Global advisory service
Our global advisory service is a more traditional financial planning solution.
It is offered to people that do not really know where to start. There are a number of steps involved in building wealth and some of the earlier steps might not actually involve any investing. However, that's not to say that you do not need any financial planning advice. Our global advisory service involves obtaining a detailed understanding of your current position, future goals and plans, your appetite for risk and many other factors. Once we have a detailed understanding, we will develop a simple to follow financial plan.
Our investment philosophy
Our investment philosophy is very focused on the risk and return payoff. Some key beliefs include:
- Safe but sure – Building wealth involves setting goals and designing the least risky plan that will achieve those goals. Quite often, our plans to accumulate wealth safely and steadily might be seen as a 'boring' strategy – but they work. Successful wealth accumulation doesn't require exclusive investment opportunities, complex financial products or picking the next Microsoft. It is okay to invest in these more 'exciting' investments but make sure your core investment strategy will achieve your goals. "Getting rich quick" often involves taking on unacceptably high risks.
- Invest in cheap index funds – Generally, managed funds can be classified into two types; actively managed and passively managed. Actively managed funds employ professionals which assess certain investments (stocks) and aim to achieve a certain benchmark return (i.e. most aim to outperform the general market). Passively managed funds aim to achieve the market return by investing in the stocks which make up a certain index such as the ASX200 or All Ordinaries Index. US data tell us that less than 20% of actively managed funds have outperformed the index (passively managed funds) over the past 20 years. In fact, there are only 2 actively managed funds that have outperformed the index by more than 3% over the past 37 years. This shows that actively managed funds do not have a good track record for achieving superior performance. In fact, many high profile investors like Warren Buffet suggest that it's not worth the risk and that people should just invest in the index. In addition, the average cost of an actively managed fund is in the range of 1.5% to 2.5% per annum (sometimes more). The average cost of a passively managed fund is often over 4 times lower at 0.35% per annum. Therefore, actively managed funds need to outperform passive funds to at least offset the higher fee – but this isn't happening. Lastly, actively managed funds tend to buy and sell stocks more often, which is tax inefficient for investors, as it crystallises capital gains. It's better to invest in a low transactional fund (read index fund), so that you minimise taxable income in return for maximising capital growth. Obviously, capital growth is better as you don't have to pay tax on the gain until you sell the investment (so the pre-tax gain is reinvested). This is why we are strong believers in passively managed funds (index products).
- Don't ignore property – There are some wonderful advantages in investing in direct residential property. Unlike many other financial planners, we take a balanced approach to the two main asset classes (shares and property) and feel that many people can prosper by investing in both. With property, we believe you can outperform the market (unlike shares). This is a huge benefit which we can elaborate on.
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For more information, read our free report titled "What most financial planners don't know will hurt you!"
