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The key focus of Alliott Investments is the prudent and disciplined approach to the creation and protection of our clients wealth.
Due to adjustments in the way insurance companies are taxed, life insurance premiums will increase.
In July, life insurance companies must operate under a different tax process that may see premiums for term life increase by up to 20%.
The level of increase may differ between companies due to their cost structures and competitive forces.
One way to negate the impact of the rise in premiums is to take out level term cover. Level cover locks the premium in for the term of the policy – normally to age 80, but there are other options. The level premium is guaranteed i.e. it cannot be increased by the insurance company.
If you would like to know more about controlling the cost of your life insurance premiums, contact Gerard Gill our insurance specialist at Alliott's on (09) 520 9200 or gg@alliott.co.nz.
Worldwide, politicians have promised much more regulation in the financial services sector in order to guarantee the bad practices that nearly tore the fabric apart in 2008 could never happen again.
These sorts of wildly optimistic notions are not merely cheap throwaway lines that never get followed up, however. Regulation is happening as we speak, and investment advisers will soon have to be approved by the Securities Commission (SC).
Simultaneously we have the Herald’s front page covered for the second time this month with news of a problem, and this time it is Peter Huljich’s KiwiSaver fund. The reporter noted “The fund . . . has marketed itself heavily on top rankings by investment research companies Morningstar and the NZX-owned Fundsource.”
The SC is investigating goings on at the Huljich fund that were happening when the country’s only two ‘independent’ fund researchers gave the fund a top rating. Funny that, because Mr Huljich presented his fund at a conference I recently attended and he handed out the documentation. I started quickly flicking though it and hit the graph on page 10. It shows “simulated” results for a KiwiSaver fund (by implication, the Huljich one).
It took me and my fellows sharing my table maybe 20 seconds to conclude the graph was not a credible depiction of expected reality, and to thus dismiss the fund as something we wouldn’t touch. Didn’t pass the sniff test. Didn’t need Morningstar etc to analyse that one.
Yet it very much looks as though, under regulation, an adviser recommending a managed fund will have to attach the Morningstar/Fundsource or equivalent ‘research’ that gives the fund a big official tick. Yes, these same research houses gave the Huljich funds a 5-star rating. And woe to the adviser who cannot find an ‘approved’ institution/research house to declare the fund safe.
The problem this creates for investors is that advice from all sources will start to take the form of generic, one-fits-all, cover my back, it’s got a respectable big tick, type paragraphs that then enable the regulatory boxes to be ticked, the SC to be satisfied, and the adviser to sleep at night.
What you won’t get is the sniff test. Yesterday I joined a conference call from Scottish fund manager Walter Scott, and the speaker said “Valuing a company is more art than science because you’re valuing not just the present but the future.” Well said. Can’t justify that approach under regulation, though.
So your challenge?
Investors will need to hone their skills of independent thought and apply that to forming their own judgment about who they are seeking advice from. This is a good thing. It has always been important but will become more so because what advisers are allowed to provide on paper will increasingly look the same. I hope regulation will throw far more emphasis on investors weighing for themselves the character and personal qualities of a potential adviser, because that will be the key point of distinction.
In the next investments report David will explain in more detail about how to assess an adviser.
For more investment advice please contact David Burt, Alliott Investments Limited, at Alliott's on (09) 520 9200 or email him at db@alliott.co.nz.
Gerard is an insurance consultant who operates his own independent brokerage company specialising in both business and personal risk protection and KiwiSaver advice.
In 2008 and 2009 Gerard was named Professional Investment Services (NZ) Adviser of the Year.
David is an independent investment specialist with responsibility for managing portfolios for many of Alliott NZ's clients.
He offers a consultancy service advising on such matters as reviewing the investment strategies of a family trust, appraising managed portfolios and calculating retirement or other personal funding needs.
David also can assist with the migration of UK pension funds to New Zealand and has found that, in most cases, a proportion of the funds can be immediately freed up as ready cash.
David Burt’s Disclosure Statement is available free of charge upon request.
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