It never ceases to amaze me in my job as a financial adviser how many people I come across who seem to think they’re bulletproof when it comes to sickness or accidents.

“Oh no, those things happen to other people but I’ll be just fine” or what was a classic comment I heard from someone recently that I was arranging a large home loan for and who had absolutely zero life insurance???…”I don’t have any intentions of getting sick or dying any time soon?

Not only was this said in complete seriousness (along with arrogance) but also that particular person had a young dependent family who he seems to think will be able to cope financially if something happens to him.

I’ve also had numerous finance/home loan clients who borrow as much as they possibly can, stretch their income to pay for the home loan and make payments for house and car insurances without giving even a thought towards insuring their lives and their ability to earn an income through something like income protection insurance.

Then when I happen to mention they should take out life insurance cover to provide financial protection to their family, they say they can’t afford it because of everything else they’re paying.

Go figure??!!

My question to people is this; if you can’t afford to have some life associated insurances in place to protect the debt you have, then you really can’t afford to have the mortgage, can you?

So many people will insure their house and contents, their cars, boats and caravans but completely neglect their own lives and income earning capacity, which enables them to have these things in the first place.

For my mind, unless a person has some health related reason why they simply can’t get life associated insurance in place, then these insurances are the absolute first priority to consider before taking on debts such as home loans, investment loans, car loans etc.

Lets face it; we all will suffer some type of illness and/or accidents in our lives and a little bit of forethought about the financial consequences this will have on our family and loved ones will go a long way towards providing much needed financial protection for them.

So, what are life-associated insurances anyway?

Life-associated insurances generally consist of four main types of insurance cover being; life insurance, which pays a lump sum if you die. Trauma insurance, which generally pays lump sum if you suffer traumatic health setbacks such as cancer, heart attack, stroke etc.

TPD (Total and permanent disability), which also generally pays a lump sum if something happens that, renders you with an ongoing disability and then there is income protection cover, which, as the name implies, covers you for sickness and/or accident to protect your income.

Now of course, a person can have all of these insurances in place for a comprehensive financial protection package or just one or two perhaps if affordability becomes an issue.

So what would be the best insurances to have in place if you couldn’t have all of these four?

Lets look at statistically what insurance covers are claimed on the most and it what order; Apart from life cover which should be fairly easy to determine; i.e. if you dead, then you’re dead!

After that in order it goes income protection claims followed by trauma claims then TPD claims.

So, if you have some debt such as a home loan for $500,000 lets say, then it makes sense to have at least $500,000 worth of life cover to pay out the amount of the home loan if you were to die.

Then it makes sense to have your income protected doesn’t it, as it’s your ability to earn an income that enables you to pay for the home loan repayments in the first place?

After that of course, we come to trauma cover and TPD. One would suspect that if you’ve made an income protection claim for a sickness and/or accident event then it flows on to making a claim for a trauma event and maybe at a later stage TPD.

When you look at it like this logically then, you should have income protection, life cover and trauma in place if nothing else.

Hang on a minute; I can hear you saying that life cover was supposed to be the first priority followed by income protection and so on.

You’re right, I did say that but it’s also important to take note that statistically when we die, 9 out of 10 of us die slowly not quickly so there’s a big chance you’ll probably need income protection and/or trauma claims before you’re estate will rely on a death benefit to pay out all of your debts including your home loan.

I’m not for one minute saying we should go through our lives focusing on how mortal we really are, not by any means.

But it is important to be realistic about how life in general really is and that none of us is bulletproof and when (not if) something unfortunate happens, then you want to be sure your family can at least not be burdened by additional financial problems that you may have inadvertently left them with.

Get the right financial protection in place and get peace of mind as well.

* The author of this article, Gary Fabian, is the Principal of Precision Advisory; Licenced finance broker, risk insurance and superannuation adviser.

I watched a YouTube video recently with this very title. It told the story of a blackboard which was erected in the middle of New York City asking this simple, yet profound question and inviting people to share their biggest regrets.

As people from various walks of life came past the blackboard, some stopped and decided to share their own regrets of things they wished they had done or pursued in their life-gone-by.

It was as if this blackboard soon became a way for lots of people to publicly expose their regrets in a way that might help each one of them to move past whatever it was that was holding them back, and to rid themselves of these emotional ghosts.

