< A winning combination of ShareAnalysis plus financial advice
“With ShareAnalysis I can see the company’s ShareAnalysis Score rating immediately, based on its debt/equity, return on equity, its cash flow. I can see what percentage of earnings is paid out as dividends, everything. It’s wonderful”
Valerie is a SMSF trustee, financial advice client and ShareAnalysis member. She took the time to share her experience using ShareAnalysis in conjunction with professional financial advice.
When it was time for Valerie to look at her superannuation fund, she found it a confusing and fascinating exercise. While she was a seasoned investor in the stock market, Valerie did not know a great deal about the financial planning and advice industry and superannuation funds.
One of the issues Valerie encountered when she first decided to seek the help of a financial planner was that the ‘advisors’ did not fit in with her idea of advisors.
“I’d go to see them, brief them and answer their questions, only to find that when they did give me a document that really wasn’t specific to my needs. Much of it was a template, on which they’d made a few tweaks. It wasn’t personal to me. I was slotted into one of a few ‘profiles’. And for that I was charged a fee and recommendations were made to purchase managed funds from the planner’s list.
“This happened a couple of times in the last decade and in the course of it I decided that it made better sense for me to handle our investments directly, with the help of financial advisors and full service stock brokers”, Valerie said.
Valerie finally settled on three advisors, each with their unique set of strengths. The criteria for their selection were integrity, honesty, reliability and efficiency.
“One has a good strategic mind and has access to research for small and mid-cap companies. The other tends to go with the ‘blue chips’ - the larger companies - as that is what the firm’s research is focused on, but they also have an international division. The third is flexible, cautious and conservative, somewhere between the other two, is willing to check data for further discussion and is a good foil to my impulsiveness sometimes,” Valerie said.
“A quick efficient response to queries is also important and they all have the backup to provide this”, she added.
With three different types of advisors, Valerie gets the perfect combination of advice.
Even under the guidance of advisors (and before ShareAnalysis), Valerie has always been the driver of the relationships. Valerie admits that she has ‘good commercial sense’ and a good ‘gut feel’ about some businesses, but needs assistance with their accounts.
“When deciding on a company in which to invest, I look at the macro economy, the political situation, the sector the business is in, and its competitive advantages. I also read a lot of business and analyst articles and research, and chairman and CEO’s comments. I’m not very good at understanding the figures and need assistance with the accounts. This is when the advisors are a boon as they provide me with the answers to questions I raise about the business – is it in debt, if so, how much; what is the yield, has that been increasing over the years; where have the dividends come from – loans or from earnings; expenses etc,” Valerie said.
“If I come across a company that I think has a sound business and possible potential (can’t forecast the future exactly), then I’d call one of my advisors, express my interest, and ask about the accounts. Then, if comfortable, I’d invest, buying at the advisor’s recommended price,” Valerie said.
When ShareAnalysis came online in November 2011, Valerie no longer had to ask her advisors to research annual reports for her. Thanks to ShareAnalysis she was able to work with them in other more strategic ways.
“With ShareAnalysis I can see the company’s ShareAnalysis Score rating immediately, based on its debt/equity, return on equity, its cash flow. I can see what percentage of earnings is paid out as dividends, everything. It’s wonderful,” Valerie said excitedly.
“I realise that ShareAnalysis is quantitative, using the published figures, not qualitative and subjective, which is fine with me. With ShareAnalysis I can have an idea about what the company will look like in six months or so in terms of its debt and cash flow, and if its performance is likely to be sustained,” she added.
Since joining ShareAnalysis, Valerie’s conversations with her advisors are now focused on whether the business fits into the strategy and objectives of her individual portfolios, the intrinsic value of the businesses recommended and the appropriate price to pay for their shares.
“Before ShareAnalysis, when my advisors would quote a valuation and recommend a buy price, I had no reference point. With ShareAnalysis, I have a base to work from and can discuss with them the company’s intrinsic value. It does not mean I won’t buy at above ShareAnalysis’s value estimate, but at least I’m better informed to decide on the risk, and the advisor could have other qualitative information to assist with the decision, such as management of the company, which ShareAnalysis does not cover,” Valerie said.
The advisors’ other major contribution for Valerie now is in their access to technical charts.
“They tell me when the share price is at a particular point, where the market momentum is, its support/resistance levels and the volume of shares traded. Technical information provided by them, together with whether the share price is way above ShareAnalysis’s value estimate, helps with sell decisions, and likewise with buy decisions” she said.