Case Studies

Joan and Frank

Long gone are the days when leaving a Will was a straight forward business.

Joan and I both have children from previous marriages, so according to our financial adviser Adam, if we didn’t build a proper family succession plan, it could spell trouble.

On top of everything else Joan’s son Jim has a bit of a gambling problem and my daughter is going through a nasty divorce.

It’s a tricky business that’s for sure but Adam was a great help. He suggested we set up a testamentary discretionary trust to help protect our assets against Jim’s gambling problems and any family law disputes. And he showed us how we can pass on assets to our grandchildren tax-effectively as well.

To sort out the legal side of things, Adam put us in touch with Oscar, a lawyer working in the same building. It’s great to be recommended a lawyer by someone we already trust, and he’s so close by, it’s made the whole thing quite hassle free. It’s like the one stop estate planning shop.

Joseph’s story

My parents have been seeing their financial adviser, Peter, for over twenty years now and they’ve always tried to encourage me to go see him to try and sort out my debt.

I’ve never been bothered by it as I’m only 47 and I own a successful architectural firm and figure it’s only natural to have a bit of debt – after all you need to spend money to make money.

But last year my parents asked me and my sister Helen to come along to an appointment with them to have some input into their estate plans. Peter says it helps to avoid arguments later on down the track if you get your beneficiaries involved in discussions.

Anyway during our discussions my parents brought up how much debt I was in but Peter wasn’t alarmed at all. He just said it was important to have a back-up plan in place in case something happened to me or my business partner, Bill.

Well Peter seemed to have a good head on his shoulders and I started thinking what would happen to the business if either Bill or I were not around to keep things running along smoothly and keep our big clients happy. So we went to Peter about a business succession plan and just in time too.

I never thought anything could keep me away from my business, but last month I broke my wrist in a squash accident and was physically unable to do my job. Luckily my business expense cover kicked in, allowing us to hire a manager and a really good draftsman to take my place.

All in all it’s worked out really well. Our clients are happy because we’re still on track with their office plans and we’re happy because we got covered just in time.

Susie’s story

I set-up my own boutique twenty years ago and have been contributing to superannuation since it came in 1992.

Anyway I’m a bit of a control freak so needless to say I want to make the decisions on how I invest my superannuation. After all it’s my third biggest asset after my business and my apartment and worth a pretty penny by now.

So a few years back I went to see a financial adviser about setting up a self-managed super fund and ended up seeing Kathy. She’s a power broker just like me and we get along wonderfully. She helped me with all the details of setting up my own superannuation fund. It wasn’t easy but, since my balance super is about $600,000, I’m saving myself a lot on fees and that kind of thing.

Then last year, the owners of the space where I lease my boutique finally decided to put it on the market and I couldn’t be more thrilled. My boutique is going great guns these days and a lot of my goodwill is tied up in its location. Plus, there’s a lot of room for growth in the area. So I went to see Kathy about how I might go about buying it.

After reviewing my situation, she suggested that I use some of the money from my self-managed super fund to buy half the property and buy the other half with equity in my apartment.

So now when I pay commercial rent, half goes to my super fund and the half goes to me! Kathy says later on down the track when I’ve made more super contributions, my SMSF can buy out my share of the property but for now I’m just happy with greater control over my own financial future.

Joe and Marie’s story

Joe was really looking forward to retiring when he turned 65 and so was I. With three kids to raise and all his long hours at work, we’ve spent precious little time together these past twenty years. At last we’d be able to spend some quality time together.

Of course, things don’t always turn out the way you plan. At 60, Joe had a nasty stroke. Thank God we had disability insurance because he was off work for about four months.

Our adviser, Christine, was worth her weight in gold at this time. I’d never had to worry about financial matters at all before this. Joe took care of all that side of things.

Joe recovered quite well eventually and he really wanted to go back to work until he was 65 like he’d always planned, but he really wasn’t up to it. So Christine advised him to go back three days a week. It’s worked out brilliantly.

Before he went back to work part-time, we sold our home (which was far too big for us now anyway) and bought into an over-55s resort. The extra money we put into superannuation, which has saved us an absolute fortune in tax. Christine took care of everything for us. It’s all worked out beautifully. I really don’t know what we would have done without her.

Louise’s story

I’ve never been the type to worry about the future too much but when I turned 55 last year, it dawned on me that that this is the age people start retiring.

Well I love my job and I’m certainly not ready to stop working yet but it’d be great to be in a position to retire in the next ten years.

So I figured it was time to get my act together. I went to see Jill in August last year.

My salary is fairly good and I had just been hit with a whopping tax bill so I thought that was a good a time as any to get my finances sorted.

Jill said I was wasting a lot of potential retirement saving paying tax at my marginal tax rate and helped me come up with a plan to boost my super instead.

Basically I salary sacrifice a chunk of my salary into super, and this money is only taxed at 15% as long as I wait until I’m 60 to draw it out. And since I’m over 55 I can use a pre-retirement income stream to top up my income, so my take home pay stays the same.

I’m glad I went to see Jill, she’s got me on track to a better retirement without me having to lift a finger.

Ted’s story

Pam and I are in our 70s now and both in pretty good health – a bit of luck and a bit of good management.

I wish I could say the same about our two kids. One’s going through a nasty divorce and the other is battling heart disease.

We’ve had the grandchildren here off and on this past year and we’ve also had to dip into our retirement savings to help them both out. We don’t mind of course, but it’s just as well we had a little bit extra put aside for this sort of thing.

