The Value of Advice
Curious how what things can look like for you with some fast-tracking? Below is an example of client outcomes and the benefits of getting advice. Please note that the below are based on the client’s ability to implement and stick to the recommendations provided to them.
Couple: late 20’s
Household income of approximately $139K before tax. Total assets worth $180k. Saving about $2K annually
Frustrations
· Not saving as much as they think they should. Trying to save for their wedding and extended holiday after wedding.
· Not sure if they should be paying off the mortgage, contributing to super or starting an investment.
What they wanted from me / the advice process
· Setting up a savings plan to fund their upcoming wedding and holidays.
· Set up a clear tax-effective investment plan.
· Set up multiple income streams.
What success looks like for them
· Saving enough for their wedding then enough for holidays
· Feel financially secure.
· Make sure that their finances are working towards their goals.
What money strategy they were following before we went through the planning process
· Trying to save money into bank account.
What money strategy they choose to pursue from our planning work
· Saving for wedding and big holiday. Then making additional contributions to super and commencing investment once these key events have taken place.
Key benefits of going through the process
· Clear automated banking structure with regular savings
· Switch to a low-cost super with access to a range of quality passive investment options.
· Clear super contribution strategy that is in line with circumstances in the future
· Clear steps for the future to continue to grow wealth.
Value of advice after all advice fees year one: $13k
Year 20 value after advice fees: $241k
Age 65 value after advice fees: $1.130M
Single; Early 50’s
Household income of approximately $340K before tax. Total assets worth $3.6 million. Saving about $150K annually
Frustrations
· No super assets or investments outside of property and cash.
· Not sure if they should be contributing to super or starting an investment.
· No idea whether they will be able to meet their retirement goals (when they would like to retire and on how much they will need each year)
What they wanted from me / the advice process
· Reviewing super and investments.
· Set up a clear tax effective investment plan.
· Understanding of current spending to know how much they would like to retire on.
· Set up multiple income streams that are tax effective.
What success looks like for them
· Understanding their situation around retirement and ensuring those goals are met.
· Building tax-effective investments that will help fund retirement.
· Feel financially secure.
· Make sure that their finances are working towards goals.
What money strategy they were following before we went through the planning process
· Purchasing Investment Properties without analysing how that will provide income in the future.
· Surplus money going into multiple bank accounts.
What money strategy they choose to pursue from our planning work
· Starting tax effective investments with a regular amount set up.
· Complete the Spending and Savings planner to get a better understanding of retirement needs and what they are spending now.
Key benefits of going through the process
· Clear tax effective investment strategy
· Clear super contribution strategy that is in line with circumstances in the future
· Clear automated banking structure with regular savings and understanding of expenses so that we can plan to cover them when income stops.
Value of advice after all advice fees year one: $10k
Value of advice after all advice fees retirement age (60): $461k
Year 20 value after advice fees: $932k
Year 30 value after advice fees: $959k
Couple; Early 30’s
Household income of approximately $130K before tax. Total investment assets worth $115K. Saving approximately $25K annually
Frustrations
· Wanting to build assets outside of their business.
· One of the couple feels like they spend excessively.
· Not sure if they should be contributing to super or starting an investment.
· Want to start to reduce workload in 15-20 year’s time and no idea whether they will be able to meet their retirement goals (when they would like to retire and how much they will need each year)
What they wanted from me / the advice process
· Understanding of current spending to know if they are overspending or if they can make cuts.
· Reviewing super and investments.
· Set up a clear tax-effective investment plan.
· Review of personal insurance to ensure this is cost-effective for what they want.
What success looks like for them
· Feel that they are building their wealth and that they are maximising the income that they have.
· To feel secure that they will have enough money in the future without relying on the business.
· Having a money plan so that they can spend guilt-free on holidays.
What money strategy they were following before we went through the planning process
· Contributing some money from the business into super.
What money strategy they choose to pursue from our planning work
· Complete the Spending and Savings planner to have funds allocated for guilt free spending on personal stuff and holidays.
· Maximising the surplus cash flow and investing in a manner that will help reduce tax payable.
· Personal insurance review to maintain levels of cover and benefits while reducing premiums.
Key benefits of going through the process
· Finding the balance between saving for the future and guilt free spending on personal items and holidays that have been allocated for.
