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Welcome to this edition of Your Financial Future which reviews the March 2005 quarter. In this issue, we discuss why drawing up a Will is crucial and examine whether a wrap account is the way to go. We also begin our exposé of Financial Planning myths and introduce you to Errol Umar, one of the Financial Planners on hand to help you secure your financial future.
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Why is a Will important?
What would have happened if you'd you passed away yesterday? Would your hard-earned assets be distributed in the way you want, to the people you want?
A Will is a legally recognised document that sets out how you would like your assets to be distributed after your death.
If you die without leaving a valid Will, you die intestate, a situation which can have a huge emotional and financial impact on your family. It means that someone, usually one of your relatives, has to apply for Letters of Administration from the court to deal with your estate. "The administrator then has to distribute the estate in accordance with the statutory rules of intestacy, not how you think it should be distributed," warns Anuj Shangle, one of a team of Financial Planners available to help you.
"A Will also allows you to specify who becomes the guardian of your children should you die before they are 18 years old. Without a Will, the person you least want them to be raised by could end up raising your children."
Consider the following situation:
Mary (aged 35) and Joe (aged 40) are married and have a son (aged 6). Mary has a brother and her mother is still alive. Both of Joe's parents are still alive. Joe has another child (aged 10) from a previous marriage. He has already established a trust fund to pay for his maintenance and support. Mary and Joe do not have a Will.
Mary and Joe have discussed what would happen if they died. They both strongly agree that Joe's parents should not be responsible for raising their son if they die before he turns 18 years of age.
Now, let's consider a number of situations where Joe, Mary and their son are involved in a car accident and do not have a Will.
Scenario 1: There are no survivors.
As Mary is younger than Joe, he is deemed to have died first so all of his property goes to Mary. Likewise, all of Mary's property then goes to their son. However, as their son has also died, the property is then split between the grandparents. Mary's mum and Joe's parents will share it in equal halves. This is probably a reasonable result and the kind of result that Mary and Joe might want.
Scenario 2: Joe is the only survivor but passes away the next day.
Joe would inherit everything. After his death, all of Joe's property will go to his child from the first marriage, who has already been generously provided for. No one else gets anything.
Scenario 3: Mary is the only survivor, but passes away the next day.
Mary would inherit the family property for a brief time. When Mary dies, all of the property goes to her mum even though Mary's brother is also entitled to apply for a grant to administer her estate.
Scenario 4: The son is the only survivor. He inherits all of the family property but Family and Children's Services determine that the most appropriate guardians for the child are Joe's parents.
This is exactly what Mary and Joe didn't want.
Indeed, all of this could have been avoided if Mary and Joe had taken the time to draw up their Will.
We can help you
The Fair Go Will Service, brought to you through the Fair Go Program, provides you with two options for creating your Will online.
The first option, called the Do-It-Yourself Will, is a lawyer-approved tool written in plain English with step-by-step directions. The end result is a document ready for signing and witnessing. You can also update and reprint your Will whenever you like.
For those requiring greater peace of mind, Fair Go also offers another option, the Solicitor Will. At the end of this process, your document is submitted electronically to a solicitor for legal checking and approval and the solicitor will contact you within two working days if any issues need to be addressed.
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Until the end of May, the Fair Go Member Benefits Program is offering a special deal.
Take a look at these great deals on our DIY and Solicitor Wills for both singles and couples:
| Will type |
Standard pricing |
FAIR GO special offer |
| DIY Will |
Single - $20
Couple - $32 |
Single - $8
Couple - $20 |
| Solicitor Will |
Single - $108
Couple - $176 |
Single - $96
Couple - $164
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To take advantage of this fantastic offer go to http://www.eisuper.com.au/fairgo/estatePlanning.asp and follow the prompts. When you get to the Promotional Code section, enter this code: 5901034724. But be quick as this offer is only valid until 31 May 2005.
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Need further advice?
If you require further information or you have more complicated estate planning needs, please contact FuturePlus Financial Services on 1300 883 788. One of our Financial Planners can work with you to determine the best possible approach to leaving your estate in the way you want, to the people you want.
You could WIN a family pass to Sydney Aquarium
Brought to you by the Fair Go Member Benefits Program
Not sure what to do with the kids now that summer is over? Why not treat them to an aquatic journey at Sydney Aquarium to explore our ocean's treasures, and save money at the same time?
How can you save money?
If you are a member of the Fair Go Member Benefits Program*, you can save 20% off adult and child admission prices simply by presenting your Fair Go membership card.
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Plus, from now until the 16th of May, you have the chance to win a Sydney Aquarium family pass for 2 adults and 2 children worth $63**. All you have to do to be in the running to win is to reply to this email with "competition" written in the subject header.
