Hi Janne, I am thinking of seeing a financial planner but am wary of the cost. Please let me know the advantages for someone with a fairly simple financial situation. I am retired and have most of my wealth in a superannuation pension.
Regards, Diana, Belrose.
Hi Diana,
I saw a client in a similar situation to you yesterday. She had a substantial amount in superannuation and wanted to start drawing from it. She had not had advice on her super for some years.
First, we looked at the components of her superannuation. Virtually all her superannuation was a ‘taxable component’, which meant that on her death – based on the current balance – there would be just under $240,000 tax payable by her only adult child. We have now started a strategy to get rid of that over the years between now and when she turns 75.
We then looked at the cost of her current superannuation account. We were able to save her over $4,900 in fees, and at the same time give her a larger variety of funds and direct shares.
Next, we reviewed her asset allocation. This is the spread between shares, property, bonds, and cash (as well as other minor asset classes). She only had about three months’ pension payments in cash. This meant that had she not obtained advice, she would have been withdrawing from share funds (without really knowing) and possibly whilst the market is falling. This is a sure way to deplete your wealth.
We also discussed beneficiary nominations for her pension. She has a de-facto spouse who is entirely supported by her. She wanted her only child to receive the proceeds of the pension. If the proceeds go to the will and the de-facto contests it, the legal costs for both parties are paid from the estate. If the beneficiary is nominated under a binding nomination in the pension, the trustees of the superannuation pension make the decision and will almost always proceed as instructed. If not, there is no cost to the estate. I also explained that the tax is slightly less if paid to the estate than to an adult child.
With all those benefits, she is happy to pay our fees. Professional financial advice is always a good investment.
On another note, I have been writing this column for around 12 years now and have enjoyed it immensely. I have met lots of my readers and do love working with Northern Beaches residents.
I have often mentioned Tammy who started at Plan Protect in 2008, then after a long break raising her two children, she decided to come back last year. I have asked Tammy to take over this column, so next month you will see ‘Ask Tammy’.
Tammy is a highly experienced financial planner and is also an Aged Care Specialist. Clients enjoy her measured discussions on all things financial planning. We shall still be working together, but I am working less and less as I get closer to retirement.
Thank you all for your questions, comments, and discussions. As always, if you have any questions, please call Tammy or Janne on 9452 7871.
Regards, Janne
Author and financial planner Janne Ashton is CEO of Plan Protect, and an authorised representative of Count Financial Limited, AFSL 227232.
Phone 9452 7871 or visit planprotect.com.au.
The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
