Tag Archives: superannuation

Its Time, Retirement Beckons

I wrote in my recent article that I have just completed a 10 day road trip visiting clients.

One of the couples I called on, Alistair and Barbara, who have been clients for 10 years +, are facing retirement at the end of the year. This is something we have been planning for, frequently modelling their situation using information and ideas they have in regards to retirement. The things that would have material effect on our modelling include the impact of buying a new vehicle, securing their privacy by buying a neighbouring block of land, travel including regular cruises and some domestic and overseas travel, renovations to their home. All these things are important to them.

And there are many more items that need to be factored in as well, such as their risk tolerance – how much downside risk can they handle. We have been working with these clients for many years so we know that Barbara has a lower risk tolerance than Alistair, and because of this we are often faced with Alistair wanting to be more aggressive, although only marginally so, than Barbara, and the end result is often come to via discussion and review of the downside risks.

It’s an in depth discussion, but in the end, it is a discussion that has to take place and the clients must be comfortable with the risks being taken with their money. Of course, risk profiling Is important, but achieving the long term goals our clients have can result in a trade-off between their desired risk profile and achieving those goals. No-one wants to take on risk that is not required and sometimes additional risk, although not desired, offers the only solution long term to the achievement of client goals. Either we take on a little more risk, or we scale down the aspirations, reduce what we are trying to achieve.

These guys have a small amount of debt which is covered by a portfolio of shares they purchased some years ago. They are reluctant to keep the debt, the only debt they have, post retirement and the decision will probably be made to sell the shares to clear the debt.  What cash is left, after retaining a buffer in bank accounts, will probably end up in superannuation.

The essence of retirement planning in my view is the sleep test. We want our clients to live a stress free life. We want them to be well rested and comfortable with the recommendations we make around their strategy and products. We and the clients prefer not to have too many surprises, so modelling downside risk is important for us. It gives us an idea how bullet proof our clients models are. Not all are bullet proof – there’s simply not enough cash to be bullet proof, but at least when the modelling is done, our clients are aware of the risks and can live accordingly.

These particular clients will be pretty secure – with 10 years to get it right, they are looking at a pretty secure retirement. They have taken strong action to prepare for this day.

There are many things that can derail financial plans. Investment markets can have an impact, but many of you would be surprised to know that investor behaviour is the one thing that does most damage. Trying to time markets, pulling out at the wrong time, spending more than was originally budgeted without considering the consequences, gifting money to kids that really is not affordable and the list goes on. Most of the risk is behavioural.

So, advice and planning is critical. Take the time to call ClearWay Advice on 1800721186. Always use the services of a Certified Financial Planner who is associated with a FPA Professional Practice.

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Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

Income Protection – through Superannuation


I’ve recently had reason to examine at close hand, the value of Income Protection, labelled Total and Temporary Protection within a workplace superannuation product.

I have a new client, who has recently suffered a series of strokes that will leave the client, most likely unable to return to work, especially to the high pressure role previously held. All sick leave and other entitlements have been exhausted and approval for an income payment has been obtained, paid via the insurance held within the workplace superannuation account.

The insurance is labelled Total and Temporary Income benefit but it has a payment period specified and most members would assume they would be paid for the term shown on their statements.

In the case of the person we are working with, there is some doubt, although not yet confirmed, that our client will now not be able to return to work. In this case the client has been advised by letter, that the client’s income benefits will cease in December, after less than 6 months of benefit’s being paid.

On advice, our client has other insurance benefits, but not income protection. The level of insurance for Life and Total and Permanent Disablement within the workplace superannuation account is low because of the age of the client and the investment balance is not great because of the years of service.

I often get told by public servants in particular, that my insurance is covered in my super. Over the years we have seen a number of cases similar to this recent case, where members of a workplace superannuation fund expect that their income protection benefits will be paid for the term specified on their statements, only to find out once on claim, that they may not have the security they initially thought they had.

Our new client, if the medical diagnosis is confirmed, may not be able to work at all again. The plan was to work for another 5 years, and at that point retirement would have been secure. Forced retirement, 5 years early and without the security of the income protection insurance thought to be held, will mean a significantly different retirement.

What does this mean, and what can you do to ensure your financial future is secure? Get advice. Make sure your insurance definitions are confirmed and that your cover is what you think it is. But put simply, insurance through superannuation is not what it used to be. Be aware that a good income protection insurance plan is about providing the right amount of funds when they are needed, to the person who needs them. In the case of my new client, this will not happen.

