This month on Astute Insights we are chatting with financial strategist Gerry McKenzie of Your Path Finder about how to achieve a path to an abundant retirement. We touch on the difference between a financial planner and a financial strategist and how, as strategists, they really look at getting their clients ahead in a way that’s going to suit them and their objectives.
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Astute Insights Show Notes
Soonah:
Hi, and welcome to the Astute’s Podcast. The reason behind the podcast is because we work with a lot of small to medium sized businesses and we get the same questions over and over. So we thought we’d run a podcast series, interviewing those people that are professionals in their field to help people to really grow and establish their business. And today we’re interviewing Gerry Mackenzie from Your Path Finder.
So Gerry was originally from Edinburgh. He studied at University of Edinburgh, where he studied agriculture. He ran his own loft and fishery in Scotland, which is cool. I want to find out more about that. You’ve won many hats over the years, you’ve got a State Manager of Modern Group, Operations Manager of Green Incentives, you’ve been a National Account Manager for Australian Solar investor, a Freedom Coach with Freedom First. On a personal note, we’ve found that you like coffee on the beach, prefer possibly at the same time.
And now if we’re going to Your Path Finder, Your Path Finder are financial strategist, their mission is achieving a path to an abundant retirement. One of their keys to success is future planning and vision of where you’re heading is key to achieving and living your best life. And I grabbed a cool little tagline off your website, which would grab people’s attention, which is “Who gets more of your cash, the bank, the tax man, or you?”
Welcome Gerry.
Gerry:
Well, thank you very much, Soonah. Quite an intro. I want to speak to this guy.
Soonah:
I know. You’ve done a lot. Come on. One thing I did want to touch on first is, do you want to give us a bit of an introduction about how Your Path Finder came about and the difference between your financial strategist and your financial planner?
Gerry:
Yeah, I would love to do that because a lot of people do get a little bit confused about that. Not about the business. The business got together. There was four… We call ourselves brothers, but sort of brothers in business. And we kept meeting in various businesses, various forums all the time. And it was about two years ago, we all met and said, “Listen guys, let’s get together. Technology was coming out ahead there because we live in different parts of the country and we said, let’s get together and pull all our knowledge and start up a business together.” So we’ve got four Finder members and that’s how Your Path Finder started off, but the rest of it is the difference between financial planning and financial strategy.
Now, a lot of people do get confused about this. Financial planners are great for everything to do with superannuation and insurances. So that is their remit and for a financial strategy, we are really looking at getting ahead, getting our clients ahead financially, in a way that’s going to suit them. It’s going to suit their objective, but it’s really to do with property. Property is our main driver, but financial planners would have insurances and funds and things like that, which they are licensed to do. We’re licensed to do property.
So we’re very much property based and looking at how your property can help you get ahead in Australia. We see so many people of getting to my age and having three or four or $5 million worth of assets, but still having three or $4 million worth of liabilities as well. And that’s doing it the wrong way. So we put some clarity on this and we show people how to get ahead better.
Soonah:
Yeah, thanks. I thought I put it out there for some questions, so we’ll get to them and I think we’ll just run through a few of those questions. So a couple of them have come through, which maybe a little bit more on Super, but we’ve got property in there as well. Where do you use guys sit with shares and things like that, that’s more of financial planning or?
Gerry:
That is more financial planning, although share traders are different from that, but mostly financial planning do the share work with share traders. And one of our Finder members was a share trader in Singapore for 12 years. So we know a lot about shares and how that works. People can make decent money out of shares. I mean, if you know what you’re doing, but you really have to be on the ball all the time.
We hear more cases of people not doing so well with shares than doing well with shares. That is something that is, it depends on your plan or it depends on your strategist who is looking after you, and how much you’re working with them, but it tends to be a hands-on investment there where you really have to know what you’re doing.
