REGULAR INCOME
Based on Price’s recommendation, a pension of 2 per cent (the minimum level allowed) is drawn from the $104,000 invested in cash. Another 4 per cent is taken as an annuity from the Macquarie Pension Manager, which provides for an initial minimum pension of $56,000 annually.
Pension funds, plus any dividends from the share portfolio, are paid into a Macquarie cash management account before being distributed to Tony’s Newcastle Permanent living account as a fixed fortnightly amount.
“Providing Tony with a weekly income of $900 gives him a needed level of independence, plus the discipline of living within a budget,” Price says.
From a timing viewpoint, Price says the decision to place half of Tony’s money into a Macquarie Pension Manager in March 2009 couldn’t have been better. He says with asset valuations at their lowest ebb, following the ravages of the GFC, this investment was well positioned to enjoy the fruits of any subsequent recovery.
“Unplanned it may have been, but the value of Tony’s Macquarie Pension Manager fund has grown from $1.4 million to $1.6 million due to a lucky break with the timing,” Price says.
FUTURE PROVISIONS
While Tony is still deemed unfit for full-time work, steady rehabilitation has got him to the point where he can drive and live with relative independence. In the not too distant future Chaz also expects Tony to be able to live on his own. With that expectation in mind, money on term deposit – now worth around $700,000 – has been earmarked for the purchase of Tony’s future home.
“It’s envisaged that Tony will ultimately be responsible for managing his finances,” says Price. “Chaz and I have encouraged his participation in any decision-making to give him a greater sense of ownership.”
Tony receives enough cash from his portfolio to cover living expenses of $46,800 annually. This is topped up with dividends from his direct shares portfolio as required, and any excess cash is retained in the portfolio.
While this strategy is far from dynamic, Price says it addresses all primary criteria required by Chaz and the NSW Trustee and Guardian for a conservatively balanced portfolio with good exposure to capital growth, while limiting the downside risk.
“We did look at other options, like investing monies solely in Tony’s personal name without using superannuation, but on a risk/return basis, plus associated tax implications, we couldn’t justify their recommendation,” Price says.
THE DETAIL WITHIN
The beauty of having unlimited access to these funds, says Chaz, is that the investment can be actively managed according to personal requirements and prevailing market conditions. He says much of the value added by Price came through his attention to detail when it came to implementing the proposed strategy.
The detail, adds Chaz, included everything from dealing with myriad paperwork, required to be filed for a personal injury contribution; meeting all the associated medical criteria; and also satisfying the NSW Trustee and Guardian’s investment criteria.
“Having had Andrew along for the journey from day one meant that by the time we were allowed to proceed with [the] investment strategy, he’d not only earned our trust as an adviser, but was already privy to the minutiae of the case,” Chaz says.
According to Price, the most arduous part in the successful execution of this strategy was ensuring that every piece of information was available at the point of sign-off so that the next step could proceed. To avoid getting to the end and finding that something vital had been omitted meant every step needed to be mapped out well in advance by Price.
“We performed several dummy runs to guarantee that what Tony ended up with best met his needs,” says Price.
“It was during these dummy runs that I fully appreciated the value of my contacts within participating organisations to swiftly iron out any issues.”
ADDING THE VALUE
While it was ultimately Price who decided where investments should be placed, Chaz says there’s been no reason to contest any of Price’s recommendations, as long as they were adequately explained. Since Price recommended and implemented Tony’s investment strategy, his net wealth position has grown by $400,000.
Chaz says it’s impossible to put a price on the peace of mind that’s come from knowing Tony’s financial security is adequately provided for.
“As I never wanted to get too involved in the detail or the process, it was Andrew’s job to meet criteria demanded by statutory authorities, develop and implement investment strategy – and keep us abreast of portfolio performance, plus ongoing issues,” he says.
