Call Us Today: (03) 55 618 618

News

Planning for your first meeting with a financial adviser?

So you’ve made the decision to meet with a financial adviser. The next step is to get ready to make the most of your first meeting. The better prepared you are, the better quality conversation you can have.

 

It starts with a conversation

Your first appointment with a financial adviser is really a ‘get to know you’ session that helps your adviser understand your financial situation before they make any recommendations.

You might be interested in a specific piece of advice, like life insurance or superannuation, or more holistic advice about your finances in general. Either way, most advisers will look at your complete financial picture as different aspects of your finances are often connected.

What to take?

  • A summary of your assets (home, car, investments etc.) and liabilities (loans, credit cards etc.)
  • An estimate of your monthly income and expenses
  • Your most recent tax return or pay slip
  • Your most recent superannuation statement
  • Policy Schedules for any life insurance policies you have
  • Your Tax File Number

What to think about?

What are the big goals (financial or otherwise) you’d like to achieve in the next:

  • 1-2 years
  • 3-5 years
  • 5-10 years

What they should give you?

  1. A financial Services Guide stating their relevant qualifications, license number and fees.
  2. A Statement of Advice (SOA) which incorporates facts and goals about your life, compares fees, lays out all possible outcomes and areas of concern and then offers a recommendation. This document is typically provided at a later date.
  3. An understanding on how often your plan will be reviewed.

What happens next?

Your adviser will come back to you a short time after the first meeting with their recommendations and proposed costs, which will be included in a ‘Statement of Advice’. They will talk you through their recommendations and give you the opportunity to accept or decline the offer to go any further.

Financial advice is an ongoing process, so expect your adviser to invite you to review your plan every 1-2 years. The frequency and scope of these meetings is something you can discuss with your adviser, but the main thing is to make sure you’re getting what you want from the relationship.

Warning signs for poor advice

Before you agree to proceed with your adviser’s recommendations, there are some warning signs you should look out for:

  • Your adviser hasn’t asked you many questions about you and your goals for the future.
  • They’re pressuring you into making a decision before you understand what you’re buying.
  • They haven’t asked you about your budget or living expenses.
  • They haven’t explained the features and options of the product(s) they’re recommending.
  • They haven’t discussed insurance through super or reviewed your existing super arrangements.
  • They haven’t provided you with a Financial Services Guide or Statement of Advice.
  • They haven’t explained their fees or what commissions they will receive.

If you experience any of the following warning signs, you may want to ask more questions or try a different adviser.

Want to know more?

If you’d like to discuss any of the content in this article and how it may apply to you, please call our office (03) 5561 8618 or book here

Getting retirement plans back on track

After a year when even the best laid plans have been put on hold due to COVID-19, people who were planning to retire soon may be having second thoughts. You may be concerned about a drop in your super balance, insecure work, or an uncertain investment outlook.

Whatever your circumstances, a financial tune-up may be required to get your retirement plans back on track. You may even find you’re in better financial shape than you feared, but you won’t know until you do your sums. 

The best place to start is to think about your future income needs. 

What will retirement cost?

Your retirement spending will depend on your lifestyle, if you are married or single, whether you own your home and where you want to live. 

Maybe you want to holiday overseas every year while you are still physically active or buy a van and tour Australia. Do you want to eat out regularly, play golf, and lead an active social life; or are you a homebody who enjoys gardening, craftwork or pottering in the shed? 

Also think about the cost of creature comforts, such as the ability to upgrade cars, computers and mobiles, buy nice clothes, enjoy good wine and pay for private health insurance. 

It’s often suggested you will need around 70 per cent of your pre-retirement income to continue living in the manner to which you have become accustomed. That’s because it’s generally cheaper to live in retirement, with little or no tax to pay and (hopefully) no mortgage or rent. 

Draw up a budget

To get you started, the ASFA Retirement Standard may be helpful. It provides sample budgets for different households and living standards. 

ASFA suggests singles aged 65 would need around $44,183 a year to live comfortably, while couples would need around $62,435.i Of course, comfort is different for everyone so you may wish to aim higher. 

To put these figures in perspective, the full age pension is currently around $24,550 a year for singles and $37,013 for couples. As you can see, this doesn’t stretch to ASFA’s modest budget, let alone a comfortable lifestyle, especially for retirees who are paying rent or still paying off a mortgage. 

Then there is the ‘known unknown’ of how long you will live. Today’s 65-year-olds can expect to live to an average age of around 85 years for men and 87 for women. The challenge is to ensure your money lasts the distance. 

Can I afford to retire?

Once you have a rough idea what your ideal retirement will cost, you can work out if you have enough super and other savings to fund it. 

Using the ASFA benchmark for a comfortable lifestyle, say you hope to retire at age 65 on annual income of $62,000 a year until age 85. Couples would need a lump sum of $640,000 and singles would need $545,000. This assumes you earn 6 per cent a year on your investments, draw down all your capital and receive a part age pension. 

