30/10/14: Punchbowl removed: The end of 'Quantitative Easing'

End of an era… After a year long phasing down period, last night the US Federal Reserve finally ended its quantitative easing (QE) program, introduced at the height of the Global Financial Crisis back in 2008.

Since the worst days of the GFC, unemployment has fallen, consumers are spending again, businesses are investing and banks are lending. So after all is said and done, QE seems to have actually worked - the US economy is now well and truly into expansion mode and looking a lot stronger than Europe and Japan that have taken longer to adopt QE.

It would be fair to say that, while the US economy isn't exactly booming, the Fed Reserve's decision to take the economy off life-support was, at least for now, an important sign that the US may now be able to finally stand on its own two feet.

While the punch-bowl may have been removed from the table, the music continues to play. Consistent with the Fed Reserve's softly, softly approach, they've also indicated that interest rates won't be going up in a hurry, even as the US economy continues to recover - an encouraging signal to the US (and the rest of the world) that concrete evidence of a sustainable recovery will be needed before interest rates are finally raised in earnest.

The ending of US QE is also a positive for Australia and removes a source of upwards pressure on the Australian dollar (great for exporters).

Rick Maggi Westmount I Financial Solutions

27/10/14: Deeming Deadline: 1 January 201

Time for action!

Has your financial advisor contacted you about the account based pension (ABP) deeming rule changes effective 1 January 2015?

Don’t miss out If you haven’t, it’s time to act now. If you wish to recommence your ABP before the changes take effect, we recommend you finalise all paperwork by 1 December 2014 to ensure you retain your current income test treatment or you may risk losing it.

Recap of deeming changes On 1 January 2015, ABPs will be added to the definition of financial assets in social security legislation, which means all new ABPs will be subject to deeming rules for both Centrelink and Department of Veteran Affairs income test purposes. Under the new deeming provisions, all financial investments are assumed to earn a certain rate of income, regardless of the income generated.

Grandfathering provisions will be available ABPs commenced prior to 1 January 2015 will retain their current income test treatment where: · The person was receiving an income support payment immediately prior to 1 January 2015 and, from that day, they have continuously received an income support payment. · An ABP automatically reverts to a reversionary beneficiary on the death of the original owner, provided that at the time of the reversion, the reversionary beneficiary is receiving an eligible income support payment.

If you have any questions or if you need help on this extremely important development contact Westmount on 9382 8885.

Rick Maggi Westmount I Financial Solutions

19/10/14: Comment: FOFA amendments disallowed

Should you care?

Back in July, the government negotiated a deal with Clive Palmer to save the 'FOFA' (Future of Financial Advice) amendments. However this morning two cross benchers (Senators Lambie and Muir) did an about-face and joined Labor senators opposing the government's FOFA agenda. We can only assume that we will now see the return of FOFA (the'full-strength' version) unless a compromise can be found.

Considering Senator Lambie's recent clashes with PUP leader Clive Palmer, this seems more like a personal grudge, along with a good helping of political naivety. But for better or worse, that's the system we now have.

So exactly what does this mean for you, as a client of a financial adviser? Hysteria and vested interests aside, probably very little.

If you already have a good relationship with a non-aligned financial adviser who provides an efficient and meaningful service to you at a fair price, you won't notice much (or any) change to the way he or she interacts with you.

Let's not forget that FOFA (Labor's full strength version) was introduced almost 18 months ago which, among other things, effectively banned investment commissions and ramped-up disclosure requirements, creating a more transparent, trusting environment for investors, retirees and professional financial advisors alike. And contrary to media reports, this law was welcomed by virtually all concerned, including financial advisors, and continues to this day.

The FOFA amendments or FOFA 'lite' (introduced by the Liberals) sought to reduce some of the new law's excessive 'red-tape' without jeopardising the lion's share of consumer protections. Personally, I thought a regulatory adjustment made some sense, but that's history now.

I've spent over 30 years in financial services and I believe that the vast majority of financial advisers I've known over this time are ethical, educated, well-meaning people who sincerely want the very best for their clients, and to also run profitable practices for themselves, their families, and their employees. That's just good business.

So naturally, it has been disappointing to see the reputations and motives of solid professionals being publicly denigrated during this lengthy, polarising process.

My advice is to ignore the cynics with obvious vested interests. If you're comfortable with your current financial adviser, hold on tight and follow your own instincts, chances are you're in very good hands.

Time to move forward.

Rick Maggi

29/09/14: Medibank Private

Get ready….

The share sale process for the nation’s largest private health insurer — covering almost four million Australians — begins on Sunday with a government campaign to get mum and dad investors to pre-register their interest.

The prospectus, which will indicate the price per share, will be available in the second half of October with the enterprise due to list on the domestic stock exchange by December.

The offer will preference registered policyholders, who will be able to get a greater share allocation than non-policy holders. Finance Minister Mathias Cormann said the government anticipated a “large amount of interest” in the sale, which could raise about $4 billion for the federal coffers.

