Weekend reading (17 & 18 June 2017)

In the Saturday 17 June 2017 edition of The Press:

  • Liz Koh explains that "Excessive frugality can be as bad as over-spending ". Koh explains that "neither underspending nor overspending is necessarily wrong. They just have different consequences". The consequences of overspending are pretty apparent, but Koh notes that "while [under-spenders] are preoccupied with preparing for their future... the present slips by". She also explains that "Under-spenders can cause financial stress in relationships", where other members of the family would rather spend more. Koh says "The key to getting under-spenders to loosen up a little is to address their need for security and the reasons for their anxiety about the future. Often these things are buried in childhood experiences or previous financial disasters that have coloured their thinking", adding that under-spending in retirement "is driven largely by uncertainty about longevity, financial returns and future expenses". Koh concludes that "There is a huge gap in the market for... investment strategies and advice to help reduce these uncertainties and allow retirees to spend without fear."
  • Susan Edmunds talks about "Cutting the cost of your [insurance] cover". This relates primarily to car insurance and contents insurance. Her advice includes: shopping around for insurance; making sure you don't pay for unnecessary bells and whistles; make sure you're not insured for more than you need to be; and increasing the excess. 

In the Sunday 18 June edition of the Sunday Star Times:

  • Martin Hawes exhorts us to "Demand more from Casanova corporates". He points out that banks offer many carrots to prospective customers that they don't offer to existing clients, despite the fact that attracting new clients is often far more difficult and expensive than retaining them. His key message is that "You can never expect [your] bank to look out for your best interests" and adds: "Bank customers should keep their banks honest. Some of the things available to new clients, such as lower mortgage interest rates and cheaper fees, may well be available simply by asking. If they say 'no', it is not hard to leave the relationship and give a wink to another bank".

In the New Zealand Herald:

  • Mary Holm discusses various topics, including health insurance, especially for older people. She makes some solid points, explaining that "With most insurance... it's a good idea to get coverage for the big bad stuff, but not for minor mishaps". This aligns with my belief that insurance is a great tool for managing catastrophic risks, but not so much for inconvenient risks. She talks about choosing a larger excess where applicable and having a longer waiting period for income protection insurance". She does qualify the self-insurance message somewhat with respect to health insurance, noting that accident-prone or unhealthy people would benefit from more comprehensive health insurance than others. Also, once you give up insurance, especially when you're older, it can be difficult (if not impossible) to get back on the same terms. 

Sonnie Bailey

Sonnie is the founder and principal of Fairhaven Wealth.

Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at www.wealthandrisk.nz.

Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.