 years and judge me over that time frame, but don’t complain until the 7 years is up”. A lot benchmark themselves against each other too. “We did ok this year, but better than the other mob” or “we had a bad year this year, but not as bad as the fund across the road, so you’re in good shape here”. The part that is important is that a lot of funds have a set range in which they can move your investments, no matter what they think.
For example, you may have a Balanced Fund – 50% shares and 50% non-shares – and if your Super fund believe that the share market is going to have a great year, then they may only be able to add another 5% or so of shares. That won’t change too much. What if they think it’s going to be a terrible year? Maybe they can reduce your exposure by 5% then. The result isn’t as bad as if it were still 50%, but it still isn’t good at 45%. Now, it’s risky to go to the extremes – moving from 50% up to 80% or down to 20% for example is a risk – but it may be the right risk at the right time. It may not be too, but surely it’s better to have that choice, and have a genuine conversation about it, then just to leave it alone without any clue of what’s actually being done.
So now what? If you want to be a bit more involved in your money, or have someone talk to you about it and involve you in conversation, choices and ultimately your future, then we just may be the right partner for you.
You can contact us on 13 000 KOMFA (13 000 56632), email@example.com or even chat to me (Dan Corbett) on one of the SKCC rides I do each month.