And especially in times like just now when the share market is so volatile, it’s very difficult to just choose the right level to go in at and the right level to come out at. I always look back to some of the legends in investment, like Tony Robbins, for instance, and he’s basically buy shares, put them over a number of years, keep buying shares. And over 25 years, 30 years you’re going to do well. They’re going to go up and that’s been the strategy for a lot of people and there’s nothing wrong with that strategy. I think where we come in is a lot of people don’t have 25 or 30 years left, me included. You got to think outside the box a little bit. What can we do to speed things along a little bit?
Soonah:
That’s interesting you say that because we’ve got a self managed super fund ourselves and we’ve had it for probably about five years now. And everyone told us we were a little bit crazy to do that because we put majority of it into shares, but my thoughts were, we’re not looking to retire anytime soon. So in another 30 years, surely we’re going to make some money off them. So yeah, it’s definitely an age factor where you are in that spectrum of how long you’ve got to make that money.
Gerry:
That’s right. And it’s very important you’ve looked at that and you said, right okay, we’re good. We’ve got a bit of time to do this. We’re not going to look at them every day because that just drives you nuts.
Soonah:
Especially not now.
Gerry:
And then just let it run for a length of time. I think overtime shares do do pretty well, but it’s just the time factor that’s involved.
Soonah:
While we’re on it, I have a question here. So we have, “My husband and I are in our early ’50s. Do you have any tips on what we should be doing to prepare better for our financial future?”
Gerry:
Yes. Anything you’re going to do if you’re in your early ’50s, you want to be doing before your mid ’50s. If you’re borrowing with any bank or anything like that, as soon as you hit 55, you’re going to have problems with that. They’re going to start loading you with all sorts of things. So it’s very good to get a plan in before then and as long as everything’s done before that time, there’s no problem with it.
The banks are very interested. When they look at lending to clients, they’re very interested in exit strategies and how long have you got to that exit strategy? Well, my exit strategy is going to be a lot sooner than your exit strategy. Your question that I ask here is going to be, if 50 plus, so they can’t have a 30 year loan because it’d be 80 by the time they finish.
But it doesn’t mean that it would be that time, but we’ve got to show the bank there’s an exit strategy. So do something sooner rather than later. And look at a word that a lot of financial planners use is transition to retirement. Look at what transitions you can make just now before retirement, because getting to 60, 65, 67, whenever they’re planning on retiring and going, retiring in six months time saying [inaudible 00:08:09] so get almost something and find out what your… It’s what we do with clients all the time, ask them what is their income? What do you think their income will be when they retire?
We use government calculators as the main source on that and show them where they’re going to be when they retire and then find out if we’re a good fit for them and then find out if they want to actually proceed with the plan.
Soonah:
And that was another question someone’s got, I can’t remember where it is there… Well, I already see it. Why do we need one and what are the benefits? And my initial response to this was in business, if you want to grow your business, you connect with that business coach. If you’re looking to lose weight, you connect with that PT, that physical coach. And that’s what you guys as I see it is. You can do it on your own, but if you really want to get the best results, that’s when you know it’s time to engage someone or you can get your benefit quicker by engaging professionals, I guess.
Gerry:
I would totally agree with you there, Soonah. You can do all of this by yourself and I always made that quite clear to clients, but there’s a lot of things, as you know, with the bookkeeping that you’ve helped me with and helped our company with, we could do it by ourselves, but it would take us all a month to do it, so we choose not to do it.
Soonah:
Good choice.
Gerry:
It’s the same sort of thing. So when it comes to plans, there’s a lot of things that we can show people. And there’s a lot of clients that I’m seeing down here just explain our [inaudible 00:09:52] away from homes this time from Canberra, and a lot of clients I’m seeing down here who are very professional ended top end earners. And it’s not that people don’t know the strategies, they just don’t know how to implement them in their lives and there’s a load of money water there, I mean, you can clear that water and show people the way forward.
