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Archives for Robert Syben

All about aged care

All about aged care

Whether considering options for yourself or deciding how best to help someone close to you, residential aged care can be a complex area requiring careful thought. The uncertainty surrounding where to move, how much it will cost and where the money will come from can be overwhelming and stressful.

There are typically three steps you need to take before entering residential aged care.

Firstly, before entering residential aged care, your health must be assessed to determine your eligibility for care. The assessment can be performed by any doctor, nurse or social worker who is a member of an Aged Care Assessment Team (ACAT, or ACAS in Victoria). You can visit to request an assessment.

Secondly, finding an aged care facility. Make sure you find an aged care facility that you are comfortable in and that will suit your needs. You may like to visit a few different places, as you can apply to as many facilities as you like. The accommodation costs for all aged care facilities are published on This website also provides a description of the rooms and services available at the facility.

Thirdly, organising your finances. Upon entry to an aged care facility, you may be required to pay either an accommodation contribution or an accommodation payment. This may involve a lump sum payment, periodic payments, or a combination of both. Some people will have their accommodation costs met in full or in part by the government, while others will need to pay the accommodation price agreed with the facility. The Department of Human Services will advise which applies to you determined by your level of assets and income at entry.

There will also be a basic daily fee to pay and there may be a means-tested care fee which is determined by your level of assets and income reassessed quarterly. Some aged care facilities offer a higher level of service or a higher standard of accommodation or food as an extra service or additional fee.

Keeping or selling your former home often forms an essential part of the strategy as does how you invest. A poorly structured and executed plan can result in lower Age Pension entitlements and higher ongoing care costs. Your adviser can walk you through the options and any implications. For example, if you keep your home, we can discuss strategies to pay the agreed accommodation payment and explain how your home will be treated for Centrelink/DVA and aged care purposes. If you sell your home, we can also help identify the best way to invest the proceeds and get the balance right between generating an income, maximising Age Pension entitlements, and reducing ongoing care costs.

There is a lot to consider and decide upon, and with the right advice, it does not have to be overwhelming or stressful. We are here to help, so please get in touch with your adviser to discuss.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Retirement Plan

Do you have an Aged Care Plan in place?

We plan for many aspects of our lives, but few people plan for future aged care needs. Now is the time to change that trend.

The truth is, most of us avoid thinking about our own future aged care needs, delaying our decisions until perhaps they are taken out of our hands.

Life expectancies are increasing. This means not only might we expect to live longer than our parents and grandparents, but we might also expect longer and more active retirements. However, this does not remove the possibility that we may need help with daily living and medical care in our older years.

If we reach a point when we are increasingly vulnerable, we do not want to be left unprepared.

Planning creates peace of mind.

Planning for our retirement, as we dream of travel, cruise ships and caravans as well as more time playing with the grandkids, can be quite enjoyable. Perhaps that’s why we put off planning for our aged care needs – it’s not as much fun to think ahead to a time when we might need more support.

But with the right advice, planning ahead offers many benefits and can be easier than you think. Benefits may include:

  • Peace of mind for you and your family
  • Taking pressure off family when a crisis occurs
  • Allowing you to have a voice, and
  • Avoiding costly mistakes.

Creating a plan that will work for you includes consideration for what sort of life you want to live and what makes a good life for you. This should take into account options for where you could live but also how to continue your interests and stay connected to family, friends and your community. Understanding the costs and planning your finances is a key component of making the plan work effectively.

Don’t leave it too late!

Don’t leave your aged care planning too late. We have helped many of our clients to start the planning process and often discuss when and how to bring your family into this process.

If you are ready to start the conversation, contact our Head of Financial Planning, Robert Syben at and let us work with you to create a plan for all of your retirement needs.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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AFL football

The Cats, the human brain and investment markets

If you said, “they are all difficult to predict,” you would be right. Although, of all three, Molly is the easiest to predict. For example, when my wife goes to the kitchen for any reason, Molly expects to be fed. It took Molly only a few short weeks to train Kathy as her slave, but Molly’s persistence paid off.

But what of the human brain and the stock markets? It is known that we only use 10 percent of our brains, but that is not true. The human brain is complex, with more neuronal connections than there are stars in the universe. Let’s think of the brain like a footy team. Using AFL as an example, we might field a side with 24 players. Of those, two will be on the bench ready to come on at a moment’s notice. The remaining 22 players, all on the field, do what their positions require. But they will not all be busy at the one time.

Our brain is much like an AFL team. We use all of our brain; just not all at once. That is a good thing because (a) it would be exhausting (the brain uses about 20 percent of our energy) – and (b) we would be in constant conflict with ourselves. Instead, our brain orchestrates a merry opera in which we ramp things up and tamp things down as our circumstances require. For example, when the emotional part of our brain (the limbic system) is in play, the pre-frontal cortex (the thinking, reasoning, decision-making and inhibitory parts of our brain) damps down with the effect. When we are upset, stressed, anxious or excited, we are not doing our best thinking. It’s much like the star forward going off the ground right at the time when kicking a goal is crucial.

