This isn’t necessarily because your demographic is particularly gullible. Rather, it’s because you’re more likely to control higher levels of wealth, perhaps as the trustee of a self-managed super fund (SMSF); you’re accustomed to making financial decisions; and you’re actively looking for attractive investment opportunities. What scammer wouldn’t want to target you?

Scams take many forms but when it comes to superannuation, two stand out:

1. fraudulent investment schemes, and
2. schemes offering early access to superannuation.

Either way, the result can be a major financial loss and dreams destroyed.

Golden opportunity

One clear warning of a scam is an unsolicited approach. Someone contacts you, usually by phone or email, offering an investment that is ‘both safe and delivering high returns’. This person will often know a lot about you, reciting accurate personal details they claim you provided in a questionnaire you completed earlier. Their story is supported by an apparently authentic website and, enticed by the attractive returns and smooth sales talk, you make an initial investment. At the beginning you receive statements showing your investment is growing steadily prompting you to add further funds. Then things go silent. Their phone number is disconnected, emails bounce and the website disappears, along with any hope of recovering your funds. Your stomach lurches. A cold sweat saturates you. You’ve been scammed.

Wonderful as modern technology is, it makes it easier for fraudsters to appear legitimate and transfer money in an instant. They close down one operation and set up another with ease. It doesn’t help that we give away much of our personal information, and what isn’t available for free can often be purchased by criminals.

Early access

The other major scam that lures many who need money quickly is the promise of early access to superannuation. This is how it works.

Bob’s superannuation is just sitting there, the solution to his financial problems if only he could access it.

He searches the internet for options and an advertisement promising early access to super pops up. This puts Bob in touch with a ‘specialist’ who helps him set up a SMSF, telling him that as the fund trustee he will be able to get hold of his super money. Bob signs the paperwork to set up the fund and rollover his super, but the money doesn’t turn up where it should. Eventually Bob discovers that his retirement savings were transferred to a bank account controlled by the scammer then moved overseas.

Not only has he lost the lot, Bob now faces a big tax bill for accessing his super prematurely. The scammers didn’t tell him that early access to super is only available:

• in cases of incapacity,
• to pay for medical treatment if seriously ill,
• if in severe financial hardship and can’t meet immediate living expenses, or
• if terminally ill.

Protection is the best cure

A few simple precautions can help protect your super (and other savings) from scammers.

• Hang up on unsolicited phone calls and delete suspicious emails.
• Take care when sharing personal information.
• Visit scamwatch.gov.au for updates on scams that are doing the rounds.
• If you suspect a scam report it to Scamwatch, even if you haven’t lost any money.
• Seek advice from a licensed adviser. Legitimate advisers and investment managers appear on ASIC’s list of Australian Financial Service Licence holders.
• And beware of dating and romance schemes. They are more common than fraudulent investment schemes, result in bigger financial losses, and are targeted at the same demographic!

For more information, contact Leenane Templeton on (02) 4926 2300 or email success@leenanetempleton.com.au.

Source: ASIC’s website www.moneysmart.gov.au – Financial advisers register

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However, we believe the probability of a major global systemic risk event due to Brexit is low in the short term. We believe the European Central Bank and Bank of England staready to provide sufficient liquidity to ensure their banking systems continue to function. Quantitative easing (QE) could also be redeployed in the United Kingdom (UK) or stepped up in the Eurozone to support sovereign bond markets if needed. The uncertainty and distraction created by Brexit are likely to result in reduced investment, increased savings and lower economic growth in the short term. In response, the Bank of England decided to reduce the cash rate to 0.25 per cent in early August.

It is important to distinguish between the nine nations that are members of only the EU and the 19 nations that are members of both the EU and the Eurozone. Leaving the Eurozone is more problematic than leaving the EU because there is no existing legal process to follow. There are four countries that are outside the EU but are part of the single market as members of the European Free Trade Association (Norway, Iceland, Switzerland and Lichtenstein). We believe it is 50 per cent likely that the UK will proceed to trigger Article 50 and negotiate an agreement to remain in the single market.

US interest rates may rise more than markets expectIn the US, a range of economic indicators show that the US economy continues to recover, including an improving housing sector, a likely stable federal deficit, competitive wages – despite the appreciation of the US dollar and a relatively low reliance on exports. Several transitory factors have been keeping inflation below the Fed’s two per cent target. However, as the oil price bottoms out, the US dollar stabilises and the labour market continues to tighten, wage growth and inflation pressures are likely to normalise. Consistent with previous cycles, this will require the Fed to tighten monetary policy, probably more so than the market is expecting.

The Eurozone is likely to continue benefiting from a weaker currency, a stronger US economy, lower commodity prices, and an improvement in borrowing conditions and credit flows in an environment of ultra-low interest rates.
However, the combined effects of high debt levels, labour market rigidities and unfavourable demographics are likely to present ongoing headwinds for growth. The Eurozone also remains vulnerable to major shocks, such as an escalation of geopolitical tensions with Russia, the election of Eurosceptic governments or a collapse in the Chinese yuan. Each of these scenarios could trigger a dramatic uplift in periphery Eurozone sovereign bond yields, and would heavily test the resolve and mandate of the ECB.