The coalition is hoping to offload 100 per cent of Medibank Private, saying there is no reason why the federal government should be involved in the health insurance market. The proceeds would be invested in productivity boosting measures, he said.

AMP chief economist Shane Oliver said it wasn’t surprising policy holders would get preferential treatment.

“It’s consistent with what happened in the past with privatisation — where policy holders get preference,” he told AAP on Sunday.

“Even AMP, when it demutualised, it’s policy holders got shares initially.” Dr Oliver said at an expected $4 billion, the initial public offering (IPO) was one of largest seen in Australia for some time. “Along with other capital raisings and IPOs in the next few months, this means quite a lot of money will be drained out of the market,” he said.

People wishing to register for the share sale can go to: medibankprivateshareoffer.com.au.

The IPO will also be open to domestic and foreign institutional investors.

The coalition is hoping to offload 100 per cent of Medibank Private, saying there is no reason why the federal government should be involved in the health insurance market.

Finance Minister Mathias Cormann said the government anticipated a “large amount of interest” in the sale. It has often said there is a conflict of interest in the commonwealth being both the regulator and the largest market participant in the sector.

Senator Cormann said Medibank Private would perform better in private hands, but denied privatisation would lead to higher insurance premiums.

“Medibank Private ... will continue to have to compete for customers with 33 other health funds and that of course will put a natural limit on Medibank’s capacity to lift premiums beyond what is competitive,” he told reporters in Melbourne.

The finance minister refused to say how much the government hoped to raise from the float, slated for December.

“The best possible net return for taxpayers — that’s what our objective is with this sale,” Senator Cormann said.

Senator Cormann said the privatisation of Medibank would see it perform better as a business.

“Medibank Private is already performing very well as a business, but there are obviously some restrictions that come with being government owned and we believe that in private ownership, that Medibank private will be able to perform even better,” he told reporters.

He said the public would get first access to buy shares, before the sell-off proceeds into the institutional phase.

But he said no buyer could own more than 15 per cent of the company.

Medibank chairman Elizabeth Alexander welcomed the announcement. “We’re excited for this new opportunity for Medibank and what it may bring and we are pleased to be proceeding with this next step that will lead us to our debut on the Australian Stock Exchange,” she said She assured Medibank customers that they can expect the same service after the sell-off.

“The Medibank you have trusted for years is the very same Medibank that will continue to look after your health well into the future.”

Rick Maggi Westmount I Financial Solutions

25/09/14: Australian property - a little too hot?

...well that depends

A balanced analysis of the Australian property sector. Read more here

Rick Maggi Westmount I Financial Solutions

04/09/14: Profits and the Australian economy

Not bad!

The property reporting season that just finished was reasonably good with profit growth expectations affirmed. Read more here

Rick Maggi Westmount I Financial Solutions

04/09/14: How long can interest rates remain on hold?

…perhaps a little longer

An interesting read for a recurring theme out there. Read more here.

Rick Maggi Westmount I Financial Solutions

18/08/14: How does the world see you?

A fascinating exercise…

I think this is a must read for all of our clients and colleagues… Read here

Rick Maggi. Westmount. Financial Solutions.

14/08/14: Why I love dividends

…and so should you

Another great read from Dr Shane Oliver. Enjoy. Read here

Rick Maggi. Westmount. Financial Solutions.

24/07/14: Investment Outlook 2014

Another solid year, but where to from here?

An excellent, easy to read commentary. Enjoy!   Read Commentary Here

Rick Maggi. Westmount. Financial Solutions.

24/06/14: The Seven-Day News Diet

Are you informed or inundated?

Having worked with investors and retirees for over 30 years, there is no doubt in my mind that anxiety levels are higher today than they were 10, 20 or 30 years ago, thanks largely to 24/7 news cycles. Personally, I'm utterly addicted to the news and would probably feel a little lost without my regular news 'fix'. But that's part of my job, to separate the daily background noise from what really matters most, and then communicate the facts to my clients, as simply as possible.

Sadly, 24/7 news is impacting on investor behaviour, but there is a way to build and protect your wealth without getting caught-up. Read more here

Rick Maggi, Westmount. Financial Solutions.

09/06/14: Abenomics

Good for Japan. Good for investors. Good for Australia.

Party politics aside, this is a big positive. Read Here

Rick Maggi. Westmount. Financial Solutions.

11/06/14: Europe getting its act together

…and what it means for investors

Dr Shane Oliver takes a close look at the European landscape. Very encouraging. Enjoy! Rick Maggi. Westmount. Financial Solutions.

Read more here

11/06/14: The Certainty Principle

When investors wait for certainty...

A frequent complaint from would-be investors is that "uncertainty" is what keep them out of the financial markets. "I'll stay in cash until the direction becomes clearer," they will say. So when has there ever been total clarity? Rick Maggi. Westmount. Financial Solutions.

Read more here

06/06/14: The structural challenges facing Australia...

…and what it means for investors.

A sobering, but balanced commentary from AMP Capital's Dr Shane Oliver. Worth a read in this blurry, politics laden post-budget environment. Enjoy!  Rick Maggi, Westmount. Financial Solutions.

