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Intergenerational Wealth: An introduction Part 1

A huge sum of wealth is acquired by beneficiaries every single year – whether in the form of inheritance after death, or via gift transfers. However, over the last few years, headlines about ‘the inheritance economy’ and ‘the big intergenerational wealth shift’ have appeared just about everywhere in developed economies.

Researchers across the globe reached the same conclusion: we are on the brink of a vast shift in assets, unlike any that we have seen before.1 Globally, worldwide demographic trends are putting in place the foundations for the largest intergenerational wealth transfer in history over the next 50 years. In Australia alone, it is expected that we will see around $3.5 trillion change hands over the next 20 years, growing at 7% per year.2

Coined as ‘the Great Wealth Transfer’ of the 21st century (GWT), it is expected to bring about a total overhaul to the way that current financial advice practices work. Is your practice ready?

Drivers behind the Great Wealth Transfer

There are a number of contributory factors that account for this large shift in money. The two main reasons are the increased net worth and changes in life expectancies.

Increased net worth: property and equity markets

In 2017, Australian household’s net wealth stood at a record $8.1 trillion.3

Growth in household net worth has historically been largely tied to property values, income and ability to save this income.

A huge proportion of this increase has been due to the rise in property prices we’ve experienced in the last 25 years. This works out at an average annual real growth rate of 4.1% p.a. above general inflation and earnings growth as shown in Figure 1.4 The beneficiaries? Baby boomers, who were able to get on the property ladder in the 1980s, and stay on it ever since.5 Indeed, the Household, Income and Labour Dynamics in Australia (HILDA) survey shows that the home is still the biggest asset, with superannuation and other property following closely behind.6 Thanks to capital growth, property can be expected to account for around 70% of the wealth transferred over the coming years. 7

Figure 1: Real property growth over time

Source: OECD

Baby boomer wealth profiles are characterised by high levels of homeownership and the rewards of the periods of economic prosperity that have occurred throughout their adult lives.

In addition to homeownership, the introduction of the Superannuation Guarantee system in 1993 has seen substantial growth in levels of superannuation holdings, which in turn has increased the amount of potentially heritable assets.8

Booming equity markets are another contributory factor to Australians’ net worth. Capegemini’s 2018 World Wealth report indicates that a growing number of individuals have hugely increased their asset bank thanks to the equity rally we have experienced over the last few years.9

Increased life expectancy

Like their net worth, the life expectancy of baby boomers has increased. Thanks to a greater awareness of healthy living practices, medical advancements and improved assisted-living facilities, our elderly are living longer. Life expectancy in Australia at age 65 has significantly grown, especially since the 1970s – from 12.2 to 19.2 years for males and from 15.9 to 22.1 years for females as shown in Figure 2.

Figure 2: Life expectancy in years in Australia at age 65

Source: Australian Government Actuary, Australian Life Tables

Living longer means that our elderly community are holding onto their assets for longer. The population aged 75 years or more is expected to rise by 4 million between 2012 and 2060, increasing from about 6.4% to 14.4% of the population.10

However, projections suggest that we will see a rising number of deaths over the next few decades. From 147,200 in 2011-12, the Australian Bureau of Statistics (ABS) expects the annual number of deaths in Australia to more than double to 352,100 in 2061 and more than triple to 545,400 in 2101.11 A significant proportion of these people is likely to transfer wealth upon death, so it is likely that we will see inheritance shift en masse.

360° degrees of financial advice

Tackling intergeneration wealth from all angles

At Russell Investments, we know that just around the corner, the Great Wealth Transfer will bring about great change. Connect with us to discuss the numerous ways financial advisers can prepare.

Contact your Russell Investments relationship manager who can help plan, build and expand your business against the changing market backdrop.

 

Source: Russell Investments

1 Cutler, N.E., D, S. J. 1996 An inheritance boom for boomers? Looking beyond the headlines. Journal of Financial Service Professionals, 50(5), 4.
2 McCrindle (2016). Wealth Transfer Report, A Report for No More Practice, September. With an estimated 7.5 million children, if 70% of wealth is transferred then it is estimated approximately $326,000 on average will be passed on to each child. If this is spent, it is likely to be eroded in two years, but if managed well, it could help Gen X and Y fund their own retirements.
3 https://www.roymorgan.com/findings/7404-australian-households-net-wealth-now-over-eight-trillion-dollars-and-growing-201711092241
4 OECD Database (September 1993- June 2018)
5 Norman Morris, Roy Morgan Research November 2017
6 Johnson, D (2017) Australia’s hidden treasure: The immense potential of baby boomer housing equity in averting a retirement cashflow crisis. PhD thesis. Griffith University
7 Template, J., McDonald, P.Rice, J. Net assets available at age of death in Australia. Population Review Volume 56, Number 2, 2017., Sociology Demography Press.
8 The 2015 Intergenerational Report; Australia in 2055 predicted that superannuation assets alone could rise to $9 trillion by 2040 (Treasury, 2015).
9 CapeGemini, ‘World Wealth Report 2018’, p.16.
10 Productivity Commission, 2013. An Ageing Australia: Preparing for the Future,
11 ABS 3222.0 – Population Projections, Australia, 2012 (base) to 2101 released Nov 2013

 

Advice clients are 5.2% a year better off

This article first appeared in the Financial Review and the IFA Magazine.

Advisers generate an average 5.2 per cent extra cash per year for clients regardless of market movements, through services such as asset allocation and behavioural coaching, new research has revealed.

