What does your service cover?
Ultimately we want to get you to your financial goal faster. We will work with you to devise a plan to get you to your goal whilst still allowing you to live a lifestyle you like. The plan of attack is tailored to each client and the nuances of their lives.
We consider the entire financial health of our clients and work alongside them in creating a clear financial structure and plan that will have them achieve their financial goals as quickly as possible. From budgeting, spending analysis and recommendations, taxation review and recommendations for efficiencies (where available), asset structuring and planning, diagnosing client’s psychology of spending and overcoming natural spending tendencies, bank account structuring, and mortgage optimisation and facilitation.
Furthermore, each of our client advisers are either Chartered Accountants or Registered Financial Advisers, who use their complete skill set to provide appropriate recommendations to clients.
Isn’t it easy to create a cash surplus?
A cash surplus is spending less than you earn. It sounds easy but in reality it is difficult. Much like losing weight, the idea is easy but sticking to a diet over a long time can be hard, really hard. Much the same with budgeting. Anyone can complete a budget, but that doesn’t mean you stick to it.
Statistics NZ says that on average we are spending more than we earn. This seems to be the case irrespective of whether someone knows how to budget, irrespective of income levels, age, or qualifications. Actually spending less than you earn is hard. Especially when life is filled with so many curve balls – like dentist bills, holidays, renovations, car replacements, etc.
Benjamin Franklin says “if you know how to spend less than you get, you have the philosopher’s stone”. He reiterates that it is easier said than done.
How do I know if I am going backwards?
As a rough rule of thumb, if you need to use your credit card and can’t repay this in full in the same month, then you are likely going backwards, or tittering at the top of a downward slope.
What can you do to help?
When you are overweight and you want to lose weight a lot of people join Jenny Craig, Weight Watchers or start going to a Personal Trainer. They already know what they need to do (eat less, exercise more etc), but doing it is so much harder, especially when they have had a lifetime of bad habits. So they enlist the help of an expert, someone with smarts who is going to be honest with them, help keep them motivated, educate them, and keep them accountable.
A typical Personal Trainer has a range of clients, ranging from those who are morbidly obese to those who are top Athletes. They use a Trainer to enlighten them, to push them and to keep them motivated. We do the same thing for our clients – from a financial perspective.
Who uses your services?
Our clients can usually fit into three broad categories.
- They are going backwards (spending more than they earn)
- Breaking even (living pay day to pay day)
- Getting ahead but could get ahead faster
Some of us start further on the back foot than others. Some have fewer options of how to fix their situation. Where you start from is not the big issue. The big issues are where do you want to be, are you prepared to change if necessary?
Do I need to have a mortgage to use your service?
No, but you do need a financial goal – otherwise how will we know if we can get you there faster? Examples of non-mortgage goals can range from, saving for an OE, feeling more in control of my money, learn how to stop ‘frittering’ money, through to providing more direction and accountability with your finances.
20% of our current clients do not have mortgages.
Are you mortgage brokers?
No, mortgage brokers help you get a mortgage; it’s our goal to help you get rid of it! We can work with all major Banks in New Zealand and can deal with them on your behalf. Some lenders pay us a commission for facilitating a mortgage with them which we rebate to you, the client. This reiterates our independence around the advice we are giving.
We are happy to work with your personal banker or mortgage broker as needed.
N.B Not all lenders pay a commission and some transactions don’t earn commission. For example; re-structuring a mortgage at your current bank.
Are you financial planners?
No, we are NOT financial planners. They either charge to put together a financial plan or receive commissions from selling investment products. All of our Consultants are Chartered Accountants or Registered Financial Advisers as a minimum. They are paid salaries so you can be sure you are receiving impartial, expert advice at all times.
Our client focuses on the entire financial health of its customers by working alongside them in creating a clear financial structure from budgeting, taxation, asset structuring, psychology of spending, bank account structuring and mortgage optimisation and facilitation.
Are you a finance company?
No, we don’t invest or lend money. We are an independent consultancy and offer expert advice that significantly improves our client’s financial situation. Most of our clients have some debt already (usually a mortgage) and it’s our goal to help them get rid of it!
How are you paid?
enableMe is a financial management consultancy and as such we charge for our time. The final cost for a client depends on each individual’s situation and if commission can be rebated.
Prior to commencing any work we will estimate how long the necessary work will take, and provide you with a fee estimate. You will also receive our terms and conditions before we start work.
Can I be sure I’m getting the best advice?
Yes, all of our Consultants are either Chartered Accountants or Registered Financial Advisers. We rebate upfront commission received from lenders, so you can be sure that you are receiving the best financial advice from a highly motivated professional. We also put our instructions in written advice. The advice is discussed and finalised before any recommendations are implemented
How are you different from all the others?
We are Financial Personal Trainers. Whatever your financial goal, we believe we can get you there faster.
All of our Consultants are either Chartered Accountants or Registered Financial Advisers. You will always receive expert advice. We are independent. We don’t endorse or sell any products. We don’t endorse any bank or lender.
We charge for our time. We don’t keep any commissions we receive from lenders; they are rebated to the client.
We offer proactive money management and financial advice and an ongoing support service.
