Insurance

Oops! I Bought an Uninsurable House!

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Wellington leads New Zealand in coffee, craft beer, gin, bucket fountains … and the very best fault line! We win at everything. And now also add high insurance premiums to that list. Yay!

 

Historically, our insurance premiums have not reflected the fact we’re living on such a lustrous fault line—but they are starting to. Insurance companies are very nervous about what an earthquake in Wellington would cost them and have started to prepare for a shaky day ahead.

 

Of course, they prepare for that day by putting premiums up and by making sure they have a comfortable level of exposure in Wellington i.e. each company will only take a certain number of commercial buildings and/or houses.

 

What this means for me as a homeowner/buyer/seller is that I need to give more thought to my house insurance. Premium increases are a given, but the good news is that home insurance is still available.

 

When buying we obviously just need to plan ahead of time by arranging cover for the new house.  

 

Marie from Thorners says it best: “Don’t expect to ring an insurer and get cover sorted the day you take possession of your new home!” 

 

We encourage people to make sure they can obtain insurance cover before they enter into an agreement to buy a property. This includes undertaking your due diligence when buying any house to understand its full history, particularly if the property has previously suffered form earthquake damage. Irrespective of whether you think it might only be cosmetic, before your cover is confirmed, insurers will ask for a lot of information like claim reports, scope of repairs, evidence the repairs have been completed and so on. All of this takes time, so don’t leave it to the last minute.

 

Velocity has a range of companies we have relationships with to help with house insurance, so please ring if you are running into difficulty or need a second opinion. 

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 


Insuring Your Wellington Property

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We’ve been talking about “the big one” hitting Wellington for decades and it seems the insurance companies are more worried about it than most. Stevie explores what this worry means for insuring your home in the capital.

 You may have heard last week’s announcement from IAG (and its associated brands) that they are further limiting their new cover in the Wellington area. If you’ve lived in the Wellington region for a few years, you will know that this isn’t particularly a new announcement. Since the Kaikoura earthquake, IAG undertook a conservative (a.k.a. risk averse) approach to Wellington homes.

 

It is, however, a good time to discuss what this means for you as a Wellington homeowner.

 

Firstly, we’ve spoken to our Fire & General Insurance Brokers and it is business as usual. There are still companies that happily insure Wellington homes.

 

Secondly, we’ll be keeping our finger on the pulse for any changes with other insurance companies and keep our clients informed as always.

 

Finally, if you are concerned about the insurability of your home or rental properties, give us a call and we’ll talk it through with you.

 

A Quick Guide to Personal Insurance

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Insurance can get confusing. Huge policy documents, insider lingo, fine print everywhere. It’s supposed to provide peace of mind, but can instead just play havoc with even the sharpest samples of grey matter.

So, here’s a 101 guide to understanding your personal insurance.

 

In New Zealand, there are four things a person can insure themselves for:

 

1. Life

 

Why? To repay debts, cover funeral costs and give your loved ones the financial freedom to properly grieve.

 

Who? This pays a lump sum to your estate or the person of your choosing.

 

2. Trauma

 

Why? Give yourself space to recover, whether or not you’re off work for a prolonged period of time.

 

Who? This pays a lump sum to you if you are diagnosed with a specific illness.

 

3. Income Protection

 

Why? Unfortunately the bills still come in if you’re unable to work due to injury or illness. This will pay a percentage of your income (or mortgage repayments) until you’re able to return to work.

 

Who? This pays you a monthly sum.

 

4. Health

 

Why? If you need non-acute surgery, you can skip the public queue and go straight to a private hospital.

 

Who? This pays the medical professionals that are looking after you.

 

Finally, it’s important to ensure that your cover is relevant to your life. Here are a few examples of life events that may impact the relevance of your cover. If any of these apply to you, give us a call!

