This section provides answers to a few of these key questions to help you determine whether our service may be of interest to you prior to setting up a free initial meeting with us. Likewise, before we meet with prospective clients we have them complete a ‘Discussion Sheet’ and return it to us (via email, fax or mail) prior to our initial meeting. This ensures our initial meeting is more productive as we will already have some background information on your individual circumstances.

There is no cost for our initial meeting.

At the initial meeting we jointly decide if you would like us to proceed with the preparation of a comprehensive financial plan for yourself (and your family). The cost of this plan is a flat $495 (incl. GST). This cost is rebated or not charged if you become a client.

In certain circumstances we may provide recommendations on a limited advice basis only where we do not take into account all of you assets, financial and personal circumstances. There is no cost for this advice.

As a client of ours we charge on a ‘Management Fee’ service arrangement which is based upon a percentage of the assets that we manage for you, on a sliding scale. Fees are generally tax deductible.

Our management fee scale is as follows (inclusive of GST):

First $1,000,000

1.98%

Next $2,000,000

0.99%

Over $3,000,000

0.495%

There is no entry, establishment or exit fees. Share transactions incur a $27.50 (incl. GST) contract note fee.

Please click here if you would like to use our calculator to estimate our management fees.

The ‘Management Fee’ service is based upon aligning our interests with the clients. As we do not charge any entry or establishment fees we make money out of servicing our clients for decades to come, not providing a set-and-forget strategy. Similarly, because we do not charge high brokerage fees on share purchases or sales, you can be assured that our advice is always in your best interests as our recommendations do not result in additional profit for us.

Due to our hands on approach and access to direct equity markets, including floats, we are in a unique position to more than pay for our professional fees through sound investment management.

Our clients span all age groups from young wealth accumulators to retirees seeking financial security and peace of mind.

All of our clients share a similar belief about money. That is, that financial success is best obtained through disciplined, long term and supported wealth creation strategies.

Although our clients span several generations, we have found a number of characteristics consistent amongst the group. Not all clients share the same characteristics. However, they all have at least one or two similar characteristics from the Client Profile below.

Client Profile

Our clients tend to possess several similar attributes. Generally, they are:

  • Financial delegators who enjoy the simplicity, freedom and peace of mind that comes from working with a trusted advisor.
  • Lead an active and busy life.
  • People who value their professional relationship with us because they know that delegating their “money stuff” helps them to focus their limited time and energy on the more important things that cannot be delegated.
  • People who prefer management fee-based services versus commission based services.
  • People who prefer not to read financial magazines, watch or listen to financial programs, as they have other things in their life that are more important to them.
  • People who value a holistic approach to financial planning encompassing a family rather than individual focus.

Currently we have 140 families that Paul & Jarrod service with the assistance of Cheyne Peat, Stella Moses and Rochelle Gordon. Our service to clients also draws on the support of many more people and resources at Morgans.

We plan to build this number to 150 clients, being 75 clients per advisor (Paul & Jarrod). We believe this number will still allow us to provide superior service whilst being fully commercial from a business perspective.

Our main source of new clients is referrals from existing clients who have experienced our services. It is quite possible that you are visiting this website as a result of a referral from an existing client.

When selecting a financial advisor it is also important to ask what type of client do they want? This may sound strange, but if a financial advisor takes you on as a client and you are not the type of client, financially and personally, that they are seeking, then the relationship is bound to fail.

The relationship between a client and financial advisor is sufficiently close and personal that you need to be comfortable and trusting of the advisor and the advisor needs to be comfortable, trusting and keen to work with you.

Accordingly, the initial meeting is also a chance for us to ‘interview’ prospective clients to ensure we would be happy to work with them on a personal level and that they are financially the type of client we wish to service.

We see our role as “working with people (and their families) who have over $500,000 in investments and superannuation and want to create financial certainty for themselves (and their families)”.

Not all of our clients currently have over $500,000 in investments and superannuation but those that do not we consider the ‘wealth accumulators’ who are on their way to creating this wealth and more prior to retirement – hopefully well before.

Portfolio Construction

NOTE: Below is general information on our portfolio construction technique and as such should not be construed as advice nor should you rely upon it for any investment decision. Before you decide to invest you should consult either ourselves or a qualified financial advisor.

For all investments we go direct to markets as this provides the greatest level of control and eliminates the added layer of fees that indirect investments (managed funds) impose. By investing directly we can control the after tax outcome which can add significant value to the wealth creation process over time.