Russell Investments’ Value of an Adviser Report sought to quantify the value delivered by advisers in five service areas beyond investment advice – asset allocation, correcting behavioural mistakes, adequately managing clients’ cash holdings, setting and monitoring goals and tax structuring.

The report found that advisers generated an average 2.2 per cent per year for clients through ensuring they bought and sold assets at the correct times in the market cycle, and 1.5 per cent through ensuring investments were made in tax efficient structures such as super and transition to retirement.

A further 0.9 per cent was generated through asset allocation basics such as selecting the correct investment option in the client’s super fund, and 0.6 per cent by diversifying a client’s cash and fixed income holdings.

Russell Investments head of wholesale partnerships Neil Rogan said the research highlighted the concrete difference advice could make even through relatively simple services such as acting as a sounding board for investment decisions.

“If you look at it, it’s around 3.1 per cent just through asset allocation and the adviser coaching the client on behaviours around when they should or shouldn’t sell,” Mr Rogan said.

“An important role that the adviser plays, not only is getting the allocation right but also really saving the client from themselves.

“When you look at the difference [in outcomes] over 20 years, I think that’s a really important point, and now more than ever that behavioural piece is important when advisers are working with clients, with these turbulent markets.”

Mr Rogan said being able to quantify the value of advice, which was often talked about in general terms in the industry, would help advisers to confidently articulate and charge fair up-front fees to clients.

“If you look at the fee piece, would you pay $3,000 to make $10,000? I think the answer to that is clearly yes – it’s a no-brainer, so why wouldn’t you get advice?” he said.

While the fifth non-investment service – setting and monitoring goals – was not specifically quantified in the report, Mr Rogan said this could often be the key piece of the puzzle when it came to delivering value for clients.

“It’s actually understanding what your client needs and wants to do, and putting in place strategies to help them do it,” he said.

“You can dress that up as goals-based advice, but it’s about the expertise and understanding the client’s behaviours and matching the asset allocation, investments and the tax strategies that fit around it.”

Source: IFA

 

Market Review September 2020

Monthly Market Review – September 2020

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How the different asset classes have fared: (As at 30 September 2020)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Australian Dollar and Australian Shares

The Australian dollar fell during September as risk sentiment deteriorated and investors speculated that the Reserve Bank of Australia will further reduce interest rates from 0.25% to 0.1% at its next meeting in early October. The dollar rose slightly as a rally in local and international share markets at the end of the month signaled improving risk sentiment but still finished the quarter down by almost 3%. Australian shares also ended the month lower as a new bout of volatility raised questions about high valuations in IT and consumer discretionary stocks. The prolonged economic shutdown pulled down valuations in commercial real estate.

International Shares and infrastructure

International shares finished the month lower as investor sentiment turned negative with technology stocks dragging down the overall market. The month saw brief rallies following reports of progress on a COVID-19 vaccine. However, concerns about the November election in the US and an increase in European COVID-19 cases weighted heavily on investor sentiment.

Valuations in Europe continue to remain more attractive on a price-to-earnings basis than in the United States but repeated waves of COVID-19 and a poor outlook for the region’s banking system has meant that the regional index has struggled to rise. Japan continued to rally, albeit at a slower pace than in August as the country brought its second wave under control and attractive valuations drew in investment. US shares were more volatile than in July and August as high valuations, particularly in the technology sector, led to volatility.

Emerging Markets

Emerging markets rallied in September given attractive valuations relative to developed market equities. There are headwinds for EM with ongoing US efforts to prevent Chinese companies from accessing the US marketplace which will continue to weigh on sentiment. An end to the sell-off in the US dollar may cause more pain for EM companies and households making purchases of imported goods.

Fixed income

Australian fixed income rallied in September as speculation that the Reserve Bank of Australia will announce further easing at its October meeting placed downward pressure on yields. International fixed-income investors were also helped by central banks. In the US, yields fell as the Federal Reserve signaled it plans to maintain near-zero interest rates until 2023.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Life cover: More essential than ever

Life cover. More essential than ever

Living through COVID-19 has brought many challenges and shifting priorities as we deal with the financial impacts of the pandemic, and that includes the issue of life insurance. 

On the one hand, the pandemic has highlighted the importance of life cover. On the other, those who may have lost a job or lost income are questioning its necessity.

Many Australians continue to view life insurance as a discretionary item. This is in stark contrast to the car or home insurance which are seen as necessities. It seems we are willing to insure our property but not the thing that matters most – our life and our ability to earn an income.

Conflicting priorities

survey by KPMG found that only 35 per cent of Australians thought life insurance was essential and just 30 per cent believed they needed income protection. But when it comes to car insurance, 79 per cent viewed cover as essential and yet, during COVID-19, car usage reduced as many were working from home and restricting their movements.

As the COVID-19 health crisis has reinforced our vulnerability in terms of health and the fragility of life, the need for life and income protection insurance has probably never been greater.

What would happen if you became too sick to return to work or if you passed away? Who would pay the mortgage, living costs, health insurance and utility bills for you or the family you left behind? For those with outstanding debt and dependants, life insurance will always be an important consideration.

It should also be remembered that the current health crisis does not rule out people getting sick with other illnesses, some linked to COVID-19 and some not. Mental health is one of these health issues and is becoming increasingly prevalent.

Claims on the rise

In the June quarter, the life insurance industry reported a net after-tax loss of $179 million on its individual income protection products, driven largely by claims for mental health issues in the wake of COVID-19.i Mental health claims are expected to grow even further as it is thought most people take more than a year to report such issues.