•          You have new additions to your family

•          Your kids leave home

•          You get married and/or divorced

•          Your job changes

•          Your salary changes

•          You have had any health issues (more than just a GP visit)

•          You have set up a new company or trust

•          You have bought or sold a property

No investment decision should be taken based on the information in this blog alone

Debra’s VERY Real Experience of Health Insurance

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By Debra Halton

As I sat recovering from my operation at Southern Cross Hospital, I was very

appreciative of Velocity’s work health insurance scheme, ultimately making my

elected surgery possible.

I was also struck by the fact that I sell health insurance and had never visited one

of the hospitals properly before — my eyes were opened to a whole new world.

And I now understood why clients’ favourite insurance is health

insurance — something most of them at some stage get to touch and use. In fact,

apparently, one-in-five New Zealanders have health insurance, so it’s more

common than I realised.

Years earlier, I had been told that in the future I may elect to have a surgery

done. I investigated the options. If I wanted to use one of the leading surgeons in

New Zealand, I would have to go private and, without medical insurance, this

would cost me personally tens of thousands. Going through the public hospital

was an option and much cheaper (i.e. free) but I would have to have an older

method of surgery and would not have the same flexibility with dates and times.

Plus, my recovery would be much longer.

So, because of all this, for years, I did nothing and grew increasingly

uncomfortable until finally Velocity came to the rescues and put the health

scheme in place. The beauty of a group health scheme is that it covers all past

health conditions, whereas a new individual scheme taken out by just me would not.

I had never been to a private hospital before and could not believe what a lovely

experience it was. From having my own private room to not being interrupted all

night (unless it was for a five course meal, which unfortunately I felt much too

sick to enjoy eating), I really appreciated the high quality of care. I felt very well

looked after. I also had the option to stay an extra night when I was not feeling

well and did not feel I was being rushed out to make room for a bed.

So, thanks again Velocity for making it possible for me to get the surgery I

needed with a top surgeon and in a beautiful hospital. I am well on the way to

recovery. I feel very fortunate to have been able to do this.

If you have a business with five staff or more you could also look to put a group

health scheme in place. It used to be that you required a large number of staff to

be able to access these schemes but that has changed.

If you would like to know more about health insurance, please speak to your

Velocity Financial Adviser.

Debra Halton is a Registered Financial Adviser with Velocity Financial. No

investment decision should be taken based on the information in this blog alone. A

disclosure statement is available free of charge upon request.

FAQs: What happens to my life insurance if my partner and I seperate?

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We take insurance policies out our partners to mitigate the financial effect on our lives if they die or become ill. If I am the life assured, that makes my partner the policy owner. My partner receives the sum money my life is assured for if I die, and vice versa.

“If they own my life insurance policy, does ownership change when we separate?”

Your separation may or not affect the ownership of the life insurance policy. If a couple separate and there are kids involved then often the insurance stays in place and the ownership remains as it was for the benefit of the kids. Essentially, if my ex-partner dies, I am still affected financially.

It can get a bit sticky when the separation is not amicable. You don’t control your life insurance policy, so if you and your partner separate they can choose whether or not they want to shift the ownership.

 

“How do I get ownership of the life insurance policy when it’s owned by my ex! I now want it as my health has changed since I took the policy out originally and I could now be uninsurable.”

The short answer is you can’t. You don't own or control the policy the policy owner controls it.  As above, they can shift ownership to you if they agree to that.

 

The solution? Always get professional advice before taking out a life insurance policy and make sure you understand the ins and outs of the policy ownership.

 

Graham is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request

What's up with the banks?

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It’s 2018 and change is afoot in the banking world. But, don’t worry, we can also expect much more of the same, says Graham.

Firstly, all banks are now lending at 65 per cent on second-hand investment property. This increase came about on 1 February and certainly helps if you are wanting to build a portfolio. Second, it’s good to note that all banks are also lending up to 85 per cent on new build investment properties. Remember, a second-hand property (by the reserve bank rules) is any property that has had a code of compliance for six months or more.