While we remain concerned about the short to medium-term outlook for China, we do not believe that China is about to have a financial crisis or experience a hard economic landing. China’s rapid economic growth in recent years, fuelled
by the large credit stimulus during the GFC, has been unsustainable. Although credit growth has slowed, it continues to grow at 15 per cent per annum.

Prospects for equity markets

Our base-case outlook for the next three years assumes a continued recovery in the US with modestly rising inflation, a continued slowdown in China (but not a financial crisis or hard landing) and an improvement in the economic outlook for Europe. We remain cautious about the outlook for equity markets given the recent Brexit vote, the environment of abnormally low interest rates, historically elevated price-earnings multiples, risks associated with the recapitalisation of the Italian banking system and the continued withdrawal of US monetary policy stimulus. While the Fed and other central banks believe their policies are highly stimulatory, such policies also act as a tax on the world’s savers by reducing or eliminating interest income.We continue to believe markets are mispricing the likely future path of the federal funds rate and long-term interest rates in the US. It is prudent to remain cautious in this environment.

We continue to see attractive opportunities for Australians to invest in high-quality global businesses, although pricing is less attractive than in recent years. Risks to the Australian dollar appear weighted to the downside and the Australian economy remains exposed to the continued unwinding of the commodities boom, domestic housing investment boom and household credit boom, which further weakness in China could exacerbate. Domestic economic weakness and global disinflationary forces are putting downward pressure on Australian interest rates at a time when the US economy is moving towards full employment and higher interest rates. The challenges facing the Australian
economy serve as a reminder to investors of the importance of achieving meaningful portfolio diversification to preserve capital and higher risk-adjusted returns over the investment cycle.

To discuss your investment options, speak to your financial planner at Leenane Templeton on 02 4926 2300 or email success@leenanetempleton.com.au

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Australians are becoming more educated about their health – whether it’s actively pursuing preventative measures or a greater awareness of healthcare options. Combined with improvements in medical technology and clinical practices, there has been a marked decline in the rate of dying from major health conditions in recent times. For example, the death rate from male cancer over the 20 years to 2007 fell by 16 percent. Due to this change in lifestyle and development in research we are living longer and therefore need to take measures to protect ourselves against survival. One aspect you need to determine is whether or not you are protecting your financial security.

Living longer

Australians are living longer – and with that is the increased likelihood you’ll experience a major health issue. But survival rates are also on the increase due to medical advancements.

• Cardiovascular disease is the number one cause of death in Australia but has increasing survival rates
• Long-term survival rates among stroke patients has more than doubled since the ‘70’s

The number of Australians living with long term health issues is also increasing. It’s estimated that as many as 1.7 million Australians have undiagnosed ‘type 2’ diabetes. More than 4 million Australians are living with some form of disablement.

Protecting your financial security

If the unforeseen was to happen to you, how would you protect yourself and your loved ones? Consider the financial impact of absences from work and medical expenses. Without a plan you may struggle to maintain your lifestyle during recovery.

Part of your plan should include considering personal insurance to protect you financially against serious disablement or illness.

Trauma or Total and Permanent Disablement – or both?

Many Australians have some type of insurance cover through their super – but are you sure it will be enough or it will cover you if you suffer a serious health condition and survive?

Trauma and Total and Permanent disablement (TPD) cover will pay you a lump sum benefit which will assist in improving the quality of your life. Importantly, it gives you choices – treatment and rehabilitation, future employment options, home modifications. Each one is unique to your circumstances.

Trauma cover pays a lump sum if you suffer a serious health condition or trauma event such as a heart attack or cancer. Trauma cover provides the financial assistance you need so you can focus on your recovery. It is worth noting that trauma cover is not usually available through your super fund so this type of cover is definitely worth considering.

If you were to become totally and permanently disabled and were unable to work again, then payment of a TPD benefit would provide financial relief. TPD covers illnesses and injuries that are not usually covered under trauma cover. The lump sum can be used to meet immediate expenses and payment of debt and can also be structured to provide an income for you and your family over the long term. If you do have TPD cover in your super, you’ll need to assess whether it’s enough?

Make sure you get the most appropriate amount of cover

The consideration is usually less about which cover is right for you but how much of each type of cover you need. At such a stressful time, the last thing you want to think about is money issues. Personal insurance is an effective way to protect you and your loved ones from the financial distress that many illnesses can cause.

Source: AIA Australia, May 2014

1. AIHW – Australia’s health: In brief (2010)
2. Australian Bureau of Statistics (2008 – 2011)
3. AIHW – Cardiovascular disease mortality: Trends at different ages (2010)
4. Stroke society of Australasia (2011)
5. Diabetes Australia (2011)
6. Australian Bureau of Statistic (2009)

Disclaimer

Speak to one of our qualified risk management specialists or financial planners, so that you can get the help you need to protect your financial security.
Call (02) 4926 2300 or email us.

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