With claims on the uptick, this has meant the insurance industry is either looking to increase premiums or already has. This, in turn, may discourage people from keeping their cover.

Indeed, the KPMG survey said that 38 per cent of policyholders were looking to cancel their income protection insurance in the next 12 months, and 25 per cent were planning to drop life cover.

On the plus side, many Australians have some level of life and income protection insurance in their super. However, if you were to lose your job, then paying premiums on your insurance in super would come out of your fund balance, reducing your retirement savings over time.

Also, your insurance might well cease when you lose your job unless you opt to take out a private policy. You generally have 60 days to take up this option.

Redundancy payments

If your income protection insurance is outside super, then be mindful that not all policies include redundancy claims. And those that do may have restrictions. For instance, there is usually a waiting period of up to 28 days before any payments will be made.

If you are thinking of taking out a policy now to cover you in case of redundancy given the current economic environment, then you will probably have to go through a six-month no-claim period before you can benefit. During that six-month period, there must be no indication from your employer that redundancy may be on the cards.

Many insurance companies recognise the financial and personal difficulties many people currently face and some have offered to reduce or even suspend premiums without any loss of continuity to your policy.

One alternative may be to look at reducing the cover you have so that your premiums reduce. But it’s important to be mindful of your needs and ensure you have adequate cover.

The road ahead

The insurance industry, like many others, is being forced to look at a different way of doing business in a post-COVID-19 world, with simpler policies and flat premiums all being discussed.

In the meantime, making quick decisions on whether you still need insurance or your current level of insurance, may prove a mistake. If you are thinking about altering your cover, give us a call first to discuss your insurance needs.

https://www.fsc.org.au/news/income-protection

2020-2021 Budget Wrap-up

Federal Budget 2020

Overview

The 2020-21 Budget was delivered on 6 October 2020, having been deferred from its original date of 12 May 2020 due to the COVID-19 pandemic. The budget is firmly focused on supporting Australia’s recovery from the first recession since 1991 and the worst economic performance since 1959.

The budget revealed that real GDP is projected to shrink by 1.5 percent in 2020-21, before rebounding in the following years. Similarly, the unemployment rate is set to peak this year at 7.25 percent and will take at least two years to fall below 6 percent.

Given the fall in tax revenue and an increase in spending, the 2020-21 Budget is projected to be in deficit by $213.7 billion, with the deficit falling to $66.9 billion by 2023-24. Net debt will increase to $703 billion this year and peak at $966 billion or 44 percent of GDP in 2024.

Central to the Government’s plans for economic recovery is the JobMaker package, which includes significant tax relief measures for households and businesses, a boost to infrastructure investment and a hiring credit for new employees.

The Government has brought forward it’s stage-two income tax cuts by two years from their original start date of 1 July 2022 to 1 July 2020. The stage-two tax cuts lift the income threshold at which the 19 per cent tax rate applies – from $41,000 to $45,000 – and the rate at which the 32.5 per cent rate applies – from $90,000 to $120,000.

Major support for businesses with a turnover of less than $5 billion includes immediate expensing of capital investment for businesses; temporary carry-back of current and future losses to 2018-19; and insolvency reforms to assist stressed businesses to restructure.

The Government has also proposed a range of reforms to superannuation to reduce the cost of duplicate accounts, improve performance of MySuper funds and increase transparency in fund management.

Further details of these measures follow.

Personal Income Tax

Bringing forward the Personal Income Tax Plan and retaining the low and middle-income tax offset.

The Government will bring forward the second stage of its Personal Income Tax Plan by two years to 1 July 2020 while retaining the low and middle-income tax offset (LMITO) for 2020-21.

The changes are intended to provide immediate tax relief to individuals and support the economic recovery and jobs by boosting consumption by providing around $17.8 billion in tax relief to around 11.6 million Australians, including $12.5 billion over the next 12 months.

The top threshold of the 19 per cent personal income tax bracket will increase from $37,000 to $45,000. The top threshold of the 32.5 per cent personal income tax bracket will increase from $90,000 to $120,000.

* The LMITO will only be available until the end of the 2020-21 income year.

Even with the quick passage of legislation, the tax measures will be backdated by around four months. As a result, reduction in PAYG tax for the remainder of the financial year will be around 1.5 times the ongoing rate.

The low-income tax offset (LITO) will increase from $445 to $700. The increased LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000. The LITO will then be withdrawn at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

The LMITO provides a reduction in tax of up to $1,080. It provides a reduction in tax of up to $255 for taxpayers with a taxable income of $37,000 or less. Between taxable incomes of $37,000 and

$48,000, the value of the offset increases at a rate of 7.5 cents per dollar to the maximum offset of $1,080. Taxpayers with taxable incomes between $48,000 and $90,000 are eligible for the maximum offset of $1,080. For taxable incomes of $90,000 to $126,000, the offset phases out at a rate of 3 cents per dollar.

Stage three of the Personal Income Tax Plan is unchanged and scheduled to commence in 2024-25.

INCREASING THE MEDICARE LEVY LOW-INCOME THRESHOLDS


The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 2019-20. The increases take account of recent movements in the consumer price index so that low-income taxpayers generally continue to be exempted from paying the Medicare levy.

