With a career spanning decades of expertise in business, economics, and investment journalism, Mr Kirby is currently the Wealth Editor at The Australian and host of the popular twice-weekly ‘Money Puzzle’ podcast.

He is a former managing editor and co-founder of Business Spectator and Eureka Report and has previously worked at the Australian Financial Review and the South China Morning Post.

Ecstra Foundation Chair Paul Clitheroe said Mr Kirby is a dedicated advocate for financial literacy and education and is well placed to assist with the amplification of Ecstra’s strategic objectives.

“This appointment underscores the Foundation’s commitment to its mission to drive change and increase financial literacy levels in communities and households across Australia. James’s diverse experience and outstanding editorial leadership make him an ideal candidate for the board.”

In addition to his career in journalism, James has previously been actively involved in governance and advocacy, serving on the boards of the Walkley Awards, the SVA Leadership Council (Vic), and First Nations Foundation. He is also the author of several business biographies.

“James continues to be a trusted voice in Australia’s financial media landscape. His work reflects a commitment to demystifying economics  and the markets, and empowering people to navigate their way through complex financial journeys. This, coupled with his dedication to social change makes him an invaluable addition to Ecstra Foundation.”

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Marisa Broome

Australians are making long term changes in their spending behaviour to minimise the impact of COVID-19 on their finances, according to CoreData research presented at The Financial Planning Association’s (FPA) keynote event held earlier this month.

‘Uncovering the Value of Financial Planning Advice’ held on 3 September brought together key players in the financial planning profession to discuss the importance of financial planning and how to ensure more people have access to quality, affordable financial advice.

The virtual event was moderated by award winning journalist Helen Dalley, with Paul Clitheroe AM (Money expert and Chair of Financial Literacy Macquarie University), Alan Kirkland (CEO of consumer advocacy group CHOICE) and Dr Pamela Hanrahan (Adviser to the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2018) as special guest speakers.

According to the survey^[1] findings discussed at the event, four in five Aussies took action to protect their finances to minimise the impact of COVID on their personal finances. The top five actions included: reduce discretionary spending (63.5%), reduce spending on essentials (47.8%), cancelling memberships (36.7%), seeking additional work/jobs (16.9%) and applying for financial support/loan (12.8%).

Yet despite these actions, more than twice as many households are in a fragile financial position now, compared to before COVID.

When it comes to spending patterns, Australians are making long term changes and may take more than a year (or never) to get back to their pre-COVID spending levels.

Particularly on memberships and subscriptions such as gym, streaming services, while 30% of Australians expect to start spending again within next six months, over 20% said they might either need more than 12 months or may never go back to the same level.

On other discretionary items and activities such as eating out, social activities, nearly half are committed to returning to normal with six months, and almost 20% within 12 months.

Marisa Broome CFP^®, FPA Chair said: “We’re experiencing an extraordinary and life changing moment in history. It’s affecting every facet of our lives. Our health, our work, our emotions, our friendships, our travel plans, our life plans and of course our financial circumstances.

“Money plays such a critical role in our ability to live the life we want. Especially in the face of challenging and unplanned circumstances.”

Universal access to financial advice

The event saw financial experts and advised clients talk about the importance of financial advice and the support of a professional financial planner to unlock dreams and manage the unprecedented times for everyone.

Mr Clitheroe pointed out that the current framework meant advisers were restricted to only being able to help high net worth individuals and other relatively well-off consumers who could afford to pay for advice.

“That satisfies [roughly] the top 10 or 20 per cent of the population of Australia. What do we do for the other millions of people who want to talk about everything from their credit cards, to investing a hundred dollars, to talking about [whether they should] put a thousand dollars in super or [towards paying off their] mortgage? That remains the challenge.”

His views were echoed by Ms Broome who confirmed that financial advice is both hard to access and expensive to pay for. It is beyond the reach of most Australians.

“We at the FPA want to change this. We want more Australians to seek financial advice but to do that they need to be able to access it and afford it. I passionately believe that helping Australians to build their financial capability and understanding is critical not just to them individually but to the nation,” she added.

Mr Kirkland from CHOICE argued that customer-centric financial advice needs to start with a good understanding of the customer’s needs and aspirations and their financial capability, and then exploring the different ways of providing that advice.

“It’s about really assessing when advice as provided by a financial planner is actually the right approach for a person and if it is, whether they need one-off advice or ongoing advice. Because sometimes, good advice is about giving people the skills they need to make decisions themselves through their day to day life,” he explained.

CoreData research further confirmed that of those who acknowledged they need help to strengthen and protect their financial position post-COVID, affordable advice and support from a financial planner appeared to be among the top three, with one quarter of Australians saying this would help.

The top two requirements for support included: ‘Tips and advice from companies I pay regular bills to on how to reduce bills’ (31.9%) and ‘a website or other free accessible resource that explains what financial services and supports are available’ (27.2%).