Soonah:
Yeah. This kind of touches on I do a lot of cash flow planning, budgeting with small businesses. And one of the exercises that I do with people when I’m doing that is ask them what they need to earn personally, or what is their personal budget and the blank faces and the blank stares that I get back from that, I find really quite surprising. Obviously I’m a numbers person. So I know personally what we need to earn for us to achieve our kind of personal goals and objectives.
So the amount of people that are in business and successful business owners that just don’t have an understanding of their personal wealth or their personal growth, or don’t even think about it. All their eggs are in the basket, that this business is going to be saleable or it’s going to be their plan for retirement. At the end, when we’ve learned that so many businesses just aren’t quite saleable without that predominant person in there or not what they thought. So I think there’s a lot of room for going away and sitting back and having a look at your personal finances and where you are. What questions would you get people to think about before they come and talk to you?
Gerry:
Well, one of the things is how much do you want to live on?
Your income and retirements, and are you on track with that? And if you don’t know how to, can you show me what we’re actually on track or we can work that out for people.
That seems pretty basic, but it’s actually quite difficult to achieve when you’re looking at your Super and you might look at a superannuation statement from a company and they’re saying it could be between here and here. Pretty well, I’m going to pick this one, everything’s just up one all the time, but in life it could be at the moment, people that who are retiring right now will be down here. So what can I put in place to mitigate these fluctuations? So yeah, look at what they are, and also look at what their life would be when they do retire.
What do they want to do? Travel? Stay at home? Do they want to stay in the house they’re in at the moment? Do they want to downsize? All these sorts of things are very, very important. And we’re now looking at helping and assisting clients to look at property based solutions that they might move into when they retire.
So in 12, 15 years time, I will move into that place, which is a nice little unit or a nice little place down by the coast, but surrounded with everything I want, but that’s an area I wanted to be in. It doesn’t mean they have to do that. It means that option’s there and you just have to give people choices and you don’t have a plan, you’re not going to have the choices to have that.
I remember when I was young, a lot of years ago. My dad was a chartered accountant and he taught me a lot of you won’t believe it, but I bet he’ll be saddened, but he taught me a lot of what I know about numbers as well. Numbers and mental of it in my head are easy.
I remember him saying to me, he said, “You’re going to plan what you’re going to do, Gerry. You got to plan what you’re going to do” and I was like a typical 20 year old, “Why do I have to have a plan all the time?”, “Why do we always plan stuff?” And it really comes back to haunt me now because he said to me, an idiot. And my dad was quite harsh. He said, “An idiot can beat a genius with a plan every day of the week.” And meaning, it comes down to that. If you have a plan, you know where you’re going and it’s fluid. You can make these alterations and chances are you’re going to come out on top.
Soonah:
Yeah. And it goes back to having that coach, like a business coach will always get you to set your 12 months, nine months your six months goal. Your PT will tell you how much weight do you want to lose? How much muscle do you want to build? It’s having that plan and the steps along the way to achieve that goal.
Gerry:
And it makes you, you then got your goal, you’ve got your objectives [inaudible 00:14:18] as well.
Soonah:
Yeah. So one of them is tips on paying off the mortgage quicker. And this is just all about having that plan. Like, what do you want to achieve? What’s the benefit of paying that off earlier? Should you look at keeping the funds there and putting it into something else so it’s all sitting down and working out what’s the long-term goal.
Gerry:
Absolutely. And I mean, if you look at your mortgage, and we get clients to say well what’s your mortgage. A lot people are going to say between 2000 and 4000 a month, in that sort of bracket.
So let’s say $3,000, that’s nearly $36,000 dollars a year. If you were to pay your mortgage off 10 years early, oh, that’s $360,000.
That’s worth having a chat about. That’s what it’s all about. And who do you want to give that money to? The bank or the tax man every day a week. They’ll take the $360,000 dollars. They don’t pay it off any area that you can, although it can be a set of tips, or they want to show you how to do it. And then the if you do do it, the money’s in your account. So you have choices to do what you want to do with that.
