Many financial decisions are time related and many fail to review what they have in place and often continue spending money on solutions that do not work. A Financial Health Check begins the process of identifying “road blocks” and unlocking potential. Common pitfalls are:
- Not starting money management early enough. The difference between a person with $40,000 income saving into a Kiwi Saver at 4% + 2% employer contribution over 20 and 30 years is $172,160!
- Not Reviewing how insurance costs are best spent. Insurance is vital but needs change over time and seldom will you be advised that you no longer need a policy! Commission free insurance advice addresses this with transparency. Just saving $20 a month in insurance costs saves $7,200 over 30 years and if invested could be three times that amount.
- Not reducing your mortgage faster. A mortgage is vital for most people. It is a debt and a product of a bank. Banks want to sell more product! You need to get out of debt as fast as you can, de-risk your life and grow your wealth. The less debt you have the less interest you pay and the less insurance you need. We can show you have save significant sums and free up funds for growing wealth.
- Not seeking commission free insurance. This is not partly discounted commission with online insurance. This is the real thing. The difference between insurance premiums with commission and without commission over 10 years is very significant, in some cases thousands of dollars. SFP’s fee for advising on the right insurance for you is 20% of the savings on a 10 year premium. This is a guaranteed return, not taxable. A good investment!
- Not being in the right KiwiSaver Fund. When selecting the right Kiwi Saver Fund account should be taken of your total financial situation. The Financial Health Check will begin that process. You may be in a consistently under performing fund or in one that does not align to your investor profile and personal situation. The FHC will help you decide what is your investor profile.
- Not doing anything! It is unlikely that a person reading this will be this type of person. Initiative has already been taken to get this far! The NZ Super retirement “safety net” is just that and retirement is a long time – 25 years?
- Not mending the “leaky spending bucket”. Ironically this applies to busy people on good salaries. Finding it hard see where they money is going? Not having a review of spending is a great way to self harm yourself financially. There is a lot of psychology at work here. Not honestly and openly addressing this can harm both finances and relationships.
- Not diversifying Investments and taking too much Risk. Risk is a part of living. Nothing is certain as they say only death and taxes! But risk can be identified and managed. It is just a case of being informed and sensible.
- Not taking advice on Personal Financial Planning. Trustees and Estate Managers are required to exercise “fiduciary care” to be “prudent” on behalf of those they act. Individuals are free to do as they wish. Historically, and still significantly today, Financial Services have used commissions as a way providing a service. Until recently this has not always had top level of transparency. This was largely because consumers did not see the value and sometimes they did not get value, just a product. We would estimate that 10% of consumers now are much smarter and can see that building a financial future requires not just building material but a financial architect. I am grateful to have survived the Christchurch Earthquake in my 14 level office building because it was built to Code! An independent advisory is able to focus better on advice (design).