Apartments .... We have one bank in New Zealand who won't lend at all on off-the-plan apartments and another who will go to 85 per cent. Please notice I didn't say who ... ring us and find out.

Another point of interest in the banking landscape is that, in 2018, we will see a continued exit of banks from giving advice in the investment and insurance space. There is big pressure building in Australia for banks to act in the best interest of their clients which is difficult to do when you only have your own products to wedge clients into. This pressure will continue to flow through to the New Zealand subsidiaries. This will have implications for KiwiSaver as well (for example, ANZ, strangely as New Zealand’s biggest bank, is also our biggest manager of KiwiSaver funds).

This news on investment and insurance advice is good news for Velocity and all other independent financial advisers. Our place with multiple product suppliers is what will continue to be demanded and expected, not just by the market, but also the regulators.

 

Graham Goodisson

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request.

The "What If?" and "Would You Rather?" Game

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When we’re young, we all feel invincible. Life is pretty good. Most of us have some disposable income and live it up. But there comes a time when we all need to ask the “what if” questions, says Debra Halton.

 

Sitting across from a young couple who had just purchased a home, I got them talking playing the old “What if …?” and “Would you rather …?” games. What if one of them got seriously sick, would the healthy one rather continue working in order to pay the bills or to have the choice to be there for their sick partner. What if one of them died? Would they rather be able to take some time off work or would their finances be such that they’d need to rush back to work?

 

Discovering what people need and what they really want and raising some very real “what if” scenarios is my job. And it’s important. I know lovely people who never had that question asked of them before tragedy struck. For example, last year, a father of four young kids dropped dead suddenly. Overnight everything changed for his wife and children. There was a long silence on the end of the phone to the insurance company when the wife realised there was only $50,000 of life insurance coming to the family. She was left to grieve and then bear the burden of housing, clothing and feeding her kids single-handed.

 

Some say that Kiwis don't’ like to discuss two things—sex and money—so I can hear the audible sigh as I write this piece on insurance. For, although it’s not sex, it’s most definitely about money. And our reluctance to talk about insurance is even more pronounced when it comes to insuring our lives: If I stopped people on the street and asked about car insurance almost everyone would say a resounding “yes”, yet if I asked about protection for you and your family if something tragic should happen, only 40 per cent would nod their heads.

 

So, I know these “what if” questions are hard, but the “would you rather” game gives us an opportunity to reflect on what we value most and how we can protect them best. The hope with good insurance is that you’ll never need to use it. But if you did, the people who matter most in your life will want to thank you for having the courage to confront those tough “what if” questions.

 

If you’d like a chance to throw around some “what if” scenarios and review your personal insurance, let’s grab a coffee—my shout! Would you rather have it black or milky and foamy? Perhaps soy or even a hot choc?

 

Debra Halton is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

When money is tight, should you drop insurance?

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With Christmas approaching, now is the season of strained bank balances. So is dropping insurance policies a good way to watch your pennies? Simon says no.

My eldest has decided he wants a turtle for Christmas. These are not the cheapest items to get, let me tell you. So, having a birthday close to 25 December, he's accepted the fact that this will be a combined present. Very kind of him.

 

If you’re considering getting a turtle here are the costs to expect: First, they need a habitat. They need a UV light to live (this isn’t a “treat” for them, it is a NECESSITY). Your tank will need a light and an area for them to bask in. You need to have a docking station for them to crawl out of the water and bask in their lighting (also mandatory). Heavy duty aquarium filter, a very specific habitat, water heater ... the list goes on.

 

For the full turtle set up, you won't see much change from a grand—and that doesn’t even include the turtle!

 

Next question is what type of turtle to get. Painted? Red ear slider? Eastern box? Yes, these are all types of turtles. I haven’t started going crazy … yet.

 

My son has been saving like mad for months, meticulously putting ticks on the chalk board each time the dishes are done, room is tidied, washing is away.