Soonah:
Yeah. Yeah. Okay, cool. That’s interesting. I’m going to pick a property one. This is more about what your thoughts on the property market, and what’s happened with the spikes on the higher end at the moment and how you think it’s going to progress as things normalize after all of this.
Gerry:
Right. Well, the new paradigm after COVID kicks in is really up there. I mean, you know where I lived, at the bottom end of the Gold Coast and Gold Coast has been booming. Sunshine Coast is even worse. Properties are on the market for a three days up there and they’re gone. That isn’t going to happen forever. But a lot of people are moving to Southeast Queensland for many reasons. The major reason is there’s a lot of infrastructure in there. It’s a nice place to live and land is still relatively cheap there.
Now, if you’re buying for investment, also inside Queensland, you’re going to get a fairly good return. You’re going to get a roundabout 5% return on rent. So if the properties costs you 500,000, you’re going to get that 500 a week. That’s 5% return. Okay. So if you had that same property in say Victoria, you’re only going to get 3% return. People are saying, well, I want to go towards somewhere that’s going to give me the best return. And that’s cashflow return, not capital gain, but we are seeing that capital gain is something we build into. We talk about it in our plans, but it’s not the main driver.
A lot of people think, oh, I’ll buy a property and I’ll sell it in 10 years time. It’ll be worth 300,000 more and I’ll have 300,000 in the pocket. Uh-uh (negative), you have capital gains tax. You have all such things to think about, and is it going to go up? What has it done to your finances in that process? And that’s what we’ll have a plan. We can sort of work out well in that interim period, this property has paid off your mortgage and you do have 350 gain or 200 gain or whatever the gain is, but these are the consequences of capital gains. And this is how we might be able to mitigate that.
Soonah:
These are from a couple of my younger clients. And so I think we can kind of answer them together, a few sort of mush in. So the business is doing okay, but we’re drowning in personal debt and help.
That was in capitals. I like to, I don’t know how much of this you want to answer, but my kind of strategy or what we kind of tell people is to have a look at what your liabilities are, write down how much it is and what the interest rates on there and start chipping away at them. Kind of like that. And again, that’s just having a plan.
When do you want to be debt free? Is it in six months? Is it in 12 months? And putting them on. I mean, there’s other strategies of actually going and getting depending on the size of the debt, combining them all together to pay them off that way. What are your thoughts on that?
Gerry:
Right. I think it depends on the size of the debt. It depends where the debts are. I agree with what you’re saying. Just be responsible for all of them, have a plan and start chipping away at them, nothing wrong with that. That’s a good plan to start off with. If they are quite big, you just think [inaudible 00:18:46] I’m just getting nowhere. I really am drowning in debt. Consolidation is a good idea. We have debt consolidation specialists that we work beside that can bring that debt together.
There’s clients at the moment that have over 140,000 in credit card debt, they’re paying out of it. So 20%. So if you just add that up, that’s 30 grand a year, it’s just crazy and just on interest, and it’s not about paying off the debt. Debt consolidation for them. I can see why there are quite a few companies out there that do look at budgets, look at people’s finances and help them with that.
They are good as well. If you really are drowning in debt, they’ll give you a plan, they will keep you honest with it, but they also have conditions with them as well to stop you getting out of debt. So you’re got to be very careful with them. If you end up with a form nine and you cannot do anything else in that five-year period, you really got a problem.
So having a chat with these sort of people, it’s not going to cost them anything to have a chat with them, see where they’re up to and give them a bit of advice and point them in the right direction. But looking at the debt, being responsible about it, being happy to talk about it.
Soonah:
Yeah, exactly.
Gerry:
Not all debt is bad and certainly you get out of it pretty quickly.
