TW3 – Mr & Mrs Claus(e)

Seasons Greetings!

From Jonathan, Nicholas, and the team at Stanford Brown, we wish all of our readers a safe and happy holidays!

We will be taking an extended holiday break, but will be back in your inboxes on the 18th of January!

Market Wrap

It was another wildly volatile week for the markets, with a slew of political developments adding further uncertainty to the investment horizon. A weak jobs report out of the US, coupled with an escalation in trade tensions, caused US shares to tank last Friday. Investors have been particularly sensitive to headlines in recent weeks, with the next report or tweet often spiking a minor rally or sell-off. A prime example of this was on Wednesday when Trump threatened Democrat leaders that he would shut down the US Government if he didn’t get $5b USD for his wall.

All this government spending with no regards to how it will be paid for got us thinking of the comic below!


2018 was the year that volatility returned to markets after years of smooth sailing, and we’ve greatly enjoyed keeping our readers up to date this year. Please let us know if you have any suggestions for the Market Wrap in 2019!

Finance 101 – The Hierarchy of Investor Needs

Students of marketing and psychology may be familiar with Maslow’s hierarchy of needs, but what about the hierarchy of investor needs? We came across a pyramid the other day that neatly aligns with our investment philosophy at Stanford Brown.


As we can see, the most important need for investors to address is their behaviour. Even the best investment strategies will lose money when not followed correctly. The most important role of an adviser is to prevent their clients from making behavioural mistakes (e.g. guiding clients through volatile periods when the temptation to sell is at its greatest).

After investor behaviour, asset allocation is the most important need to address. The allocation between growth and defensive assets must be tailored to the goals of an investor, otherwise they risk not achieving those goals. Knowing when to sell out of an asset class is often more important than the investments within the asset class – a strategy that beat the Australian share market by 10% in the GFC would still have lost nearly 40%.

Fees & transaction costs are more important than investment selection, as after fee returns are what matters for investors. A fund that outperforms the market by 1% each year but charges 1.1% isn’t of much value to an investor. Finally, an investor needs to be conscious of the tax implications of their investment strategies, just look at Labor’s rhetoric for the next election!

Christmas Comes Early!

Still looking for that perfect Christmas present? Look no further! We have collated each instalment of our Finance 101 articles in one convenient location!


Please speak to your adviser if you would like a booklet to be sent to you!

Royal Commission Round-Up

2018 was a seismic year for the wealth industry, with Kenneth Hayne and the Royal Commission exposing the sorry state of affairs in corporate Australia. The Royal Commission saw it all, from fees for no service to selling worthless insurance products to the most vulnerable members of society. And who can forget charging life insurance premiums and advice fees to dead people!

The bank CEOs strolled into the Royal Commission with the same old mea culpas and promises of change that we’ve heard over and over again. Commissioner Hayne’s interim report surprised many, calling for stricter enforcement of existing laws rather than proposing new regulations. Time and time again, the regulators were found to be sleeping at the wheel.

In a promising sign, the regulators have taken to Hayne’s recommendations, with the Australian Prudential Regulation Authority dropping the hammer on IOOF (Australia’s largest non-bank adviser group) last week after years of dawdling. APRA also announced that they would be cracking down on poor performing super funds during the week. Hopefully this is a sign that our regulators will use the Royal Commission as a mandate to tidy up the financial services industry.

The service of providing quality financial advice is indeed a noble one, however our industry has been bastardised by several rotten eggs and perverse business models. When Stanford Brown provides investment advice we do not receive commissions, and we have a full time compliance officer to ensure that our practices are in line with not only the letter of the law, but the spirit of the law also. Our industry is overdue for radical change, and Stanford Brown welcomes this development.

The Secret to Happiness? Swapping TV for Workouts

Does money buy happiness? Researchers at Harvard tried to answer that question by observing the habits of millionaires relative to the general population. The study found that although millionaires spend their days the same way as others (working, cooking, etc), how they spend their leisure time may explain their higher life satisfaction.

As we can see below, millionaires tend to spend more time engaging in active leisure such as exercising and volunteering than passive leisure such as relaxing or watching TV. Active leisure activities tend to be more fulfilling than passive leisure activities, with the researchers showing that time spent on active leisure is a robust predictor of the happiness gap between millionaires and the general population.


*Minutes spent per day

One should note that the subjects of this study self-reported their answers, and we can’t rule out that millionaires overestimate how much time they spend exercising, volunteering and praying!

When There’s A Will, There’s A Way (Even For The Estranged)

Imagine explicitly excluding someone from your Will, only for them to receive part of your estate after you had passed away! This occurs more often than you’d expect, with a Sydney man recently receiving $75,000 from his deceased mother’s estate despite being “categorically” excluded from her Will.

In New South Wales, eligible persons (spouses, former spouses, children, etc) can make a claim on an estate if they have been left with an inadequate provision for their “proper maintenance, education and advancement in life”. A judge can potentially overrule an explicit wish to exclude an individual if they have reason to believe that the claimant has not been given an adequate provision.

So how can we ensure that our estate is distributed how we intended? Uther, Webster & Evans have written a comprehensive note on the subject matter, and offer the following advice:

  • Get quality advice when drafting your will
  • Draft a Section 100 statement if you are explicitly excluding someone from your will
  • Include a provision in your will, as a judge is often less likely to overturn a will that has a provision of some sort

Word of the Year 2018

When reflecting on 2018, what word would you use to encapsulate the year? The Collins Dictionary went for the very topical “Single-use”, whilst the Oxford Dictionary’s choice is “Toxic”. The Australian National Dictionary Centre went for “Canberra bubble” as Australia’s word of the year, reflecting the discontent with the Prime Minister’s office becoming little more than a merry-go-round.

Our favourite entry has to be from the Cambridge Dictionary “Nomophobia”, which refers to the anxiety one feels when they are separated from their phones! We certainly know a few nomophobes!

Who Am I?


But who did this man grow up to be?


Pic of the Week – If Jesus Was Born in 2018


Video of the Week

Video of the Week #2

It’s raining teddies! The Teddy Bear Toss is a rapidly growing festive season tradition at ice hockey games in North America, where fans support children in hospitals by throwing plush toys onto the ice. The Hershey Bears set a new record for a teddy bear toss last week, with the crowd of 10,000 donating 35,000 teddies!

Have a great weekend!

Jonathan Hoyle, CEO & Nicholas Stotz, Investment Analyst

Stanford Brown

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