We take a holistic approach focusing on educating and empowering everyday New Zealanders so they can make informed financial decisions.
We offer our services as part of employee benefit programmes for forward thinking businesses and organisations who want to offer a tool to create financial success for their employees.
What is covered in the financial consultation?
Before undertaking any work we will meet with you for a financial consultation. The purpose of this meeting is to work out where you are right now financially, where you want to be, and whether in doing what you currently are doing, whether you will actually get to be where you want to be?
Having established that, we will assess if in making changes we can get you to your goal faster. We would show you how much faster and what the financial benefit would accrue to you as a result.
If we can show an improved result we would outline the steps involved and how much it will cost. It is at your discretion if you wish to proceed with our services beyond that point.
Prior to the financial consultation you will be asked to complete a 3-step financial profile in our online client portal Nestegg, as best you can. and at least 24 hours prior to your consultation to allow your Consultant to prepare. We expect you to spend around 30 minutes filling this in. If you are unsure where your money is actually being spent just leave the costs blank and we will work through together in your financial consultation.
Is the Financial Consultation FREE?
The charge for a financial consultation is usually $300 + GST *. This meeting will go for 1.5 hours. You will meet with a Financial Personal Trainer. If you have a mortgage, we would hope to show you that by creating a sustainable cash surplus and channelling that money into your mortgage you could save at least $50,000 in interest costs over the life of an average sized mortgage.
Examples of instances where it is impossible to save a client $50,000:
- if you don’t have a mortgage
- if you do not have a cash surplus and we are unable to create one during the Financial Consultation
- if you have a cash surplus but this surplus is ‘earmarked’ for other expenses
- if your mortgage is so small saving $100,000 over the life of the mortgage is not viable
* We run promotions from time to time discounting the financial consultation.
Aren’t you just increasing the repayments on your mortgage?
NO, if you want to pay your mortgage off quicker it is common knowledge that you should channel surplus money into your mortgage. The affect of channelling small amounts into your mortgage over a long period of time can save a lot of money in interest costs. Most bank websites will have a calculator that can demonstrate this.
If you are able to increase your fixed mortgage payments without penalty, then this may be a viable option. But this comes with its disadvantages. Namely, you cannot easily re-access or use the extra money you have channelled into the mortgage. So if you are made redundant, want to take time off to have a baby, need to replace the car, get a big dentist bill or incur any other unexpected cost where you need to access the extra funds that were channelled into the mortgage, you would have to make an application to the bank to get a mortgage top up. It will be at the banks discretion if the funds will be re-advanced. So you have lost flexibility. The problem is if your income has reduced it can be harder to get access any money as you may no longer able to pass the bank’s servicing test.
If you want the benefit of reducing your mortgage but with flexibility you need an overdraft account. But an overdraft account is on a floating interest rate. And the problem with floating interest rates is that on average they tend to be higher than fixed interest rates. So flexibility comes at a cost. How do you minimise that cost? By getting the ‘optimal’ mortgage structure. Calculating the “precise amount” that should be on a floating rate, fixed for 1 year, 2 year, factoring in the nuances of every clients situation, making it unique to them.
We have developed a calculus formula with Dr. Jamie Sneddon of the University of Auckland that works out the ‘optimal’ mortgage structure for anyone person.
Optimal is defined as allowing you to repay your debt as quickly as possible, at the lowest possible cost, whilst maintaining maximum flexibility.
We have found that a lot of people have an overdraft account but do not actually have a cash surplus. This means that the benefit of being able to repay your mortgage without penalty will never be utilised as you don’t have surplus funds to put towards the mortgage. In this instance, you are paying a higher interest rate for a benefit that you cannot utilise.
Should you channel your surplus money into
a mortgage or put into a savings account?
You can usually save more if you repay your mortgage than accumulate savings in a savings account/term deposit. This is because any interest earned is taxable, whereas interest saved is not.
e.g. If you had a mortgage and received a windfall of $100,000 cash should you put the funds on your mortgage or into a term deposit? Let’s assume the interest is the same for both options, say 7%.
If you put the money against your mortgage you would save $7,000 pa. If you deposited the money in a term deposit you would earn $7,000 interest, but this would be taxable, so you would walk away with $4,690 cash in hand (being $7,000-$2,310).
In the example above, by virtue of tax, it makes sense to repay debt as opposed to save as it realises a better return. The problem though, if you are going to repay your debt as quick as possible by channelling all surplus or savings into the mortgage, you need to know that you can re-access that money without penalty or without having to go to the bank to get permission to use those funds.
There is a way to overcome the lack of flexibility, but is this the best thing for you?
Is repaying my mortgage faster the best thing for me?
Not always. If you have more expensive debt, you should look to repay this first. If you are unable to pay it in full you should consolidate it onto your mortgage (if you have one), or consolidate onto a low interest credit card, if you can (but it is not low interest forever). At enableMe, we want to make sure every $1 surplus you have is getting the best possible return. Sometimes increasing your KiwiSaver contributions can be a better way of improving your financial landscape. But this recommendation comes with exceptions.
Essentially, the nuances of any one person’s situation will determine our recommendation.