Tuesday, 16 April 2019

Let the marketing begin!

Well, my financial planning business is now in 'soft launch' mode, with a website, Facebook page, yellow pages entry etc. all 'live'. I delivered an initial batch of ten brochures to a local gated estate (the letterboxes were nearly all marked 'no junk mail', but as I'm not a direct mail company, and the letters were individually addressed, I ignored that - on the other hand, the occupants will probably ignore my letters). It was amazing the amount of time I ended up spending on printing brochures, folding and stapling them, creating a mailing list in excel (by looking up local street addresses on google maps), and then getting the mail-merged envelopes to print out correctly using manual feed (one-at-a-time, or the printer jams). Oh, and I also wasted time creating a mock 'stamp' to print on the envelopes (supposedly this makes them more likely to be opened, rather than going straight into the bin). I'm planning to print and distribute around 50 letters/brochures a week from now on. As there are around 20,000 households in the six local postcode areas, I won't run out of letter boxes any time soon.

I'll print out another 20 envelopes tomorrow and deliver them in the evening, so that they should end up mixed in with the official mail sitting in those letter boxes on Thursday, and hence be more likely to be opened. And hopefully the Easter long weekend might encourage people to read the brochure ('Financial Health Check - 14 questions you should ask yourself'). Whether anybody actually decides to phone me or make an appointment only time will tell. According to general statistics about direct mail campaigns, the response rate is often around 2-3%%, so I'm aiming for a marketing 'funnel' of  around 200 letters/month > 4 -6 responses/month > 1-2 initial (free) meetings booked > ~1 new client per month.

Once I put some finishing touches on the website I'll setup Google and Facebook Ad campaigns to drive targeted (local) traffic to my website. Hopefully that also generates some online bookings.

My uni studies are going OK so far - my GPA for the first two subjects is 6.5/7 (conincidentally exactly the same as I ended up with for my Master of Astronomy degree). I've only enrolled in one subject per semester this year (as I also need to squeeze in the four subjects for the ADFP course I'm enrolled in, and then complete a TASA (Tax Agent Services Act) mandatory course before the end of this year) as I want to keep my GPA above 6.0 so I qualify for the "Dean's List".

If all goes well this year, I'd like to do all the remaining seven subjects next year and finish off the Masters degree, and I also want to get the Financial Adviser exam out of the way next year (the deadline for passing the exam is 1 Jan 2021).

After that I plan on doing the CFP exam in 2021 (I'll receive exemption for CFP 2, 3 and 4 when I complete the Master of Financial Planning degree, therefore I'll only need to complete the subject 'CFP 1' to then be eligible to sit the CFP Certification Assessment), and I'd like to commence a PhD in financial planning once I've completed the Master's degree. We'll see how it all turns out ...

Meanwhile, back to the marketing 'campaign' ;)

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Tuesday, 2 April 2019

Net Worth: March 2019

There was a modest rise in the valuations of my retirement savings and geared shared portfolio (both up around 1.3%) which was offset by another -1.85% decline in the valuation of my half of our home. Overall, my net worth was almost unchanged, gaining $1,824 (0.08%) during the month to $2,265,537. Still below my all time peak, with my NW tracking sideways for the past 18 months or so.

Funding my university studies and running costs of my start-up financial planning business continue to cost around $2,500 per month. I completed the second course (out of twelve) for my Master of Financial Planning degree. So far I've received on HD and one D, with a GPA so far of 6.5/7 - coincidentally exactly the same as my average for the Master of Astronomy I did previously ;) I'm aiming to average 6.5 or above, and would like to get on the "Dean's List" each year and possibly get another academic medal for Masters by Coursework.

I didn't get my website finished off during March, so that is my immediate business development goal. I've printed off a couple of hundred brochures to direct mail to local addresses (I'll do the letter box deliveries myself, as I need the exercise) and will see if they achieve the typical response rate of 2-4% (ie. I should get around 2-4 phone calls or bookings for a free initial appointment for every 100 brochures I deliver). I plan of delivering around 50 brochures each week, testing minor variations, and hope to achieve around 4-8 responses per month, which *should* result in 1-2 new clients each month. Since I haven't had a client yet, this is all very theoretical at the moment.