 

He's also very understanding that mum and dad have all sorts of unavoidable life bills to make (regardless of the holiday period) like a mortgage, food, petrol, day care ... and, boy, does that list go on.

 

I’m sure I’m not alone in facing some financial pressures at this time of year. For many, these times might mean skipping a few meals out (and drinks), cutting back on subscriptions, uploading some old treasures to Trade Me and maybe even cancelling a policy or two.

 

Whatever you do to save your pennies, don't do that last option. You never know what’s just around the corner. And if things do happen to turn sour, those insurance policies could be the most important asset you have.

 

What have you arranged to be left over when you go? Is the mortgage covered? Kids university fees accounted for? What about if you get sick? Income protection? Trauma?

 

Most of the folks I talk to about insurance want to look at what they have in place because somebody they know had something frightening happen. These events can kick you into gear to get covered. But don’t wait for those events to spark you into action, now’s a good a time as ever.

 

So, where can we help?

 

As unaligned brokers, we provide free, confidential, unbiased reviews of people’s insurance. These chats are frank discussions about what you should consider having in place. We’ve found that people can often save up to 20 per cent on their premiums simply by having a chat with us.

 

And maybe you’ve already got your insurance sorted. I'm happy to arrange a special something for you if you refer a friend (that draws down a policy). I've given away plenty of awesome referral gifts recently … but, please, don’t mention turtles!

 

Get sorted prior to Christmas (and do keep in mind portion distortion at the table).

 

Simon O’Neill is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

Update on the Sovereign Insurance sale

New Zealand's largest insurance company, Sovereign (of which Velocity Financial supports), has been sold with the new buyer being AIA. 

 

This sale will be finalised mid next year. Sovereign's history to become New Zealand largest insurer has involved amalgamating 27 companies (I think that's the number) into one big one. So this is another step in that process of a smaller insurer being absorbed into an even larger company.

 

What does this mean for you?

 

All existing policies and conditions will be honoured as they are legal binding contracts. In the insurance land, this purchase is viewed as a good thing with improvements for clients to come.

 

We will certainly be keeping all existing Sovereign clients up to speed.

Public Waiting Lists

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Getting sick isn’t much fun. Being placed at the back of a long public waiting list is even less fun. Graham shares his experiences with navigating the line between health insurance and public health care.

This is not an insurance sell; just observations from my personal experience.

 

There has been plenty of talk leading up to the election about the Southern District Health Board and waiting lists, particularly in reference to those dealing with prostate cancer. The delay in treatment and assessment has led to a shortening of life for many of those concerned.

 

What can you do about it? And how do you manage that for you and your family?

 

Well, if you are in a critical condition, the New Zealand health system is excellent. If you look like you are going to die within the next week then you will be looked after. Also, for some congenital issues, the New Zealand health system is brilliant. As many of you know my son was born with a cleft lip and palate, he's now 23 and the public health system has been excellent during the multiple surgeries and ongoing dental care. However, many years ago, my mother was diagnosed with breast cancer and went on a waiting list—not so great from our health system. 

 

For my family, private health Insurance made no difference for my son and his surgery (his congenital birth conditions are not covered) but it saved my mother’s life. Private health insurance meant she didn’t need to rely on her position in the public waiting list, her treatment was paid for and we dodged some scary consequences.

 

The key to making sense of the New Zealand health system is learning to dance between those two extremes of having great public health support and being shoved to the back of a long waiting list.

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

The importance of being earnest about insurance cover

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Just because you were insured yesterday, doesn’t mean you’ll be covered in the future. Alex shares a powerful story that illustrates the importance of an annual insurance review.

You may have read the story of the Auckland mother who was suddenly struck with Guillain-Barre syndrome in August of this year. She had a trauma insurance policy in place for over 20 years and was devastated to find that her insurance policy did not cover Guillain-Barre syndrome.

