Quarterly Newsletter | Issue 30 | September 2013

In this edition Top Tips: Estate Planning ...................... 1 Introducing Simon ................................ 1 Economic Update .................................. 2

Top Tips: Estate Planning

Thank you to those who attended our recent seminar on the Three Essential Protections: Retirement, Family and Legacy. Following on from this, we thought it might be useful to share our top tips for estate planning.

Client Seminar
Save the date for our next client seminar to be held on Tuesday 22 October 2013. Invitations will be sent shortly and places are limited, so make sure you get in early to avoid disappointment!

Did you know that in 2008, as reported by the NSW Public Trustee, only 23% of people aged between 18 and 34 had made a Will? Moreover a number of Wills, particularly homemade ones, are wholly or partly invalid and/or no longer dispose of the estate as per the wishes of the deceased. TIP Make sure you have a Will and it is valid. It must be written and signed in front of two witnesses who are not beneficiaries. Revise your Will at least every five years or when a significant event occurs such as marriage, divorce, birth of a child or the death of a family member. Only estate assets can be distributed via a Will. Your superannuation is not an estate asset and will be distributed at the discretion of the Super Fund Trustee. Consider making a Binding Death Benefit nomination if you want certainty. Ensure sufficient provision has been made in the Will for close family members and any person for whom you have an obligation to provide. This can include stepchildren and any person who provided you with care to avoid a potential (and costly) dispute. Ensure the Executor of your Will understands their responsibilities and duties, and is capable and willing to perform this task. The Executors duties include, amongst other things, the distribution of assets to beneficiaries either by transfer of ownership or by the sale of assets, investing funds or managing assets of the estate, to name a few. Although we cant be the executor of your Will, as your financial planner, we can provide advice to your executor with matters relating to the investments/estate assets and other accounting considerations. TIP Make sure your Executor knows who we are - you may even want to name us as your financial adviser in your Will. Have you considered what may happen if your Executor is unable to perform their duties? TIP Make sure you name an Alternate Executor.

Keeping you up to date

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McPhail HLG Financial Planning Pty Ltd 38 Ellingworth Parade, Box Hill VIC 3128 PO Box 93 Box Hill VIC 3128 Australia t +61 3 9898 9222 f +61 3 9890 6310 email planner@mcphail.com.au

This is a complex area, and we strongly recommend you consider seeking professional legal advice in matters relating to estate planning.

Introducing our new team member, Simon

We are extremely happy to welcome Simon McGuirk to our team at McPhails. Simon who is originally from Adelaide has recently moved to the most liveable city in the world to further develop his career in the financial planning profession. Simon has been an adviser for 5 years however he has been in the Financial Services industry for over 12. Simons area of interest is providing quality advice to wealth builders and building long term relationships with his clients. He has earned an Advanced Diploma in Financial Services (Financial Planning), and is currently studying toward a Masters in Applied Finance. He is also an AFP member of the Financial Planning Association of Australia. Needless to say he is also a football tragic, er fan!

Economic Update
Since our last update, global economic conditions have been, at best, mixed. Recent data from Europe indicates the Eurozone as a whole has emerged from a recession that has lasted for 6 quarters. As usual, growth was led by Germany, and many of the usual suspects remain in recession. However, forward indicators suggest a broader recovery may be under way. German elections in September will hopefully allow for continued stability as further structural reforms are implemented in Europe. At its recent meeting, the U.S. Federal Reserve indicated economic growth continued at a Modest pace. This represented a change in language that several pundits leapt upon the description changing from Moderate. Really. We must consider though that in this age of assisted growth, talk is anything but cheap. Although U.S. monetary authorities espouse a policy of openness and guidance, markets appear more confused. Investment markets have enjoyed a steady diet of easy money and low risk since the Federal Reserve announced their open ended accommodation regime about a year ago. Even talk of winding this back has caused ructions in some markets. This experiment in monetary policy was always going to have 1 unintended consequences and be difficult to unwind. As it happens, a replacement for the current Fed Chairman is due to be announced in October. Therefore, it appears unlikely the Fed will do more than talk until then. Emerging market economies are also a mixed bag at present. Many of those that have been beneficiaries of loose monetary conditions are now facing headwinds as monetary conditions tighten. Others simply continue to shoot themselves in the foot. India, once the next great hope to take over as the emerging market economic locomotive, appears plagued by institutional inertia and event driven policy reactions. Having said that, who are we to judge? Other so-called BRIC nations have issues of varying degrees. China is attempting to re-align growth away from investment and exports. Brazil, like Australia, is suffering from lower bulk commodity prices and internal imbalances. As for Russia, well, I just dont have the time or the space. Nevertheless, the broader emerging market universe is in a much stronger position to wear the effects of U.S. monetary policy than it was in 1997. Adjustment is inevitable, but a crisis is unlikely. Australia is well into election mode, and this may well be over by the time you read this. Based only on the laws of probability, we should have a new Government after th September 7 . The only thing that really matters is that whoever wins gets a clear mandate and can implement their program without impediment (but with due scrutiny, of course). Even without the distractions of global economic and political issues, Australian businesses remain reluctant to invest. Funding is cheap and plentiful confidence is the only element lacking. A period of stable Government will go some way in providing this element.

Global investment markets have for the most part drifted for the period of the northern summer. The main point of interest, as raised at our recent seminar, is in regards to long term interest rates. Talk of an eventual end to the extraordinary U.S. monetary policies has caused global bond markets to fall significantly. U.S. 10 year bond yields have risen by over 1% in the past 9 months. Despite lower official rates in Australia, long term rates here have followed, as has been the case in most other developed economies. Past a certain point, rises in long term rates will eventually have an impact on real economic growth and equity markets. This is an area we are monitoring very closely. Given that Australian equity markets have lagged the performance of global equities over the past 3 years, we believe local stocks may now be more attractive in relative terms. As usual, this applies to quality companies. As the recent reporting season attests, companies that meet earnings expectations will be rewarded while those that dont will be punished. The key is to look at the quality of the earnings, rather than the headline numbers. It may not be apparent, but overall we remain relatively optimistic. Returns are unlikely to be as strong as last year. However, a period of mundane returns is preferred while the real economy catches up with expectations. Risks remain, but while they are apparent and broadly acknowledged, potential impacts are likely to be more limited. It is the unknown unknowns that concern us most. Over the next few months, you can anticipate another budget stoush between component parts of the U.S. administration. In October, Janet Yellen is likely to be named as the successor to Ben Bernanke as head of the Federal Reserve. This is despite the Presidents preference for former treasury secretary and wunderkind Larry Summers. Anticipation of a change in U.S. monetary policy will remain subject to short term economic data. Most recent data suggests growth not yet strong enough to begin monetary tightening. The outcome of U.S. budget negotiations will have significant bearing in this regard. Further European restructuring is as likely as another bailout for Greece, i.e. both are likely the causes and correlations are less clear. Improvements in Australias forward economic indicators will delay further rate cuts. However, deterioration in external conditions may prompt further cuts in December or early 2014. David Graham CFP 29 August 2013
Disclaimer This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances. McPhail HLG Financial Planning Pty Ltd ABN 27 091 207 000 is a Corporate Authorised Representative and Corporate Credit Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL and Australian Credit License 240687 Level 7, 530 Collins Street Melbourne VIC 3000 Australia
Liability limited by a scheme approved under Professional Standards Legislation
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See Issues 26 & 27 2012

Quarterly Newsletter Issue 30 September 2013

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