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Monday, 4 March 2019

Net Worth: FEB 2019

The continued rebound in local and international share markets meant that my retirement savings balance increased $43,045 (4.47%) and my geared share portfolio increased $29,660. The continued deflation of the property bubble nationwide, and especially Sydney, meant that the gain in my share portfolio was somewhat offset by the valuation of our home decreasing by $4,198 (0.55%) during the month. The rate of decline in house prices appears to be moderating slightly, suggesting a normal house price cyclical decline rather than a 'crash' or deflation of a 'bubble'. Overall, my net worth recovered $68,732 (3.13%) during the month to $2,263,713. Still below my all time peak.

Funding my university studies and running costs of my start-up financial planning business continue to cost around $2,500 per month. I received my annual bonus last month (approx. $9K after tax), which will help with cash flow for a while. I setup a free business entry in the 'yellow pages' yesterday and was immediately called by a couple of charity fund-raisers this morning seeking sponsorship/advertising support this morning. I agreed to sponsor the local Neighbourhood Watch (via a $440 ad in the local youth support magazine they produce annually) but I will have to decline supporting any other local groups (at least until I have my first paying client!) I'm still working on the website for my business, but should get that up and running by the end of March.
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Friday, 1 February 2019

Financial Planning CPD and FASEA requirement progress

Now that I'm a registered Financial Planner/Adviser I need to meet the annual CPD requirements (basically 40 hrs of approved training pa) and also work towards the new FASEA education requirements that existing Financial Planners have to meet over the next couple of years.

I did 8.75 hrs of CPD during January via the MyKaplan website access provided by my AFSL, and also made a bit more progress towards completing the specialisation courses I'm doing in SMSF and Margin lending (these IIT courses *could* also provide some CPD credits when I complete them - the ML course quotes CPD Accreditation number 006725 for 11.5 CPD points and SMSF quotes the same CPD Accreditation number for 25.75 CPD points). And the Advanced DFP I'll be completing with IIT this year could also provide some CPD units (75.25 units!), however my AFSL tracks CPD compliance via Kaplan, so a maximum of 30 units of 'external' CPD can be counted towards the 40 unit requirement from their point of view. The four subject I complete for the Masters degree during 2019 could also provide some CPD units, but I won't need those CPD points to reach the minimum requirement this year. I find it quite amusing that some existing Financial Planners (and accountants providing SMSF 'advice') have been whinging online about having to complete 40 units of CPD pa!

What I will need is to complete the FASEA educational requirements by 1 Jan 2021. As I only have a DFP and a 'non-relevant' degree I will need to complete at least the 8 units required for the Graduate Diploma by then, although I'm currently planning to complete the 12 units for the Masters sometime in 2020 and have commenced a MRes degree by then.

Oh, and I also need to complete a TASA course from IIT later this year, as I won't get all the Master's degree courses that will satisfy TPB registration requirements completed before the end of this year, whereas my AFSL requires all new Financial Planners to get the training required for TPB registration completed within the first 12 months...

Looks like a fairly busy 2019 study-wise, not to mention trying to launch my business part-time while working full-time at my 'day job' ;)

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Net Worth: JAN 2019

A rebound in local and international share markets meant that my retirement savings balance increased $42,724 (4.64%) and my geared share portfolio increased $19,533. The continued deflation of the property bubble nationwide, and especially Sydney, meant that the gain in my share portfolio was more or less offset by the valuation of our home decreasing by $18,397 (2.37%) during the month. Overall, my net worth recovered $44,081 (2.05%) during the month to $2,194,981. Still well below my all time peak.

I've started using some of the credit available in my St George 'portfolio loan' facility to fund my financial planning expenses (the self-education costs of the Masters degree, and the monthly licencee fee and CRM/admin package fee for the basic module of 'Midwinter'). Until I start receiving some client fee income, this debt will accrue at a rate of about $2,430 per month. Using the one loan facility to fund the major business running costs and self-education costs will make it easy to keep track of the amount of (tax deductible) interest I pay.

