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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Tuesday, 4 December 2018

Net Worth: Nov 2018

Another negative month, with my geared share portfolio and retirement savings balances each dropping by about $10K, and our house price estimate declining by about $10K (so my share dropped about $5K). The global (and local) stock markets recovered a bit yesterday (due to the 'ceasefire' in the US-China trade 'war'). Whether the 'correction' is over is anyone's guess. Hopefully the markets will have decent performance over the next 5-10 years until I 'retire' (the past ten years haven't been too flash). The Sydney housing market looks likely to continue to decline for another 12-18 months, so that won't be helping my net worth figures during 2019.

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Thursday, 29 November 2018

Almost a Financial Planner

Well, I managed to get all the assessment tasks for the Diploma of Financial Planning finished off last month. I'd left the video 'role play' tasks to the very end (after I'd completed all the written assessment tasks for all four modules), and I kept putting it off until I finally recorded the required 'client interviews' using DW and DS1 as 'the clients' and DS2 as my 'personal assistant' during the role play. In the end all four role play videos got graded as 'satisfactory' despite having very poor audio quality (using the built-in microphone on my laptop when recording from across the room didn't work as well as I'd hoped). I paid an extra $50 for 'priority marking' of the role play submissions, as marking normally takes around two weeks, and I was running out of time to finalise the DFP so I could apply to become an 'authorised representative' of an AFSL (Australian Financial Services Licence) company before the end of this year. Once the video role plays were marked I also paid an extra $50 for 'priority processing' of the certificate (so it was mailed out within three days rather than the usual 2-3 weeks).

Once I'd completed the DFP I was able to start the application process to become an 'authorised representative'. That process has so far involved filling in a set of online forms about my business (non-existent apart from having a business name registered) and my clients (none), and getting a set of background checks (police, bankruptcy, credit etc.) done. I had read that this could take 4-6 weeks to get done, but the AFSL company paid for the checks to be done and they only took two days. One nice feature was that I could submit take and submit photos of my ID, credit card etc. and didn't have to get photocopies certified by a JP. So the process was fairly quick and easy.

I also had to fill in an online form detailing my qualifications and submit copies of the certificates. I only submitted a copy of the DFP certificate and results, as I don't think my science degrees and post-grad qualifications are particularly relevant (although I listed them on the form). The AFSL can always ask for copies of those testamurs if needed. The final step was to fill in details of three business referees, so yesterday I had to ask some people at work if they would be happy to be listed as a referee. Once I had their permission I completed the online form for business references, and they were each emailed a form to complete today. Two of the three referees have already let me know that they'd sent back the completed referee forms today, so hopefully all the paperwork might be completed tomorrow.

If everything is in order I should then be notified of a date to travel to Perth to attend a two-day 'induction training' session. As the AFSL company shuts down around 20th December for the Christmas/New Year period, I have to make sure I get the induction training completed before then and the AFSL company gets my name added to the ASIC register of 'authorised representatives' before 31 December. That is a deadline, as the rules for 'new' financial planners are changing from 1 January 2019, and if I'm not a 'registered adviser' before then I would have to do one year of 'work experience' -- which isn't possible as I'm still working at my full-time job.

If everything goes according to plan I'll be able to complete my Master of Financial Planning part-time via distance education over the next two years, while also starting up my financial planning business part-time. I'm planning to do client meetings at their homes in the evenings or on the weekend - hopefully being able to meet with a financial planner outside of business hours might be attractive to somef prospective clients. We'll see how it works out in practice.

The cost of just being an 'authorised representative' is around $1000 per month (and that is through one of the cheapest AFSL companies I could find!) plus some extra costs for software licencing and a fee for having every client SoA (Statement of Advice) 'vetted' by them. Apparently financial planners in Australia usually charge between $1000 to $3000 or more for a routine SoA, so I'm thinking about charging $1200 for a SoA (and only taking on clients with fairly simple situations and needs while I'm completing my Masters). At this fee rate I would need to have about one paying client per month to just about cover the basic business running costs. I'd need about two clients per month to 'break even', as I'll be paying around $12,000 pa for my Masters courses for the next 2-1/2 years.

Fingers crossed that my AR application is approved and I get registered before the end of this year.

I finished my first course for the Masters degree this week (exam was on Tuesday), and I'll be doing four subjects next year (one per semester). Before the next semester starts in January I want to finish off a couple of additional 'specialist' add-on units that go with the DFP. One in Self-Managed Superannuation Funds, and the other in Margin Lending. They are both via distance education through the company that I did the DFP course with. I can also do the 'Advanced Diploma in Financial Planning' with them. That course costs around $1,400, so I might do it next year while doing the Masters courses (which cost $3,000 each!).

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Monday, 5 November 2018

Net Worth: October 2018

Things that make you go hmmmm...

Oh well, the random walk down wall street took us head-first into a lamp-post last month. My NW is back down to where it was in September 2017, having dropped almost $100,000 during October. Up by the stairs, down by the elevator, as they say. It could have been even worse if I hadn't sold up a lot of my geared share holdings in June, so thank Plutus I decided to de-leverage rather than gear-up. The poor stock market performance was complimented by the continued decline in house prices in Sydney, so the only positive contribution to my net worth during October was the $225 reduction in our home mortgage.
Although I'd been aware of the market 'correction' happening during October, I didn't really pay much attention as I've been busy trying to finish off my assignments for the Diploma of Financial Planning course I'm doing (nearly there!) and the first subject of the Masters in Financial Planning course I'm enrolled in this semester. The Hayne Royal commission interim report has been laying bare the rampant greed and unethical behavior in the financial planning 'industry' in Australia, with the Big 4 banks coming in for special attention, along with the large financial planning 'groups' like IOOF and AMP. Several well-known ('celebrity') financial planners/firms closed up shop after having to front the Royal Commission. Combined with the major changes to regulation and education requirements for 'financial planners' coming into effect on 1 Jan 2019 I expect a lot of the 'old school' planners will be exiting the 'industry' during the next few years. Many of them had business models reliant of hefty commissions received when selling life insurance products, which is being wound back and is under pressure to be completely eliminated (like commissions on non-insurance investment products), and they would struggle to move to a fee-for-service business model. In addition, many of them do not have a uni degree, so would have to go 'back to school' to meet the education requirements for existing planners by the 2024 deadline. I'm trying to get my DFP and become a 'registered' financial planner before 31 Dec so I don't have to meet the supervision requirements for 'new' planners that comes into effect on 1 Jan 2019. There seems to have been a recent addition of the category 'career changer' that might spare me from the supervision requirement if I don't get registered before 1 Jan 2019, but it isn't clearly defined, and I'd still need to complete the Graduate Diploma in Financial Planning before being able to get registered in that case. So, full steam ahead with finishing off my DFP asap...

Hopefully the changes will 'professionalize' the financial planning industry in the next few years, and the exodus of existing planners and barriers to entry for new planners may reduce competition and increase demand - all good things for my intention to set up my own (part-time) financial planning business next year. We'll see how it goes.

ps. no diet updates at the moment, as I haven't been sticking to my diet plan, and haven't had time to go to the gym. Hopefully I'll get back on track after my uni exam at the end of this month.

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