  • The threshold for singles has increased from $22,398 to $22,801.
  • The family threshold has increased from $37,794 to $38,474.
  • For single seniors and pensioners, the threshold has increased from $35,418 to $36,056. The family threshold for seniors and pensioners has increased from $49,304 to $50,191.
  • For each dependent child or student, the family income thresholds increase by a further $3,533, instead of the previous amount of $3,471.

Business Support

The Government has announced a significant suite of business supports intended to kick-start investment and help businesses manage the current economic downturn.
Notably, the measures that provide financial support are temporary, so as not to affect the long term fiscal outlook.

TEMPORARY FULL EXPENSING TO SUPPORT INVESTMENT AND JOBS


In a major initiative to promote business investment, the Government has announced it will allow eligible businesses to immediately deduct the full cost of eligible capital assets acquired between now and 30 June 2022. The initiative will be limited to businesses with a turnover of less than $5 billion.

Full expensing in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets. For small and medium-sized businesses (with an aggregated annual turnover of less than $50 million), full expensing also applies to second-hand assets.

Businesses that hold assets eligible for the enhanced $150,000 instant asset write-off will have an extra six months, until 30 June 2021, to first use or install those assets.

This initiative is expected to provide $26.7 billion in tax relief for businesses over the next four years, with $1.5 billion in the current financial year.

TEMPORARY LOSS CARRY-BACK TO SUPPORT CASH FLOW


In another initiative intended to allow eligible businesses to better manage the current economic downturn, the Government has announced that eligible businesses will be able to carry back tax losses from 2019-20 to 2021-22 to offset previously taxed profits from 2018-19 or later years. The initiative will be limited to businesses with a turnover of less than $5 billion.

The carryback allowable must not be greater than the profit taxed in the earlier year and a carryback will not generate a franking account deficit.

This initiative is expected to provide around $4.9 billion in support over the forward estimates and, as it is a time-limited measure, will not have a significant long term impact on the budget.

JOBMAKER HIRING CREDIT


To support employment, the Government has announced a weekly payment for businesses who hire eligible new employees. The payment will last for twelve months and is available immediately. To be eligible, new employees must be between 16 and 35 years old. For employees between 16 and 30, the business will be eligible for $200 per week. For employees between 30 and 35 years old, the business will be eligible for $100 per week. Employees must be engaged for at least 20 hours per week and all businesses (except for the major banks) are eligible.

INSOLVENCY REFORMS TO SUPPORT SMALL BUSINESS


The Government had previously announced a new, quicker and lower-cost process to allow small businesses to address insolvency. This measure is intended to help small businesses to restructure, avoid liquidation and continue trading. This process will be available to businesses with liabilities under $1 million which represent around 76 percent of all insolvencies.

INCREASE THE SMALL BUSINESS ENTITY TURNOVER THRESHOLD


The Government will expand access to a range of small business tax concessions by increasing the small business entity turnover threshold for these concessions from $10 million to $50 million. Businesses with an aggregated annual turnover of $10 million or more but less than $50 million will have access to up to ten further small business tax concessions in three phases up to 1 July 2021.

DIGITAL BUSINESS PLAN


The Government is continuing its support for digital uptake in Australian businesses through its $796.5 million Digital Business Plan. Measures included in this plan will support the roll-out of the Consumer Data Right, assist in the commercialisation of regtech and fintech, and support Australian businesses using technology to reduce regulatory compliance costs.

Superannuation

Despite much speculation, the Government has not made any unexpected changes to the superannuation system for the 2020-21 financial year. Previously announced COVID-19 measures in relation to early access to super and pension drawdown relief will continue.

The Government has otherwise continued its commitment to the Your Future, Your Super package which will see super funds follow members as they change jobs, new interactive comparison tools, active management of underperforming funds, and increased trustee transparency and accountability.

COVID-19 RESPONSE PACKAGE


Temporary early access to superannuation

The Government is allowing eligible Australian and New Zealand citizens and permanent residents affected by the financial impacts of COVID-19 to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21 to help support them during COVID-19. The 2020-21 application period for the measure will cease on 31 December 2020.

Temporarily reducing superannuation minimum drawdown rates 

The Government has reduced the superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years. Minimum payment amounts are calculated on the basis of asset values on 1 July of each income year.

YOUR FUTURE, YOUR SUPER


The Government will provide $159.6 million over four years from 2020-21 to implement reforms to superannuation to improve outcomes for superannuation fund members. The reforms will reduce the number of duplicate accounts held by employees as a result of changes in employment and prevent new members joining underperforming funds.

Commencing 1 July 2021, the Your Future, Your Super package will improve the superannuation system by:

  • Having your superannuation follow you: preventing the creation of unintended multiple superannuation accounts when employees change jobs by “stapling” super funds
  • Making it easier to choose a better fund: members will have access to a new interactive online YourSuper comparison tool which will encourage funds to compete harder for members’ savings. This tool will be developed and maintained by the ATO, and enable new employees to select the right MySuper fund for themselves when they start
  • Holding funds to account for underperformance: to protect members from poor outcomes and encourage funds to lower costs the Government will require MySuper products to meet an annual objective performance Those that fail will be required to inform members. Persistently underperforming products will be prevented from taking on new members.
  • Increasing transparency and accountability: the Government will increase trustee accountability by strengthening their obligations to ensure trustees only act in the best financial interests of The Government will also require superannuation funds to provide better information regarding how they manage and spend members’ money in advance of Annual Members’ Meetings.

