The Hudson Report For December

December has been a big month at Hudson. We have all had new photos taken, we put together a video for our new web (which was daunting for some of us!), we are employing new support staff, our finance team has never been so busy with interest rates at historic lows and our advice team has had a year like no other, navigating clients through the COVID pandemic. It has certainly been a big year and the end of the year is not going to disappoint!

We would like to take this opportunity to wish you a very Merry Christmas and a Happy New Year.

This month to celebrate our new website and our new video, we thought we would take time to reconsider why people have financial planners in the first place.

An ASIC report paper released in August 2019 highlighted some of the areas that consumers look for in regard to financial advice. The paper offered survey results which showed that 79% of people use an adviser because they believed they had the expertise in financial matters that they did not. 75% believed that Financial advisers can recommend products that they wouldn’t probably find on their own. 73% were excited with the notion that their adviser might offer a strategy they hadn’t thought of and 69% were looking for financial education about financial matters from their adviser.

Hudson started in February 1992, almost 29 years ago, with a vision to educate as many people as possible about their financial journey. Over the years we have matured into a professional firm, offering our clients the ability to take care of all of their financial needs in one place, but our core focus of empowering everyday Australians to make educated decisions has not changed.

We’d like to re-introduce our Senior Advisers this month and introduce you to our specialised accounting and legal partners. As an inclusive team, we are committed to working closely to offer a comprehensible financial plan so that you have more time to focus on the fun things in life!

Ivan Fletcher

Hudson Financial Planning

Ivan has been an Adviser with Hudson for over 15 years and is one of our most senior and technical advisers.

Prior to his time at Hudson, Ivan spent his entire working career in the field of finance including prominent Corporate Treasuries and Trustee Companies, including 4 years with National Custodian Services as head of Investment Compliance for some of Australians largest Superannuation funds (including some of the Industry funds).

What Have I Learned this Year?

In 2019 the share markets shrugged off trade war tensions and BREXIT meltdowns. In 2020 the share markets have repeated the pattern with COVID-19.

The lesson is an old one but one of the most important. Share markets do not like uncertainty. If you need visual on share markets during uncertainty (late February to March) look no further than the footage we all saw in the super market isles (that is what panic looks like) and the share markets were no different. Fast forward a few months where the leading governments of the world rolled out stimulus (like Job keeper) and imposed lock downs to control the spread of the virus, we started to see some clear vision of how to manage the pandemic and the share markets started what was to be a fairly fast recovery.

Prediction for Next Year

We move into 2021 with 20-20 vision. The focus is already very much set on vaccine. If positive results start to accumulate in high numbers the share markets could well rejoice. However there still may be some twists to come if the early release vaccines are ineffective or produce unexpected side effects. One thing is certain the global back drop is well stimulated for good long term growth on the back of global low interest rates. Regarding Fixed Interest investments, expect to see lower returns. Historically we have seen very good returns in fixed interest asset allocations in our super funds however this has been against a backdrop of declining interest rates. Just like we have come to expect next to nil return on our cash savings or term deposit expect to see significant drops in future returns from your fixed interest allocations in super now that both short and long term interest rates are at all time lows.

Last Year’s Prediction

“It is becoming increasingly obvious that RBA interest rate cuts are not as effective in an already low interest rate environment, so expect a different tact from our governing bodies. That could be the buyback of Australian bonds or government boosts to Infrastructure spending or maybe some further unexpected tax cuts. Australians have slowed down discretionary spending which is the Achilles heal of our economy at present and needs a solution.”

RESULT - Well COVID ensured we at least got the tax cuts.

Final Word for 2020

With so many plans held up in 2020, 2021 is shaping up as the year of making up for lost time, whether that be rebuilding small business, travelling in retirement or simple reconnecting with that part of our lives that we lost.

In Australia at least, we have the opportunity this Christmas and new Year to appreciate what really matters this time of year and that is to actually spend some time with family and friends we love that we may have been distanced from during the year. As always, but especially this time of year, if you see someone without a smile, give them one of yours.

What Have I Learned this Year?

What have we ALL learned this year? That a lethal global pandemic, the likes of which has not been seen for 100 years, can essentially cripple economies, heighten unemployment and shatter confidence…and yet sharemarkets can shake it off and rebound within a matter of months.

The unpredictability of sharemarkets never ceases to amaze me. This year has been a powerful lesson in the art of holding tight and staying the course whilst the world seemingly fell apart and markets floundered.

Last Year’s Prediction

Brexit and Trade issues will be resolved and markets will react positively, but there will always be some other crisis looming to cause uncertainty in markets and subsequent volatility.

Cue Covid-19. One doesn’t have to be Nostradamus to predict an X factor event to impact sharemarkets, but I’m quite certain no one would have predicted the X factor event we have all experienced over the past 12 months. It really has been the perfect scenario to separate those investors with a steely resolve and those who crumble under the threat of adversity. Thankfully, the majority of Hudson members are educated enough to know that markets fluctuate, that the recession has been a government induced one in response to a health crisis (not as a result of shaky financial markets) and that not reacting is the best response.

