The new, mandatory examination for Financial Planners in Australia has finally kicked off - bookings for the June session of examinations opened earlier this month and close at 5pm on Friday 31st May. I decided to enrol in the exam (I'm booked in for Sunday 23rd June), as I *should* know all the required material already, having recently completed the DFP and done financial planning and ethics subjects at uni in the past six months. There will also be some preparation materials available via Kaplan (which my AFSL provides in order for their authorised reps to complete the annual CPD requirement), which will give me a chance to revise thoroughly. The exam is being run by ACER (UNSW) and costs $594 - hopefully I pass the exam on the first attempt, as although you can resit the exam it will cost another $540+GST (ie $594) each time!
Although the exam will be held every three months this year and every two months during 2019, I've seen mention that you will only be able to register for an exam if you haven't sat for one within the past three months - and since registrations close a couple of weeks before the exam session commences, this would mean that if you fail the June exam you couldn't register for the next session in Sep 2018. And during 2019 you would only be able to resit after four months, not two.
In any event, existing (registered) financial planners have to pass the exam before 1 Jan 2021, or they will then have to pass the 'new planner' registration requirements - which would include doing 12 months of supervised professional experience!
The exam 'pass' mark is 'credit level' (ie. 65%), but as the exam (70 Qs to do in 3 hr 15 mins, after 15 mins 'reading time') consists mostly of multiple choice questions I'm hoping it isn't too hard compared to a typical university exam. It probably will be a bit of a shock to existing planners that have been in the industry for many years and don't have any tertiary qualifications. The exam is also 'open book' in terms of having the relevant statutory materials available (presumably on the dedicated computers that the exams are being run on during 2018-19.
Anyhow, as soon as I finished off my uni exam on 11th June I'll get stuck into revising for the FASEA exam. Then I'll have to get cracking on finishing off the ADFP I've also enrolled in (but haven't yet started).
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Wednesday, 29 May 2019
Lagging my 'stretch' benchmark
One 'benchmark' that I use for evaluating how well I am doing at increasing my net worth is the cut-off amount for the annual 'rich list' of the 200 wealthiest Australians - I compare my NW to 1% of the cut-off figure. The latest 'rich list' will come out this Friday, but they have already announced that the cut-off amount for being included in the list has increased to A$472m this year. So my 'benchmark' aspirational figure is A$4.72m for the end of 2018 (the list takes several months to compile, so I compare the annual figure to my previous year-end NW estimate).
Unfortunately my NW has lagged this benchmark during 2018. I'm guessing this is mostly due to:
1. A large fraction of my NW is tied up in our home, so the deflation of the Sydney (and Australian) residential real estate bubble has had a major negative impact on my net worth
2. Although the exact make up of the 'rich list' won't be known until Friday, looking at some of the names that have dropped out of the 'top 200' suggest that many traditionally rich families, while doing OK during 2018, were surpassed by the rapidly rising fortunes of several people involved in the Australia 'tech' industry. The founders of Atlassian are one example.
I don't expect 2019-2020 will be particularly good for my NW either, as I will be spending quite a bit of my cashflow on my uni studies and the running costs of my new financial planning business. Hopefully by the time I finish off my masters degree at the end of 2020 (or early 2021) my business income will at least be sufficient to cover running costs (even if I'm not still not drawing any 'salary' from the business). In 2021 the business will either be running profitably, or I'll shut it down. And in 2021 if I enrol in a PhD in financial planning the uni fees may be covered by RTP (research training program) funding.
If my business does start to generate profits from 2021 onwards, I may start to make some progress relative to the 'rich 200' benchmark.
Subscribe to Enough Wealth. Copyright 2006-2019
Unfortunately my NW has lagged this benchmark during 2018. I'm guessing this is mostly due to:
1. A large fraction of my NW is tied up in our home, so the deflation of the Sydney (and Australian) residential real estate bubble has had a major negative impact on my net worth
2. Although the exact make up of the 'rich list' won't be known until Friday, looking at some of the names that have dropped out of the 'top 200' suggest that many traditionally rich families, while doing OK during 2018, were surpassed by the rapidly rising fortunes of several people involved in the Australia 'tech' industry. The founders of Atlassian are one example.