The event also featured clients sharing their stories about the valuable experience of working with a financial planner, particularly the intangible benefits of confidence, comfort, peace of mind and empowerment over their financial situation.

———-

[1] n = 1,145 Australians

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Paul Clitheroe

Research from digital wealth provider InvestSMART has shown many of the country’s biggest fund managers are charging fees for no, or underwhelming, performance.

InvestSMART modelling of Morningstar data shows over $414 billion of everyday Australians’ hard-earned cash is invested in underperforming funds. Analysing over 9,300 managed funds in Australia, the research revealed that out of the 5,297 funds with a 10-year track record, 78% have underperformed their respective benchmark indices by an average of 1.88%, with average fees at 1.74%.

Commenting on the findings, InvestSMART CEO Ron Hodge said fees were the most important part of any performance equation.

“It is pretty well known in the industry that over the longer term, most fund managers will underperform their benchmark by the cost of their fees. This is largely because a benchmark does not have any transaction costs – it is a hypothetical calculation.

“So why are benchmarks important? Benchmarks are a comparison metric, allowing investors to compare apples with apples when they are looking at a number of investment options. For example, there is not much use comparing an International fund to an Australian Equities fund or a property fund with a bond fund,” he said.

To help investors more easily compare their fund’s performance against its peers, including fees, InvestSMART recently launched an industry-first online tool, Compare Your Fund. The tool allows investors to compare a range of managed funds (including super and pensions).

You can’t control performance but you can control costs

InvestSMART Chairman Paul Clitheroe said while historically it had been difficult for investors to compare fund fees and costs, Compare Your Fund allows investors to really do their homework before investing.

“While you can’t control the performance of your fund, you can control fees and we believe this tool will help investors truly understand the fees and costs involved in investing,” he said.

“There are plenty of low-cost investment products out there, if you’re paying too high a fee, you’re giving away too much of your share of investment returns.”

Technology as an enabler

Mr Hodge said technological innovation was gradually levelling the playing field for investors.

“Fund manager fees have fallen globally over the past decade and we believe advances in technology, along with regulatory change, will continue to put pressure on traditional fee models,” he said.

“InvestSMART is currently investing heavily in new technology-based products and tools, with the goal of continuing to help lower the total costs of investing to help Australians grow and protect their wealth.”

In addition to the Compare Your Fund tool, InvestSMART also offers stock research and analysis to over 630,000 members, and a popular free online Portfolio Manager, which allows investors to track all their investments in one place and conduct regular portfolio health checks.

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Kendall Flutey

Key points:

• Netwealth in partnership with a NZ tech company, is bringing a financial literacy program to Australia targeting 15,000 kids nationally over the next 12 months.
• Known as Banqer, the program aligns with Netwealth’s desire to inspire Australians to see wealth differently and to discover a brighter future.
  Banqer is a virtual classroom economy created where kids can learn to earn, save, spend and invest their money in a safe and engaging way.
• Netwealth is the proud supporter of a ground breaking financial literacy program which over the next 12 months will be released nationally across Australia to an estimated 15,000 students, fully funded, forever changing the financial futures of these young Australians.

A breakthrough in financial literacy in Australia, the program known as Banqer, teaches kids about money and financial concepts, giving them the chance to learn about money in a safe, engaging and fun way.

According to Netwealth Joint Managing Director, Matt Heine, supporting the program is an excellent way for Netwealth to extend its wealth philosophy to Australian kids.

“Netwealth was created to provide investors and wealth professionals with a better way to invest, protect and manage their current and future wealth,” he said. “We seek to enable, educate and inspire people to see wealth differently and to discover a brighter future. Banqer is a great opportunity for us to extend this purpose supporting a program that starts kids on this journey.”

More than 30,000 students from 450 schools in New Zealand currently use Banqer, as well as a handful of teachers in the United Kingdom, United States, Canada and South Africa. Banqer is currently being used by 28 schools in Australia, with plans to take it to the US this year.

“We all want a brighter future for our kids, and that means making sure programs like Banqer get into our schools so kids can learn in a practical way, life-long concepts about money,” said Heine. “We are very proud to have brought this program to Australian kids.”

Launched in New Zealand in 2015 and the brainchild of accountant turned developer and Banqer CEO Miss Kendall Flutey, kids can influence their financial environment by doing classroom jobs to earn cash or offering services to other children. Any virtual money that they earn from rewards for good behaviour or classroom jobs, they can choose to save, spend or invest in houses in a virtual real estate market.

Teachers can use the program’s reward system to help motivate kids, encouraging development and confidence. Kids learn valuable life skills by managing the rental of their desks and paying for class privileges. Teachers can also trigger virtual earthquakes or sudden interest rate rises to emphasise the benefits of insurance and to demonstrate the importance of savings relative to debt.

