Quarterly Newsletter | Issue 26 | September 2012

In this edition AFA Female Excellence in Advice Award nomination ........................................ 1 Upcoming Seminar............................. 1 SMSF Trustee Obligations .................. 1 Economic Update ............................... 2

AFA Female Excellence in Advice Award Nomination

We are pleased to announce that Anne Graham CFP CPA has been nominated for the AFA Female Excellence in Advice Award. Established in 2011, the Award recognises women in financial advice who are making a significant contribution to their profession, their community and their clients. The AFA Female Excellence in Advice Award sponsored by TAL is presented to the winner at the AFA's National Conference at the end of October 2012 good luck Anne!

Brian McPhails 40 Year Anniversary

Congratulations to Brian McPhail on his 40 year anniversary at McPhails!

Upcoming Retirement Planning Seminar

Anne and David will be presenting a client briefing on Thursday 4th October 2012 at the Clarion Hotel on Canterbury. Topics covered will include:

Did you know?

Our associates, McPhail & Partners Pty Ltd have now been providing accounting and taxation services to individuals and companies for over 65 years!

Economic update Whats happening with China? Planning to retire? Its never too early (or too late) Open Forum Answers to questions that are on everyones lips

Client Survey
What is McPhail HLG Financial Planning really good at? This is what our clients have said: Keeping abreast of current economic conditions & communicating them in an 'easy to understand' way. Providing high quality, professional paperwork - in the way of financial plan or individually tailored advice. Offering information seminars/economic updates via newsletters & email Providing personal, individual based and client focussed advice as well as providing ongoing education and follow through services. A thoroughly professional and academically sound operation

Please contact Samantha Lunt on 03 9898 9222 or planner@mcphail.com.au for additional information or to register your attendance for this event.

SMSF Trustee Obligations

The ATO introduced measures on 7 August 2012 which are part of a suite of measures announced within the Stronger Super legislation. In short, these measures mean that you, as trustee of an SMSF, are required to:

conduct a review of the fund's investment strategy on a regular basis consider insurance for fund members as part of the fund's investment strategy value the fund's assets at market value for the purposes of preparing financial accounts and statements

The obligation that you as a trustee of an SMSF are required to keep money and other assets of the fund separate from any money or assets held by you personally or by a standard employer-sponsor or an associated standard employer-sponsor is now a prescribed operating standard.

How can we help?

We can assist you with a review of your current investment strategy to ensure that it continues to meet the needs of your changing circumstances and life-stages, and where appropriate we can advise on whether you should be considering insurance for the fund members as part of that investment strategy. We can also provide you with guidance relating to meeting your compliance requirements to value your fund assets at market value for the 2012-13 year accounts and statements. Please contact our office on 03 9898 9222 should you wish to discuss this further.

McPhail HLG Financial Planning Pty Ltd 38 Ellingworth Parade, Box Hill VIC 3128 PO Box 93 Box Hill VIC 3128 Australia t +61 3 9898 9222 f +61 3 9890 6310 email planner@mcphail.com.au www.mcphail.com.au