Read here

01/06/14: Budget update (for retirees)

Some further clarification...

The following is a quick, easy to understand summary of some of the key changes impacting retirees. Since the budget was released, we've noticed quite a bit of confusion surrounding the new Age Pension deeming rules (coming into effect from 1 January 2015), and the proposed rules impacting Commonwealth Seniors Health Card holders in January 2015, and July 2014. Hopefully this summary will make things a little clearer.

Of course, these budget measures will need to be passed by Parliament, so it will be interesting to see what the final outcome really is. We'll keep you posted. Rick Maggi, Westmount. Financial Solutions.

Read summary here

13/05/14: Federal Budget 2014/15

Tough Love...

Good evening.

Tonight's Budget announcements, while reasonably tough, were not particularly surprising considering all of the speculation leading up to the event. Of course, passing these measures through Parliament will be an interesting challenge indeed.

With a little luck, our Budget deficit will fall from its current $49.9 billion level to $29.8 billion next year, closing in on surplus territory by 2017-18.

Thankfully, the Government held firm on its commitment not to make adverse changes to superannuation, although changes to social security and the temporary budget levy are likely to impact a number of clients.

Focusing on the financial planning space, the three key areas for clients to consider are as follows:

Personal Income Tax and the Budget Repair Levy

With the exception of the temporary 'Budget Repair Levy', personal income tax and thresholds will remain unchanged from 1 July 2014.

The Budget Repair Levy will essentially be a 2% tax on individual's taxable income in excess of $180,000 pa. The levy is scheduled to last three years (2014-15, 2015-16 and 2016-17).

Individuals with taxable income of $180,000 or below will pay no levy.

Commonwealth Seniors Health Card

At present, superannuation account-based income is excluded from the Commonwealth Seniors Health Card (CSHC) income test, which is $50,000 for singles and $80,000 for couples.

However, from 1 January 2015, the Government will begin including superannuation income to determine eligibility for the CSHC.

Please note that all superannuation account-based income streams held by CSHC holders before the January implementation date will be 'grandfathered' under the existing rules.

Increase the Age Pension age to 70

As widely expected, from 1 July 2025, the Age Pension qualifying age will continue to rise by six months every two years, from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70 years by 1 July 2035.

Other measures

There are many other proposals worth noting, particularly in the area of family payments and job seekers. To read a more detailed report, click here.

Over the next few weeks, we'll pour over the finer details and let you know if there is anything else you should be aware of. In the meantime, please feel free to call me personally if you have any questions or concerns.

Rick Maggi. (Westmount. Financial Solutions)

06/05/14: Bank Financial Planners: Tread carefully

80% of financial advisers now 'owned' by the banks

Last night's 'Four Corners' documentary on ABC (watch video here) primarily focused on the shameful behaviour of a particular Financial Planner within Commonwealth Bank's planning division. But more importantly, the documentary also highlights a broader 'conflict of interest' issue with bank advisors generally, and possibly other institutions.

While I suspect that 'bad advisers' (in all professions) will continue to lurk in the shadows forever and a day, the problem highlighted in last night's report goes beyond a single 'rogue' adviser. Rather than a one-off event, the flaw appears to be systemic, possibly stretching across the entire banking wealth management model.

So with over 80% of financial advisors in Australia now directly or indirectly owned by the banks, as a customer, it's now prudent to question the motives behind that humble bank teller who subtly offers to introduce you to their friendly financial planner for a 'second opinion', the next time you review your home loan or term deposit.

And if you believe that your financial advisor is employed by an 'independent', non-bank aligned firm, you now have every right to ask whether that advisor's license is indeed owned by a bank - chances are it is.

Of course, following on from last night's Four Corners report it would be easy to conclude that you simply can't trust financial planners, or anyone else, to look after your hard earned money. That would be wrong (and sad). The reality is that there are more than enough high quality financial advisers out there, doing terrific work, helping clients achieve their dreams - I personally know many of them and wouldn't hesitate recommending these professionals to family and friends.

So expect the best, just ask plenty of questions and do your homework.

Rick Maggi

17/04/14: Are shares headed for a crash this year?

…not likely

After a strong period of growth its natural to wonder whether the share market is headed for a crash at some point in the near future. This article examines the potential going forward. Read more here If you have any questions about the structure of your own superannuation or investment portfolio, please don't hesitate to call us.  Rick Maggi, Westmount. Financial Solutions.

30/04/14: Smart End of Financial Year strategies 2013/14

The countdown begins...

With the end of the financial year fast approaching, we're commencing a 60 day countdown to assist you in getting your financial affairs organised and ready for the June 30 deadline. Taking action now can open up more opportunities for you. The following guide lists 12 key superannuation and insurance based solutions you should look at.  Read Here

As always, we're only a phone call away. So if you would like to discuss your own strategy, tax, superannuation, investment, retirement planning, Centrelink issues or the Federal Budget, please call us on 9382 8885. (Rick Maggi. Westmount. Financial Solutions.)