“Banqer helps kids get curious, creative, and ultimately, confident with money,” said Flutey. “It has been embraced by kids and teachers, but is also transcending geographical borders as we all start to understand financial literacy is a global challenge.”

Attending the launch event in Sydney, the Chairman of the Australian Government’s Financial Literacy Board, Mr Paul Clitheroe said the obvious starting point for financial literacy was with kids. “You have to start early with good habits in life, and money is no different,” he said. “To get the full benefits of strategies such as compounding, it is about the long-term and that means getting started young.”

Kids in Year 1 to Year 5 learn money management and personal finance topics such as income, savings and interest while Years 6 and 7 learn about topics such as mortgages, rent, paying tax, paying excesses on insurance claims.

The recent Young Australian Survey by Roy Morgan Research which surveyed more than 2,500 Australian kids aged 6-13 years found 76% of them saved money. Of this group who did save money, the highest proportion (25%) had saved between $1-$49. Meanwhile, most kids surveyed spend their money on toys (44.7%), with a close second saving it in a bank (43.6%). Buying snacks and drinks came in at number three at 29.3%.

“All kids deserve a great start to life and being financially literate, being confident and curious, is a huge step towards this goal,” said Heine. “We are very excited by the future we are working with Banqer to create.”

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Paul Clitheroe

Renowned financial literacy advocate, philanthropist and media commentator, Paul Clitheroe AM, has accepted an invitation from the trustees of Future2 to be Patron of the Foundation.

Mr. Clitheroe is executive director at ipac securities, a company he founded in 1983, and Chairman of the Australian Government Financial Literacy Board.   He is a CERTIFIED FINANCIAL PLANNER^® professional, former Chairman of the Financial Planning Association and among the handful of people to have helped spearhead the development of the modern financial planning profession.

“Paul has a unique combination of qualities, beliefs and skills that make him an ideal choice as Future2 Patron”, says Future2 Chair Steven Helmich. “A gifted communicator and inspirational role model, Paul will reach out with the Future2 message.  There’s no one better placed to shine a light on the heart of the financial planning profession which, through Future2, is making a real and lasting difference to the lives of those most in need.”

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MoneySmart Week is an Australian Government Financial Literacy Board initiative led by Paul Clitheroe AM and supported by more than 100 organisations from the business, community and government sectors.

“The aim is to encourage all Australians, including young people, to take a closer look at their everyday money management,” said Tax Commissioner Michael D’Ascenzo.

“When it comes to money, knowing what support and services are available, including through the ATO, can make all the difference.”

Understanding money can help young people and their friends and families make sound financial decisions, manage financial stress, work towards meeting their goals and secure their financial wellbeing.

As part of the week, the ATO is encouraging its employees to do the MoneySmart money health check which will provide simple steps, tips and an action plan to improve personal finances. We are also promoting the week and our leveraged tax and super messages to young people through twitter.

“The reality is money plays a major role in our lives – it can affect our quality of life, sense of security and impact what opportunities we choose to pursue, said Mr D’Ascenzo.

“So think about making the most out of MoneySmart Week and your tax and super – a few simple steps could make a big difference to your finances.”

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The initiative aims to educate Australians on the importance of financial planning and encourage consumers to visit the Ask an Expert online forum where people can ask qualified trusted financial planners their questions.

Greg Medcraft, ASIC Chairman said:

“ASIC strongly believes in helping Australians to better manage their money and create a brighter financial future. The FPA’s Financial Planning Week is an important initiative and we support efforts to increase the community’s understanding of the benefits of good financial advice.”  

Alison Maynard, Investment Ombudsman, Financial Ombudsman Service said:

“We believe that Australians need professional financial advice and education about how to find good quality advice.  We support the FPA’s Financial Planning Week and the FPA’s initiatives to raise professional standards in financial planning for the benefit of all Australians.” 

Noel Whittaker AM CFP® said:

“Financial Planning Week helps Australians to get a glimpse of the positive difference that good advice can make to their financial future.  I always suggest choosing a financial planner who is well regarded in the industry. Above all, I recommend they be a member of the Financial Planning Association as they would have signed up to high professional standards and are pledged to a code of conduct.”

Paul Clitheroe AM, Chairman, Australian Government Financial Literacy Board said:

“Improving the financial literacy of Australians is vital to help achieve a secure future.  The FPA’s Financial Planning Week initiative is an important part of helping to educate and empower Australians to reach this goal and I encourage everyone to get involved.”

The FPA welcomed the comments, highlighting the importance of the industry supporting Australians in improving their financial well-being.

Mark Rantall, CEO of the FPA said:

“It is great to receive such strong support from the industry for Financial Planning Week, encouraging Australians to improve their lifestyles and financial well-being. The FPA continues to build awareness on how consumers can find a trusted financial planner that is qualified and will put your interests first. Every time. Financial Planning Week is just one way we are playing our part in doing this.”

Financial Planning Week takes place from 20-26 August 2012.

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