“Starting Early Reaps Rewards” by Steve Marsten

I was talking to some 20 some things this week who admitted that they really don’t like paying for financial advice. That said, when I queried them further - they really weren’t sure what a financial advisor could really offer them.

Now this couple still lived at home with mum and dad and didn’t really pay board but occasionally “chipped in” from time to time - seemingly at their own discretion. What a great deal! Both had jobs and apart from a car payment there was not much else they were paying for other than entertainment, clothes and cosmetics. Interestingly, they didn’t really know where all their money went.

The first thing we worked on was measuring where the money went. So we established a Xero file to get the figures up to date. You can’t manage what you don’t measure!

Then we put the plan together. Firstly, they needed to get over the shock that 47% of their income went on entertainment! This largely included alcohol as well. They came to the realisation that they may have overspent in this area – I didn’t need to tell them this. By the end of the session we had smashed out the action sheet which concluded that they could actually save nearly 40% of their earnings. They valued their relatively “free” accommodation; had a super plan assisted by the Government; had a plan to build on their super; had a plan to obtain health insurance before they turned 27 and worked out they would have a healthy deposit for the next stage of their lives over the next 18-24 months! We also agreed that we would meet for 30 minutes in 3 months to ensure that the plan was on track.

The value of financial advice is always debateable, however good advice should add value immediately.  When you are in your twenties, if there is a regret that I had, it was not starting with a plan sooner. Bringing health to your wealth starts with people who may not have many assets now but at least have a desire to start somewhere. At Sothertons we encourage “Early Planners” to get the ball rolling with an initial consult to flesh out the real goals and objectives. The sooner the plan starts, the sooner the rewards arrive – call Sothertons on 07 4972 1300 to commence your plan.

A Question of Ethics by Tina Zawila

According to Google, "Ethics" is defined as the moral principles that govern a person's behaviour or the conducting of an activity.

In business, just as in life, there will always be differences in the interpretation and application of ethical principles.  What may be "normal practice" for some, will be completely off limits for others.  However, as a society, we do have rules to follow, to protect us all. 

Recently, I have encountered a few situations where ethics have been questioned in business, such as the interpretation of the "spirit" of a written contract or agreement, versus the exact wording, or in relation to the conduct of an individual or business as a whole. 

It's also interesting to reflect on how we, as human beings, form our own ethics and morals (guided by society, family, friends, religion etc), and how we will defend our own position passionately against anyone who may take a different view.  Sometimes even to our own detriment.  After all, it's often very difficult to admit we may have been wrong.  

However, there are times when we must follow our own "moral high ground" even if that means not giving in to the temptation to take the "easy" or more favourable option.  Whilst that is often not an easy choice, it is one that most of us will face at some time during our lives. 

At the end of the day, each of us has to be able to look in the mirror and know that we have done our very best to follow society's rules and to serve and respect others.  In business, this means your clients and customers, suppliers and alliances, and the community which you serve.  

Sothertons Gladstone has been serving the local community for almost 40 years, and we are here to listen to your challenges in business.  Call us on 07 4972 1300.

“Is Life Insurance a risk?” by Steve Marsten

Article by Steve Marsten

Have you had a chance to review your Life Insurance recently? In the words of an old rock commentator – do yourself a favour! As financial planners with Professional Investment Services,  we see what’s happening in this space quicker than most people and at the moment the increase in premiums is a big concern.

I understand everything tends to go up in price and with Life Insurance this is particularly the case. The older we get, the more it costs to be insured. Usually we have expected increases of some 5-8% with each year we get older during our 40’s and 9-12% during our 50’s. Each birthday puts you one year closer to your life expectancy and thus you become a higher probability to cause a payout to the Insurer.

But in recent times we have noticed that some companies (well known and in the industry more than 20 years) have suddenly put the prices up 20-30% and some have put their prices up 10% and then added a further 10% 6 months later. The reason is, apparently, they have been told by their actuarial advisers and underwriters that they are short on funding as the general population ages, to meet the potential major payouts in the medium term. Hence they quietly raised the premium.

Now of course they must let you know and they do that by some form of correspondence. My advice is – take the time to read it. I know many people sign up for their life insurance and it becomes a set and forget approach. Recently I have found clients who have life premiums built into their super so they don’t realise that these huge increases are eating away a fair chunk of their super and they can’t understand why their super isn’t growing fast enough. Or it is simply a direct debit from their account and they have seen it but assumed it hasn’t moved much.

These increases will discourage people taking up Life insurance, however you should review your insurance and make sure it’s still relevant and of value to you. Has the original purpose or objective changed?

At Sothertons PIS - we can review your insurances to make sure you are not paying too much for them or making sure that the cover is still relevant for your purposes.  Call us for a free review on 07 4972 1300.

Start Me Up! by Tina Zawila

In the last few weeks I have had the pleasure of working with several new business owners – both start ups and those who are buying into established businesses.   These new entrepreneurs are full of passion, excitement and enthusiasm for their new venture.  However, what I respect the most is that they have all sought professional advice at the start of their business journey.

“Getting things right” from the start can mean the difference between success and failure.  There are a myriad of things to consider when starting a new business – premises, renovations, stock, equipment, finance, pricing, your target market, advertising, website, staff, and the list goes on.  That list though, didn’t include the legal, financial and taxation matters that must also be addressed, including:

• choosing the appropriate legal/taxation structure and getting it set up correctly,
• registering for a Tax File Number (TFN) and Australian Business Number (ABN),
• registering for GST, and
• setting up your record-keeping and accounting systems.

In the 2015 Federal Budget, one of the incentives for ‘start ups’ was to allow new businesses to immediately deduct certain capital costs incurred when starting up a business (which previously had to be deducted over 5 years).  So now you can also claim an immediate tax deduction for your investment in “getting things right”.

Your professional advisor can also help you with the ‘fun stuff’ – making sure you have a clear vision for your business, and a documented plan to achieve that vision.  He/she can help you identify the key drivers in your business and the key performance indicators that you can use to measure your success.  And most importantly, he/she can be your mentor, sounding board, and hold you accountable to do what you say you will do.

Just as in the lyrics of the infamous Rolling Stones song “Start Me Up” – “If you start me up I’ll never stop”, if these passionate new business owners are given the right advice and support from the start, there will be nothing stopping them from achieving their goals and dreams!

At Sothertons, this is what we love to do.  Call us on 4972 1300 to discuss your business journey.