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Expect the unexpected when keeping your finances in order
Technical article

Expect the unexpected when keeping your finances in order

This article originally appeared in The Weekend Australian on 6 March 2021.

Sudden events, such as unexpected lockdowns, prompt us to inquire whether our financial affairs are also well prepared for the unexpected.

At all times we need to have our financial data up to date and secure. We need trusted others to be able to access our financial data and step into decision-making roles where that is required.

And we always need to have an asset base that is sufficiently liquid and flexible to adapt to new and rapidly changing circumstances. The unexpected can be physical such as power and/or network outage. Some of us still feel reassured retaining a

The unexpected can be medical — a sudden illness or incapacitation for which we can put in place financial powers of attorney. And the unexpected sadly can also be a relationship breakdown, an event for which no one typically plans, but for which we can be broadly prepared.

So much of our financial wellbeing now relies on timely communications. Moving house or changing email addresses can mean you can miss vital information or advice.

Can your advisers and product/service providers reliably reach you by phone, email or post? Are your communications numbers and addresses up to date? Our financial wellbeing also relies on our financial data being accurate and up-to-date and accessible.

I strongly recommend clients back up their personal financial data and other important documents at least annually and store the data off-site, say at a safety deposit box at the bank. A combination of digital and paper records cover all bases.

These days passwords for banking, investment accounts and pretty much everything really are ubiquitous, and security protocols often require that the passwords are regularly refreshed. I recommend the use of a secure “password keeper” or other mechanism to keep your passwords current and allowing a trusted person access.

If you are unexpectedly not in a position to make necessary financial decisions it is important that you have a delegate who can. Time-specific, event-specific and enduring powers of attorney are available to enable decisions to be made for you by trusted persons when you either temporarily or permanently lose the capacity to make them for yourself.

Powers of attorney — both financial and medical — are an important part of your financial plan for the unexpected to review on a regular basis. It is important that your financial advisers know who your powers of attorney involve and ideally that the advisers hold copies of the documents.

It was this time last year when the unexpected coronavirus pandemic hit us in earnest and financial markets reacted violently, selling off for a frightening 20 days or so from late February 2020. Before that time, good investment advisers had already reviewed their client portfolios to ensure there was both sufficient liquidity sufficient room for flexibility in preparation for any unexpected events.

At that time attention could then turn to identifying stocks and sectors that might suffer more than most and generally to orient portfolios to batten down the hatches to survive what was coming.

Experienced advisers and investors were also then in a position to take advantage of opportunities in excessively sold-down assets with rock-solid fundamentals.

Since then advisers have helped their clients to navigate through interest rates falling to near zero, through sectors of Australian commodities being subject to increasingly adverse trading conditions, through major international political uncertainties and events and most recently throughshare activism targeted at Wall Street hedge funds.

None of us can know with certainty what lies ahead but with up-to-date, secure data, sufficient back-up of access and decision-making, sufficient liquidity and flexibility in our asset base and wherever possible a trusted financial partner, we can be in a position to deal with the unexpected with confidence.

The views expressed in this podcast are provided by Pitcher Partners Investment Services and do not represent the views of any other Pitcher Partners financial services licencees. Pitcher Partners is an association of independent firms. The advice provided to you is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. Accordingly, before acting on the advice, you should consider the appropriateness of the advice having regard to your objectives, financial situation or needs. If you wish to acquire a financial product, we recommend you seek advice from a Pitcher Partners Investment Services’ representative, and where applicable, consider the relevant offer document prior to making any financial decision. ABN 24 052 941 036 | AFS LICENCE NO. 229887


This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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