Q. How do I access cash in my portfolio cash account?
A. Send an email to firstname.lastname@example.org requesting the amount and the the account into which is transferred. All transactions require written instructions.
Q. How can I monitor the balance of my portfolio cash account?
A. You can monitor the balances and transactions of all your investments including your cash account by can logging onto your Client Login here. Save this as a book mark. You will need your confidential login name and password.
Q. Can I get a regular income from my portfolio?
A. Once you have discussed your income needs with us we will set up an auto payment at intervals that work for you. At your Review we will rebalance your portfolio and set aside cash to meet future needs.
Q. Why do I need a cash account?
A. There are 3 reasons for holding a cash account. 1) To have immediately liquidity for any emergency. 2). Cash is an asset class in its own right and there are times when ” cash is king”. 3) In market cycles there points when there are bargains in the market and cash can be used to take advantage of these. In addition all transactions flow through this account which acts an audit window on portfolio activity.
Q. Can I replace an existing Insurance Life, Trauma or Income Protection Policy for a more recent policy with better benefits and/or lower premiums?
A. Yes you can but you need to be careful. Never cancel an existing policy until a new one is in place. In the underwriting process of the new policy you may find that you have a medical condition or circumstance that means you cannot get replacement insurance or it may be more expensive than you thought. If you can secure better benefits or better pricing it makes sense. There has been a history of a few Insurance Agents “churning”, that is selling a new policy to secure the high commission on an initial sale regardless of the benefits to the client. See Q & A Below.
Q. Is it possible to buy Insurance without commission and reduce the premium?
A. Yes some advisers offer this service as does Strategic. The commission is replaced by a fee. As with all products there is a cost in delivering the right solution and making sure it meets the needs of a client. As there are often commission incentives from providers which are linked to volume sales there is always the possibility that this could impact on advice. Fee based insurance sales can be more transparent and objective approach.
Q. What percentage of an Insurance Premium is commission?
A. Our understanding is about 30% of the premium over the life of the product. Over 10 years this is quite a large amount. Strategic has a policy of applying a fee + GST of 20% of the savings made over 10 years or $750 + GST whichever is the greater. If you keep the policy for over 10 years there are even greater benefits. The ongoing commission usually applied is to help the agent service the client. At Strategic, if you need an Insurance Review, we will charge you an hourly rate or a Review Fee. All clients seeking new insurance, additional insurance or replacement insurance are required to complete a Financial Health Check which enables you to see your insurance needs in the wider context of your life. If you proceed with Insurance the Financial Health Check Fee is credited to your account.
Q. Why do you recommend selling some investments when they have done or are doing so well?
A. With investments you have a choice to sell an investment that is not performing so well at the moment but there is nothing inherently wrong with it. This would book a loss. Selling an investment when it has done very well is to book a profit or as we sometimes say “bank the profit”. No investment has a straight line return! If the portfolio is aiming for a 7% return and an investment has returned 21% over the year it means you can reinvest it into a low risk investment, get a few more percent and still have 7% for the next two years with little risk.
Q. What return will I get from my investments?
A. First we need to define return. With a portfolio the gains made are a combination of both capital movements and income. We call this Total Return. The return you get will vary with the range of investments you are holding and your investor comfort zone for investing and when you entered the market. It will not be fixed as economic conditions vary. The “fixed rate” from an annuity is a composite drawdown of both income and capital. The rate quoted is not a “Return”.
Q. How is the performance of a portfolio calculated?
A. It is easy to calculate the performance of a single fund. The percentage change in the unit price between two points and plus any dividend. Whereas a portfolio has many different investments with different amounts in each and often not all have been in place for the full duration of the calculation. Strategic Uses the Money Weighted method rather than time weighted. The rationale behind the options can be found here. How Portfolio Returns are Calculated
Q. When can I get my portfolio tax reports?
A. With a wide range of investments within a diversified portfolio we have to wait until the very last manager has sent us their tax report. We usually get the last one by the end of May. Then we have to check and generate portfolio tax reports. These are published under reports on your client logon. From here you can open the file online and complete your return or email to your accountant.
Q. Why do I need a Will when I am still young?
A. None of us know our date of death, if we did it would make Financial Planning much easier! Spend your last dollar on your last day! To die without a Will means you die intestate and a legal procedure comes into play. See here for New Zealand . Avoid this burden for those who have to sort out your affairs and make sure your assets go to who you choose.
Q. Should everyone have a Family Trust?
A. No! Only if you need one. The Get Sorted site has a good overview.
Power of Attorney (POA)
Q. I am getting confused with the different ways other people can act on my behalf.
A. Yes there are several options. First the legal term Attorney means that a person is authorised to act on your behalf.
The ways in which they can do this are:
An enduring power of attorney (EPA) which is a legal document giving someone the power to act for you if you lose the ability to make decisions yourself. The are two types. Once covering your Personal Care & Welfare and one covering Money and Property. The Get Sorted site gives further guidance.
Q. What is a Limited Power of Attorney (LPOA) used for?
A. LPOA is used for specific purposes and can be created for a limited duration or circumstance, and tailored to meet the needs of a particular transaction or set of transactions. Strategic’s policy is for clients to “sign off” on all transactions unlike the other option which is “discretionary management” where the advisor can make decisions, at their own discretion, without necessarily referring to the client under a LPOA.