RETIREMENT INCOME REVIEW


The Retirement Income Review was speculated to be released with the budget, however, this has not occurred. The Government did announce however that the Retirement Income Covenants which would have required superannuation trustees to have a strategy in place to support the retirement income needs of members from 1 July 2020 has been delayed to 1 July 2022.

Social Security

As the country finds itself in a recession, much of the focus for the 2020-21 Budget has been on social security measures to support Australian’s who are out of work. The Government has confirmed announced extensions to the JobKeeper payments, provided clarification around COVID-19 payment supplements to those on JobSeeker, will make two $250 payments for eligible social security recipients, and a developed a new JobMaker Hiring Credit for employers who bring on younger Australian’s who have been on JobSeeker.

JOBKEEPER PAYMENT EXTENSION


28 March 2021, with the Payment, targeted to those businesses that continue to be most significantly affected by the economic downturn. The level of the JobKeeper Payment is being tapered to enable businesses to transition towards their longer-term plans and a two-tiered payment is also being introduced to better match the Payment with the incomes of employees. The ATO will also be given additional resources to manage the JobKeeper and JobMaker programs.
The JobKeeper Payment extension announced on 21 July 2020 provides continued support until

COVID-19 RESPONSE PACKAGE — FURTHER ECONOMIC SUPPORT PAYMENTS


The Government will provide two separate $250 economic support payments, to be made from November 2020 and early 2021 to eligible recipients of the following payments and health care cardholders:

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Family Tax Benefit, including Double Orphan Pension (not in receipt of a primary income
  • Carer Allowance (not in receipt of a primary income support payment)
  • Pensioner Concession Card (PCC) holders (not in receipt of a primary income support payment)
  • Commonwealth Seniors Health Cardholders
  • Eligible Veterans’ Affairs payment recipients and concession cardholders.
  • The payments are exempt from taxation and will not count as income support for the purposes of any income support payment.

COVID-19 RESPONSE PACKAGE — INCOME SUPPORT FOR INDIVIDUALS


Since 27 April 2020, the Government established a new time-limited Coronavirus Supplement to be paid at a non-income tested rate of $550 per fortnight. This is paid to both existing and new recipients of JobSeeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, Farm Household Allowance, Special Benefit, and recipients of the Department of Veterans’ Affairs Education Schemes, Military Rehabilitation and Compensation Act Education and Training Scheme and Veterans’ Children’s Education Scheme.

From 25 September 2020, this supplement will change to $250 per fortnight and continue to 31 December 2020.

The income free area will also change to $300 per fortnight with a 60 cents taper for income earned above the income free area for JobSeeker Payment (except principal carer parents who have an income free area of $106 and a taper rate of 40 cents) and Youth Allowance (other) recipients.

Payment eligibility which was relaxed on a temporary basis, with the One Week Ordinary Waiting Period waived from 12 March 2020, and a range of further exemptions applied from 25 March 2020, including waiving the Newly Arrived Residents’ Waiting Period, Assets Test, Liquid Assets Waiting Period and Seasonal Work Preclusion Period, will all be reinstated from 25 September 2020 except the Assets test and Liquid Assets Waiting Period which will be reinstated from 31 December 2020.

Eligibility criteria for JobSeeker and Youth Allowance (Other) have also been extended to allow sole traders and the self-employed to access the payments provided they meet income test requirements.

Finally, mutual obligations will be changed to give job seekers greater flexibility to count education and training toward their activity requirements.

WOMEN’S ECONOMIC SECURITY


The Government is investing in women’s economic security and supporting increased female workforce participation through the 2020 Women’s Economic Security Statement. The Government will provide $240.4 million over five years from 2020-21.

The Government is supporting new parents whose employment was interrupted by COVID-19. As a result, 9,000 individuals will gain eligibility for Parental Leave Pay and 3,500 for Dad and Partner Pay. This change will extend the work test period from 13 months prior to the birth or adoption of the child to 20 months prior, enabling access to Paid Parental Leave (PPL) where eligibility has been impacted by COVID-19. The Government is supporting disadvantaged parents on Parenting Payment through a $24.7 million expansion of the Parents Next program.

Aged Care

With the Aged Care Royal Commission recently handing its interim report to Government, the expected adoption of recommendations and new support measures for the aged care sector have been implemented. The Government is introducing close to $3 billion of measures to address the recommendations as well as address the unfortunate COVID-19 related issues which have emerged in the aged care sector.

ADDITIONAL FUNDING TO SUPPORT THE AGED CARE SECTOR’S RESPONSE TO COVID-19


The Government will provide $2.0 billion over four years from 2020-21 to further support older Australians accessing aged care by providing additional home care packages as well as continuing to improve transparency and regulatory standards. Funding includes:

  • $1.6 billion over four years from 2020-21 for the release of an additional 23,000 home care packages across all package levels
  • $125.3 million over three years from 2020-21 to replace the Commonwealth Continuity of Support Programme with a new Disability Support for Older Australians program
  • $91.6 million over two years from 2020-21 to continue the reform to residential aged care funding
  • $4.6 million over two years from 2020-21 to review the support care needs of senior Australians who live in their own home and determine how best to deliver this care in the home.

SUPPORTING OLDER AUSTRALIANS THROUGH COVID-19


The Government will provide $812.8 million over four years from 2019-20 to support older Australians throughout the COVID-19 pandemic. Funding includes:

  • $70.0 million over two years from 2019-20 to provide access to short-term home support services through the Commonwealth Home Support Program to senior Australians who are frail or have self-isolated due to a high risk of contracting COVID-19
  • $59.3 million over two years from 2019-20 to guarantee the supply of food, including groceries and prepared meals, for senior Australians who are frail or have self-isolated due to a high risk of contracting COVID-19
  • $71.4 million in 2020-21 to support residents of aged care facilities who temporarily leave care to live with their families.