I don't expect 2019-2020 will be particularly good for my NW either, as I will be spending quite a bit of my cashflow on my uni studies and the running costs of my new financial planning business. Hopefully by the time I finish off my masters degree at the end of 2020 (or early 2021) my business income will at least be sufficient to cover running costs (even if I'm not still not drawing any 'salary' from the business). In 2021 the business will either be running profitably, or I'll shut it down. And in 2021 if I enrol in a PhD in financial planning the uni fees may be covered by RTP (research training program) funding.
If my business does start to generate profits from 2021 onwards, I may start to make some progress relative to the 'rich 200' benchmark.
Subscribe to Enough Wealth. Copyright 2006-2019
Sunday, 26 May 2019
2018 was a bad year for billionaires
According to the Wealth-X Billionaire census the number of billionaires world-wide declined by 5.4% to 2,604 during 2018, and their total wealth also declined by 7% to $8.6 trillion last year.
The Pacific region, which includes Australia, did worse than average, with the number of billionaires declining by 6.3% (to 30) and their wealth declining by a massive 14% (to $64 billion) during 2018.
Overall, billionaires account for only 1% of all Ultra-High Net Worth (UHNW) individuals (defined as those with $30 million in net worth). However, they accounted for 28% of UHNW total wealth.
One interesting aspect of this is that 'wealth distribution' is actually a lot more 'equitable' amongst UHNW individuals than, for example, wealth distribution globally (where the top 1% of global population have at least 50% of the total wealth). Of course, this is largely due to the fact that no UHNW have a negative net worth, whereas the global population includes many people with negative net wealth (are in debt), or zero net wealth.
Australia is under-performing in terms of how many billionaires we have - our GDP ranks 13th, but we are not in the top 15 countries in terms of number of billionaires. This may of course reflect the much cherished belief that Australia is a more 'egalitarian' society than many other countries.
While not many people will feel much sympathy for billionaires having a tough 2018, it will have some adverse 'trickle down' effects - after all, the most popular hobby amongst billionaires is philanthropy, with over 50% known to be actively involved in philanthropic giving - often via educational grants, scholarships are so on. A recent example was Robert Smith paying off all student loans for the class of 2019 graduating from his Alma Mater (as is often the case when rich people engage in charitable giving, this immediately resulted in some criticism - the Washington Post wrote a piece questioning whether this act of charity was fair on those students (or their parents) that had saved and paid for their education without going into debt). Another recent example was the immediate, large donations of several French billionaires towards the restoration of Notre Dame cathedral after the recent fire. This, too, was promptly criticised - some on the basis that it was an example of Western privilege (i.e. it was easy to raise donations to restore a Western cultural icon, yet little had been raised to restore the damage done to Palmyra done by ISIS), and others simply objected on the basis that the generous donations provided another example that billionaires have more money than they need, or 'deserve'.
Subscribe to Enough Wealth. Copyright 2006-2019
The Pacific region, which includes Australia, did worse than average, with the number of billionaires declining by 6.3% (to 30) and their wealth declining by a massive 14% (to $64 billion) during 2018.
Overall, billionaires account for only 1% of all Ultra-High Net Worth (UHNW) individuals (defined as those with $30 million in net worth). However, they accounted for 28% of UHNW total wealth.
One interesting aspect of this is that 'wealth distribution' is actually a lot more 'equitable' amongst UHNW individuals than, for example, wealth distribution globally (where the top 1% of global population have at least 50% of the total wealth). Of course, this is largely due to the fact that no UHNW have a negative net worth, whereas the global population includes many people with negative net wealth (are in debt), or zero net wealth.
Australia is under-performing in terms of how many billionaires we have - our GDP ranks 13th, but we are not in the top 15 countries in terms of number of billionaires. This may of course reflect the much cherished belief that Australia is a more 'egalitarian' society than many other countries.