 

Trauma insurance is a complicated product compared with life insurance and there is a big difference between the types of cover and the conditions covered in your policy. Many people assume that if something traumatic happens to you then your trauma insurance will cover it. However, not all policies are created equal and it pays to check the conditions listed in your policy. Cheap polices may cover five to ten different conditions, while the quality insurance cover may cover up to 40 different conditions with better policy wordings.

 

In this instance of the women with Guillain-Barre syndrome, her policy had not been changed since she had originally taken it out over 20 years ago. With the advances and changes in medical treatment over the last 20 years her policy wording would have become outdated and covered conditions that were considered traumatic at that time. So, outside influences can influence your cover, even if things from your point of view haven’t changed.

 

The good news is that trauma cover policies are typically getting better and better with more conditions being covered.

 

So, what does all this mean for you and me?

 

The above case highlights the importance of reviewing your cover annually. Making it an annual habit makes sure it gets done and we can do much of the leg work for you.

 

This annual habit to update your insurance will ensure your insurance reflects any industry changes or changes in your life situation and, most importantly, that your insurance cover has the highest likelihood of payout.

 

We are always happy to review your cover or simply just have a chat about what you need.

 

Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

Are you a Sovereign client? 

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Graham explains what the top-level changes at Sovereign mean for clients.

You may have heard, or not (if you prefer the entertainment sections of Stuff.co.nz rather than the business section), that there are changes afoot at Sovereign. 

 

Sovereign is New Zealand's largest life insurer. It also has a mortgage product. Both Sovereign and ASB are owned by Commonwealth Bank of Australia or CBA. 

 

CBA has signaled the possible divestment of its life insurance businesses in New Zealand and Australia is basically being driven by the increase in compliance for insurance sales in Australia and that compliance is coming to New Zealand.

 

In a nutshell, banks have changed their minds and now no longer want to own insurance companies.

 

What does that mean for those of us who are Sovereign Insurance clients? Basically, nothing.

 

It’s business as usual for Sovereign and, if they are sold, then the new owner, by contract law, must honour all the existing policies that Sovereign holds. In fact, new owners could bring some innovation and new ideas. 

 

If you want more information and/or if you think it’s time for a review of your existing cover, please contact us.  

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Who owns your insurance?

Alex is our resident detail guy, which is handy when talking about the finer points of insurance. In this case, he investigates the importance of getting policy ownership right … and tweaking it to suit life changes.

 

Whenever you take out insurance there is a simple question that can have drastic consequences to the end result come claim time:

 

“Who is the policy owner?”

 

In most cases this will be you, your partner, your business partner or sometimes your parents/siblings. Assigning ownership to the right person/s is a great start but life changes can also require a re-look at this ownership structure.

 

For example, you might have taken out life insurance when you were still single and now you have a partner and kids and you’ve started a business. In this case, you will definitely need to re-look at your cover and ownership of these policies.

 

For further explanation, let’s look at a common example:

 

·      Joe and Mary are married and have two kids. Joe owns $500k of life cover to set up his kids in case he is not around anymore.

 

·      Years down the track, Joe and Mary decide that being married is not the way forward and both go their separate ways.

 

·      Joe stays single but Mary remarries a few years later to John who already has three kids.

 

·      Joe suffers a serious trauma and dies not too long after. Sorry about the tragic story but at least he had cover …

 

·      Life insurance proceeds are paid out to the policy owner.

 

 

If Joe never changed ownership, his policy is still owned by Mary, meaning the $500k is paid to Mary.

 

Mary can decide where that money might go. Joe’s kids might get it or Mary might decide to share it with her three stepchildren as well—probably not what Joe wanted.

 

Needless to say, this is a far from an ideal situation. And it wouldn’t be hard to imagine an infinite number of permutations of this scenario that could make things even worse.

 

So this all boils down to the fact that, aside from insurance being important, setting up the ownership of that insurance, and tweaking it to suit changes in life circumstances, is probably just as important.