We now also run many client accounts on a discretionary basis. This means that we act like personal fund managers for each client on an individual basis. This approach means that each client is treated fairly, as changes to clients’ portfolios occur at the same time, rather than when we are able to make contact with each client. This process allows us to spend more time on adding value through investment management and strategy advice to clients. Clients use our service because they trust us and do not have the skills or desire to be responsible for ensuring their families financial security, therefore they entrust the day to day management of their portfolios to our team.

Although portfolios can be run on a discretionary basis, clients receive contract notes every time something is bought or sold on their account. In addition, clients have 24 hour access to their account via a secure online facility and receive quarterly portfolio valuation and transaction reports by mail. All of this results in fully informed clients.

To provide an overview of how we run client (and our own) portfolios and how we propose to invest prospective clients funds (in a way we believe produces the best long term financial result), we share the following thoughts on the various investment (asset) classes. Remember, not every portfolio will have exposure to all of these asset classes. The percentage of a portfolio invested in these different asset classes will vary depending upon the individual circumstances of a client. What is constant however, is how money within each asset class is invested. E.g. Whether 30% or 70% of funds are invested in Australian Equities, the investment methodology is the same.

Cash

We operate client accounts out of a Macquarie Cash Management Account (CMA). All dividends, interest, and other receipts are credited into the clients.

Surplus cash above that required for immediate liquidity may be invested in short term money market securities with an appropriate credit rating, including term deposits.

Fixed Interest & Hybrids

Our preference for fixed interest exposure is through hybrid securities. These securities are normally referred to as Converting Preference Shares (CPS) or Resetting Preference Shares (RPS).

Hybrid securities offer enhanced yields that are normally fully franked. Therefore, when comparing to traditional fixed interest investments their yield must be ‘grossed up’ to compare on a like for like basis. On a balanced portfolio of hybrid fixed interest investments, an indicative grossed up yield would be between 5-7%.

This enhanced yield is a factor of increased risk relative to government bonds due to the hybrid nature of these securities i.e. Part fixed interest and part equity characteristics. We believe the risk/return characteristics of these hybrid securities favour that of traditional fixed interest investments at present. Hence our preference of these securities for the majority of fixed interest exposure for a portfolio at this particular point in time.

It is important to note that the characteristics of each hybrid fixed interest security will vary. To this regard it is the appropriate allocation of funds within this sector to ensure the minimisation of risk.

Property

For property exposure, outside of any principal residence and other investment properties, we prefer to use Listed Property Trusts (LPTs).

Via these LPTs we can gain exposure to quality commercial, industrial, retail, leisure and some residential property. A benefit of LPTs is the high level of liquidity and diversification not available with direct property ownership.

LPTs have historically kept pace with inflation through an average growth rate of approximately 4% per annum over the long term. Indicative income yields with LPTs is between 4-7%. On average approximately 40% of this income is tax advantaged (tax free or tax deferred).

Equities
Australian (Domestic)

Exposure to Australian equities is through direct shares as opposed to managed funds due to decreased cost and greater control over investments including taxation implications. Investment will predominantly be in blue chip shares (80%+ in top 100, excluding listed investment companies).

We construct client portfolios using listed investment companies (LICs) as the backbone to the portfolio due to their consistent returns and lower level of volatility. It is anticipated that a minimum of 20% of the Australian equities exposure will be invested in LICs.

The balance of Australian equities will be invested in companies that have solid fundamentals and have demonstrated earnings per share growth, dividend growth and strong return on equity over the long term. Consideration is also given to the management track record of a company and to corporate governance.

From a macro perspective, we look for companies that meet the above criteria and are also in sectors with a strong long-term outlook (demand) for their products or services. Some examples include banking and finance, healthcare, consumer discretionary and utilities.

In regard to specific stock recommendations, they will vary depending upon the exact timing that we provide specific security recommendations to a client, having regard to current market conditions at that time.

International

Under most market conditions it is important that some exposure to international equities is maintained (depending upon a persons individual risk profile), despite reduced taxation benefits being available and a higher level of volatility.

For exposure to international equities we prefer to use either direct overseas listed shares and/or locally listed Exchange Traded Funds (ETFs). We prefer to invest in large global brands with market leading positions and strong balance sheets. An example of some of the direct shares we have and/or do own for clients include Berkshire Hathaway, McDonalds, Microsoft, Intel, ING Group, IBM and Google.

Our office are located at Level 5, 689 Burke Road, Camberwell.

We conduct client meetings at our office so that you may see where we work from and so we have access to our infrastructure (computers, facsimiles, photocopiers etc) should we need to utilise these.

We can also meet in our CBD office – Level 28, 367 Collins Street, Melbourne – should it be more convenient for our clients.