Some thoughts on the Bluechip affair by Peter Dredge, BSc

I’ve been working with a Bluechip Investor with several properties.

I am acting in my capacity as a Residential Property Investment Advisor.

Our joint aim is to weather the current storm whilst protecting my clients’ retirement plans.

The key short term issues we have identified:

1.

Cashflow: arranging new rental agreements now (Well covered by now by Paul Dale et al).
2.

Take control. Reputable rental agents will help here.
3.

Arrange contingency funding to manage the shortfall. See your funder urgently. You must have contingency funding in place.
4.

Reconcile rates, insurance and body corporate accounts immediately. The last thing you need as an investor is a black mark with a credit reporting agency.
5.

Keep your risk management up to date. Do not view this as a discretionary item. If you get sick the whole deck of cards could collapse. See your risk advisor.

The key point is to have access to cash reserves. Business failure is mostly due to lack of working capital. Medium to long term:

1.

Remember why you did this in the first place and that you are in for the long term. Review your portfolio in relation to your long term plans. Specifically: what is your desired income in retirement (future value)? $50,000 in today’s dollars will require an income of around $110,000 in 20 years to have the same spending power. You will need net investment portfolio of around $1.4m (assuming 4% inflation and 8% return in the income phase of your investments). Take a reality check and review how you would cope on $20,000 joint income tomorrow, if you have no home mortgage. A good planner should be able to help here. To date you have been seeing sales people not planners.
2.

Keep your head! Fire sales will help nobody. I see most groups with structural issues are seeking further information. Having been in the building industry I question any delay that can lead to further deterioration of the building. Take advice here as to how to resolve these issues and protect your investment at the same time. Be aware that the vultures are circling looking for bargains. Be wary of low quotes on your property.

The key people in your “circle of advice” right now:

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Lawyer (legal matters)
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Accountant (tax matters)
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Funder (bank or mortgage broker)
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Action Group (join now)
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Risk Advisor (protection of your estate)
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Planner (where to from here?)
*

Friend/mentor/shoulder to cry on.

There will be other advisors particular to your situation. Be wary of free advice. Look for written statements of advice in all areas. As of 29th February, all advisors in the financial services area will be required to have a disclosure document on hand outlining specifically: their areas of competence, their experience, associations and relevant interests. Planning: Some key points to watch for:

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Is the whole process transparent? Is the plan based on full, correct, pertinent information? In other words, was sufficient information gathered to competently make recommendations regarding your financial future?
*

Is the plan relevant to your targets in retirement with a specific program to get you there?
*

Does the plan outline the investment risk and account for your specific risk profile?
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Does the plan keep you fully informed? Is full due diligence in place to make sure your risk is reduced and that you have all the required independent information to make a good decision.
*

Does the planning process involve your other advisors at the right time?
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Most importantly: does the plan involve an ongoing monitoring process to keep you on track. Conditions change continuously and will have an effect on your future directions. Do you have easy access to ongoing advice as required?

The above list is not comprehensive.

My observation is that a number of very important basics have been missed in the Bluechip program.

Don’t panic, seek help! As anyone who has been through a rough patch in business will tell you, it’s not the end of the world.

It just seems that way at the time.

I am more than happy to offer a free consultation to any individuals of the investor group to see whether we can help.

If I feel that we can be of any assistance I’ll offer that with no pressure or obligation.

Cheers and good luck
Regards Peter Dredge BSc
Professional Investment Services, (NorthshoreSuite)
1Level 16 / 48 Emily Place
Auckland 1010
Ph: 303 3305
Fax: 303 3306
peterdredge@nzpis.com

Someone said recently “The only difference for investors between the horror of Blue Chip disappearing with their money and the Titanic going down is that there was no band playing as they were sinking.”

For years Professional Investment Services has been proud of the fact that our model is about as close to Blue Chip as a apple is to an orange.

Basically they are both food, the are both fruit as well which is often where the confusion begins. Ultimately though we have totally different underlying values.

We have never been a company to criticise our competition but now when it is perfectly obvious to all concerned how bad this company collapse is we think its really time to tell you how Professional Investment Servces are totally different.

The main point is that if anything ever happened to PIS and you were one of our property investors (remember we have people who invest in all types of investments), your money is totally yours and secure in a property in your name.

Here is how we work. (This is relevan to our property investors only as the question is related to property, the process is idential for other investments as well however you would obviously not receive rent if you did not own an investment property)

1. Firstly we are Financial Planners, this means we only recommend investments that are appropriate to meet our clients goals once we have completed a confidential needs analysis including a risk profile and our advice is made in writing.
2. We don’t hold deposits on your behalf like some companies. All deposits are held in solicitors trust accounts
3. We don’t collect rent from your property and put it into our account. Your rent is collected by you or a property manager who also operates a trust account.
4. We use registered valuations from independent valuers, not estimations.
5. We don’t have high overheads. Chances are that if you have heard of us, it is through a referral, an education course or telephone introduction.
6. We don’t recommend just one style of property. Essentially each clients situation is analysed and based upon your information we recommend the type of investment that is appropriate to you. We have no bias towards on investment or another.
7. We have built our company to operate with the same stringent governance as a financial planning company has. That means that we are solid with most likely the best back end system in the market.
8. We want you to sleep at night and we want to sleep too.

The last point is our whole philosophy. Whilst we want to be profitable, have a good business and be able to have holidays and provide for our children like everyone else, we won’t build a business that is so, ‘sell sell sell’ that we struggle sleeping. None of our Directors are ex bankrupts, and all of us have a good public record.

Life is bigger than just collecting money. That’s why we want you to get wealthy. So that you too can not have to worry about financial matters and can focus on bigger things, such as family, health and maybe giving back to the community.