SUPPORTING OLDER AUSTRALIANS — EXEMPTING GRANNY FLAT ARRANGEMENTS FROM CAPITAL GAINS TAX


The Government will provide a targeted capital gains tax (CGT) exemption for granny flat arrangements where there is a formal written agreement. The exemption will apply to arrangements with older Australians or those with a disability. The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.

CGT consequences are currently an impediment to the creation of formal and legally enforceable granny flat arrangements. When faced with a potentially significant CGT liability, families often opt for informal arrangements, which can lead to financial abuse and exploitation in the event that the family relationship breaks down. This measure will remove the CGT impediments, reducing the risk of abuse to vulnerable Australian

 

 

The Value of Financial Advice

Do the benefits really outweigh the costs?

The value of financial advice goes beyond dollars and cents – it can simplify your life and give you a sense of security and peace of mind about your current and future financial position.

A professional financial adviser can thoroughly consider your circumstances, and then develop strategies to help you reach your goals. These may include funding your children’s education, helping with tax planning, having enough money to live comfortably after retiring, insurance, estate planning and so on, all of which requires specific knowledge and experience.

You may seek financial advice to help you with a specific circumstance, such as starting a family, buying a house or managing an inheritance; a good planner can empower you to make the most of these situations.

These benefits are supported by recent US-based research. A 2013 study from US investment research giant Morningstar found that financial advice can help retirees boost their investment returns by 1.59% a year, reducing the risk of running out of cash.

This Research shows financial advice is not only good for your finances, it can make you happier and more confident too.

  • Research shows professional financial advice can help give you greater peace of mind.
  • Your financial adviser is there to help you reach all of your retirement lifestyle goals, not just look after your investments.
  • Professional advice can help you confidently navigate each stage of retirement while managing the complexities of constantly changing rules.

Researchers have also shown that people who receive professional financial advice feel happier, are more confident, less stressed and more in control.

That’s because financial advice is about much more than money. Your financial adviser is there to help you reach your goals at every stage of your life while taking care of all the things you may not have thought of — from the complexities of superannuation and Centrelink rules to tax planning and healthcare costs.

So if you haven’t spoken to your adviser lately it’s worth getting in touch with them to make sure you’re making the most of all the benefits that their professional financial advice can bring.

Australians have one of the highest life expectancies in the world, so we’re spending longer in retirement. Over time, our needs are likely to change dramatically.

Financial advisers can play a vital role in helping clients navigate each stage of retirement — from the active, early years spent travelling and pursuing hobbies, to the later, more sedate years with possible health and mobility challenges. By taking care of critical issues ahead of time and monitoring the situation on an ongoing basis, advisers help ensure their clients and their families are protected, whatever the future holds.

Because financial advice is all about creating a personalised plan designed for your individual needs, the cost of your advice will depend on your circumstances. However, your adviser is obliged to clearly outline all of the costs upfront, then get your written approval before going ahead, so you will know exactly what each service will cost ahead of time. Some of the fees you may be charged include a statement of advice fee, an implementation fee and ongoing advice fees.

So, if you’re weighing up the costs and benefits when it comes to securing your financial future — and your peace of mind — meeting with an adviser could be one of the best investments you ever make. 

Why not schedule a meeting with a Financial Adviser today?

Reach out to the Sherlock Wealth team to discuss your unique situation here.

Disclaimer

This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication. You should read the Product Disclosure Statement (PDS) before making a decision about a product.

Market Review August 2020

Monthly Market Review – August 2020

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How the different asset classes have fared: (As at 31 August 2020)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Financial markets gained in August as US shares recovered their losses and soared to new highs. The Australian dollar surged to nearly 74c by month-end as bearish sentiment drove the US dollar to multi-year lows. International shares also rose strongly in August but gains for unhedged investors were offset by a rise in the Australian dollar. Unlike July, emerging markets retraced some of their gains as fresh tensions between the United States and China sent Chinese stocks tumbling. Government bonds also gave back some of their gains as faith in vaccine trials fueled investor optimism and a rise in bond yields. Listed property and infrastructure also gained on rising optimism about the path of economic recovery but the rising Australian dollar offset gains for unhedged investors.

Cash and Fixed Income

Interest rates remained fixed near zero in August and central banks continued to use their balance sheet to hold down bond yields. The RBA also restarted its purchases of 3-year Australian Government Securities as Stage 4 restrictions in Victoria and new cases in NSW and Queensland impacted economic activity. The central bank has also revised its forecasts for the impact of COVID-19 and now predicts that unemployment will peak at 10%. At the same time, though, pharmaceutical companies and leading universities have now advanced vaccine trials to their third and final stage before potential approval. Bond yields rose moderately (and prices therefore fell) as investors priced in a potential resolution to the global pandemic that has sent yields tumbling across the fixed-income complex.

Australian Shares

The Australian share market gained in August as investors continued to crowd into IT and consumer discretionary stocks. Mining and healthcare stocks largely tracked the index. Unlike in July, though, mining stocks fell and listed property rose on investor optimism that a vaccine for COVID-19, which has seen valuations for shopping centres and office towers fall substantially, might be approved before the end of the year.