I guess we all have them to a certain extent but it really depends on what we do with them and how we manage them from affecting our future-selves?

This was a very interesting social experiment and before too long a very big list of regrets had been written in chalk on this board and it became apparent that just about every one, from all different backgrounds, religions, race, colour and gender have regrets they harbour that have gotten in the way of them living their lives with fulfilment…or in some cases, with the one they truly loved.

It’s a cliché that fear can, and does hold people back from achieving their dreams. We hear it time and time again and most of us just put it to the back of our minds as if it doesn’t apply to us…”oh no, that’s not me” or “oh no, I’m not one of those people who lets regret in get my way”

Ask yourself this question; what’s stopping me from achieving my goals in life? What stands in my way from being who I really want to be? Is it having enough time or money?

Is it your health or available resources? Or, is it fear of failure????

What would you do if you knew you wouldn’t fail? Imagine that, what would you go and do if you really knew you weren’t going to fail at it?…the mind boggles!

This blackboard video goes on to ask people what happens when their regrets are simply wiped clean, gone, so they can all start fresh again. People come away from the blackboard feeling enthused and encouraged about their future.

More often than not, having a realistic plan in place about what it is you want to do and achieve in your life can, and usually does, give you great clarity and along with clarity comes some motivation.

But not only does your plan need to include what it is you want to achieve, it also needs to include the steps you’re going to take to get there i.e. “What do I want and how am I going to get it?”

More times than not, finances form a large part of people’s life plans.

As it is often said, money doesn’t necessarily buy you happiness and I completely agree with this statement however, whether we like it or not, money also plays a very large role in our lives today in being able to live in modern society with a reasonable level of comfort (and dignity) and to be able to support and provide for our families.

Where am I going with this?…simple, if you haven’t got some type of plan for your future, then get one (to get some clarity)

It doesn’t have to be fancy or complicated; in fact, it’s best if it’s simple and to-the-point.

And, get to your plan NOW rather than saying you’ll get to it tomorrow, or the day after that

Remember, life moves fast and before you know it you’ll wake up one day and 20 years would have passed you by.

Get a financial plan and put it into action, because action is the start of every thing.

* The author of this article, Gary Fabian, is the Principal of Precision Advisory; We develop plans for people’s financial future including, finance, insurance and superannuation retirement funding.

A recent survey conducted by MLC has unearthed some interesting perceptions of how Australians think about money and especially wealth, class and retirement, compared to 20 or 30 years ago.

Some striking revelations from this survey such as; Twenty per cent of those with a household income of $200,000 are living pay-to-pay and having $1 million does not make you rich.

46% of survey respondents said they were living from pay-to-pay, which on it’s own is very alarming.

Also, about the same proportion (48%) said living comfortably requires at least $150,000 per annum income.

This survey was conducted by MLC for the purpose of providing advisers and wealth managers with a better understanding of how Australians identify themselves and discover their financial aspirations.

It seems the results are confusing and alarming to say the least, I would say anyway!

There were other misconceptions revealed from this survey about how Australians view their own, and other people’s wealth. Two thirds (66%) labelled themselves as middle class or lower middle class whilst in reality only 20% actually fit this category.

The research suggest there is a clear disconnect between the definition of “lifestyle” and “standard of living” with many of the respondents saying the pre-requisites for a typical middle class Australian were; having a professional job, the ability to send their children to private school and owning a house and a car. With the average household income of the middle class now sitting at $77,676 per annum it seems most Australians attitudes are a mismatch with financial reality.

It seems that managing people’s expectations as we move forward is going to be harder and harder when it comes to money and especially retirement.

One thing is for sure; our spending patterns have changed dramatically and are most certainly not in line with our savings patterns.

It also seems that financial apathy is becoming more of the norm as this research tells us that Australians are looking to the government for answers with almost half of the survey respondents believing the government should do more to help middle class families.

Personally, I thought government was there to govern and lead the country as a whole and provide the resources for its citizens to take advantage off. Since when is the government there to provide us all with wealth in retirement…wait, didn’t communism promote that and fail miserably, time and time again.

Yes I totally agree that whatever government has power they should put in place the systems for people to prosper, but it’s up to us to get off our collective butts and actually do something with it, not sit back and wait to retire on a government (less than subsistence) pension.