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The Fair Go Member Benefits Program also has a range of other special offers for you at a variety of attractions, including a discount of 20% off admission to Manly Oceanworld, 10% off admission to Sydney Tower and OzTrek, 20% off entry to the Australian Reptile Park, and $2 off the adult admission price to the Jamberoo Recreation Park (for up to 4 adults).
There are also great discounts on accommodation at a wide range of holiday destinations, car hire and regional airfares, plus savings on everyday products and important services - from telephone, mobile and internet costs to health cover and even making a Will.
For more information about Fair Go, visit the website at http://www.eisuper.com.au/fairgo/fairgo.asp or call Member Services on 1300 369 901.
 It's time you had a Fair Go!
Phone 02 8251 7800 or visit www.sydneyaquarium.com.au for more information about Sydney Aquarium.
* The Fair Go Member Benefits Program is available to actively contributing Scheme members with a minimum balance of $1,000 in their superannuation accounts. When you reach this balance, we will mail you your membership card and program information.
** [TPL05/03151] The winner will be notified by telephone on 2 May 2005 and published in the next edition of Your Financial Future.
For Competition Terms and Conditions, click here.
The Myths of Financial Planning
In this day of financial information overload, it's often difficult to discern fact from fiction. For this reason, in each forthcoming issue of Your Financial Future, we will expose a Financial Planning myth to help guide you through the maze of information out there.
Myth 1: Diversification is simply having a number of investments.
Diversification is one method to minimise loss. If an asset type, a particular fund manager or a country's investment markets suffer a sudden misfortune, diversification is the discipline that limits the proportion of your assets exposed to that setback.
Nonetheless, diversification is not just about the number of investments you hold. It's also about how you spread your investments.
Across asset classes
The worst performing asset class one year - be it shares, fixed interest, cash or property - can become the best performer the next year. However, history shows that one asset class rarely stays in the lead for two consecutive years; such is the nature of investment markets.
Rather than trying to predict which asset class to invest in at any particular time, the wise investor diversifies across all asset classes. In this way, downward movements in one asset class only ever affect a portion of the portfolio.
Across countries or regions
The Australian share market makes up less than 2 per cent of world markets. It is also rather susceptible to volatility because it is heavily resource-based and its small size makes it easily influenced by large international investors. Because of this, accessing the other 98 per cent of world markets can greatly reduce the volatility of having all your eggs in the Australian basket.
Across fund managers
History has shown that last year's star performing fund managers are seldom next year's heroes. Fund managers have different styles and skills that may perform better at different times of the investment cycle. None have been able to shine through all cycles. Just choosing a number of managers isn't the solution. What happens if they all have a similar style that is currently not favoured by the market? A financial planner can help you blend a portfolio to create a style that is appropriate to your needs.
Want to know more?
To find out more about how we diversify your investments, contact Member Services on 1300 369 901.
A Financial Planning tip: Don't back last year's winners!
Investing in the asset class that had the best performance last year - or chasing returns - may be a big mistake.
Chasing returns means that you are moving your investments across to the fund or asset class that had the best performance last year. Why can this be a mistake? Take a look at the chart below.
This chart shows the main asset classes and their percentage returns each year for the 20 years to December 2004. It also tracks the erratic movement between asset classes that would have occurred if you had chased the previous year's best performing sector. You will see how unlikely it is for the same asset class to have the best performance for two years running. So if you invest in the asset that performed the best last year, it is unlikely to have the best performance again.
Performance indices used to compile this table are: Australian shares - All Ordinaries Accumulation Index; International shares - MSCI World Gross Accumulation Index ($A); Property - Listed Property Trust Accumulation Index; Australian Bonds - Commonwealth Bank Bond Accumulation Index; Cash - UBS Warburg Australia Bank Bill Index. All earnings are reinvested but do not take into account the impact of tax and fees on earnings. This example is based on historical performance and is not indicative of future performance (future performance is not guaranteed and is dependent upon economic conditions, investment management and future taxation). The Balanced column refers to a portfolio mix of 30% Australian shares, 20% international shares, 10% Property, 30% Australian Bonds, and 10% Cash.
What is FuturePlus?
FuturePlus* is owned by your Scheme and was established to provide a Financial Planning service to Scheme members. In addition to Financial Planning, Retirement Planning and Estate Planning, FuturePlus can help you with your insurance needs, home loans and non-super investments.
*FuturePlus Financial Services Pty Limited (ABN 90 080 972 630) is an Australian Financial Services Licensee (AFSL 238445).
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Is a wrap account for you?
It's not hard to see why wrap accounts, which bundle all your investments into a single easy to manage portfolio, are becoming increasingly popular. Their many benefits include:
- Greater investment flexibility;
- Enhanced reporting; and
- Reduced headaches at tax time.
