Have you ever wondered how professional advice could improve your financial future? Naomi Fraser, Senior Wealth Adviser at Macquarie, shares how she helps people plan and achieve their goals.
Naomi often works with people in their run-up to retirement, when many critical decisions need to be made. They are often anxious about what lies ahead.
“I find a lot of people have significant assets building up, but are not always sure about how best to structure their situation to make the most of what they have. This can cause some angst about how their retirement years will pan out,” she says.
"My role is primarily to relieve them of that fear by helping them map out an action plan that addresses all areas of the retirement puzzle.”
Approaching retirement is crunch time
Naomi expanded on her approach by giving an example of how some practical and timely advice can make a dramatic difference to her clients’ peace of mind.
“I recently helped one couple, let’s call them Jeff and Jan, who initially came to me with a lot of concern about how they should position themselves for retirement. Geoff was 58 and wanted to retire at 65, while Jan was 57 and wanted to retire at 62. Their super was modest, with balances of $330,000 and $140,000, but they owned their home outright, and had three debt-free investment properties with a post Capital Gains Tax values of $500,000, $950,000, and $1.1 million.”
Relieving Jeff and Jan’s concerns
Jeff and Jan’s main worry was how they could transition themselves into retirement and fund their living costs. Should they retain some or all of their properties? What should happen with their super? How could they make the most of what they had built up?
After examining their situation closely, Naomi was able to identify some key issues.
“One of the biggest opportunities I was able to pinpoint for them was the tax efficiency advantages available by gradually shifting their position out of property and into super, through a progressive strategy that was staged to work within the annual contribution limit rules.
“Apart from maximising their tax benefits, I was able to point out how this would also relieve them of the risks of having a high concentration of their funds in one asset class, and the benefit of diluting that risk by diversifying into other sectors. The strategy would also give them some added liquidity and relieve them of potential hassles involved in managing investment properties.”
Seeking professional advice can help set-up a retirement strategy that best suits your circumstances and future plans
Putting the strategy together
Jeff and Jan quickly understood the significant benefits that Naomi had identified and decided to proceed with the strategy she had outlined. Naomi then developed a detailed plan on how best to time their property sales and the shift of their funds into super gradually in the lead up to retirement.
“Like any strategy we put together for our clients, it is not simply a matter of flicking a switch and changing everything at once. A proper financial plan is something that is managed over time and adapts with a person’s situation and needs.
“The first stage in the process for Jeff and Jan was to sell their $950,000 property and gradually channel the majority of the proceeds into both their super funds over the following two years. By staggering the transfer into their super, I was able to maximise the tax benefits available through the maximum contribution regulations. A portion of the sale proceeds would also be directed into a term deposit as a holding fund to give them some liquidity.
“The second stage involved the sale of their $1.1 million property in the fifth year of their plan, with the majority of funds again being channelled into super progressively up until their retirement year.
“The final $500,000 investment property will be held until retirement and decisions made at that time on whether to retain or sell it, depending on their circumstances.”
Well-positioned for a worry-free retirement
By the time they reach retirement, Jeff and Jan will hold sufficient funds within their super to enable them to convert some of those funds into a tax-effective income stream. Their assets will also be well diversified, and they will have the flexibility of having some funds held outside of super in term deposits and their remaining investment property.
By seeking advice from a professional financial planner well before retirement, Jeff and Jan were able to vastly improve their investment position and relieve themselves of the worry of making the wrong move.
Naomi relates how rewarding it is to be able to help people like Jeff and Jan come to grips with their financial issues.
“I see my role as being an advocate, coach and mentor for my clients. Many people are a lot more aware of the need to build their wealth these days, but the complexities surrounding regulations and the investment environment make it essential to have someone alongside to guide you. I see every day what a dramatic difference it can make.”
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