Throughout the sea of people claiming to be ‘expert economists’, there is one in the financial industry that truly stands out. Dr. Shane Oliver. Being part of not only AMP, but the finance sector as a whole for almost 30 years, he is revered and respected by peers and fellow chief economists around the world. Seen and quoted often in leading newspapers such as The Age, The Herald Sun, and many other industry based magazines; Shane has built up somewhat of a cult following and his advice is not only trusted but diverse as well. From the smallest of businesses owners and working class citizens, to multinational corporations and large income earners, his ability to relate is considered paragon compared to many other Chief Economists around the world. Below is his latest Q&A that delves into the deep issues about the trends within our current markets and what, as an investor, we can do to keep up with its expeditious nature.

Towards more positive trends

Recovery and growth remain a key focus for the global economy, and there’s good news for the Australian economy too. Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital, talks about key market movements and economic developments.

What type of investment solutions could hold investor interest in 2013?

Although in hindsight it made sense to have invested in term deposits and bonds over the past few years of equity market volatility, now that the global economy is in a recovery mode, it may be worth investors reconsidering this approach. The yields on term deposits are getting lower and may fall below 4% depending on interest rate cuts. Bonds too are not performing particularly well, because of record low yields resulting in low returns. There is also the risk that yields rise as a result of investors moving out of bonds, leading to the loss of capital.

Investing in assets such as property and shares could be a way to avoid such risks. While it appears that Australian homebuyers are cautious in taking on more debt, yields from residential property continue to improve. Shares too have come back into play as an attractive asset, with grossed up dividend yields of around 5.5 – 6% and capital growth potential as the global growth outlook continues to improve.

Is there a danger that the Euro will break up or that the European Union will not be able to rise up to the economic challenges of its member states?

This was a matter of great concern over the last three years, but events from last year have helped to calm such fears. The European Union is slowly but surely getting on top of their financial problems. The European Central Bank (ECB) provided cheap financing to European banks, which restored market confidence inEurope’s financial system.

Strong words of support from the President of the ECB didn’t go to waste either; speaking at an investors’ conference in London mid-last year, he defended the then embattled currency, saying, “The ECB is ready to do whatever it takes to preserve the euro.” Such a strong commitment, backed by financial support, points to a steadily improving situation inEurope. And in the longer term, say over the next five to 10 years, we will be looking at a much stronger Eurozone and a stable Euro.

International lenders appear to be dealing with a number of lawsuits, fines and investigations. What impact does this have on international markets?  

It’s true that there were questionable activities taking place at various financial institutions prior to and during the Global Financial Crisis, eroding public confidence. The LIBOR scandal in particular was quite disturbing – LIBOR refers to the London Interbank Offered Rate, a benchmark interest rate for financial markets, which was manipulated to make more profits and to increase creditworthiness. TheUSJustice Department has also now brought a lawsuit against a credit ratings agency.

Overall, though these events should be seen as typical after-effects of a financial crisis, their impact on financial markets is not enough to cause a serious disruption to market movements.

Growth in China appears to have stabilised. What’s the impact on the Australian economy?

In a word, the impact is positive. Last year’s fears of a Chinese hard landing (which results from a government’s effort to slow down growth and control inflation by tightening monetary policy, and fears that this would expose imbalances in the economy regarding debt and the housing market) have subsided, as growth indicators have stabilised and strengthened. In particular, the Chinese property market has proven to be far more resilient than feared. Chinese commodity prices have also stabilised.

All this helps to take some pressure off the Australian economy, which is experiencing a slowdown of the mining investment boom. A stable Chinese economy means our export prices and export demand remain solid. In the meantime, lower interest rates should enable the Australian economy to become better balanced to the extent that they encourage a return to reasonable growth in areas such as housing, retail and non-mining construction.

Want to know more?

For more information on how current financial markets are affecting your investments and how we can help, call us today.

What you need to know

This document was prepared by AMP Capital Investors Limited (ABN 59 001 777 591, AFSL No 232497). This document, unless otherwise specified, is current at Tuesday, 12 February 2013 and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after that date. While every care has been taken in the preparation of this document, AMP Capital Investors Limited makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance.

This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

Jason is the newest planner to the EJM family, and joins us after several years of experience within the AMP network.

Jason assists his clients in building wealth through providing holistic, scoped and ongoing financial advice through all areas of finance.

Jason’s focus is on strategic advice underpinned with a platform of protection, and makes sure his client’s financial plan’s stay relevant by maintaining an ongoing professional relationship with regular reviews and always putting his client’s needs first.

Jason’s passionate belief that real wealth is built through strategy and sustained by discipline has been recognized through numerous awards, including membership and selection in AMP’s inaugural Horizon leadership group and honored with AMP New Planner of the Year Award in 2012.
Jason holds an Advanced Diploma in Financial Planning, a Diploma In Financial Services (Mortgage Broking) and is currently studying his Bachelor of Business majoring in Financial Planning through RMIT university. Jason also attended and excelled in AMP’s elite Horizon planner school program.

