Markets reel...


At the time of writing, the local share market is down 4.5 percent since the beginning of Monday trading - all due to the heightening trade tensions between the US & China.

It’s a cliche, but a week really is a long time in politics. Last Monday, despite some pretty bruising words, both sides were pressing ahead with their negotiations, attempting to find at least some common ground. After all, neither the US or China wants to see a further slowing of their respective economies - President Xi’s grip on power isn’t what it used to be, and President Trump has an election to win next year.

But of course, these are not normal times. Over the weekend, President Trump, presumably in an attempt to leverage his bargaining power, abruptly announced his decision to slap 10 per cent tariffs on the remaining $US300 billion in Chinese imports, a move that essentially ended the current round of talks. And in response yesterday, China announced countermeasures that included a devaluation of its currency (the yuan), along with a halt to grain imports. According to one Wall St pundit, on a scale of 1 to 10, China’s response was an 11.

And for good measure, President Trump formally labeled China a ‘currency manipulator’ this morning, hence the continued market sell-off, along with the usual spike in gold.

On the face of it, it would seem that any hope of the US and China striking a trade deal in the near future is now well and truly off the table. This matters, as about half of the bounce in local and global shares since January this year was based on the assumption that, sooner or later, both sides would finally get their act together. So this could get worse before it gets any better.

But all too often, discomfort precedes victory. My instinct is that a deal will eventually be made (because they simply must), and what we may actually be witnessing are the final, angry, rough and tumble, face-saving stages (for domestic consumption) of an eventual trade deal. As with most compromises, neither side will be delighted with the final outcome, and no doubt Trump will declare himself the ‘winner’, but a deal will be made. Polyannaish, perhaps. But anything less than a calming, confidence inducing trade agreement would virtually guarantee both political and economic suicide, and both sides know it. This isn’t over by a long shot. Hang in there.

Rick Maggi, CFP

Election brings greater super certainty...


Chris Bowen, the Labor Party Treasurer told a group of elderly voters that if you don’t like our policies then don’t vote for us - it seems that self funded retirees and aspiring self funded retirees took his advice.

Refundable franking credits remain, but the cost of imputation may still lead to change in the future. But for the time being, consider what has been spared from a Bill Shorten led Government…

Non-concessional contribution cap remains at $100,000. Labor planned to slash this to $75,000.

Catch-up concessional contributions remain. An initiative of the current Government, the ability to make ‘catch-up’ contributions only came into effect last July. It was designed to allow people with interrupted work patterns, such as a mother who goes on maternity leave, to make additional super contributions when they return to work and still receive the same tax concessions.  Labor planned to abolish this altogether.

Deductibility of personal contributions within the concessional cap ($25,000) remain. Concessional contributions include your employer’s compulsory super guarantee contribution of 9.5%, salary sacrifice contributions and personal  contributions you make and claim a tax deduction for. They are capped at $25,000 in total. Until recently, the third category was only available to “self-employed” persons who satisfied the “10% rule”, that is, they received less than 10% of their income in wages or salary (ie genuinely self-employed). Last year, the Government scrapped the 10% rule so that anyone who was eligible to contribute to super could claim a tax deduction for personal super contributions (within the overall concessional cap of $25,000). This was designed to assist, amongst others, employees whose employer didn’t offer salary sacrifice facilities. Labor planned to abolish this and reintroduce the the 10% rule.

Higher income super tax remains at $250,000+. Known as Division 293 tax, a higher tax rate (effectively 30%) applies to concessional super contributions made by higher income earners. Originally introduced to apply to persons on incomes of $300,000 or more, the threshold was reduced last year to $250,000. Shorten proposed lowering this to $200,000.

SMSFs can still borrow. David Murray’s Financial System Inquiry recommended that SMSFs be prohibited from borrowing to purchase investment assets such as property. While the current Government chose not to adopt this recommendation, Shorten’s Treasury Spokesman Chris Bowen had stated that an incoming ALP Government would adopt this recommendation and change the law to prohibit SMSFs from borrowing.  

6 Member SMSFs are now guaranteed, paving the way for SMSFs to add on other family members, like children, to their SMSFs - a potential negative for industry and retail funds.

Going forward, we can also expect Industry Superannuation Funds will spend a little time under the spotlight, and finally forced to have independent boards. As Industry Super has always been joined at the hip with the Trade Union Movement, and therefore the Labor Party, their voice will be greatly diminished in the coming years, and should face the same scrutiny that Banks and retail super funds endured during last year’s Royal Commission - the final piece of the super puzzle, and a great win for all Australians.

Rick Maggi, Certified Financial Planner.