International Shares

International share markets soared in August as US shares recovered their losses from earlier in 2020 and closed at all-time highs. International shares continue to be led by US shares, especially investor optimism in the so-called FAANGM (Facebook, Apple, Amazon, Netflix, Google, Microsoft) universe of consumer technology stocks. Unlike in July, Japanese stocks rose strongly as a second wave appeared to gradually subside throughout the month. European stocks continued to underperform – the divergence between valuations in European and US shares is now at its highest level in almost a century.

Emerging Markets

Emerging markets experienced a mild sell-off in July as tensions between the US and China led to new measures from the United States. US President Donald Trump issued an executive order forcing Chinese technology company Bytedance to divest or sell its US operations, leading to a bidding war between US technology companies for its popular app Tiktok. As in developed markets, Chinese technology stocks dominate the emerging markets index. Tencent, Alibaba and Meituan now constitute 38% of the Chinese index and Chinese stocks make up a majority of the emerging markets index. Efforts by the US and other developed countries like Australia and the UK to restrict Chinese technology companies’ access to their markets has therefore had a negative effect on EM valuations.

The Australian Dollar

The Australian dollar rose to almost 74c in August driven mostly by a sell-off in the US dollar. Iron ore prices climbed to $120/ tonne as Chinese appetite for iron ore continued to grow. COVID-19 is still causing issues with supply chain issues in Brazil and other emerging-market iron ore producers, further supporting the price of the bulk commodity. The spread between Australian and US Government, 10-year securities also climbed to 28 basis points by the end of the month, further supporting the Australian dollar (because offshore investors can gain a secure income by exchanging US dollars for Australian dollars and buying local government securities).

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs.  Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable.  Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review July 2020

Monthly Market Review – July 2020

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How the different asset classes have fared: (As at 31 July 2020)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Financial markets were mixed in July as a sell-off in the US dollar and promising earnings reports from US technology giants fueled investor enthusiasm. However new COVID-19 outbreaks across the world undermined faith in the economic recovery. The Australian dollar surged to US 72c by month-end as bearish sentiment drove the US dollar to multi-year lows. International shares also rose strongly in July but gains for unhedged investors were offset by a rise in the Australian dollar. As in June, emerging markets also enjoyed robust gains as a sell-off in the US dollar eased financial conditions in developing countries and investors bought into Chinese technology companies that are likely to benefit from changes to commerce during the global pandemic. Government bonds largely traded sideways as central banks around the world maintained ultra-low interest rates. International bond yields fell (and prices therefore rose) in large part because new viral outbreaks dampened faith in the economic recovery from COVID-19. Small gains in listed infrastructure and global listed property were offset for unhedged investors by the rising Australian dollar.

Cash and Fixed Income

Interest rates remained fixed near zero in July and central banks continued to use their balance sheet to hold down bond yields. International and Australian bonds rallied as a resurgence of COVID-19 cases in Australia and overseas renewed fears of deflation and a prolonged downturn. The RBA kept rates fixed close to zero but allowed rates on 3-year Australian Government Securities to float above their target of 0.25% during July (rates peaked at 0.28% in the middle of the month). The RBA has subsequently pledged to restart its purchases as a new lockdown in Victoria and the closure of state borders placed new pressure on the Australian economy.

Australian Shares

The Australian share market was relatively subdued in July, returning 0.95% for the month. New restrictions on domestic movement following the outbreak in Victoria and new clusters in NSW have set back the clock for the economic recovery. The RBA has revised its estimates for the Australian economy and now expects unemployment to peak at around 10%.

The increase in the ASX 200 index was largely driven by mining and technology stocks. Mining stocks outperformed as Chinese stimulus buoyed prices in international markets and the IT sector strengthened as investors gain faith in the long-term beneficial impact of COVID-19 on e-commerce providers. Healthcare and bank stocks dragged in July as a second wave of infections in Victoria and NSW undermined recent gains and undermined faith in the recovery.

International Shares

International share markets gained momentum in July as strong earnings reports from US technology companies fueled a surge in prices and renewed investor optimism in the so-called FAANGM (Facebook, Apple, Amazon, Netflix, Google, Microsoft) universe of consumer technology stocks. The S&P 500 finished the month strongly enough to offset falls in Europe and Japan’s equity markets.

Emerging Markets

Emerging markets were also supported by new inflows and investors’ growing appetite for risk. As in developed markets, Chinese technology stocks like Tencent and Alibaba have attracted significant new investment as investors look for companies that are likely to gain from the global pandemic.

The Australian Dollar

The Australian dollar rose to 72c in July in large part driven by a sell-off in the US dollar. A worsening COVID-19 outbreak in Victoria and news that Australian consumer prices had fallen at the fastest quarterly rate since 1931 failed to dampen investor sentiment. Iron ore prices climbed more than 10% as Chinese stimulus fueled new demand for Australian bulk commodities.

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

Market Review June 2020

Monthly Market Review – June 2020

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How the different asset classes have fared: (As at 30 June 2020)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Financial markets were slightly more subdued in June than in April and May as the reopening of economies caused new outbreaks in the Americas, Middle East and India. Australian shares and the local currency rose, buoyed by authorities’ relative success at containing the local epidemic. International shares also rose modestly in June but gains for unhedged investors were offset by a rise in the Australian economy. Emerging markets rose more robustly as an economic recovery in China and successful containment of viral outbreaks in Asia raised investor confidence. Government bonds largely traded sideways as central banks around the world maintained ultra-low interest rates and asset purchases while credit spreads narrowed as the economic reopening continued. Listed infrastructure underperformed in June as investors priced in the effects of a pandemic with multiple waves on sensitive infrastructure assets like toll roads and airports.

