Financy Making Finance Fancy

Sometimes, luck and opportunity can be utterly on your side.

That’s the only way I can explain scoring tickets to the Oprah show in Sydney without actually winning them.

How? My quest to see first hand what makes Oprah one of the most powerful businesswomen on the planet saw me ditch work and join the standby line for tickets on the morning of her first show in Oz.

It took 40 minutes in the line and several phone calls to my manager, promising that I’ll be back to work soon, before I overheard a young security guard mischievously asking if anyone wanted to buy a ticket.

Of course selling or scalping tickets to the Oprah Show was totally against the rules; to some it’s probably sacrilegious.

But despite my fears of bad karma, I was willing to test my luck, so I perked up and told the guard that I would buy the ticket on the proviso that it was valid and matched the amount of spare cash that I had in my wallet.

His offer of $100 was palatable, so I accepted and he escorted me to the ‘real’ ticket holder’s area.

Once there, his conscience must have got the better of him because he refused my money and said “…don’t worry about it, here are the tickets. Have a good time.’ I didn’t question him. Lady luck had found me!

Being at the Oprah show with a seat on the steps of the Opera House was not only entertaining but also inspirational and addictive.

There were of course the celebrity guests such as Jay-z and Bon Jovi, plus lap-tops and huge cash giveaways, and each audience member received a pearl-pendant necklace, however it was Oprah’s comments at the end of the show that made me realise why she is so successful.

If you’ve ever watched Oprah you would know she is big on life energy and what you do and how you treat people, will come back to you. She has built the success of her talk shows around this concept.

It’s this concept and her ability to find a common ground with strangers and address a crowd as though she is talking to the individuals within it, that allows her to capture audiences.

Once hooked, and okay not everyone is, but once hooked Oprah’s own magnetic energy serves to motivate people to believe in themselves, to take control of their lives and to enjoy laughing or crying out-loud.

When you really think about it, Oprah’s success has been borne out of making other people feel good about themselves. In fact addicted fans subscribe to her multitude of magazines and travel far and wide just to hear her speak. It’s almost like her word is gospel, and for many it is. The launch of her new television channel in 2011 might even require it’s own satellite dish to ensure enough reach.

The formula to Oprah’s success as I see it, is firstly a feel-good concept that ultimately inspires people and secondly it sells.

‘Financy’ draws on her experience in the world of finance. She writes financial education articles, presents online finance, real estate and business news reports for the Finance News Network and produces training videos for Kaplan Professional. She writes regular blogs for her own website Financy – where she aims to present finance information a bit ‘fancy’.

‘Financy’ draws on her experience in the world of finance. She writes financial education articles, presents online finance, real estate and business news reports for the Finance News Network and produces training videos for Kaplan Professional. She writes regular blogs for her own website Financy – where she aims to present finance information a bit ‘fancy’.

Forget “pie in the sky” property market appraisals, when it comes to selling your property – enlisting the right real estate agent is as much about service as it is about price. The challenge however, is finding an agent who can deliver on both.

It’s also important to realise that “dodgy” agents, just like dodgy financial planners and lawyers, are not the norm of the industry – real gems are out there, so put them to work!

Where people have had bad experiences with agents is when they don’t enlist the right agent to help them. Instead they become dazzled by often unrealistic property estimates and they don’t ask enough questions about the agent’s experience and reputation.

One of the first warnings signs is where an agent drastically discounts their commission in comparison to other agents just to get your business.

The truth is that when an agent really starts to cut back on his/her service fee, they’re cutting back on their own commitment to your property, and ultimately that will be reflected in final sales price.

Remember: commission is the income that is earned for selling performance, so research what is realistic in the current market.

In Australia, most real estate agents are either on a low salary plus commission or they are commission only – which is why the commission rate is a driving force for them to achieve the best possible result for the client.

So how can you enlist a good agent and importantly someone who doesn’t make you squirm when the phone rings – because you fear being pressured into a sale.

Choosing an agent will usually take into account three things:

* The best sale price that the agent believes is achievable
* Their commission cut
* And the advertising costs attached. (Often advertising fees are confused with the agent’s commission – but these are completely different)

Basing your decision on these points alone is a good place to start however don’t be afraid to get a bit tougher.

Sydney property expert Kerrie Rogers recommends asking agents five additional questions to gauge their sales performance and their level of communication/service.

Service is the key word here because let’s face it, doing all the chasing yourself can be an exhausting task so it’s good to know upfront if the agent is committed to really working your property.

When an agent (an ideally have at least three agents quote) visits your property to do a market appraisal, consider asking the following:

* Do you enjoy selling?
* Are you able to provide a list of your last 10 recent sales, including the sales prices you achieved? (An agent’s sales history can speak for itself)
* What is the average time frame you take to achieve a sale?
* Where was the last property you sold and can I call the vendor to ask them about their selling experience with your company?
* Will you be available and easy to contact during the sale process, through to settlement?

These questions will help you to ascertain whether you can work with the agent and whether they have anything to hide.

Another tip when it comes to choosing a real estate agent is to “go local” and pick an agent who understands the local market and the age demographic of buyers.

Any local agent worth their salt should know the current buyer profile for your property and have names of potentially interested buyers ready to buy in their database.

A good agent should also be someone who understands the appeal of your property and what it is going to take to improve that appeal by enhancing the features and benefits.  Often a sales agent will suggest doing a little “touch up” work or rearranging some furniture if they feel it will add value to the sales price.

And finally, when it comes to selling your property don’t underestimate the power of marketing as successful property presentation, professional photography and written copy, are essential in attracting several interested buyers – and you do want several buyers as the forces of demand will help drive up the sales price.

It’s actually amazing how many buyers are turned off properties because the marketing of the property is poor and they often think there must be something wrong with the property itself, when the problem is that the photos are either too few, too dark or just plain ugly.

The ability of an agent to attract buyers should be evident by their presentation, so next time you are on the hunt for a good agent scope out how their office looks, especially the shop front, and whether it meets your standards.

And remember don’t be a victim to dodgy agents – take control and get picky – the good ones are out there.

‘Financy’ draws on her experience in the world of finance. She writes financial education articles, presents online finance, real estate and business news reports for the Finance News Network and produces training videos for Kaplan Professional. She writes regular blogs for her own website Financy – where she aims to present finance information a bit ‘fancy’.

The Retirement Standard report essentially defines a comfortable retirement as being able to enjoy a broad range of recreation activities and being able to have insurances, a reasonable care and have the occasional holiday.

What this means is that if a couple or single person were intending to live comfortably in retirement for only 10 years they would basically need a lump sum of $535,650 (10 multiplied by $53,565) or for singles, $391,600 (10 multiplied by $39,160).

But the problem with this basic maths is that people are living longer and a woman’s life expectancy is around 84 years of age, whilst the current retirement age is 60, which means spending just 10 years in retirement is unrealistic.

To try and help women build their wealth, Jill Wilberforce and Nicky Boustred have established Wisewomen, which offers a “grass roots” approach to educating women about managing their money and investing for the future.

Nicky and Jill provide personalised group coaching sessions on various topics, from share market and property investing through to superannuation.

“There are things we make women aware of, including ways to boost super through salary sacrificing and government co-contributions, plus the benefits of cash management and budgeting,” Nicky said.

A Wisewoman “Super made Simple” session will cost between $40-$180 and covers:
• What is Super and why it evolved
• The types of funds and how to choose between them
• The nuts and bolts on super, including the benefits, contributions (both employer and voluntary) as well as taxation: and,
• Self managed super funds.

The main reason why women are often left behind when it comes to building up their retirement savings is because of motherhood.

For many women, taking time out of the workforce to have children and then returning to work later in life, can affect their ability to regain the same level of earnings that existed before children came into the picture.

Jill also says that women generally don’t think about their future retirement plans until later in life, and will often abdicate responsibility of their personal finances to men.

“While women are focused on family, we tend to leave matters financial to our partners. The problem is that if something goes wrong, such as divorce, we are often left with little confidence to manage this aspect of our lives,” she said.

When you’re trying to work out how much money you will need for your retirement, the rule of thumb used by most financial planners is to estimate how much you will need to meet your annual living expenses and then multiply that figure by 20.

Alternatively, visit and click on the financial calculators section and you’ll be able to estimate how much money you’re going to need to retire on.

When it comes to understanding your personal financial position and taking an active approach to building your wealth, Wisewomen recommends eight simple steps:
1. Define what you want – create a picture of how you want your life to be and work towards it
2. Get paperwork organised in order as chaos causes confusion
3. Stream line your banking – use one transaction/credit card/high interest savings account
4. Reduce your personal debt as much as possible
5. Build a buffer account for unexpected expenses
6. Prepare a budget but don’t let it rule your life
7. Educate yourself on money-matters so that you know the options available to you
8. Start early – for example a savings program of $50 to $100 per month when you start working can make a big difference down the line.

So when should women start thinking about their retirement plans?

Wisewomen recommend the earlier the better. “It’s so important to practice consistent savings habits over a lifetime rather than relying on some magic bullet of wealth creation,” Nicky said.


By Financy

As a regular reader of the Australian Financial Review, (a bible in my eyes) I’ve been closely following the coverage on financial planners dumping sales commissions in favour of a fee for advice model.

Why you ask? Well the move is designed to lower the cost of financial advice for the average person and I’d like to know just how much extra commissions actually add to the cost of financial advice.

As part of my investigation, and as someone who wants to know what on earth to do with my hard earned cash, I recently met with a financial planner to weigh up my investment options.

Now in many ways my first meeting with this planner was a bit like speed dating.

We sat down at a local café; he asked me about my dreams and aspirations for the first 15 minutes, and then I asked him about what he does and what he can do for me.

Like most speed dates, I left the session feeling hopeful but still asking myself – is this person the real deal and can he deliver?