Are you being heard?


For humanitarian Alex Sheen, the actions of one person really do matter. It’s one of his core beliefs behind his social movement campaign – because I said I would – to change the world through promises made and kept.

We’re all guilty of making promises that we don’t keep – whether in the workplace, with family or friends, or even with ourselves. So, whatever happened to your ‘word’ being your ‘bond’ and why are we today so quick to break a promise made?

It’s an intriguing question that Alex Sheen asked himself six years ago, when his dad passed away.

“My father was the type of person you could really rely on. His promises were rock solid,” Alex says. “Dad was ‘old school’, where a handshake meant something. Unfortunately, my father succumbed to cancer in 2012 and at his funeral, I delivered his eulogy which was titled – ‘Because I said I would’.”

As part of the eulogy, Alex spoke about the importance of promises, which his father excelled at keeping. It was a defining moment for the then 27-year-old, who gave out his first ‘promise card’ – a small piece of paper with a written commitment on it, passed on to the recipient of that promise.

For Alex, it was the best way he could honour his dad’s legacy and the values his father instilled within him.

“These promise cards hold people accountable to their commitments,” Alex says. “And after fulfilling that commitment, you earn that card back, which becomes a symbol of your commitment, of your respect and honour.”

By honouring his father’s legacy, a social movement was born, with this US philanthropist and change-maker founding – because I said I would – a not-for-profit aimed at improving social good by changing the world through promises made and kept.

Today, the global movement has sent over 10 million promise cards at no cost to 153 countries, with Australia ranking third for the number of promise cards sent. And this global movement shows no signs of abating. But why?

“I think it’s because people want to be part of a global movement that crosses borders, languages and cultural barriers,” Alex says. “Technology has linked us in ways unimaginable just a decade or two ago. Today, we’re all part of a globally connected community. So, the concept of people being held accountable to their promises, is resonating with a rapidly increasing number of people. It’s truly been phenomenal.”

What type of promises are people committing to?

The 33-year-old says the promises made through because I said I would range from the seemingly mundane to the esoteric, and right through to the extreme, like: ‘I will not kill myself.’

Over the past six years, Alex himself has committed to a range of promises, including:

  • Walking 245 miles across the state of Ohio in under 10 days to fulfil a promise to the three Cleveland women who were held captive for 10 years

  • Volunteering at 52 different non-profit organisations in a single year

  • Promising children with cancer trips to Disneyland and personally delivering 100 tickets

  • Driving through the night to deliver disaster relief aid to the victims of Hurricane Sandy

“The common denominator for all these promises, regardless of who makes them, is that they mean something important to the person writing them. What’s important is that people matter and so too, do their promises.”

Classroom lessons

Alex is also taking the because I said I would campaign direct to schools in the US, with the not-for-profit rolling out its Character Education program for students and teachers. The program teaches children the concepts of honesty, self-control and accountability in the classroom.

“Learning English, math and science is incredibly important. But, if we are not educating the next generation to be decent human beings to one another, then what’s the point of it all?,” asks Alex.

“Character Education provides the opportunity for students to build the self-control needed to face life’s adversities. Learning things like honesty, accountability and compassion builds stronger citizens. We have launched high school chapters, provide personal development activities, and conduct assembly’s to inspire students to be a person of their word.”

Alex says the vision of because I said I would in the classroom is to create a culture of accountability and to train and encourage the next generation to be “difference-makers”, by making and keeping promises to oneself and others, and by actively engaging in humanitarian causes in schools, neighbourhoods and communities.

“By providing kids with this personal development opportunity, we’re empowering and equipping them with the skills to become a person of their word,” Alex says.

“That’s how this movement really started, with my father keeping his promises to me and my brother. The movement has since grown and we want to take it much further by creating programs that actually make a difference in communities through keeping promises.”

Be the change you wish to see

However, it’s a sad reality that everyday we are exposed to bad role models who don’t keep their promises, whether it be politicians, employers, workplace colleagues, or even friends and families. But Alex is adamant that people should care about changing the world though promises made and kept, and that change begins at the grassroots level.

“When we carry around this dangerous idea that the actions of one person doesn’t matter, then that idea costs the world. People stop voting, people don’t volunteer, people don’t show up for engagements, people don’t care. Society breaks down.

“So, keeping promises might seem simple and easy to do, but it’s not. You only need to scratch the surface to understand the effect that broken promises have on unraveling a lot of important parts of society.”

Gandhi famously said: “Be the change that you wish to see in the world.” It’s this sentiment that Alex whole-heartedly embraces, believing his social movement – because I said I would – is a genuine catalyst for societal change.