I’d like to take the credit but to be honest if it wasn’t for our adviser we wouldn’t have been able to help much at all. The first thing he did was to adjust our finances so we’d get more government support. In fact he more than doubled it.

Then he had a look at our investments. We had a fair bit tied up in some debentures. When he explained that although they paid a fixed return they were actually quite high risk, we had no hesitation in taking our money out. That was a close call. Instead we invested in a portfolio of managed funds that generate enough regular income for us to live on, without even eating into the capital.

Our adviser also pointed out that with Belinda’s divorce going through, we might want to update our Will. We were so upset about what was happening with her we hadn’t even thought about the possibility of her soon to be ex-husband ending up with some of our estate. We fixed that quick smart.

Like I say, if it wasn’t for our adviser we’d be in a real mess today. Instead we’re fine and healthy and happy. That’s a good result in my book and well worth the money.

Barbara’s story

I’m 76 now, but we began seeing our financial adviser David about 20 years ago when Jack and I started thinking about retirement. I am embarrassed to say it never really crossed our minds before that stage but as retirement loomed closer and closer, we realised we needed professional help to get ourselves on track.

David was great on that front, saving us in taxes and helping take advantage of the changes to pensions and social security. He also helped us organise our estate so we can continue to help our children out after we’ve both gone.

Unfortunately Jack passed away recently and as much as I miss him, I’m glad we got a chance to sort out our affairs while he was still alive. It wasn’t pleasant thinking about it at the time, but it could have been so much worse if I had to make all the decisions now without Jack’s input.

Anyway as much help as he’s been over the years, I never dreamt David could do any more for me at this stage. But with Jack not around, it’s getting really difficult trying to keep up with the house maintenance and all my medical needs too.

So I’m looking into aged care options and it’s a pretty complicated business. Luckily David’s playing a big role, walking me through all the different options – what level of care they provide and at what cost, and advising me of the impact on my social security benefits. I found out that if I keep the family home and rent it out rather than selling it, I can continue receiving my part pension, which is a big relief.

I’m glad I have someone on my side through all this. Someone I trust to help me make the financial decisions, now that Jack’s not around.

Gordon’s story

I’m 68 years old and retired from the bank about three years ago after 40 years of service. I originally had $320,000 in my allocated pension account but the global financial crises wiped more than 20% from my balance, leaving me with about $250,000.

I’ve always been quite content with my lifestyle, drawing down $13,000 each year from my allocated pension, and receiving another $12,000 each year from Centrelink.

I don’t need a lot to be happy – just enough to get by and to take the grandchildren out to the occasional movie or what not. But I was worried what would happen if another market downturn occurred during my lifetime. Would I have enough money to last for the rest of my life?

I decided to see an adviser and he has been a great help. It was all about having the right mix in my super. It was a big relief, I can tell you – knowing I’ll have enough money to see me through.

That’s the best thing about having a financial adviser – the peace of mind of knowing where you’re headed.

Antonio’s story

I’m pretty young and have a long way to go until I have to worry about retirement or any of that sort of thing so I’d never really thought about seeing a financial adviser.

That is until a few years ago when I turned 32 and was offered a new job. The new role came with a hefty pay rise and I figured, since I’m going to be investing at least 9% of my salary into super for the next thirty odd years, I’d better choose the right super fund.

Luckily, my new workplace offered a free consultation with a financial adviser as part of our employee benefits program so I thought I’d have a chat with them to see if they could give me any tips.

Well I ended up getting a lot more than I bargained for. During the initial consultation with Susie, she pointed out a lot of areas where I wasn’t getting the most out of my money – I had a lot of inefficient debt, and was paying more tax than necessary. It became clear I needed a whole financial plan including not just super but wealth creation, debt management and even some insurance.

Susie had to twist my arm to get me to fork out good money for things like life and trauma insurance. My wife Jane and I are young and have always been fit and healthy, and besides we have the kids’ school fees to save for. But Susie was adamant on that point.

Every day I thank my lucky stars she’s as persuasive a woman as she is, because six months ago Jane was diagnosed with breast cancer. We started treatment straight away and, while the outlook is good, Jane won’t be able to work until at least the end of the year.

It came completely out of the blue and it has been a horrifying experience for all of us. But at least we don’t have to worry about the financial side of things. Our trauma cover paid out a benefit of $515,000, which covered the costs of Jane’s ongoing medication and treatment, and meant that we could pay off the mortgage. We’ve still got a long road ahead but at least we don’t have to sacrifice everything we’ve worked so hard for financially.

Michael’s story

On my 30th birthday my Dad and I went on a fishing trip. I got the surprise of my life when he pulled out a cheque for $20,000 cash and gave it to me. I was stoked – until he told me there were two conditions. He said I had to invest it, and I had to get professional advice on how to do it.

I went and saw Bill and I have to say I was pretty blown away by what he could do for me.

It turns out I was wasting money left right and centre. Not by spending it on having a good time but stupid things like not paying my credit card off in time to avoid interest charges, like using store finance to buy my sound system. We worked out that I could save $50 a week just by managing my cashflow better.

So I started an investment plan, and put my $20,000 into a growth fund, then took the $50 a week I’d been wasting and invested it as well.

Now I’m 35 and my investment portfolio has grown to more than double what I started with. It’s great to have some assets behind me, but the big thing for me is that it’s given me some choices I don’t think I would have had otherwise. There’s no way I would have started my own business when I was 33. It was the second best thing I ever did financially.

The best thing I ever did? Going fishing with Dad on my 30th birthday.