2021 – The year in review
Welcome to the December edition of our Exchange Newsletter.
In this final edition for 2021, our leadership team review the past 12 months and look ahead to what we might expect in the coming year in terms of market changes, interest rate movements and potential investment opportunities. We also hear about Financial Decisions’ expanded service offering in 2022.
We hope you enjoy the read!
Damien Cooper (Chief Executive Officer)
Broadening our horizons
Just when we thought 2020 was the most unpredictable year in recent memory, along came 2021. Before beginning this article, I reflected on what I wrote at the end of last year, which was:
“The overall message is we’re here to help you navigate through this turbulent period. Our expertise and experience combined with the right strategies for your unique situation will see you ride things out until the economy adjusts to the new ‘normal’.”
Twelve months on and I’d like to echo this sentiment. Yes, we are living in strange and unpredictable times, however Financial Decisions is by your side every step of the way. And rather than focus on the past 12-24 months, we’re continually looking ahead to strengthen both our business and service offering.
That includes expanding our offering to include legal services in 2022. This is an exciting time in the evolution of Financial Decisions, and we look forward to discussing our enhanced family office offering and how this could benefit your immediate family. This decision aligns with our goal of providing you with a full suite of financial services across wealth management, superannuation, insurance, estate planning, mortgages, tax and accounting, and now legal. By having all these services at your fingertips under the one umbrella, you enjoy investment synergy and a seamless experience when it comes to your financial service needs. We hope the trusting relationship we’ve established with you (over many years in many cases) can extend to your family and friends in 2022.
So with that in mind, I’d like to thank our wonderful clients and the amazing Financial Decisions team for their efforts over the past year, and I wish you all the best for the holiday season.
Archana Bhatia (Head of Wealth Management)
A flexible approach to wealth management
As I reflect on 2021, I’m amazed and inspired at how well our clients have adjusted to the new ‘normal’. Faced with constantly evolving rules, requirements and restrictions, adaptability has been the key element, and this is particularly noticeable when it comes to technology. With more interactions taking place via platforms such as Zoom and Microsoft Teams rather than face-to-face, I have found that everyone’s ability to work with and embrace technology has been a positive experience. That’s why I would like to take this opportunity to thank all our clients for their patience and flexibility over the past 12-24 months.
Speaking of flexibility, that’s been the cornerstone of our Wealth Management division in 2021 and will continue to be a focus in the new year. Global growth is expected to be modest; strong in the United States but more subdued in China as it moves from an emerging to developed market. Domestically, interest rates are tipped to rise over the next 12 months, which will offer income opportunities for retirees.
Overall, our Wealth Management division is well prepared to overcome any challenges and take advantage of new opportunities in 2022. We look forward to hopefully having more face-to-face interactions with our clients in the coming year!
Chetan Sharma (Director)
Change is the only constant
The world seemed to shift to another dimension in 2021. As a community and nation, we faced numerous challenges, however the year also brought out the best in people in terms of compassion, solidarity and strength. Our firm, along with many other organisations, adapted to the constantly changing requirements of the workplace, found new ways of doing business, and built trust in both new and existing relationships.
Technology is still at the forefront of discussions. New innovations are disrupting the traditional business models, as well as the way we communicate with one another. Data analytics and social networking will have a huge impact on our future as we move towards a more data driven world. An example is the opening of the world’s first fully automated and robot-served hotel in 2022.
Moreover, today’s workforce is more diverse than ever; hierarchical structures are becoming increasingly leaner and many new job roles and titles are being created. As such, we need to adapt to the changing nature of work and employ radical thinking in our daily lives and business practices.
With change being the only constant, it is now time to refocus on both short-term and long-term goals and objectives. Are they still aligned to your financial, investment and/or business strategy? What is your Plan B? How do you ensure the continuity of your plan or business?
I am particularly proud of the ingenuity and resilience shown by our team in keeping up with legislative requirements and changes, as well as going above and beyond to assist our clients throughout 2021 year.
I also wish to thank our clients for the faith they’ve shown in our firm and for their ongoing support. We look forward to working with you all again in 2022.
Daniel Rolley (Chief Investment Officer)
Investing in quality
After a tumultuous 12-18 months, we’re starting to see major economies recover from Covid-19 on the back of vaccine roll outs and stimulus initiatives – both fiscal and monetary. This has driven increased risk appetite, with most asset classes finishing the year at or near record highs. Over 12 months, the ASX is up 10%, the S&P 500 is up more than 20%, and Sydney property prices are up 25%.
The question is, will the rally continue? Valuations are extended relative to historical norms, however the share market still looks appealing compared to zero cash rates and bond markets. For example, the US stock market is still firing on all cylinders, with US corporate earnings expected to increase by 10% over the next 12 months. The largest companies within the S&P, such as the tech giants, are all delivering record earnings results, delivering growth of 20% to 50% year on year. This includes areas such as business productivity tools (MSFT), cloud computing (AMZN/MSFT/GOOGL) and e-commerce (AMZN).
There are other long-term themes we think will provide investment opportunities going forward. These include energy transition (renewable technologies and related commodities), the increasingly connected nature of the world (including the metaverse – semiconductors and platforms), and blockchain technologies (crypto platforms and service providers).
At Financial Decisions, we’re mindful of potential risks such as inflation, less supportive fiscal spending programs, and Covid-19 variant outbreaks. That’s why we believe it’s more important than ever to ensure your asset allocation matches your tolerance for market volatility. It’s also critical that you understand your investments, specifically what you’re invested in and why. A focus on high quality companies that feature economic moats and cashflow generation is paramount to staying the course and achieving strong and sustainable investment outcomes.
Wade Stanley (Head of Mortgages)
Are interest rates on the move?
As we all know, 2021 saw a continuation of record low interest rates and runaway house price growth in many areas across Australia. In particular, Sydney’s hot housing market extended to regional centres up and down the eastern seaboard, with many areas throughout the south coast, mid north coast and northern NSW experiencing record growth.
Interest rates are set to rise in 2022 and 2023 despite the Reserve Bank indicating the cash rate is to remain at 0.1% until mid to late 2023. At the time of writing, fixed interest loans make up around 50-60% of the market, which indicates a shift in sentiment across the board. There are still very competitive rates available for residential investors, although if you haven’t already locked in a rate, time is of the essence – we may not enjoy these favourable conditions for too much longer.
As always, the Mortgage team at Financial Decisions is here to help you navigate the market, analyse your mortgage position and recommend suitable lending products to meet your goals and objectives.
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 Friday 24 December until Monday 10 January.
We look forward to working with you again in 2022.
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 2021
Contact: Financial Decisions PO Box 484 Mona Vale NSW 1660, T 02 9997 4647, F 02 9997 7407