Economic Update
We ended the previous quarter anticipating a number of significant political/economic events. The weight of these expectations was reflected in lacklustre performances in most markets in the final quarter of the financial year. As we approach the end of September we can reflect on some truly historic events in terms of global economic management. Global economic conditions have continued to slow as the year has progressed due to a number of factors. The ongoing issues in Europe remain the most significant cause of anxiety. Growth in emerging markets, which in many cases was being slowed by domestic policy settings, has been further affected by a European in recession (depression in some parts). U.S. growth remains consistent, but at lower levels than one would have otherwise expected. Australia has not been immune to these trends as tepid demand starts to impact the prices of our major exports i.e. iron ore, coal etc. To help stimulate growth, a number of key policy initiatives were recently announced. China announced a number of measures designed to address the loss of economic momentum. These initiatives are designed to support growth through spending on major infrastructure projects. The European Central Bank (ECB) announced a program to support the economies of Spain and Italy. ECB President promised to do whatever it takes to ensure the survival of the Euro. The German constitutional court also made a ruling that backed the legality of bailout structures designed to support economic miscreants. Finally, the U.S. Federal Reserve (Fed) announced further measures designed to support the U.S. economy. It appears the extraordinary measures often threatened by central bankers to promote economic growth have truly commenced. The actions of the Federal Reserve are particularly notable. The recent statement by Chairman Bernanke is effectively open ended. To quote a gambling parlance the Fed has gone ' all in'. The outcome of this approach cannot be predicted because the actions are without precedence. The U.S. central bank is charged with a dual mandate; price stability and full employment. It is now obvious that the former is being well and truly subordinated to the latter. The Australian economy remains somewhat at the mercy of global economic conditions and policies. Moderating global growth is impacting the demand for our major exports. This feeds into lower commodity prices, thus reducing export income. As this trade has been critical in maintaining our economic wellbeing during the past few years, a sustained slowdown in this part of the economy will have a negative effect on broader economic growth. Under normal conditions we would expect to see the AUD weaken as a result, providing some relief to both the export sector and trade exposed domestic sectors such as manufacturing. However the policies being undertaken by the Fed, ECB et al are having the perverse effect of keeping the AUD strong in relative terms. As noted in our last letter, this is likely to mean continued restructuring pressures on the trade exposed sectors of the economy. Looking forward there remains only 48 more sleeps until the U.S. election.
Quarterly Newsletter Issue 26 September 2012

At this time we believe the most likely outcome is the reelection of President Obama, but with Republican gains in the Senate meaning the GOP will control both legislative houses. This is not a situation that is normally conducive to effective policy implementation. Nevertheless this would mean the current administration could hit the ground running in terms of addressing the next potential economic flash point the fiscal cliff. This concept was outlined in our last letter, but the short version is that a number of expansionary policies will lapse on 1 January 2012. If this occurs recessionary conditions could again arise in the U.S. We do not think the U.S. authorities will let this happen. We remain cautious in regards to Chinese growth. A new administration is due to be vested in October and we do not expect any surprises in this regard. Nevertheless China appears caught between trying to engineer structural changes to the economy and maintaining sufficient growth to meet social policy targets i.e. employment and social stability. We expect Chinese growth to remain solid, if not spectacular. This of course impacts Australia. Is the commodities boom over? Probably. Does this spell disaster? Probably not. Marius Kloppers, Tom Albanese, Twiggy Forrest all these heads of the major mining house know they operate in cyclical businesses. There will always be booms and busts in this sector. We can expect the slowdown in mining activity to affect the broader economy and may prompt further interest rate cuts over the next 6 months (Melbourne Cup Day is always popular). However it is worth remembering that most of the investment spending proposed over the next few years is actually concentrated in the energy sector. This should help in preventing the bottom from falling out of economy all together. Investment markets have been remarkably quiescent since the start of the financial year. Measures of volatility are at their lowest levels since March 2007. This partially reflects the fulfilment of market expectations by various central banks and governments in recent weeks. We get the impression that markets are now at a loss as to what to do next. We are enjoying the calm but do not expect this to be more than a brief relief. Europe is likely to maintain fitful progress in its attempts to save the Euro-zone. The U.S. should maintain steady, if sub-par growth. Our concerns in the short term turn to North Asia and the Middle East. Political miscalculations in either area could inject new risk factors into the global economy and financial markets. David Graham CFP 20 September 2012
Disclaimer This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances. McPhail HLG Financial Planning Pty Ltd ABN 27 091 207 000 is a Corporate Authorised Representative and Corporate Credit Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL and Australian Credit License 240687 Level 7, 530 Collins Street Melbourne VIC 3000 Australia
Liability limited by a scheme approved under Professional Standards Legislation
th

Page 2