While not many people will feel much sympathy for billionaires having a tough 2018, it will have some adverse 'trickle down' effects - after all, the most popular hobby amongst billionaires is philanthropy, with over 50% known to be actively involved in philanthropic giving - often via educational grants, scholarships are so on. A recent example was Robert Smith paying off all student loans for the class of 2019 graduating from his Alma Mater (as is often the case when rich people engage in charitable giving, this immediately resulted in some criticism - the Washington Post wrote a piece questioning whether this act of charity was fair on those students (or their parents) that had saved and paid for their education without going into debt). Another recent example was the immediate, large donations of several French billionaires towards the restoration of Notre Dame cathedral after the recent fire. This, too, was promptly criticised - some on the basis that it was an example of Western privilege (i.e. it was easy to raise donations to restore a Western cultural icon, yet little had been raised to restore the damage done to Palmyra done by ISIS), and others simply objected on the basis that the generous donations provided another example that billionaires have more money than they need, or 'deserve'.
Subscribe to Enough Wealth. Copyright 2006-2019
Saturday, 25 May 2019
How 'fair' was Labor's policy to increase redistribution by raising taxes on the 'top end'?
One of the things I found most irritating about Labor's election campaigning was their constant assertion that raising taxes to spend on more 'redistribution' to reduce inequality was 'fair', and that the coalition policy to provide some income tax relief to those on above average wages was terribly unfair. I suppose it all depends on how you define 'fair'.
According to Labor, greens and other 'progressive' parties, any inequality of incomes or assets in 'unfair' and the role of government policy is to play Robin Hood - taking from 'the rich' and giving to 'the poor'. The confuse to goal of equal opportunity with that of equal outcomes.
We already have a progressive tax system, which ensures that those that can 'afford' to pay for the country's essential services does so, and also ensures that social welfare is provided to those in need. Does it need to be even more progressive? I doubt that many people realise how progressive it already is. I came across an interesting 'fact check' that was done back in 2015 when Hockey (then treasurer) made a statement that 50% of all tax was paid by the top 10% of the working population. The fact check confirmed this. But what I find even more interesting is that a phenomenal 98% of all income tax is paid by the top 50% of the working ie. those earning more than an average wage!
Whether or not it is 'fair' that 98% of the funding (in terms of income tax) to run the country is provided by only half the population (ie. the other half are basically free-loaders), I can't see how increasing that tax burden even more in order to hand out additional 'support' to the bottom half is 'fair'.
In any case, fairness (or unfairness) of redistribution is in the eye of the beholder. Those voters who will end up paying more taxes and not receive any direct benefits will tend to vote against such policies, and those who won't foot the bill, but will receive substantial benefits, tend to think it is a great idea (and self-evidently 'fair'). It is also the reason why younger voters (who often pay little or no tax) tend to vote more to the 'left' and older voters (in peak earning/taxpaying years or retired after a lifetime of paying taxes) tend to vote more 'left'.
Subscribe to Enough Wealth. Copyright 2006-2019
According to Labor, greens and other 'progressive' parties, any inequality of incomes or assets in 'unfair' and the role of government policy is to play Robin Hood - taking from 'the rich' and giving to 'the poor'. The confuse to goal of equal opportunity with that of equal outcomes.
We already have a progressive tax system, which ensures that those that can 'afford' to pay for the country's essential services does so, and also ensures that social welfare is provided to those in need. Does it need to be even more progressive? I doubt that many people realise how progressive it already is. I came across an interesting 'fact check' that was done back in 2015 when Hockey (then treasurer) made a statement that 50% of all tax was paid by the top 10% of the working population. The fact check confirmed this. But what I find even more interesting is that a phenomenal 98% of all income tax is paid by the top 50% of the working ie. those earning more than an average wage!
Whether or not it is 'fair' that 98% of the funding (in terms of income tax) to run the country is provided by only half the population (ie. the other half are basically free-loaders), I can't see how increasing that tax burden even more in order to hand out additional 'support' to the bottom half is 'fair'.
In any case, fairness (or unfairness) of redistribution is in the eye of the beholder. Those voters who will end up paying more taxes and not receive any direct benefits will tend to vote against such policies, and those who won't foot the bill, but will receive substantial benefits, tend to think it is a great idea (and self-evidently 'fair'). It is also the reason why younger voters (who often pay little or no tax) tend to vote more to the 'left' and older voters (in peak earning/taxpaying years or retired after a lifetime of paying taxes) tend to vote more 'left'.
Subscribe to Enough Wealth. Copyright 2006-2019
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