Dear Friends
I’ve got your back – it’s my job!
“Don’t keep a dog and bark yourself” was my working title for this eGrow edition, however my minders said this was not a professional way to introduce the message. Whilst it is a basic analogy, I still like to think that it relates to the content without being too offensive to the dog!
Nevertheless, “having your back” certainly is my job, and there are many ways as financial advisers we add value. They range from:
- Helping clients to sleep at night by taking the guesswork out of their financially security (despite the tendency of human nature to fear the worst).
- Making sure they are maximising opportunities to increase wealth and reduce tax.
- Untangling the communications with which we are all bombarded – this is especially important given the propensity of our news media to catastrophise events.
In the current environment, keeping up with the economic debate is also an integral part of the service we provide. The first section of this special edition eGrow deals with this most pressing conundrum.
The second section is designed (once again) to highlight the value of adopting a strategy and staying with it. Finally, in the third section I’ve included an anecdote as a reminder that being able to trust our professional relationships takes the worry out of situations where we have no expertise or control.
Keeping up with the economic debate
The big question: where is Donald Trump coming from?
A starting point for a discussion involving the US President might well be this quotation: “Don’t take him literally but do take him seriously.”
We’ve seen the ‘Trump Bump,’ the ‘Trump Slump’ and now the ‘Trump Crump’ – all colourful ways the media and markets use to describe his impact on the confidence in shares and bonds. One thing is clear – Trump is trying to reset America’s pre-eminence in the global economy. This happens roughly every 40 years.
For example, economic historians will recall the President Reagan’s pressure on Japan, Korea, and other key trading partners to open barriers against US exports. The ensuing 1985 Plaza Accord was an agreement among the G-5 nations to devalue the US dollar against other major currencies to reduce the mounting US trade deficit. This was a palpable departure from the historic Bretton Woods Agreement, which in 1944 established a fixed exchange rate system pegging currencies to the US dollar, which in turn, was pegged to the gold standard and Pax America (protection for the West under the US defence umbrella).
In today’s scenario, the US needs to claw back its central role in the global economy or face bankruptcy; a prospect which has dire ramifications for us all. Put simply, the United States has put too much on its trade credit card and is now renegotiating its repayment with the world.
The current methods are extreme, but regardless of political persuasion, some argue that there is a ‘method in the madness.’ In the bigger picture, the US administration is trying to re-create two trading blocs, the communist-aligned and the capitalists, with Beijing and Washington at each core. Realistically, Australia is a bit-player.
To a large degree (as discussed in our last eGrow) Australians are currently in the more fortunate position of being able to sit on the sidelines and watch the titan’s clash. If the market falls, we have cheap buying opportunities; if it rises, we benefit.
If you would like to read in more detail the rationale behind the US pursuit of its present tariff policies, this lengthy paper by Stephen Mirren, a leading US economist and economic adviser to the present administration, outlines a menu of options (including tariffs) under the proposed ‘Mar-a-Lago Accord’ driving the Trump strategy and provides an interesting read (at least for this undergraduate economist). Another economist, US Treasury Secretary Scott Bessent is leading tariff negotiations for the Trump administration, and for the detail minded, you can see more here.
Whether the Mar-a-Lago Accord will be successful in reducing the US budget deficit by reshaping global trade, boosting US manufacturing, and forcing America's allies to pay for the US security umbrella, is yet to be seen. What it reminds us, however, is that over a lifetime we will see plenty of challenges to the global economy, which makes the following (oft heard) mantra even more important.
Having a strategy and sticking with it
Our past readers of eGrow may recall several case studies around a client who dubbed himself ‘Billy the Goose’ over his then concerns about funding his remaining days.
To summarise his situation, after a lifetime of extremely hard work, at the depths of the Global Financial Crisis in 2007-08, Billy’s capital in super and other invested funds had diminished to just $3 million. He was drawing annual income of $60,000 and worried he would run out of cash. At the time, I was able to demonstrate to him that even if his money earned a nil return, he would be able to maintain his lifestyle to age 112. Further, were he to invest in a term deposit at just 2% pa, he would not even touch the principal!
Acting on our advice, Billy adopted a strategy which saw him invested conservatively in diversified index funds, and maintaining a ‘Marinis Buffer.’ Since then, Billy has weathered the 2009-12 European Sovereign Debt Crisis, the 2010 Rise of Unconventional Monetary Policy, the 2014-16 Oil Price Crash, the 2018-19 First US-China Trade War, the 2020-21 Covid Pandemic, the 2021-2023 Post Covid Inflation Surge, the 2021 End of the Afghanistan War, the current 2022 Ukraine War, the 2023-24 Banking Sector Instability and now: Trade/Tariff War II.
Billy now draws the minimum annual income of $96,000 from his Account Based Pension, however as of 24 April 2025 his ‘nest egg’ has more than doubled to $6.557 million (for the record, I refer to him as ‘Billy the Swan’ and he is more than happy for us to use this reference and his story)!
Providing an understanding of how long your money will last is a key component of financial advice – and for more than 85% of clients, their retirement savings and potential Centrelink benefits will well and truly cover this, despite the reality of ‘straightened’ economic times.
Trust someone else to do the job
I’ve known my client ‘Dr A’ since I was a teenager, his brother and I being great friends from school days. A couple of years ago he said to me: “Theo, I understand everything you tell me when we are together, but when I walk out of the room, I can’t remember it… but I know you have my back.”
I assured Dr A that there were parallels – he uses his training and skills as a surgeon, I apply mine as a financial adviser, and neither relationship would work without trust. In other words, we trust the other’s commitment to do their very best job.
We continue to agree neither of us need to make changes to our designated skill sets!
And another thing – 30 June super contributions deadline
Don’t forget, the deadline for topping up your Super guaranteed contribution ($30,000 including employer contributions) is not 30 June – it is normally 10 days prior to 30 June. If you are below the maximum contribution and can top it up, it is likely that you will be able to claim a tax deduction on that extra money.
And one more thing – remember to stay cyber safe
Over the last 12 months or so I have been reminding everyone to be on guard against scammers and to follow the Federal Government’s scam watch: http://www.cyber.gov.au/protect-yourself
Don’t forget to stay scam smart. If something seems too good to be true, it probably is.
One of the layers of security our clients have is the personal relationship with their adviser and our team. We recognise voices, we know the individuals, we are business ‘friends.’
As always, if I or any of our team can be of assistance, please don’t hesitate to get in touch by either calling (08) 8130 5130 or email admin@marinisgroup.com.au
Yours sincerely
Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative
