Foxplan - 1996 - 2016

We celebrate 20 years – through some difficult times together.

Over the last 20 years there have been many influential events which have not only had an impact positively or negatively on our company, but also events which have seriously impacted on our clients. We have survived and flourished.  In no particular order I name the top 20

MMP

Has it really enhanced democracy or is government focused to a path of paternalism – away from personal choice and decision making?  Is Government much more cautious due to multi party involvement?  Is political correctness a convenient shield to bold policy?

Y2K

We wouldn’t debate the positive advancement for business of the growing IT contribution.  Y2K was a heads up – is cyber-attack and individual liberty, on report.  When rather than if – and at what cost?  Does ‘paperless’ really mean less thought due to less consideration?

911

The day US lost its invincibility tag and many ignored the risk (Europe) or took the opportunity to reconstruct (Russia – North Korea – China) whilst US went on a social crusade of wanting to be liked, the rest of us lost the US sheriff. (Not for long if Trump becomes commander and chief – which I doubt).

GFC

When the corruption of the US investment banking system collided with the political influence of social housing and the world’s financial markets were shaken to the core.  Many countries, including US and NZ continue to print money and still deflation or inflation have failed to eventuate.

Debt

Personal and government debt in New Zealand is astronomical and growing exponentially.  Families and governments are no longer concerned about expenditure exceeding income.  There will come a day.  $407 billion bank lending 2016 in NZ – 55% is personal.  As a percentage – double what it was 3 decades ago.  (1.7 billion then – 223 billion now – personal debt).

Dairy Conversion

Commodity prices are historically volatile and yet the country has embarked on a single commodity product focus that is dependent on middle class growth in China and India.  The banking sector must have a judgment day coming.  The farmers in crisis will sell, the country must take another hit, or will milk powder prices begin to rise?  Will a potential Labour government bail out the farming industry – now there’s an anachronism.

Baby Boomer Retirement

A quite extraordinary group of people started to receive their state pensions in 2011 – those born in the aftermath of World War II.  The phenomenon will continue for a further 13 years.  Thank you New Zealand, although Muldoon would have been paying me 5 years earlier.  Can enough millennials continue to fund this ongoing welfare for the well-off baby boomers?

Finance Company Collapse

Finance companies were well set up to provide a product and a service to the demographic change (baby boomers).  Except they got too greedy and ignored risk.  Many baby boomers are now a lot worse off, and have the ignominy of experiencing the lowest interest rates on their savings since I can remember.  Investors need to reconsider their options.

KiwiSaver

Michael Cullen got this right, the timing and the design.  The results (numbers of participants) proves the Minister had done his homework.  If only more public policy could be so planned and implemented (and voluntary – apart from the employers perspective).  Unlike student loans which are a ticking time bomb – free credit affects behaviour – it has – habits of debt are now entrenched.

Immigration

Whilst immigration is not a new phenomenon in our society the ‘Australian’ transformation (Kiwis returning is) and the impact of foreign students – initially for education and latterly on work visas, has impacted.  Especially in Auckland.  We need immigrants if we expect to continue funding welfare at current rates.  These kids are bright (they must be) our education system has enriched them – or do they just prefer to live here?

Auckland House Prices

With burgeoning demand and the cheapest and most easily accessible finance in my 50 years involved in financial services, economics 101 says – prices will rise.  They have.  It’s now extending to other NZ desirable places to own property.   Supply and demand is not theory – now we need the Central bank to step in to ‘control’ our commercial bank lending – and they are.  It becomes a cycle of impulse and reaction.

Social Media

Is slowly and inexorably replacing main stream media and the historical means of communication – letters.  The affect is most evident with the young but smart marketers in politics and business are evolving – on demand and online.  So to, a community affect – some good, some not so good.  Online investment trading is becoming the fastest growing ‘business’ worldwide.

Two World Cups

The country had a deserved party in 2011 and we celebrated again 4 years later.  Rugby is a feel good factor for our country – long may we excel.  Arise Sir Ted, the headmaster of our rebirth.  Can we do the three peat in Japan – not sure but many baby boomer rugby stalwarts will be there to see.

Tourism

John Key wanted this portfolio and his focus has proven providential.  A small island(s) at the bottom of the world was once perceived as disadvantageous – no longer.  No. 2 money earner – he was a foreign exchange trader after all.  Perhaps Celia and John can cycle together as and when they exit politics – a sort of Contiki on Cycle replacing the French experience.

Radical Islam

Having a liberal attitude to this threat will certainly mean there is an ongoing price to pay in socialist Europe.  Unfortunately the leadership of their religion and the leadership of the most disaffected countries are seemingly focused to ideology and power as opposed to decency.  Hopefully it stays north of the equator, although the benefits to NZ are obvious – but at a huge cost to the innocents and the disaffected.

China

The BRIC countries of Brazil, Russia, India and China were once ‘emerging markets’.  Goldman Sachs sold billions in these capital market funds (unfortunately they also euchred the world with collateralised debt obligations).  China has emerged – it is no longer reliant on trade, its home market is colossal.  They will slow (and have) but the world has an emerging middle class of an unprecedented size and consumer capacity.  We just want a growing share.

Christchurch/Wellington Earthquake

The cost in life, lifestyle and financial expense is astronomical and ongoing.  The true cost in lost peace of mind, I don’t think will disappear in this generation.  Has it made more people consider their personal risk – I don’t think so, not from my experience.  The change I do see is with the young – their ‘community’ concern is evident.

Financial Advisers Act – Regulation

Following the demise of the finance companies and strongly influenced by worldwide pressure to regulate the finance industry more comprehensively – the governments of the time, have created another burgeoning government department.  The Financial Markets Authority.  Compliance costs FoxPlan $100,000 per annum.  I wish we could point to how our clients have benefited.

‘P’ Houses and Leaky Buildings

Trying to buy a house in Auckland or Wellington at the moment is a costly exercise.  Not just because the prices are escalating due to lack of supply but because the due diligence necessary to manage the risk, get a LIM report, valuation and solicitors fees are necessary for each offer.  The sales methodology of ‘tender’ is a nightmare – and a costly one at that.  Just ask frustrated ‘buyers’ – willing and able to purchase – blocked by cost, compliance and a convoluted purchasing procedure.

Financial Literacy and Capability

I’m not convinced FoxPlan has made any sort of a dent in the poor financial literacy and capability in our community other than with our clients.  Social issues are compounding – many of which are driven by a lack of financial control.  Our intentions are laudable – but we have much to do to make my departure anything like the legacy I was hoping for

Perhaps the next 20 years will be less traumatic.  More like the ‘happy days; of low inflation, cheap housing and full employment.  Then again, I wake up and realise we had no microwaves, or hand held devices, banks didn’t provide housing finance, the government didn’t allow importation of cars (unless you were special) pubs closed at 6.00pm, and towns went to sleep in the weekends, you couldn’t invest in international markets and we sold all our primary produce to UK.

The next 20 years in business belongs to those that successfully provide value and service – a little like the last 20 years and completely unlike my first 20 years of life when ‘cradle to grave’ was the mantra – for which the young are now paying and the survivors are receiving.