What do Civil Defence and Financial Planning have in common?
News alert March the 5th 2021: Three large earthquakes occurred off the coast of NZ. Civil Defence alerts buzzed cellphones around New Zealand warning of a possible tsunami on the East Coast. Updates in media and Civil Defence website were made known and Kiwis around the land in at risk areas responded to the threat.
Along the East Coast of the North Island officials evacuated homes, business, and communities to ensure safety of civilian life, following an 8.1 earthquake of the coast. Later in the afternoon the Civil Defence alert level was downgraded and people could return home and to their work. The New Zealand North Eastern Coastline and communities thankfully spared of a natural disaster on this occasion.
Some points to note on Civil Defence were:
- Understanding the risks of the event.
- Have a plan in place to prevent damage and loss of life.
- Implementing the plan when weather, earthquake or floods determine a prudent course of action, through the various agencies.
- Visit the Civil Defence website to understand more about what to do in a disaster. https://www.civildefence.govt.nz/
So, what does Financial Planning have in common with Civil Defence?
Given the sudden and unexpected nature of natural disasters, at first not many similarities may come to mind, but on examination here are some of the common themes I observed.
As above, I would suggest a financial plan has the following attributes:
- Understand the financial risks of an insurable life event, whether for property or health.
- Have a personalised plan in place to prevent damage, protect wealth and minimises financial loss due to uncontrollable life events such as accident or illness.
- Implement the plan and review regularly. When did you last review your financial plan - or your Wills and Enduring Powers of Attorney (estate planning) for personal injury or untimely death due to changes in your life circumstances?
- In other words: Plan and be prepared.
Some further questions for readers to consider are noted below:
- When did you last consciously make time to review the financial risks to your life, family, business, and work interests to protect your own health (families) and life plans for the next 12 months and beyond?
- Do you have the correct fire and general insurance to replace loss to physical assets? Are things the same value or greater value?
- Do you have the correct health cover to access medical treatment for an unexpected diagnosis requiring an operation?
- What protection do you have for your income earning ability for the next decade? Even a modest income of $25,000 p.a. multiplied 10 years is $250,000 of unearned pre-tax income. If you do not have a suitable policy in place for illness, how would you manage?
- Legislation and bank lending policy often changes, this may impact your plans if you want to sell your home and buy another one. Is there a funding gap?
- Should you maintain a balanced investment / KiwiSaver portfolio in retirement?
- What is the difference between a balanced investment portfolio, compared to a growth or conservative investment portfolios? Why is this important to review?
Here at Lifetime as advisers we like to assist you, our clients, to manage and arrange your financial affairs to meet your life goals and aspirations. Helping you identify gaps in your thinking and/or planning using our collective experience to assist you in your goals and life choices is part of our Advice for Life philosophy and approach to financial planning.
Research in New Zealand from two leading professional bodies, the Financial Services Council and Financial Advice NZ, has shown people with financial advice experience less stress and have the potential of more productive and happier lives. Who would not want a slice of that outcome? Investment returns are 4% better on average from advised New Zealanders than non-advised New Zealanders*.
“To put this 4% into real terms; if a 25-year-old were to take financial advice and saved $2,500 per year, they would be $1.5 million better off at 55 than if they didn’t take advice. That’s a remarkable difference, and a benefit that many more New Zealanders should be receiving,” said FSC chief executive Richard Klipin.
"...if a 25-year-old were to take financial advice and saved $2,500 per year, they would be $1.5 million better off at 55 than if they didn’t take advice."
We welcome the opportunity for our existing and prospective clients to contact us and arrange a time to talk. A great outcome is for us to provide an assurance (where possible) that your current plan is well suited for your life stages, and plans.
If your current plan has some gaps, a conversation with your adviser would look at sensible changes to make to address life’s unexpected and unpredictable moments, and add value to your planning.
I encourage you to read the reviews on our website from some of our satisfied clients that mirrors the research findings. We invite you to make a time to update your financial plan; just as you may need to review your personal (and business) Civil Defence plans should the need arise in the future.
About the Author
Bruce Cameron is an experienced adviser who has 20 years’ experience in the New Zealand financial services industry. Based in Tauranga, Bruce has a passion for working with clients to ensure they get practical financial and investment advice that is relevant to their goals.
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs. Any opinions contained in it are held by the author as at the report date and are subject to change without notice.
This week the Government announced a suite of new policy with the intent to assist first home buyers into the market. This included tax changes for investors, bright-line extensions and increases to the cap on First Home Loans and First Home Grants.