Dover’s Friday Reflections

  • February 8, 2018

    Effective Referral Arrangements

    Effective Referral Arrangements
    Fee for service practices require advisers to provide the full range of financial planning services to each client. It’s just too hard to get meaningful fees from one service.   What is “the full range of services”? Opinions differ, but for me it includes: home advice, particularly advice on how to buy a first home […]
  • December 21, 2017

    Financial planning for clients not like you

    Financial planning for clients not like you
    The Corporations Act, and the general law, require advisers to ensure their advice is in their client’s best interests, appropriate to the client’s circumstances, and prioritizes the client’s interests over the adviser’s interests. This means each client’s unique circumstances must be considered when constructing financial plans. Their age, existing wealth, expected future wealth from inheritances, […]
  • December 19, 2017

    The financial planner as the fund manager

    The financial planner as the fund manager
    Most fund managers will not beat the index. This premise was predicted by Modern Portfolio Theory in 1952, and has been validated by numerous researchers since then. As Buttonwood wrote in the Economist in June 2017: “It should not be a surprise that the average fund fails to beat the index. The “iron law of […]
  • December 13, 2017

    Three kicks in a quarter

    Three kicks in a quarter
    The year was 1991. Big Jim Stynes had just won his Brownlow medal playing for the Melbourne Football Club in the Victorian Football League. A risky experiment in Gaelic-Australian football collaboration, ruckman Jim became the first foreign import to win the biggest gong in the biggest game in the land. And he did not pick […]
  • November 15, 2017

    A Retro Friday Reflection

    A Retro Friday Reflection
    Ten years ago our training manager, Adrian McMaster, was the humorist for Alan Kohler’s Eureka Report, which has since become part of the Murdoch Press. In recent years you will have heard us ‘banging on’ about how average returns are actually wonderful. But our thoughts are not new: here is what Adrian was saying about […]
  • October 24, 2017

    What I am doing on the investment side of things…

    What I am doing on the investment side of things…
    I am lucky. I enjoy my work. A particularly pleasant part of my work week is sitting down with clients and discussing what they should be doing on the investment side of things. (If we have not done this for while please ring and make an appointment.) In a meeting last week my client asked if I was […]
  • October 18, 2017

    Financial planning is about basketball

    Financial planning is about basketball
    Since when was financial planning about financial products? I recall a meeting with Steve some years ago. Steve was a 40-something medical specialist whose oldest son was about to play his first game of under nines basketball. Steve lamented that he would probably never see him play a game: they were scheduled for just after […]
  • October 1, 2017

    Get rid of that non-deductible debt!

    Get rid of that non-deductible debt!
    Non-deductible debt is expensive debt. Non-deductible debt should always be paid off as a priority over any other investment. If your client earns more than $180,000 a year they face an effective marginal tax rate of 47%, made up of 45% and plus a 2% Medicare Levy (2.5% from 1 July 2019). This means your […]
  • September 21, 2017

    Bernard Salt got it wrong

    Bernard Salt got it wrong
    Women access financial planning less than men. Women also earn less than men, accumulate less than men and retire with less than men. Women live longer than men.  One third of female age pensioners live below the poverty line. It’s expected to get much worse. Single women who do not own a home suffer the […]
  • September 8, 2017

    Ten steps to a great financial plan

    Ten steps to a great financial plan
    Being a financial planner is easy when your client is a really nice person. The first twenty minutes was more like catching up with an old friend. What are your kids doing? Where have you been on holidays? What else have you been up to? It was very pleasant. We had to wilfully drag ourselves […]
  • September 7, 2017

    School fees: the big issue

    School fees: the big issue
    Clients need strategies. Clients need ideas. Clients need an adviser who can put a texta to a white board and explore thoughts and possibilities that interest clients and grab their attention, and worries. Thought explorations are by their nature imprecise and imperfect. You sometimes get more than halfway in before you suddenly realize it’s not […]
  • August 30, 2017

    So you thought you were insured

    So you thought you were insured
    Interviews with potential Dover advisers are interesting exercises. Many do not understand how their AFSL’s compensation and insurance arrangements work. They think “they are covered for everything above $15,000”, or whatever. The questions “Who is covered?” “What is covered?” and “When it is covered?” do not get much thought. But more worrying is the common […]
  • August 25, 2017

    Who is your competitor?

    Who is your competitor?
    Most financial planners would answer that other financial planners are their main competitor. That might be the wrong answer. In business, your competitor is anyone who is doing work that you could do. If you have a client with more than $200,000 in super (combined if they are a couple), then there is a good […]
  • August 22, 2017

    AI and the future of financial planning

    AI and the future of financial planning
    An AFSL licensing robo-advice will have huge compliance problems, and will probably be un-insurable. The Corporations Act contemplates ASIC licensing persons, i.e. AFSLs and their authorised representatives. The Corporations Act does not contemplate ASIC licensing algorithms or technology. The Corporations Act imposes extensive subjective advice requirements on personal advice, including the best interests duty, the […]
  • August 21, 2017

    Ten Great Income Protection Strategies

    Ten Great Income Protection Strategies
    Financial planning sees what it wants to see. Most advisers focus on the low possibility of a temporary income loss caused by illness or accident, and what can be done about it. Few advisers focus on the high probability of a permanent income loss caused by technological change and redundant or inadequate skill levels, and […]
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