· Investment strategy to help minimise the amount of personal tax payable.
· Clear long term investment strategy
Value of advice after all advice fees year one: - $2k
Year 20 value after advice fees: $1.053M
Value of advice after all advice fees retirement age (60): $1.719M
Couple; Early 40’s
Household income of approximately $591K before tax. Total assets worth $591K. Saving approximately $30K annually.
Frustrations
· Felt like current investments weren’t working hard enough for them.
· Wanting to reduce work hours in 10 – 15 years time and wanting to start planning for that.
· Would like to purchase a holiday home in the future and not sure how to go about that.
· Review of personal insurances to ensure that they are appropriate and cost effective.
What they wanted from me / the advice process
· Reviewing super, investments and personal insurances.
· Set up a clear tax effective investment plan to help fund the slow down from work in the future when super wont be accessible.
· Understanding of current spending to know how much they would like to retire on.
· Review of personal insurance.
What success looks like for them
· Building tax effective investments that will help fund early retirement/ slow down from work.
· Review of investments to maximise growth.
· Have the flexibility in the future to purchase a holiday home if the right became available.
What money strategy they were following before we went through the planning process
· Purchase some direct shares.
· Contributing funds to super
· Excess money going back into business.
What money strategy they choose to pursue from our planning work
· Starting tax effective investments with a regular amount set up to help fund slow down from work.
· Review of super and investments to help maximise growth and income.
· Review of insurances to maintain benefits but reduce premiums.
Key benefits of going through the process
· Clear investment strategy that will provide for early retirement and purchase of potential holiday home in the future.
· Clear super contribution strategy to ensure future goals are met while still enjoying life today.
· Understanding of what their future looks like if strategies are followed.
Value of advice after all advice fees year one: $550
Year 20 value after advice fees: $1.034M
Year 30 value after advice fees: $2.946M
Couple; Late 50’s
Household income of approximately $213K before tax. Total assets worth $901K. Saving approximately $58K annually
Frustrations
· Want to retire in 7 years or earlier and want to know how much they can comfortably live on in retirement. Travel is very important and want to make sure that they can still do that in retirement.
· Not sure if they are invested in a way that will meet their goals.
· Would like to address banking as currently run separate accounts.
· Understanding if they should use cash savings to pay down debt or invest the money elsewhere.
· Reducing Capital Gains Tax due to the sale of asset
What they wanted from me / the advice process
· Understanding of current assets and how long they will last in retirement.
· If they need to save more money to reach their retirement goals
· Review super and investments to better suit their investment preferences.
· Understanding on how to best utilise cash savings.
· Reduce personal tax payable
What success looks like for them
· Clear understanding of how much they need to save to fund the retirement that they want.
· Reduction in personal tax payable
What money strategy they were following before we went through the planning process
· Current money and surplus savings to cash account
What money strategy they choose to pursue from our planning work
· Investment strategy to reduce tax payable and grow investments for retirement.
· Investment of cash fund in at call saver to increase interest but maintain flexibility.
· Review of super and investments to help maximise growth and income.
· Savings plan in place to holiday wish list.
Key benefits of going through the process
· Clear understanding of spending capacity in retirement with allowance for overseas holidays every 2 years.
· Clear automated banking structure with regular savings to fund holiday goals and also investments to help fund retirement.
· Clear super contribution strategy to ensure future goals are met while still enjoying life today.
· Understanding of what their future looks like if strategies are followed.
Value of advice after all advice fees year one: $5K
Value of advice at retirement (7 years): $81K
Year 20 value after advice fees: $426K
Please note that the above numbers are all in today’s dollars. What does this mean? "Today's Dollars" refers to the value of money right now, without considering changes in prices over time. It's like looking at the cost of something as if you were buying it today, without thinking about how its price might go up in the future due to inflation or other factors. This helps us compare things and plan for expenses with the understanding of how much they're worth in today's terms. In other words, I have taken into account the rise in cost of living when planning for your future.
You may have notice a trend in the above clients ‘value of advice’ and that is time. The longer the clients have to put the recommendations into action the bigger the benefit. The sooner you start the easier it is and I am always here for a chat if you just have some general questions.
General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.