And without doubt our superannuation system should have long-term certainty to match its long term proposed outcome of self-funded retirement. Rather than being tinkered with by successive governments who look to superannuation as a means to recoup the massive multi-billion dollar losses from whichever government has stuffed up previously.

All this being said, and regardless of extensive surveys that reveal that Australians have unrealistic financial expectations, we do still have a fairly robust and workable superannuation system that caters for the vast majority of us working Australians so, why the hell not take advantage of it??

Come on people, get real about your financial future!

I’ve said it before and I’ll say it again, we need financial literacy to be taught at schools to educate our young generations about the need to plan, to budget and to be mindful of money so they do something positive about their financial futures.

And I don’t just mean at high school. This is an important issue and it needs to be taught to our kids at a young age across the board so future generations will be savers, not just spenders and end up with nothing.

I’m a father and I try to teach my son to be financially responsible and it seems to be working as he has a healthy attitude towards working for his pocket money and saving it rather than blowing it on worthless, meaningless stuff….and he seems to understand the meaning of what’s good value and what’s not.

At 11 years old he’s even asked me what superannuation is and when I told him he asked me if he could have a super plan, wow! I really wish he could have one at 11 years old.

Imagine what the future finances of this country would look like if every 11-year-old child wanted to have a super plan to save for their retirement?

That’s a debate worth having, don’t you think?

* The author of this article, Gary Fabian, is the Principal of Precision Advisory; finance, insurance and superannuation advice and consultancy.

There’s no doubt that our financial lives today (and the financial products available on the market) can most certainly be very complex, to say the least.

It’s my opinion that seeking financial advice from a professional adviser is absolutely critical and people should never even think about getting risk insurance and/or superannuation without speaking to one such adviser.

An experienced adviser who knows their stuff can make a world of (positive) difference to your financial outcomes in all sorts of ways, and usually any costs associated with this type of advice will pale in comparison to what you should end up gaining by the exercise.

Plus, a good adviser will stay in touch and review your financial circumstances on a regular basis, to ensure everything is current and up-to-date.

Take for instance just the two areas mentioned previously of risk insurance and superannuation. These two subject matters are financial-minefields and for anyone to think they can navigate either of these (or both) without professional help is really kidding themselves!

Superannuation, wow!…even the absolute technical experts on this subject will tell you they struggle sometimes to keep up with all the little bits and pieces on this particular financial product.

In most cases, clients who go it alone will almost always make poor choices and generally purchase inferior products that simply don’t provide the level of cover and/or superannuation benefits they really need to suit their personal circumstances.

Today there are literally thousands of various types of financial products available to the consumer and whilst I’d say by-and-large most of these products are reasonable (at least) in delivering what they promise, it’s important to understand there is also a fair share of cheap-and-nasty stuff out there as well.

Don’t get me wrong, I’m not advocating having to pay through the nose for something either. I for one hate paying too much for anything, so I’m not suggesting that expensive financial products equal the best financial products, far from it.

All I’m saying is that professional advice in these complex areas will go a long way toward getting you the most appropriate products in place that will deliver when you need them the most.

I often say to my clients that this business of financial advice is very much like an iceberg in that what you (the client) see, is most definitely not what there really is lurking below the surface.

This is one reason why I truly believe the need for good financial advisers will only get stronger as time goes on.

I’m all for progress but the truth is, some certain things just require trained and experienced personal (human) advice and will always end up better than us dealing with robots or some wiz-bag tech web site that promises to solve all of your financial needs and requirements.

Technology has assisted us in making financial products substantially better for the consumer, but it’s the personal touch of a trained adviser that will ensure the use and application of these products is in the client’s best interest.

* The author of this article, Gary Fabian, is the Principal of Precision Advisory. He specialises is risk insurance, superannuation and finance.

The simple way to answer this question is to look at your credit card, or credit cards if you have more than one. Simply speaking, if you’re not paying off your credit card and clearing the debt back to zero each and every month then sorry, but you have too much debt.

Credit cards should only be used very sparingly and as a means of financial convenience, NOT a means of getting an easy loan from the bank or other financial institution. They are just way toooo expensive when it comes to interest rates and can be the absolute worse financial mistake you can make if you’re not careful.

Banks throw credit cards at people like frizz-bees and it’s very easy to use the credit that’s given to you but stop and take a good hard look and so no more.

Before you do anything else, you may want to pay off the existing balance on your card (or cards) and get back to using them for your benefit, not the banks benefit.

A good benchmark for the minimum amount of money to set aside in liquid reserves is about 6 months of living expenses. This way if anything does happen such as a disability or extended illness etc. then this will cover your expenses until disability insurance kicks in (assuming you have some that is?)

Now, if you’re self-employed, the benchmark here is about 12 months of living expenses due to the higher risk of an economic disaster happening.

Leading on from the previous question about emergency funds, it’s paramount for almost everyone these days to have in place risk insurance cover to protect against loss of income, disability, trauma events and of course, death. As I’m always saying in my job as a financial planner/risk consultant, absolutely no one is bulletproof and if you’ve been one of those very fortunate few who have (so far) escaped some type of injury or illness then don’t get cocky and think it can’t or won’t happen to you.

The cold hard facts are that we all end up facing some type of health challenge at some time and it always will result in being an expensive exercise that will place an enormous financial burden on you and your family.

So, don’t just insure the house and the car, insure you most valuable asset which is yourself. Don’t be cheap about it though, get proper advice from someone who actually knows what they’re talking about and can get in place quality risk insurance to give you and your family complete financial protection.

After all, what’s more important to you, you car and your house OR you’re family and their well-being?

Easy question to answer I suspect!

Have a look at all the services we use in our day-to-day lives and especially all the electronic/computer/communication related services the world has gone mad with.

Sit down with a pen and paper and get out all of these things that you pay on a regular basis and go through them in detail; you’ll be surprised I’m sure!

Somewhere in there will be some cost savings and maybe you might even find there are things you don’t need at all, so you can cancel them outright.

These services can also include such things as extra bank accounts you don’t use much or even need and these attract fees to keep them in place.

Then of course there’s the typical cable TV subscription and magazine subscriptions as well. Check them out and make sure you’re getting real value for your money.

I’ve seen clients do this exercise and save a tremendous amount of money each and every month and this adds up to lots of money over the course of the year, which could go towards that family holiday you’ve always wanted, or the kids school fees, or even towards the home mortgage repayments and/or extra superannuation contributions to boost your retirement savings.

You’ll be much better off with this money in your pocket rather than going out the door each month to various service providers, some of which you probably don’t need.

Now, speaking of superannuation and point 4 above about overpaying for other services. It never ceases to amaze me in my job as a financial planner when I come across people who happen to have a few old super funds just “laying around” (like they’re old socks or something) and they just don’t seem to place any importance at all in the money that sits in these old funds.

After all, it is your money and if left in an old super fund (probably due to previous jobs) and with no contributions going into them, the old super funds will surely go backwards because of management fees and the effects of inflation.

I’ve seen incidents with clients who have 2, 3 or even 4 or more older super funds that have amounted to many tens of thousands of dollars sitting in these funds that we’ve been able to consolidate into one super fund with superior investment performance and more cost effective management fees.

The end result of this will most certainly be a better retirement outcome, no doubt.

Whether you have older super funds to be consolidated or not, it’s still important not to take your current contributory superannuation fund for granted because a little bit of tweaking here and there could mean much better outcome for you when it really matters, which is when you come to your retirement age.

That being said, I’m suggesting you have to become a superannuation expert because this is a very complicated subject matter. All I’m saying is to take more than a passing interest in your super fund and get some advice from an experienced financial planner who can provide some objective advice.

It’s important to remember that not all superannuation funds are the same and there are many available to choose from, primarily industry funds, retail funds and then there is Self Managed Superannuation Funds (SMSF’s)

A good, objective financial planner should be able to guide you through the maze of superannuation and give you some clarity and direction on what is right for you and maximising your retirement outcome.

So, all in all sit down with a pen and paper and get out all those files containing various bits and pieces of your financial life and start to get a clear picture of exactly where you are right now. Then get in touch with a financial planner to get some professional advice and direction on where it is you want to go.

You’ll be so much better off financially if you do!

* The author of this article, Gary Fabian, is the Principal of Precision Advisory and is a long term, experienced financial adviser. He specialises is risk insurance, superannuation and residential and commercial finance.