In his spare time Jason enjoys watching and participating in Music, Sport and family time. He enjoys guitar, is a passionate member of the West Coast Eagles and is the proud owner of a three year old pug x jack Russell, Lucy.

His previous job roles include a much loved overseas stint at IBM in Dublin Ireland, and a member of the Royal Australian Navy as a Writer.

Jason is an member of the Financial Planning Association and is an Authorized Representative of AMP financial planning Pty Limited.

Charlene Connors has been with EJM since 2010, initially taking on a Client Administration role where you would have seen her at reception alongside Manuela. Since then she has also taken on a Para-Planning role, developing her technical and strategic knowledge through research and hundreds of case studies.

For a while now though, her interest has been in Debt Management, specifically Residential and Personal Loans.

As many of our clients know, EJM has a passion for providing the very best advice and outcomes we can, especially when that relates to integrating services such as Accounting.

Therefore, we have been working over the past year to add Lending Services to our offering.

Whilst in the past we have referred clients to trusted partners for advice relating to their mortgages and loans, from April we will embed thorough Debt analyses more deeply into our process and advice to clients.

Charlene is now accredited through AFG (Australian Finance Group), which are an ‘aggregator’, basically meaning she has access to 32 different Lenders, including the major institutions as well as smaller niche banks too.

Finally, she is a member of the MFAA (Mortgage & Finance Association of Australia), which is the largest professional body for mortgage brokers and the benchmark of professionalism in the industry.

“I will be working closely with all Planners going forward and will assist in all strategic reviews, so you may meet me sometime soon!”

As you may have already heard we have moved our Melbourne office while we redevelop the King St building in 2013.
Until this is completed our Melbourne office is located at:

7 / 88 Wirraway Drive Port Melbourne VIC 3207

Don’t worry, all our phone numbers, emails and PO Box address will remain the same.
If you have any queries feel free to contact us on 9320 7600 in Melbourne, or 5721 2020 in Wangaratta.

We recently held our annual VIP Client seminar at Ascot House.
It is so nice to catch up with many of our closest clients for a great evening of socialising and financial strategies.

Gian Pandit from AMP Capital discussed the evolving market and the possibilities of protected investments, followed by Manny Mezzasalma providing an economic update and what it really means to us.

Frank Marcaccio hosted the night for the second year and he did a fantastic job of both keeping the night running while also providing some laughs.

I’ve included a couple of pictures below.

How many balloons can you fit into a Ford Focus on a cool morning in sunny Wangaratta? As many as it takes to get the message across for a good cause.  18 bike riders, many of whom are or were financial planners, set off from Sydney to Melbourne over 9 days and 1200 km’s to raise awareness for the Future 2 program. A foundation sponsored by AMP to help raise funds for disadvantaged young Australians.  The path these bike riders took was anything but direct, as they travelled through many country towns, and the weather they encountered was anything but mild, but yet they powered on, driven by this cause to make a difference and do some good in the lives of those needing a small hand.

A dinner was held to celebrate the bike riders arrival into Wangaratta, and in they walked, each with a certain degree of difficulty after spending 5 days straight on their bikes.  Some looked as though they’d been riding horses, some hippopotamuses and a few as though they’d never walk again. They sat down to a much needed meal to refuel their tired bodies and ate enough food to feed a small nation, but no-one complained though, they only reflected on the wonderful times and sights they’d seen thus far. Upon the nights completion, one rider was loudly pondering if the local McDonalds was still open…

The following morning people walking past the AMP future2 stand on the main street of Wangaratta, tried to win themselves an IPad2 by guessing as best they could the number of balloons in the Ford Focus. They also enjoyed some early morning breakfast supplied by the local Lions club and some banter with the bike riders about the tightness of their Lycra….. maybe it was a cold morning after all. Eventually the morning finished when the riders set off on the 6th leg of their epic journey, riding 100km’s to Shepparton. “On ya fella’s” an elderly gentlemen yelled above the claps and cheers as they left,  “Good on ya’s!”.

For more information about the Future2 Foundation and the bicycle ride, visit http://www.future2foundation.org.au

In a recent Newspoll survey, it was revealed that couples who live together speak more often about household chores than their finances.

While this may come as no surprise to some; it reveals a widening trend we see in the Financial Planning industry – that of the ‘financial passives’, those who know they should spend more time working on their goals and finances but can’t seem to find the time or energy to change.

Therefore, one of the more commendable initiatives the Federal Government has sponsored recently is the creation of MoneySmart Week, which runs 2-8 September.

This week is a key part of the Government’s Financial Literacy strategy, designed to increase the wider community’s skill and interest in their day to day affairs.

In addition to running a number of media campaigns, quite a number of events have been scheduled around the country to spread the message of making a decision to change your financial situation for the better.

A great little feature they have created is the Money Health Check, which walks you through most aspects of your financial well being (Having clear goals, Debt Management, awareness) and provides you with some crucial action items to follow up.

While this week’s focus is deserved, we recommend that people continue their curiosity and talk to an adviser, not only if it seems their situation is desperate or stressful, but also if your aspirations are clear but you are not sure how to reach them; that is where we are most effective!

Greg Davis
General Manager