2020 – What a year!
Welcome to the December edition of our Exchange Newsletter.
In this edition, we hear from our leadership team on what can only be described as an extraordinary year, plus we get their thoughts on what 2021 may bring in terms of the current financial landscape, the wider economy and the opportunities for prudent investors.
Enjoy the read!
Damien Cooper (Chief Executive Officer)
A safe pair of hands at the wheel
As we approach the end of what’s been a difficult and interesting year, I’d like to reassure our valued clients that the team at Financial Decisions is working harder than ever to meet your financial goals.
We are indeed in unprecedented times, with COVID-19 significantly impacting all parts of the economy. In response, both the federal and state governments have implemented a number of stimulus measures, including increasing liquidity in the market, and creating a low interest rate environment. Already at historic lows, interest rates are expected to remain low for the next 2-3 years at least.
So what does this mean for investors?
Put simply, investors will need to increase their level of risk to remain on course to reach their longer term objectives. With cash providing minimal returns and the three-year bond rate currently at 0.1%, focus will turn to slightly riskier assets that pay a higher rate of return e.g. equities, property and asset backed securities (mortgages). Mortgages have the underlying security of residential and commercial property, which means as an investor, you’re measuring the level of risk you’re prepared to take on.
At Financial Decisions, our job is to bring these opportunities to you and mitigate your risk exposure. For example, we target sectors of the property market that we feel are more robust, whether it be residential, commercial or warehousing. We also focus on the demographics and location of the underlying assets (e.g. particular capital cities) to ensure the strongest possible returns.
It’s certainly a brave new world and we’re at a genuine reflection point in history. As a result, we all need to adapt and thrive. As we move into 2021, the experienced advisers, accountants and mortgage professionals at Financial Decisions are ready to assist you in adopting the right strategies to minimise your risk, maximise your returns and achieve your planned objectives. Onwards and upwards!
Archana Bhatia (Head of Wealth Management)
Glass half full
Whilst 2020 certainly proved to be a challenging year, it also reminded us of the importance of connecting and communicating with each other – friends, family, colleagues and clients. It also presented new opportunities to strengthen and diversify many of our clients’ portfolios.
With COVID-19 in full swing in March and April, governments around the world moved into quantitative easing mode, with economies propped up by support packages, stimulus initiatives and infrastructure projects. That said, we’ve been extremely lucky in Australia to avoid the worst of the pandemic unlike our friends in Asia, Europe and North and South America.
As I look ahead to 2021, I’m determined to further enhance my offerings to my valued clients. I will be working closely with two of our experienced analysts, Anwar Raslan and Marc Lerner, to create strong portfolios for clients in this low interest rate environment. I’m also thankful to have the incredible support of our in-house accounting team, led by Chetan Sharma, to help solve client tax issues.
Globally, there is renewed market optimism and energy with a new US President taking office in January and a COVID-19 vaccine not too far away. And with the team here at Financial Decisions always taking a ‘glass half full’ approach to market conditions, I’m also heading into the new year with an optimistic outlook for a positive economic rebound and improved health outcomes both here and abroad.
Chetan Sharma (Tax & Accounting Director)
Taking stock and looking forward
It goes without saying that 2020 has been a personally devastating year for many individuals, families and communities around the world. Financially, COVID-19 impacted markets across the globe, with a sudden drop in demand for products and services, labour shortages, and supply chain disruptions.
Here in Australia, our governments scrambled to save the economy and protect peoples’ livelihoods through the introduction of both JobKeeper and JobSeeker, cash flow boosts, and instant tax write-offs.
The last 12 months have been an extremely busy time for us here at Financial Decisions, and technology has played an integral part in helping us keep in touch with our clients and continuing to meet their financial needs. Thanks to this technology, we’ve been able to adapt our services to the way you and your customers are now operating e.g. working from home more often.
Given the changing business landscape and market uncertainty heading into 2021, now is a good time to consider things such as:
- How do you keep up with demand for your products and services?
- Where is your business heading?
