What Is Financial Advice, Financial Planning, Investment Management And Do You Need It?

Sometimes I find it hard to explain what we do and how we charge for it, part of this is due to public misconception and part to where this industry/profession has come from. Most people seeking financial advice expect to pay a fee but they expect their financial dollar return to be greater than that fee – but financial advice is not a transaction and it isn’t an investment service. Financial advice is a service that takes time and expertise, hence the charging of a fee. Not wanting to pay this fee would be like only paying your accountant if you get a tax refund – and if that’s you, I’ll decline to take you on as a client.

In trying to articulate what it is we do as financial advisers I quite like this article written by Ben Carlson. He describes the difference between a financial adviser and an investment manager. I encourage you to have a read of it.

So how do I describe financial advice; it’s a comprehensive fluid financial plan employing the right financial tools to help you achieve what you want out of life.

And your financial Adviser – they are your lifeline or coach, helping you articulate what you want, guiding you emotionally in your choices, spelling out the legal jargon and if needed serving you a harsh reality check. They are your project manager that will help develop strategies to help you get the most out of what you have to work with and will liaise with your other advisers to ensure everything is working toward your objective.

With any personal financial advice there is a mountain of paperwork and financial administration that goes with it – a good financial adviser will have a team that will take care of this for you.

Financial advice is not about generating investment return, that may be one small part of the service they provide you. It is about a stewardship and providing strategies to get what you want out of your hard earned dollars.

 

 

 

Keryn Batsilas  is a Financial Adviser  (AR No.: 436348 ) employed by McQueen Group. McQueen Group is a corporate authorised representative (AR No.: 267498) of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579. This information is of a general nature only and does not take into account your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).

Growing Your Superannuation

Making voluntary superannuation contributions is a key way to boost your retirement savings. This article explains the different methods of contributing to superannuation.

There are several ways an individual may add to their superannuation. These include:

  • Personal superannuation contributions
  • Salary sacrifice
  • Spouse contributions; and
  • Government co-contributions

 

Personal superannuation contributions

Making a personal contribution into superannuation and claiming a tax deduction for the contribution increases your retirement savings and reduces your income tax payable.

Benefits

  • Investing in superannuation boosts your savings to help meet your retirement goals
  • The rate of return inside superannuation may be higher after-tax than investing outside superannuation. This is because earnings inside superannuation are taxed at a maximum rate of just 15%, whereas earnings from non-superannuation investments are generally taxed at your marginal tax rate. This helps your savings to grow faster
  • The additional contributions can help to cover the cost of insurance premiums if you hold insurance inside superannuation.

This deduction reduces your taxable income and the tax you would otherwise pay. The contributions are however taxed at 15% upon entry into superannuation. Please note, if your ’income’ is over $300,000 you may pay an additional 15% tax on part or all of the deductible contributions. 

Salary sacrifice

A salary sacrifice to superannuation is where you and your employer agree to pay a portion of your pre-tax salary as an additional concessional contribution to your superannuation account. This is typically a tax-effective strategy if you earn more than $37,000 a year. At McQueen Group, we think salary sacrifice is a winner, as it increases your retirement savings and reduces the amount of income tax you pay.

You can agree with your employer for your voluntary contribution to be in addition to your employer’s compulsory superannuation contribution.

Spouse contributions

A spouse contribution involves making a contribution to your spouse’s superannuation fund to help boost their retirement savings. It is important to note that there has been a change to the spouse tax offset eligibility.

From 1 July 2017, the spouse income threshold has increased, meaning more people will be eligible to claim the tax offset. The intent of this change is to extend the spouse tax offset to assist more couples to support each other in saving for retirement.

You are generally able to claim the maximum tax offset of $540 if:

  • Your spouse is under age 65 or aged between 65-70 and satisfies the work test
  • You contribute to the eligible superannuation fund of your spouse, whether married or de-facto and living together; and
  • Your spouse’s “total income”* is $37,000 or less.

The tax offset amount will gradually reduce if your spouse’s income is above $37,000  and completely phases out when the amount reaches $40,000.

* The ‘total income’ threshold is assessable income, plus the value of any fringe benefits that you have as part of your salary package, such as a car, plus any salary sacrificed contributions. Assessable income also includes bank interest and net capital gains from selling shares or property.

Government co-contributions

If you are a low or middle-income earner and make personal (after-tax) superannuation contributions to your superannuation fund, the government will match 50% of the contribution (called a co-contribution) up to a maximum amount of $500.

For the 2017–18 financial year, to be eligible for a government co-contribution you must meet 4 main tests:

  • Age test – you must be under age 71 in the financial year in which you make your after-tax contribution
  • income test – your total income* is less than $51,813 within the financial year
  • Work test – you must earn 10% or more of your income from gainful employment or from carrying on a business, or a combination of both; and
  • Superannuation balance test – you must have a Total Superannuation Balance less than the general transfer balance cap for that year

 

* The ‘total income’ threshold is assessable income, plus the value of any fringe benefits that you have as part of your salary package, such as a car, plus any salary sacrificed contributions. Assessable income also includes bank interest and net capital gains from selling shares or property.

If you want to know more about how you can make additional contributions to boost your superannuation savings, please contact us.

In any of these cases you have the full financial year to make these contributions, making now the perfect time to set a small amount aside each month rather than trying to find cash at the end of the financial year.


McQueen Financial Group is a corporate authorised representative of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579. This information is of a general nature only and does not take into account your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).