All insurance and superannuation plans should be reviewed by advisers not associated with the product provider.

Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

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The Value of Advice

The Value of Advice:

It is often difficult to ascertain the advice value, provided by financial advisers. It’s difficult because much of the value we provide to clients, or more particularly, the value client’s state they get from their relationship with us, is not easily quantifiable.

However, Russell Investments has recently released their “2019 Value of an Adviser Report” where they have tried to quantify the value of our advice. In addition, they have identified areas where value is provided but the value in these areas was difficult to quantify.

Most of the value that they can quantify are for things advisers do every day, often without clients being aware. These include:

  • Ensuring your portfolio asset allocation remains in line with the risk profile originally agreed to,
  • Advice and cautioning clients against poor investment decisions,
  • Providing guidance around the tax implications of decisions you are making.

These day to day tasks are estimated to contribute around 4.4% on average per year to the performance of client portfolios.

But Financial Advisers do much more than this. Getting a plan in place, helping you to focus on the outcomes that you have indicated are important to you. Helping develop strategies that will assist you in:

All of these things have value, but that value is difficult to quantify in dollar terms, but knowing these strategies are taken care of, can help you sleep at night. What value do we place on peace of mind?

If you are considering getting advice, speak with a Certified Financial Planner, who is part of an FPA Professional Practice. Take advantage of the Value of Advice.

Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

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Forum 4 Business Growth

On Friday I joined other members of the Forum 4 Business Growth (F4BG) in Cairns for lunch and to listen to an address by the General Manager of the COUCH Wellness Centre, Kelli Beardsmore.

What a great story Kelli had for us. From her brochure we find that “COUCH” is a local charity, supporting local people. Providing real outcomes and striving to make a difference in the lives of those affected by cancer.

With a background in aviation, health and the ‘for purpose’ charity sector, Kelli joined local charity COUCH in October 2018 to lead their newest community initiative the COUCH Wellness Centre.

The CWC and their staff, connect with patients and make real differences in their lives. Her passion for the facility and the services offered to cancer sufferers is clearly obvious. Marvellous presentation, and great work to Tony McInnes from F4BG for organising the event.

F4BG is a great way for local small business operators to get to know each other, share some successes and discuss how we can do things better. Building relationships in the business community helps to build business.

ClearWay Advice and Financial Management provides financial planning advice across Far North Queensland with offices in Innisfail and Cairns.

Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

The Purpose of Superannuation


Superannuation, a long term investment

You can be forgiven these days for forgetting what the real purpose of superannuation is and what it is meant to do for you. And remember, any advice you receive about superannuation has to be in your best interest. In simple terms, implementing that advice should result in you being in a better position than you are now.

What is the real purpose of superannuation? It is to provide benefits for your retirement. It is a long term investment and it should be designed to ensure you are well placed when your retirement date arrives. But not only should you be better off at retirement, but in retirement as well because superannuation, via the pension fund variation, is a very tax effective place to hold your funds during your retirement.

So what of all these other things we can do with superannuation funds. Buying property, holding life insurance and other personal insurances, buying shares, managed funds, and the list goes on.

The purchase of any of these products or assets inside a superannuation fund has to meet the “sole purpose test” which means your fund needs to be maintained for the sole purpose of providing retirement benefits to you, or your dependant if you were to die before retirement.

So the investments you make inside your superannuation fund can only be justified if, in the eyes of a reasonable person, the investment or item can be expected to provide a benefit for your retirement.

Life insurance products are allowed under superannuation laws as they can have the effect of supporting us or our dependants if we were to die or are injured and a claim is required to provide support either pre or post retirement age.

One point worth noting when it comes to investments within superannuation funds, studies have shown that up to 95% of investment return is determined by the asset allocation. A point worth thinking about.

Finally, one of the problems with the superannuation system is that the labels used to describe funds, such as Balanced or Growth are not defined. This means it is virtually impossible to compare Balanced Funds because it’s a bit like comparing apples with oranges. The same applies to comparing other labelled funds such as Growth or Conservative funds. There is no consistency between the way in which the funds are invested within similarly labelled funds.

If however, you would like to know how your fund compares with others of a similar nature, feel free to call us on 0740780900.

Just remember that the main aim of superannuation is to provide for your retirement, and therefore it is a long term investment.