My goal is to start generating business income during 2019, and to generate enough business income during 2020 to cover running costs ('break even'). Hopefully by 2021 the business will be profitable, or at least cover the running costs and related self-education costs (the Masters, then possible a MRes degree followed by a PhD in Financial Planning). We'll see how things pan out.

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QFF points for saving for my retirement

I received an unusual offer via email the other day - I could receive 20,000 Qantas Frequent Flyer points if I opened a superannuation account online with AustralianSuper using the provided link, and contributed $350 within six months.

I already have a SMSF (low cost admin/audit annual fee of around $900, with the cost shared across my account and that of DW and DS1) for the bulk of my retirement savings, and an account with the super fund specified by my employer (as they subsidize the admin fee, so its quite low cost, and they also pay the premiums for a fixed amount of life insurance within that fund, so the admin cost is less than the value of the insurance premiums benefit I receive). So the main question when deciding whether or not to take up the AustraliaSuper offer was how much will the account cost compared to the value of the QFF points? The fund has a fixed admin fee of $1.50/wk, which is rising on 30 March to $2.25/wk. There is also a $35 'exit fee'. So, if I keep the account open for five months (the QFF points are supposed to be allocated within 2-3 months of making the $350 contribution) and then rollover the account balance to my SMSF it will end up costing around $1.50x9 + $2.25x13 + $35 = $77.75. 20,000 QFF points are worth between $132 and $456, depending on what flight or 'Qantas Store' product the points are eventually redeemed for. For most domestic economy flights, 20,000 points are worth around $280 of travel. The points are 'worth' a lot more when used for upgrading economy international flights to business class, but that isn't something I'd actually spend cold, hard cash on. Overall, the 20,000 points are probably 'worth' around $280 to me, so my net gain for taking up this offer is around $200. Of course I am also locking away that $350 until I reach preservation age and can withdraw money from my superannuation, but that isn't too long to go now...

Anyhow, I decided to take up the offer. It took about 5 minutes to complete the online application process, and the BPay details for making a contribution were available the following day when I logged in to my new account. I did a BPay of the $350 personal contribution the day after I opened the account, and the funds were reflected in my balance the next day (I invested 50% in Australian Shares and 50% in International Shares) - which had gone up to $351.25. I'll wait an see when the promised QFF points get credited, and then do a rollover application. All in all, a fairly quick and painless way to 'earn' an extra 20,000 QFF points.

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Saturday, 19 January 2019

Bought some Vanguard ETFs

As I had reduced my geared stock portfolio significantly in mid-2018, I decided the time might be right to invest a bit more in the stock market given the recent market weakness and slight recovery. I decided to buy some VAS , VSO, VSIM and VGAD ETFs. Altogether I invested about A$17,000 using my Comsec margin lending account. I'm planning on leaving this investment in place for about ten years, over which timeframe the total return will hopefully exceed the interest costs (currently around 6.6% pa).

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Thursday, 10 January 2019

Working on my business website

As I'm trying to launch my business on a low-cost, DIY basis I registered my business domain name using Dotster but then want to host the website content using my existing personal hosting account with GoDaddy. So I had to set up a 'redirect' of the URL from the name servers at Dotster to the hosting at GoDaddy. Took a bit of fiddling around but it seems to be working OK.

The next step was to install Wordpress for that domain in GoDaddy, and install a suitable 'Theme' (free of course). I eventually picked 'Sydney' after dabbling with 'Tesseract' but not being able to get it to work properly. I had a bit of trouble getting the recommended plugins (Elementor and Sydney Tools) working until I eventually figured out that I needed to upgrade the version of PHP installed in my GoDaddy hosting from 5.2 to 5.4 (and eventually I went to 5.6 as it was needed by 'Appointment Booking Scheduler' by Weblizar that I'll use for my online client booking tool).

I now seem to have all the tools installed to create the website content I have (vaguely) in mind - so the next stage is to sketch out my sitemap and page layouts and to actually write my page content, pick some suitable (free) stock photos to use etc. I could waste tons of time fiddling around with this stuff (I already wasted time browsing through free stock photos to pick a suitable background image for my page 'header' background), so I'll have to be quite disciplined about working towards a website that is 'fit for purpose' rather than trying to make it an award-winning masterpiece.