Everyone has heard the analogy about the iceberg, you know, you only see the tip of the iceberg, but there’s a lot more to it than that!

You can use this analogy for a lot of things really (I do often), but it’s a very true one when it comes to getting a good financial plan together that will reflect your true needs, wants and objectives for your financial future.

I do emphasise the word, good here, as like anything, if you pay across hard-earned money for something, you want to be sure you’re getting value for your money, don’t you?

I often here people say “why do I need to get a financial plan together”? Or, more importantly, why do I have to pay to get a financial plan together?…the answer to this is simple and I’ll use another well-worn saying here which is People don’t plan to fail, they fail to plan. So true for the majority of our population as I guess life just gets in the way and most people don’t get around to doing it and then they wake up 35 years down the track and wonder what the hell happened???

On the subject of actually paying for the financial plan, my comments to this statement could be many, but I’ll keep it brief for now. Having a professional prepare a detailed financial plan (AKA, Statement of Advice) that truly reflects your personal financial circumstances and also takes into account what it is you want to achieve in the future, takes time, research and effort and all of these things cost money.

Not to mention the fact that a true financial professional knows what he or she is doing and will bring something to the table that you just can’t (apart from specific expertise) and that’s objectivity…VERY important!

Even for people who are high-income earners and have reasonable, or in some cases, very strong asset bases with low debt levels, they can get so much more traction from a well prepared financial plan. Just because they might be doing “very well” by the standards of us mere-mortals J with a good financial plan in hand, they could do so much better.

In fact, recently I prepared a financial plan for one such individual who was doing very well in his business, earning really good money, growing his family asset base, as well as growing the family business.

As a financial adviser, I was impressed with his candid attitude when he said, “I need to focus on what it is I do best and build this business and make money and find a professional I can trust to assist me to secure the financial future for myself and my family”.

It wasn’t the fact that I was preparing a comprehensive financial plan for him that impressed me, as I’ve done plenty of them. It was the fact that he didn’t need to be told or convinced that a well prepared and executed financial plan would benefit him far more than the cost of getting it done.

Along with it he was also prepared to allocate the necessary time for me to get all the information I needed to get the job done properly and spend more time down the track with reviews and adjustments whenever it was needed. And guess what, he’s getting really good results from this plan that has been devised for him.

Don’t think for one minute that I’m advocating that financial plans are only for the well off and high-income earners, as that couldn’t be further from the truth. In fact, everyone can, and should get a financial plan prepared for themselves. Perhaps if more people did this there would be less financial hardship in a lot of families and especially a much higher level of self-funded retirees in society, which has got to be a good thing overall for the economy.

I’ve said before that something like this should be taught at schools to our kids from an early age, or at least in early high school to give kids a good understanding of money management etc. But, I don’t want to get started on this particular subject right now. I’ll leave that for another forthcoming blog article.

Of course it’s all good and well and to go out and find who you think is a good financial planner, then pay them some money to prepare a plan for you and then you go and shove it in the draw somewhere safe and never do anything with it.

And to add insult to injury, that so called good financial planner never even picks up the phone and calls you to follow up after you’ve gotten your plan and to get things moving forward in the right direction.

Both of these are wrong! Plans require action to make them work and action is what gets us somewhere, anywhere in life! AND, to be a good financial planner he or she needs to follow up and stay in touch with the client and motivate them to put the plan in action.

In my experience, anyone can get great results from a well prepared, but most importantly, a well executed financial plan. And I do mean anyone. It doesn’t matter what background you have, what type of job you have or how much money you earn. A good financial plan that is executed and followed through will almost always reap great benefits to the plan-owner.

It’s important also for everyone in this equation to have realistic expectations about the outcomes. Nothing great or worthwhile ever happens quickly, remember that. I always like to explain this to my clients from the very out-set of the relationship, and for financial planning outcomes to be successful there will need to be a relationship of sorts in place between the planner and the client.

That’s just the way it is and will always be and it’s the main reason why robots will never take the place of successful financial planning humans who develop a working relationship.

This is not a one-size-fits-all industry and good financial planners know exactly that.

So, if you really want to have financial prosperity in your life, go get a good financial plan happening…can’t go wrong!

The writer of this article Gary Fabian, is a qualified Gold Coast financial adviser and director of Precision Advisory.