I wanted to share with you an example of how INDEPENDENT financial advice is changing lives in Orange.  Names and other identifying details have been changed for obvious reasons, and figures have been rounded to make them easier to read.

Colin and Jenny are aged in their late 50s. They have been married for 25 years and both work locally. They expect to continue working for the next 10 years.

Colin and Jenny came to see me with a simple ambition: to be able to retire as comfortably as possible, when the time comes. They had got some advice from a financial planner from a big bank some time ago but had noticed that the name of the person who is supposed to be their adviser kept changing at the top of their annual statement and they were getting no ongoing advice at all. Their accountant had recommended they come and see me.

Between them, Colin and Jenny earn about $90,000 per year. They receive compulsory superannuation amounts of 9.5%, or $8550 per year. Importantly, they own their home and they also have an investment property with a loan of approximately 30% of the property’s value. Combined, they have approximately $200,000 in superannuation.

Colin and Jenny are sensible enough to understand that they don’t have enough to retire as comfortably as they’d like and really want to try and do something about it.

Colin and Jenny have never paid much attention to superannuation. When they took out a loan years ago, they were encouraged by their bank to get some advice from the bank’s financial adviser and ended up in a retail super fund affiliated with that bank. As it turns out, they’ve been paying fees of 2.4% per year… the average in Australia is around 1% and I routinely put my clients in super investments with fees below 0.3%!

This means that Colin and Jenny are paying approximately $4800 per year to manage their superannuation.

I worked with Colin and Jenny to find a profit-for-members fund as an appropriate place for them to hold their superannuation. This fund charges a flat member fee of $1.50 per week, an admin fee of 0.10% and the recommended investments within the super fund have investment fees of 0.13%.

This means that Colin and Jenny could have their existing $200,000 managed for $538 per year.

Simply rolling their superannuation benefits over from the existing fund to the new fund will save Colin and Jenny $4,262 every year! As more money goes into their super, the saving will only increase over time.

Given it’s likely that one or both of them will live well into their 90s, it’s not difficult to see that simply switching their superannuation benefits from a very expensive retail fund to a very low cost profit-for-member fund may well save them a six-figure sum (and easily a six-figure sum for someone who does this in their 30s or 40s).

What’s more, because the benefits to Colin and Jenny are in terms of an amount saved, the benefit will definitely happen – the point being that the benefit is not reliant on investment returns, it’s simply a saving in fees. Add into the mix some tax-effective super contributions that reduce tax, a great mix of investments suited to the clients, some budgeting advice, some help with estate planning and visual projections to show what the financial future may look like for these clients, it’s not hard to see how these clients are better off for seeking professional independent advice.

INDEPENDENT financial advice changes lives. If you think you might benefit from some, get in touch for a FREE financial health check.

Cheers,

Daniel