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Friday, 4 January 2019

Starting my Financial Planning business

I did a couple of days of 'induction training' in December (had to fly from Sydney to Perth for the training, as the AFSL company does their training there) and managed to get 'registered' with ASIC as a Financial Planner before 1 Jan 2019. Looking back over my records, I'd been enrolled in the DFP course on and off for about six years, so it was only the pending FASEA rule changes that prompted me to hurry up and finish off the DFP to I could get registered before the new work experience requirements came into effect.

Having completed the DFP I'm now enrolled in the ADFP ('Advanced' Diploma) with IIT, and I'm also doing a Master of Financial Planning (via distance education) through Western Sydney University. I aim to get the ADFP completed during 2019, while also setting up my business website, creating a marketing 'funnel' to prospect for potential clients, and (hopefully) starting to provide advice to some clients. I should be able to complete the Masters degree sometime in 2021. I might then do a MRes degree with the idea of eventually doing a PhD in financial planning at WSU (that should be a *lot* easier to complete part-time than the PhD I tried to do in astrophysics).

Fortunately the AFSL company I've signed on with provides considerable resources for their 'authorised representatives' in the form of documentation templates, feedback on strategies being considered for clients, and has a requirement for all SoA (Statements of Advice) to be prepared by a professional third party paraplanner service. They also 'vet' all SoAs produced by new planners, so there is considerable supervision and assistance provided. On the down side their monthly fee is over $1000 (plus they also retain 20% of all revenues until annual income reaches a certain threshold), and there is also a minimum monthly fee for the required CRM software. Then for each SoA there will be paraplanner and vetting fees of around $250. The fees charged by the AFSL company cover such things as PI (Professional Indemnity) insurance, annual compliance costs (monitoring CPD requirements are met and conducting an annual audit) and the processing client fees and commissions.

My initial plan is to slowly build up to servicing around one new client per month, by which point I should just about 'break even'. Fortunately I'll be running this business in the evenings and weekends, while still keeping my full-time 'day job', so there isn't any great need to become profitable in the short term. Initially my business losses will have to be 'carried forward' until eventually I'll be able to deduct them against my other (salary) income (once my assessable income as a sole trader reaches $20,000 pa).

Aside from all the usual 'business expenses', I will also need to keep track of how much time I spend working on my business in my 'home office'. I won't use the dedicated office area I've setup in my home for meeting with clients (I plan on meeting with clients in their homes), so I won't be able to claim a deduction for pro-rata 'occupancy expenses' such as rates, house insurance and so forth, but I will be able to claim a deduction (at the set rate of $0.45/hr) for 'running expenses'.

I also had to register for GST, so I've started using Reckon One (online accounting) to track things and help prepare my annual BAS statements. As I'm now registered for GST I'll also have to include any UberEats delivery income in my BAS returns.

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Net Worth: Dec 2018

Another negative month, with my geared share portfolio and retirement savings balances each dropping by more than $20K, while our house price estimate stabilized. Still waiting (and hoping) that the global stock market 'correction' is over, but it appears that there may be further weakness ahead. The Australian economy is still growing quite well, so there may soon be a buying opportunity. Our Superannuation is already fully invested in growth, but my gearing is currently very low, so I could use my available margin loan facilities to invest in the local stock market when it seems to have reached the 'bottom'. However, as I am currently funding around $1,200 per month for my Financial Planning registration fees (without any clients so far) from my wage cash flow, I don't really want to add margin loan interest payments at this stage.

My goals for 2019 are:
- lose weight and exercise more (a perennial goal it seems) - I'm currently ~108kg and need to lose about 30-35kg! I also need to start using the Gym membership I took out in July...
- startup my financial planning business and get my first clients during 2019 (my target is 1 per month)
- complete the two 'specialisation' modules ('Self-Managed Superannuation Funds' and 'Margin Lending') that I enrolled in when I finished the Diploma of Financial Planning course in early December
- start and complete the Adavanced DFP course that I enrolled in recently
- complete the four courses for the Master of Financial Planning degree I've enrolled in for 2019 (1 per quarter).

So, it looks like I'll be quite busy during 2019 ;)

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