“What mostly changes the world are all those little things we do each and every day that we say we will do. So, our movement is about engaging with people to commit to doing the things that are right in front of them – to vote, to go watch your kids play sport, or donate blood just once a year.”

But saying and doing are two completely different things, and Alex believes people can become better at keeping their promises by personally making themselves accountable for them. And what better way of doing that than by the constant reminder of a calendar.

“Most people only use a calendar to diarise meetings. But one of the best ways people can get better with keeping their promises is to add it to their calendar, which not only reminds you about the promise but also keeps you accountable to that promise.”

Money moves and changes the world

As the founder of a not-for-profit charity and one of the world’s fastest growing social movements, Alex is only too aware of the reality that “money moves and changes the world”. But he believes society has become too obsessed with the almighty dollar, with the accumulation of wealth seemingly the sole purpose of life.

“I think we’ve forgotten how much a bag of rice or medicine – things we take for granted – can really change someone’s life. So, in that respect, money is a wonderful thing because it can solve a lot of problems in the world today. But it’s also a terrible thing because we sometimes focus on the wrong application of it.”

But that’s where financial planners can step in. When it comes to committing to promises, Alex believes planners are well placed to take a greater role with effecting real change, not just with themselves, but with their clients and in the wider community.

“Planners are in a position to have deeper conversations on topics like, ‘the purpose of life’, with their clients. I think a professional who can help someone else allocate or spend their resources, like time or money, for the greater good, is in a truly privileged position,” he says.

“And if we’re talking about ‘the purpose of life’, then charity and charitable given has to be in there somewhere. It’s one of the greatest gifts we can bestow on others.”

It’s a simple message

Alex will be sharing his personal story and mission to better humanity by changing the world through promises made and kept on the final day of the FPA Professionals Congress.

One of the key takeouts from his presentation will be the fact that the actions of one person really do matter.

“One of the most dangerous ideas today is that the actions of one person doesn’t matter. What we stand for at because I said I would is the personal responsibility and accountability of your beliefs. Unfortunately, doing what you believe in is underrated. So, it’s dangerous to believe that our actions don’t matter or we can’t make a difference, when in fact, we can.”

Another takeout from Alex’s session will be the fact that promises are difficult to keep.

“A lot of people like to ‘people please’. They willingly agree to things but fail in their commitment to uphold their promises. By doing so, we’re creating disappointment and inconvenience for others, not to mention personal reputational damage. So, think before you leap, and be patient when it comes to making promises.”

And finally, although it might sound clichéd, Alex challenges planners to think about how they want to leave their own personal legacy – whether it’s a life of regrets and missed opportunities, or a life of fulfilment and engagement.

“I’ll let you in on a little secret, a lot of because I said I would is not actually all that innovative,” Alex confides. “I’m actually saying a lot of things people already know. Our mission has a simple message about making promises and keeping them. It’s not rocket science.

“Through a culture of honesty and accountability, we can all become stronger and compassionate citizens of the world, capable of truly making a difference with our lives and the lives of those around us. Why? because I said I would!”

Alex Sheen is a keynote speaker at the 2018 FPA Professionals Congress in Sydney (21-23 November). He will be speaking in the third keynote session on Friday 23 November.

taken from ‘Money & Life’, Financial Planning Association of Australia

Banking Royal Commission: A Quick Word...


Over the last couple of months, the Banking Royal Commission has, finally, exposed a variety of unsavoury practices that have been taking place in the Banking/Financial Planning community, triggering investigations and lawsuits levelled primarily at the four big banks and AMP. 

While I was well aware of many of the issues raised, I was also shocked and disappointed on hearing some of the client experiences that had surfaced during the proceedings. And one of the takeaways from this sad story that became quite clear to me is that the big bank's foray into wealth management (circa early 1990s) has essentially failed, and they know it.

Today, non-bank owned advice firms (like Westmount) currently represent only about 15% of the entire financial advice profession (85% are bank owned, AMP owned, or aligned with a union fund). But now, banks are heading for the exits, offloading their respective 'wealth management' divisions en masse.

So while this level of negative media attention is sometimes a little difficult for me to hear (as it unfairly tars every financial adviser with the same brush), I'm quietly optimistic that both clients and professional financial advisers will significantly benefit from the bank ownership 'exodus' taking place today; a direct consequence of the Banking Royal Commission.

Hopefully we're witnessing the early stages of a shift to a more thoughtful, transparent financial advice model where the client's best interests are at heart - the way it was always meant to be.

As we move forward, feel free to call me personally if you would like to discuss your own arrangements with us.

Rick Maggi, Certified Financial Planner