- What’s your financial plan and is it structured appropriately?
- What does your IT footprint look like?
- What’s your cash flow situation and do you have enough working capital?
- What does your cost structure look like?
- Is your workforce ready for the new world?
- What’s your capital efficiency?
Wherever you stand presently, Financial Decisions is here to support you and/or your business streamline your tax and accounting processes, and keep your financial strategy on track into 2021 and beyond.
Anwar Raslan (Chief Investment Officer)
Emerging from the storm
After starting at Financial Decisions in January this year, my first 12 months have flown by!
Before I take a look at the investment landscape for 2021, I thought I’d share a bit about my professional background. I started my career in Adelaide having had a passion for investing from a young age. I considered stockbroking, however the impersonal and transactional nature of the business didn’t appeal to me, so I moved into financial planning where I could build long-term relationships with my clients.
Whilst in Adelaide, I worked for Bridges Financial Services where I gained valuable exposure to direct share and property investments, after which I ran my own financial planning business. I then re-located to Sydney in 2014 to work for Mercer Asset Management. Not only was I responsible for looking after high net worth clients and driving new business leads, I also spent time working closely with the Institutional Wealth Division. I then accepted a role at State Plus Super, which gave me valuable insights into how large superannuation companies managed their investment funds.
Prior to joining Financial Decisions, I also completed my Chartered Financial Analyst qualification, primarily so I could gain a deeper understanding of the analytical side of investment management.
And so we come to the present. Despite being a difficult 12 months for the industry as a whole, it’s actually been quite an interesting and rewarding period to navigate. At the beginning of the year, we ramped up our cash exposure to add an extra layer of security for our clients, and then we invested some of this cash back into growth investments around April when the COVID-19 pandemic took hold in Australia. We also increased our currency hedging for client portfolios in mid-2020.
Looking ahead to 2021, I believe emerging markets such as China, developing countries in Asia, Latin America, Eastern Europe and Africa will do well, and small to medium-sized businesses will rebound strongly. At Financial Decisions, we’re constantly researching an extensive range of managed funds and direct shares to ensure our clients are invested in the right asset classes for long-term stability and growth.
Wade Stanley (Head of Mortgages)
Bricks and mortar hold the key
What a year! As Damien has already mentioned, in response to ongoing volatility around COVID-19, both the federal and state governments have intentionally created a low interest rate environment. Indeed, the Reserve Bank has flagged that interest rates are likely to remain low for the next 2-3 years.
The result is there’s a lot of cheap money available, which presents an opportunity for investors to potentially refinance and put some bricks and mortar into their portfolio.
Financial Decisions can help you take advantage of this situation by analysing your existing asset mix and finding the right property investment strategy for your circumstances. What’s more, our Mortgages Division can work closely with the other parts of the business to ensure you enjoy an efficient and complementary approach to investing, helping to streamline your finances and maximise your returns.
Merry Christmas and a Happy New Year to all
From all of us here at Financial Decisions, we wish you and your family a very safe and happy Christmas.
Please note that the office will be unattended from Wednesday, 23 December until Monday 11 January.
We look forward to working with you again in 2021.
Disclaimer: This publication has been compiled by Financial Decisions (AFSL/ACL Number 341678). Past performance is not a reliable indicator of future performance. While every effort has been taken to ensure that the assumptions on which the outlooks given in this publication are based on reasonable data, the outlooks may be based on incorrect assumptions or may not take into account known or unknown risk and uncertainties. Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information and any advice in this publication do not take into account your personal objectives, financial situation or needs. Therefore you should consider its appropriateness having regard to these factors before acting on it. While the information contained in this publication is based on information obtained from sources believed to be reliable, it has not been independently verified. To the maximum extent permitted by law: (a) no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up-to-date or fit for any purpose; and (b) Financial Decisions nor its employees are in any way liable to you (including for negligence) in respect of any reliance upon such information or advice. December 2020
Contact: Financial Decisions PO Box 484 Mona Vale NSW 1660, T 02 9997 4647, F 02 9997 7407