What Have I Learned this Year?

Despite writing many an article relating to investing biases and how emotions can drive poor decisions relating to share investing, the short-term volatility we saw this year between February and May has absolutely blown me away. Our domestic share market (exclusive of dividends) saw a 37% decline in the space of 31 days. From here, it then rose 37% in the space of two and a half months (23rd Mar-9th June). Looking back this is an exceptional bounce back and testament to the emotion driving the market rather than economic fundamentals.

Prediction for Next Year

Granted, more a hope than a prediction, but I would like to see a lot more stability. As the whole world continues to combat covid-19 in so many ways, from social distancing and the wearing of facemasks, to the use of vaccines, this will bring a sense of unity and most importantly confidence that will, if nothing else, brace the market against any more emotion-driven sell downs.

As the financial stimulus measures (jobkeeper, jobseeker, small business concessions) wind down, combined with an increasing inability to use monetary policy due to the RBA’s cash rate being almost zero, I believe Infrastructure will continue to become the cornerstone of our Government’s stimulus attempts. As such infrastructure funds/investments could be an attractive investment option for those seeking a growth option that hasn’t bounced back like many share-based alternatives.

Last Year’s Prediction

As of July this year the US recorded its’ longest period of economic expansion on record (going back to records from 1854) at 120 months, and it has continued to grow in the months since. So could we finally see the US sharemarket begin to falter? If the US does sneeze will the rest of the world catch the cold? I like the outlooks for a couple of other sectors that have posted ordinary returns over the last few years, including the Emerging markets sector and Australian small caps.

Outcome?

We did of course see the US share market “falter”, albeit for very unusual reasons. As for the US sneezing and the rest of the world catching a cold … I won’t even go there! As for the sectors with potential, I’m happy to say that the Emerging markets and small caps funds I regularly utilise have significantly outperformed our domestic share market at large.

Final Word for 2020

No two ways about it, it’s been a remarkable year that has seen heartache and tragedy for many and huge change for most. However it’s also seen many people take the opportunity to spend more time with family and to engage in activities that they otherwise wouldn’t have, from doing a long-overdue renovation to deciding to get healthy and start riding that bike again. Personally I’m going to try and take away the positives from 2020 and incorporate those things into 2021 and beyond.

I wish all Hudson members a Merry Xmas, a Happy New Year and a fortuitous 2021.

Aaron Alston

Hudson Financial Planning

Aaron has worked in the financial services industry for 6 years. Aaron commenced his professional career working for a privately owned financial planning firm for 4 years where he found his passion for working with hundreds of clients to help them achieve their financial and lifestyle goals.

Aaron has recently joined the Hudson team and is excited to impart his knowledge and skills and contribute to the positive team culture that is Hudson Financial Planning.

Having an expert accountant is crucial in planning for your financial future.

Having the right tax structure is key to minimising your tax obligations as is knowing what you can and can’t claim. It is important to make sure that you’re getting the most out of tax time by ensuring that you’re claiming all the tax deductions you’re entitled to.

A good accountant should take a holistic approach and work with your adviser to take into consideration your personal lifestyle objectives. Tax plays such an important role in growing your wealth, that is why it is important that your adviser work directly with one of our specialist tax partners or team up with your chosen accountant to maximise your benefits and to work seamlessly towards your financial goals.

Hudson Advisers work in collaboration with accountants Angela Stavropoulos and Kristy Baxter from Pilot Partners. Relationship building is key to any successful strategy and we think that together we can add so much more value to our clients portfolio. We’d like to share a little more information about our very experienced partners.

If you would like to find out more about our relationship with Kristy or Angela, please call your Hudson adviser.

Kristy Baxter
Pilot Partner

Kristy Baxter is a Chartered Accountant and partner at Pilot Partners with more than 20 years’ experience in accounting and taxation across various sectors. She advises individuals and businesses across many different industries on tax planning strategies, budgeting and cash flow forecasting, asset protection, financial accounts analysis and business planning and structuring, ensuring they have their tax and accounting requirements set up the right way from the start.

Kristy’s aim is to create long-lasting relationships with the clients by helping them build their business using solutions tailored to their needs.

Angela Stavropoulos
Pilot Partner

Angela is a Fellow Chartered Accountant and a partner at Pilot Partners with more than 20 years of accounting and taxation experience across a diverse range of industries. She assists her clients at Pilot Partners by providing tailored solutions to ensure their accounting, taxation, business planning and asset protection requirements are met. By understanding all facets of her client’s business, Angela can offer tailored solutions and work closely with them to achieve their goals.

WHY IS ESTATE PLANNING IMPORTANT ?

Estate and Succession Planning takes into consideration your needs for the future and ensures that appropriate mechanisms are in place to facilitate your intentions being met. Whether it be assistance with your personal circumstances such as Enduring Power of Attorneys and Binding Death Nominations, or the transitioning of a family business from one generation to the next, we can assist.