Cash and Fixed Income

Interest rates remained fixed near zero in June and central banks continued to use their balance sheet to hold down bond yields. Investment-grade spreads narrowed as Federal Reserve purchases of bond ETFs (exchange-traded funds) drew in new investment and raised prices while government and high-yield bonds largely traded sideways.

Australian Shares

The Australian share market extended its rally with another gain of 2.34% in June. An increase in the ASX 200 index was largely driven by banks, IT and consumer stocks. Mining stocks underperformed the index as a whole as Brazilian mining supply gradually came back online. A new outbreak in Victoria towards the end of June placed some downward pressure on prices, as well as the Australian dollar as the state was forced to reintroduce selective lockdowns to contain the spread of COVID-19.

International Shares and Emerging Markets

International share markets continued to recover in June although the incremental improvement in valuations was smaller and accompanied by much greater volatility. As in May, the global economic reopening and a continuation of extraordinary fiscal and monetary support supported higher valuations, but new outbreaks nevertheless forced localized lockdowns or a delay in reopening.

Once again, though, US IT stocks outperformed even as news of a Facebook advertiser boycott briefly shook investors’ optimism in the mega-cap tech stocks. International shares are now trading around the same price-to-earnings ratio that they were before the pandemic. Emerging markets were also supported by new inflows and an investors’ growing appetite for risk after the sell-off in March.

The Australian Dollar

The Australian dollar continued to rise in June. However, the local currency trimmed rapid gains at the beginning of the month by the end of June as a new outbreak and some adverse economic data dampened investor sentiment. Iron ore prices remained steady as Brazilian miner Vale, which has been heavily impacted by the COVID-19 crisis in Brazil, gradually brought more supply to the market. The Australia/US interest rate differential (the difference between yields on 10-year US and Australian government bonds) has stabilized at around 25 basis points, which means that investors earn more from holding Australian government bonds. Along with a gradual increase in investors’ appetite for risk and Australia’s apparent success at controlling the coronavirus, the interest-rate differential helped the Australian dollar finish the month at just under 69c.

Market Review May 2020

Monthly Market Review – May 2020

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How the different asset classes have fared: (As at 31 May 2020)

1 Bloomberg AusBond Bank 0+Y TR AUD, 2 Bloomberg AusBond Composite 0+Y TR AUD, 3 Bloomberg Barclays Global Aggregate TR Hdg AUD, 4 S&P/ASX All Ordinaries TR, 5 Vanguard International Shares Index, 6 Vanguard Intl Shares Index Hdg AUD TR, 7 Vanguard Emerging Markets Shares Index, 8 FTSE Developed Core Infrastructure 50/50 NR AUD, 9 S&P/ASX 300 AREIT TR, 10 FTSE EPRA/NAREIT Global REITs NR AUD

Financial markets continued to rally in May, continuing on from the momentum seen in April. Share markets, both in Australia and internationally, rose and the Australian dollar appreciated as risk sentiment improved. Government bond yields largely moved sideways over the month, while credit markets gradually rallied as investor confidence rose and central banks continued their support.

Cash and Fixed Income

Interest rates remained on hold in May, with central banks already having lowered rates as much as reasonably bearable. Bond markets generally traded sideways over the month. Credit markets rallied modestly particularly after the US Federal Reserve began buying credit exchange traded funds (ETF’s). There remains an ongoing debate about how effective central bank intervention will be, in the short term central banks can help support confidence and liquidity. In the longer term its solvency that counts, which will be driven more by the state of the economy, and less by central bank intervention.

Australian Shares

The Australian share market extended its rally with another gain of 5% in May which was welcome news by investors. To some extent this growth can be attributed to the Australian government getting the Covid-19 pandemic under control with markets looking forward to the prospects of a quick reopening of the economy.

We would offer some words of caution to those expecting significant additional gains in the near term from today’s levels. The Australian share market is trading on a rich valuation multiple relative to its history. Additionally there remains considerable uncertainty about the scale and scope of the recovery in the economy, even with a promising beginning.

Within the share market we witnessed a shift from healthcare and tech and back to the banks as well as some of the more economically sensitive sectors.

International Shares

International share markets continued to recover in May, supported by the substantial and coordinated fiscal and monetary response to the coronavirus globally and the prospect for social distancing measures to be eased in a number of countries.

As with the Australian share market, it should be noted that a lot of good news is already in the price with valuation levels high relative to longer term historical norms.

While Australia has handled the Covid-19 crisis reasonably well, the same cannot be said for America, home of the world’s largest and most important share market. Unfortunately it seems likely that there will be a second wave of infections as the US economy opens up. This fact, along with the potential for volatility associated with the upcoming US elections is keeping us a little cautious about both US share market generally.

The Australian Dollar

The Australian dollar continued to rally in May. The Australian dollar was also supported by resilient iron ore prices and a widening in the Australia/US interest rate differential (with the Australian 10-year government bond yield now higher than the US 10-year government bond yield).

Disclaimer

The information contained in this material is current as at date of publication unless otherwise specified and is provided by ClearView Financial Advice Pty Ltd ABN 89 133 593 012, AFS Licence No. 331367 (ClearView) and Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, ClearView and Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by ClearView or Matrix. While due care and attention has been exercised in the preparation of the material, ClearView and Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.

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