 

This sort of detail is the stuff a good insurance adviser will talk you through. We’ll help make sure that what you intend to happen, does happen if and when it’s time to make a claim.

 

Alex is our insurance expert in the office and would happily help out with all insurance questions you would have in regards to this article or insurance questions in general.

 

Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

 

Baby on the way? This insurance can help

Debra and Dai encourage soon-to-be-parents to consider extra insurance as part of their nesting checklist.

 

Insurance typically isn’t the first thing that comes to mind when thinking about starting a family, let alone pregnancy or maternity cover. But, like most insurance policies, pregnancy insurance could save you money and give you piece of mind in case something happens to you during your pregnancy or even after you’ve given birth.

 

Being mothers ourselves, we have experienced both the joys of pregnancy and the excitement of becoming first-time parents. But it can also be an emotional rollercoaster for the mother as our bodies adapt to all the myriad of changes.

 

During this exciting time in your life, you may not be thinking about what challenges could lay ahead but let’s be honest we can never be too prepared and in this day in age, it pays to be.

 

So what is pregnancy insurance?

 

In most cases, New Zealand’s public health system is well equipped to deal with pregnancy and it’s unlikely you will need additional assistance if you have a normal pregnancy. However, in some circumstances, you or your baby may experience health challenges along the way and this is where pregnancy or maternity cover can assist. 

 

As an example of a scary unforeseen event that could happen, what would you do if your new born was diagnosed with cancer or has a major health issue that requires full time care? What would happen to your income? Would your spouse be able to take care of you and your baby and look after your household expenses? These are all things we don’t want to think about, but, tragically, these situations do occasionally occur. Thankfully there are additional insurance options available to assist you through it or just give you peace of mind.

 

There are a number of insurance companies who offer additional pregnancy or maternity benefits that will cover certain medical bills due to pregnancy complications. And, if your child becomes critically ill, some insurers will also pay you or a family member to take time off work to care for your sick child.

 

When these sorts of events occur, the last thing you want to deal with is financial stress. Knowing what is out there and making a plan to get appropriate insurance for you and your family could be just the sort of peace of mind you need before tackling this new chapter of life.

 

If you would like more information, please contact our office and we will be happy to discuss the options with you.

 

Debra Halton is a Registered Financial Advisers with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

Funeral Insurance: How to Avoid the Guilt Trip

Alex wades into the murky waters of funeral insurance vs. life insurance to bring some clarity to a conversation often thick with emotion.

Recently, during an insurance review, a client had an important question for me: “I have bought some funeral insurance over the phone, but I don’t know what it does? Could you help me understand it?”

Needless to say, I was quite surprised not only that someone even offered such a complicated product over the phone but also that it was purchased without full knowledge of what it was. On the other hand, the client felt obliged to take it out. The phone salesperson knew exactly what to say to use guilt to make the sale.

Funeral insurance might seem a straightforward product, however, the mechanics behind it are not. Funeral insurance is a sort of insurance with hardly (if not any) underwriting requirements. This means that, whether you’re healthy or unhealthy, you will pay the same price based on age, gender and smoking history. Because of the lack of thorough health checks, it is quite expensive for everyone.

In this particular case, the funeral insurance was 15 times more expensive than regular life insurance! The reason the client purchased it was due to their love of for their children—they did not want their passing to be a burden on their family.

I finished the review by explaining that life insurance policies actually have a funeral benefit or early payment of benefit built-in. Your family will have access to an advancement of up to $15k upon receiving a notification of death. So, life insurance can have you covered for funeral insurance and all on a much lower premium. I advised the client to cancel the funeral cover as there was no reason for a young, healthy professional to have it.

Moral of the story, if you have any questions regarding insurance policies or know of someone with questions/doubts, come and have a completely guilt-free and obligation-less chat to an adviser at Velocity Financial.

 

Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.