The FuturePlus Premium Wrap, which is available to you as a member of the Scheme, makes your investment portfolio easier to administer because everything - from buying and selling assets to the reporting and maintenance of your investments - is managed in one place, using the latest technology.
The Premium Wrap allows you to view the value of your assets online at anytime and turns record keeping into a breeze. For example, you don't have to look for missing pieces of your income tax puzzle from different institutions at financial year-end, because you'll be sent one consolidated statement with guidance on how to fill in your tax form.
You also have access to over 300 wholesale funds and you can invest directly in shares. You can even choose to invest via more sophisticated products such as hedge funds or margin lending.
And, you are never alone in making investment decisions. Our Financial Planners are on hand to guide you from start to end in devising, and then achieving, an investment strategy that specifically suits your personal circumstances.
What's more is that you don't pay any establishment fees and can bring in any shares or managed funds that you already own, without having to sell and repurchase them, a move which could attract Capital Gains Tax.
However, Andrew Whelan, Wealth Planning Manager at FuturePlus, cautions that a wrap is not for everyone. "Wraps suit investors looking for more flexibility and who are looking for a wider array of investments or to invest directly in shares. They are also an ideal alternative to DIY or Self-Managed Super Funds," he says.
"Wraps are not cost-effective if you don't have at least $50,000 to invest, or if you are content to put your money in one of the already diversified investment options available to you in your Scheme."
Andrew's advice is to speak to a FuturePlus Financial Planner who can help you, free of charge, decide whether your investment needs will be best suited by a wrap or one of the other alternatives available to you. Contact FuturePlus Financial Planning on 1300 883 788.
Financial Planner profile: meet Errol Umar
 Pay yourself before you pay others. That's the simple Financial Planning principle that Errol Umar likes to pass on to his clients.
"Lots of people spend their money and pay their bills before they put anything into their own pockets," says Errol of the principle he's borrowed from the book, The Richest Man in Babylon, by George S. Clason. "I tell them to put something into their pockets first, through their mortgage or an investment. After all, it's their hard-earned money."
Errol, who has completed an economics degree at Macquarie University, has been in Financial Planning since 1998. He has also completed the Advanced Diploma in Financial Services (Financial Planning) and continues to study further, beyond his compulsory ongoing training requirements.
On why he's chosen this career path, Errol says: "Money is important to everyone. Helping people to achieve their financial goals gives me a great sense of satisfaction. I love the interaction I have with people, as well as looking at different scenarios and having to come up with solutions for them. It's never the same day everyday."
What Errol finds frustrating about his job is hearing about the advice that clients have picked up from their neighbours or the cab driver. "There are lots of misconceptions out there about Financial Planning principles," he says.
"I hope that the first thing that I can provide for my clients is education. But after we've talked the talk, I also help them to walk the walk and put what we've spoken about into practice. I'm there to guide them through this."
He adds: "If my mother or father or sister were to come and see a Financial Planner, I definitely know how I want them to be treated and that's how I approach my job every day. I pride myself in wanting to give our clients an experience beyond that which is offered out there in the general marketplace. I don't want to be someone on the other side of the desk, but rather someone sitting side by side and working together with a client."
Free Seminars
Are you looking to set aside some money for a house, a holiday or perhaps for your children's education? Would you like to know more about investment options, risk and return and managed funds? Are you wondering whether you will have enough money to retire on?
You could get the answers to these questions, and more, by attending one of the FREE wealth creation or pre-retirement planning seminars we are running at a venue close to you. To find out more, click here, or contact Member Services on 1300 369 901.
Investment and market commentary
Do you know what happened in investment markets this quarter? To find out what the big story was in the March 2005 quarter, please click here.
Energy Industries Superannuation Scheme
Ground Floor
28 Margaret Street
Sydney, NSW 2000
Member Services
T: 1300 369 901
F: (02) 9279 4131
Financial Planning
T: 1300 883 788
This document was prepared for the exclusive use of members of the Energy Industries Superannuation Scheme.
For members of the Energy Industries Superannuation Scheme:
Any advice in this document is provided by FuturePlus Financial Services Pty Limited (ABN 90 080 972 630) as an Australian Financial Services Licensee (AFSL 238445) on behalf of the trustee of the Energy Industries Superannuation Scheme, Energy Industries Superannuation Scheme Pty Ltd (ABN 72 077 947 285).
Please note that the information contained herein is of a general nature only. It has not been prepared taking into account your particular investment objectives, financial situation and particular needs. You should assess whether the advice is appropriate to your individual investment objectives, financial situation and particular needs. Before making any investment decision, you should seek the assistance of a professional adviser.
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