Add up your savings and investments inside and outside super. Subtract your debts, including outstanding loans and credit card bills, to arrive at your current net savings. Then work out how much you are likely to have by the time you hope to retire if you continue your current savings strategy. 

There are many online calculators to help you estimate your retirement balance, such as the MoneySmart super calculator

Closing the gap

If there’s a gap between your retirement dream and your financial reality, you still have choices. 

If you have the means, you could make additional super contributions up to your concessional cap of $25,000 a year. You may also be able to make after-tax contributions of up to $100,000 a year or, subject to eligibility, $300,000 in any three-year period. 
You might also consider delaying retirement which has the double advantage of allowing you to accumulate more savings and reduce the number of years you need to draw on them. 

These are challenging times to be embarking on your retirement journey, but a little planning now could put you back in the driver’s seat. 


Get in touch if you would like to discuss your retirement strategy. 

https://www.superannuation.asn.au/resources/retirement-standard

Our changing relationship status…with our devices

If your New Year’s resolution was to spend less time glued to your phone, you’ve probably found that unexpectedly challenging this year. While the impact of COVID-19 differs from state to state, many of us have experienced social isolation and the call to stay and work from home where possible, resulting in an increase in the amount of time we are spending online.

In fact, data demand over the NBN increased by more than 70 to 80 per cent during daytime hours in March compared to figures calculated at the end of February. Due to greater usage, internet speeds across Australia slowed to cope with the uptake.i

It’s not just the time we are spending online that’s being impacted, our relationship with technology is evolving as we adapt to the changing world around us. 

The benefits of technology

While technology usage often gets a bad rap when it comes to mental health, it has also brought positives into many of our lives, especially during 2020: greater work flexibility, connection to loved ones, and access to online resources and support groups. 

During social isolation, many of us relied on technology to keep our lives as normal as possible. For some that meant working from home, keeping up a regular exercise regime with online classes, or having a regular video chat scheduled with family and friends. 

Changing nature of how we use our devices

Technology has stepped up and is filling the gap in areas we previously hadn’t relied on it for. With gyms and boot camps off limits across many parts of Australia during stages of lockdown, online workouts started popping up on platforms such as Zoom and Facebook. 

Online shopping is understandably booming as the trend away from ‘bricks and mortar’ retail quickens pace and people embrace the convenience and safety of shopping online during pandemic conditions. Based on Australia Post deliveries, there was an 80% increase in online shopping during the months of April and May.ii

When concerts were cancelled and movie theatres and galleries closed, we also turned to our devices increasingly for entertainment. Netflix saw a boom in their subscribers, up a whopping 15.8 million users in April, while Instagram Live was up 70% in the US in March.iii, iv

Transforming how we work

Many workplaces have had to put in place processes to support working remotely. Prior to the pandemic, besides face-to-face meetings, most workplace correspondence was done via email or phone. Due to social isolation and increased feelings of loneliness as a result, video meetings and catch-ups have become more of the norm. The cameras on our phones and computers have been able to make us feel more ‘in person’ as a result. 

Collaboration has also been on the rise, with collaborative platforms and online communities such as Slack, Asana and Trello making it easier to work together while we’re apart. 

Looking out for others

Much of our online activity has tended to be a reflection of our self-absorption. The ‘it’s all about me’ approach of many influencers and content creators was tempered during the crisis by a more giving approach. We saw an outpouring of generosity, from entrepreneurs offering time to listen to pitches, master yoga instructors teaching free classes and musicians performing regular concerts. People have banded together to keep us feeling connected. 

Local communities used technology to engender a sense of support and inclusion, with groups springing up to assist others in a myriad of ways such as offering to shop for those who were in isolation, providing free produce from gardens, or toilet paper for those who missed out in the panic buying frenzy early in the pandemic, to just making sure that everyone in the community had a ‘voice’. 

Our relationship with our devices and the way we conduct our digital lives is ever-evolving. If we take the positives that have come from the way the crisis has influenced our lives in the digital realm, we’ll continue moving in a direction that not only makes our lives easier but also supports genuine human interaction. 

https://www.abc.net.au/news/2020-04-01/coronavirus-internet-speeds-covid19-affects-data-downloads/12107334 

ii https://auspost.com.au/business/marketing-and-communications/access-data-and-insights/ecommerce-trends 

iii https://www.abc.net.au/news/2020-04-22/netflix-warns-record-users-will-not-last/12171800 

iv https://www.businessinsider.com.au/instagram-live-70-percent-increase-social-distancing-psychologist-explains-2020-4?r=US&IR=T

Get In Touch

P.O. Box 495
78 Henna Street, Warrnambool, VIC
Phone: (03) 55 618 618
Fax: (03) 55 618 600
Website: www.shbbusiness.com.au
Email: office@shbbusiness.com.au

Address