Financial Planners

If you fear that there will be a recession in 2016, the financial advisors in our Perth office would like to give you some information that may help allay your fears.

This information comes from Dr Shane Oliver, the Chief Economist for AMP Capital, our parent company. Dr Oliver also serves as AMP Capital’s Head of Investment Strategy and Economics. Recently, Dr Oliver provided an extensive document on the AMP Capital website, filled with predictions and projections for 2016.*

In that article, he covered the chances of recession, both global and in Australia. He rated the chances of global recession in 2016 unlikely, while saying that there will not be a recession in Australia in 2016. We would like to provide you with the points made by Dr Oliver.*

The financial planning advisers in our Perth office would like to provide a quick review of 2015 and what it may mean to you in 2016. We are going to provide some information for you courtesy of Dr Shane Oliver, who is the Chief Economist and Head of Investment Strategy and Economics of our parent company, AMP Capital.

On 21 January 2016, Dr Oliver wrote an article on the AMP Capital blog called, “2016 – A list of lists regarding the macro investment outlook.” The article covered many facets of the economy and how they performed last year. We are going to give you a look at some of the highlights.*

2015: What Happened?

2015 provided mixed returns for investors. Monetary conditions “remained easy” while the global economy saw mild growth. However, global markets did suffer from a variety of fears, such as dropping commodity prices, China being in the forefront of a possible emerging market crisis, the first interest rate hike in the US over seven years and Australia continuing a “soft” pattern of growth.*

2016 greeted investment planning professionals in Perth and across Australia with bad news as the global sharemarket dropped sharply on the first trading day. Chinese shares were down around 7%, European shares lost around 3% and US shares dropped 2.7% before rallying to a loss of 1.5% by the end of the trading day.*

So, what happened? Shane Oliver, Head of the Investment Strategy Team and Chief Economist for AMP Capital, addressed it in a piece on the AMP Capital blog called “Rough start – What’s happened in markets?”*

According to Mr Oliver, market volatility is being driven by insecurity about Chinese growth potential, increased tensions between Iran and Saudi Arabia and manufacturing data from the US resulting in their drop in the Institute for Supply Management (ISM) Manufacturing Conditions Index for December.*

Mr Oliver’s Food for Thought

Mr Oliver reminded investors to consider and “keep in mind.” Here is the condensed version.*

The financial advisors for our clients in the Perth area would like to discuss emerging markets with you. Recently, our parent company AMP Capital covered this on their website. We would like to provide you with some highlights from the article, written by AMP Capital Investment Strategist Callum Thomas. *

According to Mr Thomas, investor sentiment in emerging markets is deteriorating, due to somewhat softer growth in those markets. Mr Thomas questions whether or not those fears are warranted. *

A recent survey of AMP Capital fund managers determined that 75% of them perceive the possibility of an emerging market debt crisis or a recession in China to be the tail risk that causes them the most concern. *

If you are seeking financial planning help in Perth, you may or may not be aware of Australian unlisted commercial property as an investment. Recently, Shane Oliver, the Chief Economist and Head of Investment Strategy and Economics with our parent company, AMP Capital, addressed unlisted commercial property in his column, “Oliver’s Insights.” *

Mr Oliver mentioned that unlisted commercial property has been generating returns of 9.5-10.5% per annum over the last six years, since the end of the Global Financial Crisis (GFC). According to Mr Oliver, this is because yields have fallen due to investors in search of income bearing investments. *

According to Mr Oliver, when yields fall .25%, capital gains rise 4%. He goes on to explain that property prices rise relative to rents in what he calls a “falling yield environment.” This provides capital gains for those who invest in property. Mr Oliver goes on to note that Australian Real Estate Investment Trusts, or A-REITs, have produced capital gains of “around 13% PA over the last six years.” *

We offer a wide range of financial planning services in Perth. Recently, our parent company, AMP Capital, published its monthly “Insight Paper” on the AMP Capital company blog. The blog post featured three AMP Capital executives discussing how to develop a resilient equity portfolio. *

The discussion was based on research being conducted at AMP Capital with “building resilience in your equity portfolio” as a theme. AMP Capital shared the results on their blog to demonstrate what they are currently doing to “strengthen clients’ portfolios to make them fit for the future.” According to the article, technology is “disrupting” the practices of many businesses and the market is “becoming more competitive.” This makes it necessary for investment managers to “differentiate (themselves) through research.” *

According to Dr Ian Woods, who is the Head of Environmental, Social and Governance Research” for AMP Capital, investors need to be aware of the impact that policy and regulatory options implemented by governments have on their portfolios. Dr Woods elaborated, using climate change risk as an example. *

Do you want to do your own financial planning? We don’t provide individual advice online or on this blog, but we can provide you with some questions to ask yourself if you are thinking about doing your own financial planning.

Do You Understand Finance?

At Approved Financial Planners, we are licensed through AMP Financial Planning Pty Limited. Not only do we have 40 years’ combined experience in financial planning, we had to learn a lot about finance to obtain licences. We live and breathe finance.

Do You Have the Resources of a Financial Planner?

We have the full resources of AMP behind us. We have near-immediate access to research that those who aren’t “in the business” may not be able to find. From the financial planner you talk to in our Perth office to the AMP Chief Economist, Dr Shane Oliver, we have access to information and insight that is difficult for those who don’t work with finances every day to access and assimilate.

When our financial planning professionals talk to people in our Perth office, we occasionally talk to people who have the opinion that “financial planning is only for rich people.” At Approved Financial Planners, we have the backing of our parent company, AMP Capital. Here is what they have to say about how financial advice can be helpful to you, no matter where you are on the financial ladder.*

Helping You Attain Your Financial Goals

No matter where you are on the “ladder,” your financial goals are going to be unique. Whether you are planning your retirement or just trying to take your current situation to the next level, you can find help from Approved Financial Planners. A financial adviser can function as another set of eyes and help give you a different perspective on your individual financial situation and what you need to do to achieve your goals.*

Why Advice Can Be Helpful

A financial planner can be like your own, personal “money coach.” They have access to information and expertise that can help you figure out where you want to go and how to get there. It’s never too early to start; the faster you start, the faster it is possible to attain your goals.*

According to a recent survey by the Australian Psychological Society, financial stress was the leading cause of stress among Australians in 2014. Approved Financial Planners in Perth is aware of how financial stress can affect families and we are here to help you alleviate that stress.*

By the Numbers

Stress can not only affect your mental health, but your physical health, too. Seven out of ten who responded to the survey said that their current levels of stress were affecting their physical health. One out of five reported that impact to be from strong to very strong.*

49% reported personal financial issues as a source of stress in 2014, compared to 52% in 2013. However, this is not a trend, as 48% reported financial stress in 2012 and 53% reported financial stress in 2011, the first year of the survey.*

Financial advisors in Perth and across Australia are working even harder lately, thanks to the Australian Prudential Regulation Authority (APRA). In December 2014, the APRA announced that measures would be implemented to decrease the ratio of investment property home loans to owner-occupier home loans. *

The response for many lenders has been to make the standards for investment property home loans tougher, using tougher income tests and lower loan to valuation ratios. In addition, even though the Reserve Bank of Australia (RBA) cash interest rate is at an all time record low, most major banks are raising the interest rate for home loans on investment properties.*

Dr Shane Oliver, Chief Economist and Head of Investment Strategy for our parent company, AMP Capital, recently gave his opinion on what this means for the property markets and for small property investors. Here are some of the highlights.*