WHAT OUR ESTATE PLANNING SERVICE OFFERS?

Forge Legal is well placed with decades of knowledge and experience, to ensure that your personal and business needs are carefully considered. Our full range of service offerings include the preparation of Wills, Enduring Power of Attorney, Advanced health directives, Testamentary trusts and Super binding death nominations.

Hudson advisers understand that your estate plan is one of the most valuable assets you can have. Knowing that you can protect your family and leave a legacy that secures their future is about more than money. This is why we have teamed up with Forge lawyers, to help make this process as stress free as possible, to help guide you through the process and to review your estate plan into the future. Tracey McMillan and her team offer tailored estate planning solutions, as well as a more affordable option of preparing online wills for our clients. For a small fee, Hudson clients can prepare their will online after which one of the qualified lawyers will review the will while it is in draft form. One of the most innovative firms in Australia, Forge are able to help the Hudson community all around Australia, operating in much the same way Hudson has over the last couple of decades. Tracey McMillan appears in many podcasts and is passionate about family law and making ‘law’ affordable for everyone. No one gets left behind. We’d like to introduce you to Tracey McMillan and John Clowes, Hudson’s legal associates.

Tracey McMillan
Forge Legal

Tracey McMillan is the CEO of Forge Legal who works tirelessly to achieve best possible outcomes for her clients. She became a barrister in 2001, practising predominantly in the areas of Family Law and Criminal Law.

In 2008, Tracey opted to leave the Bar and work as a solicitor, as she wanted a more hands-on approach with her clients, recognising that most matters were won or lost well before a barrister was involved in the case.

Her passion for justice sees her regularly invited to speak on topics of Domestic Violence and gender inequality in the Courtroom. She has also received numerous national and international awards, for her expertise in Family Law and matrimonial issues.

It's been a busy, exciting 6 months re-joining the Hudson team after a 20 year break! And I am so pleased to be back in the fold, working with Hudson members again.

It's no secret that the lending world has been topsy turvy this year with Covid, changing regulations and an uncertain economic environment overall. But, the good news is we have record low interest rates (some would say crazy low rates) and the banks are actively looking to lend money.

Yes, it's true we do have to jump through a few more hoops to organise finance - but overall it's a positive lending environment - despite the extra paperwork required.

2021 will be an interesting year and we are expecting more changes in the regulatory environment that impacts lending. But with some rates as low as 1.94%, it's hard to imagine further rate drops. I remember working for Hudson in the 90's and we did all our analysis and predictions back then based on 10% interest rates - hard to believe in the current climate!

It's been an absolute pleasure working with Hudson again and I'm looking forward to connecting with more Hudson members in 2021 and helping you to re-structure, re-organise and finance your property and shares. If you've been wondering if your rates are ok or you could do better, feel free to reach out and book an appointment and we can go through your situation together. I always say that as useful as those banks are, there is no need to give them an extra bonus by paying too much interest!

Merry Christmas and best wishes for 2021.

Nicole Green

Finance Manager

General Advice Warning: Information contained herein is general financial product advice and does not take in to account individual situations, needs or goals. It should not be relied upon and persons should satisfy themselves through independent means that any decisions based on this material are appropriate. We recommend that you consult with your qualified and licensed Hudson Adviser who will be able to make a recommendation based on your specific circumstances.

Disclosure: Hudson Financial Planning is not a stock broker. The research for our stock recommendations is collected from various sources: Intelligent Investor, Morning Star, Ord Minnett, ABN Amro Morgans and Citigroup. Employees of Mainview Securities Pty Ltd currently hold shares in the following ASX Codes: ASX Codes: CAJ, EWC, HSN, NAB, QBE, TLS, VRT, GXL, FLT, PDL, AD8, VHT, MVP, ALQ - Managed Funds APIR Codes:- FSF0041AU, FSF0035AU, FSF0264AU, FSF0877AU, FSF0876AU, FSF0877AU, FSF0090AU, FSF0873AU, FSF0924AU, FSF0244AU, FSF0228AU, FSF0873AU, FSF0795AU, FSF0043AU, FSF0505AU, FSF0220AU, FSF0233AU, FSF0409AU, FSF0484AU, FSF0468AU, FSF0469AU, FSF0891AU, FSF0892AU, FSF1085AU, FSF0969AU. This is not a recommendation.

Copyright & Disclaimer: The content in the Hudson Report is written by a Hudson Adviser and edited and created by The Hudson Editor. The views expressed in any article are those of individual advisers and do not necessarily reflect the views of Hudson Financial Planning. The material provided in the Hudson Report and on Hudson Financial Planning website by Mainview Securities Pty Ltd, is copyright protected. As this information is copyright protected, it is not for redistribution. Any requests to use the information provided for commercial use may be directed to - The Hudson Report Editor. The Hudson Report Online is published by Hudson Financial Planning, trading under Mainview Securities Pty Ltd, Australian Financial Services Licence No. 241177.