Sure enough, this particular financial planner was lovely but – yes there is a BIG but – in the two weeks after our meeting he sent me a Letter of Engagement, which outlined our discussion and what he proposed to do to enhance my financial situation – and this is where things got interesting.

The letter, which is one of the steps in the finance advice process before any recommendations are made or accepted, contained a number of errors and the commissions and fees attached were overly high.

Issue one – the proposed investment recommendation was to invest using a Self Managed Super Fund (SMSF). Yet in our meeting I specifically told him that I was not interested in investing via superannuation. Clearly the adviser hadn’t listened to me and ignored the point I made that as a 30 year old investor I’m looking for growth type investments rather than a more conservative vehicle.

Issue two – on the third page of the Letter of Engagement, the advice was that I invest using a platform known as a Separately Managed Account (SMA), and not an SMSF. Clearly a typo had been made and whether it was the planner or his secretary – it should have been doubled checked before it was posted to me in the mail.

Issue three – the fees in the letter were roughly $2600 upfront and there were $95 – $100 fees attached to each unit shares and managed fund invested in through the SMA.  On top of that there were continual annual advice fees and managed fund administration fees. A quick calculation tells me that depending on my level of upfront investment, the total cost could be between $5,000 and $10,000 in fees/commissions in the first year alone.

It is because of these three issues that I have decided not to go with this particular financial planner, but the exercise has not been in vain. Remember:

Lesson 1: Make sure the adviser listens to your needs, takes into account both your personal and financial circumstances as well as your risk tolerance, preference for growth or conservative style investing.

Lesson 2: Do yourself a favour and always read the fine print to make sure the recommendation is consistent.

Lesson 3: Ask yourself, can I afford the fees and commissions – if not, don’t go ahead.

Don’t be disheartened if your first financial advice experience isn’t what you had hoped for. It can be a process of elimination and it’s important that you feel 100% comfortable with the person and that you feel you can trust them.

And like speed dating – if it’s not what you’re after, keep shopping!

‘Financy’ draws on her experience in the world of finance. She writes financial education articles, presents online finance, real estate and business news reports for the Finance News Network and produces training videos for Kaplan Professional. She writes regular blogs for her own website Financy – where she aims to present finance information a bit ‘fancy’.

It wasn’t until I was 28 that I realised I loved my own money. I still didn’t really understand much about it or what to do with any surplus cash I had – other than to keep on spending it until the next monthly pay day came around.

I’m sure I could defend my spending by saying it was part of a broader view to get the economy moving again from the depths of the global financial crisis (GFC) that started to unravel in Australia in 2008, but it really wasn’t good for my own financial well-being.

Two years on – I’ve hit the big 30 – and have started to get my money in order by actually learning from what I do as a financial journalist and writer of education material for financial planners; and as such I have hired a financial planner.

Now financial planners are often called a number of things, from sharks that prey on those with plenty to invest and little financial knowledge, to nothing more than well-paid salesmen who get commissions and kick backs from most of the products they sell to investors.

To the contrary, most financial planners that I know personally are focused on getting to really know their clients and offering a more complete service, rather than a one size fits all pre-packaged deal. So it’s with a degree of confidence that I have finally bitten the bullet and employed a planner.

When it came to choosing a planner, I opted for someone that I connected with, someone who could explain complex material and also someone who uses a lifestyle planning approach. Lifestyle planning is basically where my personal lifestyle goals have been taken into account when formulating investment strategies.

I’m happy to try the increasingly popular life-planning investment style after purely investment style planning lost favour during the GFC.

My biggest concern with employing a financial planner relates to their fees and the risk that I may lose all of my money.  So what I needed to ask myself, and what I would suggest to anyone before meeting a financial planner is:

  • How much am I prepared to pay for the financial planning advice?
  • And, how much risk am I prepared to take for a return on my investment?

When I look at job ads for financial planners, I can see that they typically earn anything from $80,000 to $150,000 upwards per year. Some of the most successful planners earn around $200,000 to $500,000 per year due to their fees and commissions.

My planner is charging me $2,640 in fees to get my investment package up and running, but I think it is important that I meet with him again to find out if there are any hidden fees that I need to be aware of.

If this amount is all I am going to be charged for the construction of a simple portfolio, which consists of stocks and managed funds, then for me this sounds reasonable – however I still want to know what the expected annual investment return is in percentage terms.

If you study any sort of finance you’ll be taught that you can’t achieve a return without taking a degree of risk – thus risk and return are related. It’s just like buying pair of sexy six inch heels – sure they look great and you can usually justify a couple of hundred dollars on the purchase, but the risk is that you will only be able to walk so far in these heels before your feet start to cramp and your toes go numb (trust me I go through this daily).

So in essence if I want high returns, I have to be prepared to take risk, and the important question to ask yourself with all investing is how much risk am I prepared to take to get those returns?

Again this is another thing that I have paid my financial planner to explain to me and when I meet with him next week, I plan to make him work for that $2640 in fees.

To be continued…

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