tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, November 1st, 10:39AM

Insurance

rss
Latest Headlines

Odd priorities – and how some are resolved

Life is full of risks and one cannot manage them all. Most risks have financial consequences, and it is the money-part of the problem that we can best manage too, but it is worthwhile remembering that while money is the currency of our interactions with the world, it isn’t an end in itself.

Monday, May 13th 2019, 10:40AM

by Russell Hutchinson

What are the big risks? How well prepared are we for them? I’ve got friends that smoke and only buy organic chicken, to me, that looks like an odd couple of priorities. Taking care of my health makes a big difference to my life – and prevention is always easier than cure, so effort goes into that.

Of course, trouble can come to all of us – whether healthy or not – so planning for sickness or a job loss makes sense.

I am a fan of taking advice, and recommend that, but some fundamentals are well known: having a cash cushion, an emergency fund, makes a huge difference to one’s ability to face everything from the need for unexpected work on the car to receiving a cancer diagnosis. Some financial advisers I know recommend three months’ income as a guide. They tell clients that if you aren’t in a position to save towards an emergency fund you are in a precarious place – because even a little bad luck will knock you off your perch.

Even with good planning, some risks are too large to effectively save for.

What if you cannot work for two years? Or even the rest of your life?

If such a disability happened more than ten years before retirement, it would be financially devastating for most households. That’s where insurance comes in.

The difficult thing is working out how to allocate resources between your goals.

The two most common financial goals in life are a debt-free home and a retirement fund. Having enough insurance to ensure that you can still achieve those two even if someone in your household suffers illness, disability, or death is usually wise.

But how do you share out your money between those three demands?

Last week I spent almost three days in workshops with advisers, and this theme came up several times. Some have deliberate strategies for working through the conversation in detail: providing strong guidance to the client along the lines ‘x is more important than y’ and ‘the risk of a is bigger than b’.

Others just keep challenging the client to think about their values and come up with an answer.

I cannot tell you which is, objectively, the ‘best’ from a customer perspective.

I have some suspicions that it may vary depending on the client. I know that training requirements and documentation will vary a lot between the two approaches, with the more rules-based one being easier, while the client-values-focused approach may mean greater commitment on their part.

But whichever path you take, I am sure that it takes planning. The relief that a client feels from having the conversation, working out their approach, and then being able to let go of the worry may be the most valuable thing about the entire engagement.

Tags: Russell Hutchinson

« The many different kinds of financial adviserHere's why you haven't seen many CEOs and senior execs recently »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

nib launches tool to support women through menopause
nib has launched a new health management programme designed to support women as they navigate the stages of perimenopause and menopause.

Employees are wanting health and life insurance
A new survey shows potential employees what life and health insurance benefits, but less than a third of employers plan to offer such benefits.

Chubb Life makes changes to trauma benefit
Chubb Life has made a series of enhancements to its Assurance Extra and Assurance Extra Business policies, including the addition of a new Continuous Trauma Benefit,

Resolution Life gets new president
Global life insurance group Resolution Life has appointed Moses Ojeisekhoba as its new President.

News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com