Soonah:
Great point. I kind of say, business debt is way healthier than personal debt, but it’s not to say that all personal debt is bad either. It depends on what you were trying to achieve at that time. So I think in that space, I think we’re going to see a lot more problems sort of in six to 12 months time, because a lot of people have borrowed for these assets and whatever else. So again, I’m not against business asset debt, but I think a lot of people have sort of gone in a little bit too deep recently with all the
Gerry:
Right. We were talking about new cars and things like that for our business. We said at the moment I’m not going to move on that. Maybe the end of the next financial or this financial year we’ll have a little bit but at the moment because it might be distance there but it’s still [inaudible 00:20:56].
Soonah:
If you were looking to purchase a car within the next six months, bring it forward and take advantage of this. But if it’s not on your radar, don’t make it on there just to.
Gerry:
Man, I keep seeing this car I like.
Soonah:
I mean the idea is nice. I found that the idea as well of a new car, but yeah it’s not going to happen this year. But again, the government always puts out incentives and tax brackets for businesses, for those kinds of things. It’s just how much that’ll vary. So I can’t believe we’re running out of time. I’d like to try and keep them under 20 minutes. So thank you very much for your time. But I do like to finish. Have you’ve got anything to finish on that you wanted to say before?
Gerry:
I think, yeah, coming back to speak to the clients where there’s no upfront costs with us. So we’re speaking to clients we’d like to, but not all clients are a fit for us. So the meeting clients is either online or on the phone, first of all, then if it’s Gold Coast we would meet them face to face, but if it’s farther afield we sometimes do online, but there’s no cost in that. And it’s just having a chat with people and see if we’re going to be a good fit.
We’ve got a lot of experience, a lot of degree here. So I’m new here. But with the experience that comes with that, we do enjoy helping people. And that’s why we set the business up, to try and get to for Australia is a first world country, but with less than 3% of Australians retiring and not having to depend on the government pension is a ridiculous figure. It’s almost third world figures, you know? So that’s why we set the business up just to point people in the right direction.
Soonah:
Yeah. That is crazy. And I’ve written here so for those that are in their ’50s, it’s time to hit the banks for loans before they reach their mid ’50s. And it’s all just about having that plan, having a chat about what do you want to know and knowing what your personal finances are. So personal finances as in now, what debts you’ve got, what income you’ve got, but also what it is that you need upon retirement as well. Kind of need those to go in to have the discussion.
Now, I’m going to finish on a rapid fire. I don’t want you to think about the responses. I want you to answer them. First CD you ever purchased.
Gerry:
Better Days.
Soonah:
Ah, nice. Current book that you’re reading.
Gerry:
What’s it called? I can’t remember. It’s Grace Courtney’s one.
Soonah:
What’s your favorite book you’ve read or top book that you’d recommend.
Gerry:
The favorite books that I read to really get me out of work mode is I’m a bit of a romantic in the Wilbur Smiths ones and Wilbur book series. I just love it. They just get my mind game [crosstalk 00:23:42].
Soonah:
I can tell. I can hear it in your voice. And what has been the best thing for you about COVID?
Gerry:
I think spending more time at home doing a lot of personal development there on myself, because you spend so much time traveling around and sitting still has been great for me and also I’ve managed to lose about five kilos. So getting out there, walking on the beach-
Soonah:
I was going to say all those walks along the beach with coffee.
Gerry:
Yeah, that’s it. That’s my health regime, yeah.
Soonah:
Well, thanks a lot for taking the time to chat to us today and answering questions. As I said, I was quite surprised by the number of questions that are out there and people that are kind of in that space where they feel that they don’t have the money to see a financial planner, whereas they’re trying to [inaudible 00:24:29] but it’s not always about that. It’s just having the plan to get to that point. So thank you for your time and we hope you enjoy it down there in Canberra.
Gerry:
Thanks very much, Soonah. Thank you very much and we’ll hope you have a nice day up in Queensland. It’s looking a bit cloudy lately.
Soonah:
It’s nice and sunny here as always. Thanks Gerry.