You might think this is an interesting lesson on the brain (or not), but what does it have to do with investment markets? Investment markets operate in much the same way, although sometimes less predictably. The Buddy Franklin-like full forward may be seen as somewhat of a stalwart, a match-winner, a sure bet, but he is not a machine and, as such, he is subject to the same human frailties as the rest of us. Stock markets can be like that too. They have ups and downs, ebbs and flows and sometimes, even crashes.

In a bear market, the blue-chip resource stock that supposedly could not lose, might stumble, just as Buddy did on Grand Final Day (sorry not sorry to the Swans supporters!), while other stocks hold or make gains. Even bonds, often thought of as a sure kick, have dipped.

So, what happens when we play the game and lose? It is disappointing but it is only ever a moment in an arbitrarily punctuated point in time. It is not the end. There is another day, another season, another chance.

Not often do we think this way, but what happens in the world happens – what one person sees as good, the other sees as harmful. Events are neutral; it is our reaction, strongly shaped by our past experiences, that decide whether it is good or bad. For example, when stock markets take a hit, we may view that negatively particularly if we have a holding. However, what if we want to buy into the market? A dip or tumble could present wonderful opportunities. Understanding where our position falls against our long-term strategy is important as is tamping down our limbic system and ramping up our pre-frontal cortex.

It was once said that the only certainties in life are death and taxes. I would change that to “very little stays the same.” This brings us to the need to be both informed and prepared. This is why, at The Investment Collective, we take the time to understand your circumstances, aspirations and risk appetite. We work with you to effectively balance your portfolio such that when one player stumbles, others can help fill the void. Sometimes, almost an entire team can have a bad game. It happens, players will be traded, others retire, but many will be retained because they are the heart of the team and the heart of the team beats strong.

The market has taken a tumble; the rollercoaster is in motion. We do not know when the ride will end. However, we have an ever-vigilant eye on geo, political, economic and social trends coupled with up-to-date research on the companies within your portfolio. This better positions us, as the coaching team, to steer you to a win at the Grand Final.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Human brain when investing

The human brain and investing

Although Oreo has his own letterbox next door, he likes nothing more than watching the world from ours. Perhaps it is a better vantage point; perhaps he likes to look at things from different perspectives; or, perhaps he sees an opportunity to seize more territory (or wealth), at Molly’s house while Molly’s asleep at the wheel (inside in front of the heater).

We will likely never know Oreo’s motivation, but here are five things I have learned from watching Oreo and Molly and the choices they are making:

Cats live in the moment

They take time to enjoy the sunshine or a warm fire. We should too. There is a lot of pleasure in life’s small moments, if only we stop, breathe and take it all in.

Curiosity doesn’t kill the cat; it keeps the cat alive

Cats are attuned to changes in their environment. They do not get emotionally invested in catching that mouse if a vicious dog is barking at them. But, if they learn that a fence contains the dog, they may well go back to hunting that mouse. They stay alive to what’s happening around them, making adjustments as necessary, without being consumed by it.

You don’t need to lick all four paws at once

Sometimes the right decision is to start smaller and to invest just a little. You may elect to clean just that one paw, or you may decide to make a bigger investment and wash all four. But not everything is an ‘all or nothing’ decision.

Cats land on their feet

Probably not if you drop them from a 30-storey building (please don’t try) but, like walking a tight rope, they move with such precision, grace and steeliness that, even faced with volatility, they get safely to the other side.

Cats do not really have nine lives

They are just good at assessing their risk. Oreo knows that as a strong, young cat, he can be a little braver. He does not need to spend as much time lining up his jump. His inherent strength, agility and balance allow him to take a risk. And, if he does get it wrong, he has a lifetime ahead of him to correct his error. Molly, on the other hand, as a much older cat, knows she needs to play it safe. She adopts a lower-risk strategy, opting to protect what she has, resisting the urge to chase the shiny new object promising high yields (that may not deliver). Like Molly, people generally become more risk averse as they get older meaning that investment strategies that work for a 25-year-old with no dependents probably won’t work for a 75-year-old.

While I draw some wonderful lessons from watching these two felines, for humans, the world is much more complex. Our brain is both amazingly evolved and concerningly flawed. We are filled with cognitive biases (it is estimated there are in excess of 200 biases) which can lead our thinking away from the correct judgement, without us even knowing. There are reasons for this.

Our brain is a slave to speed, efficiency and comfort. It dislikes uncertainty and it dislikes dissonance (two conflicting thoughts). Fortunately, or unfortunately, the brain is also a prediction machine. Where information is unknown, our brain will simply predict. And, to do that, it uses our past experiences. You see, when making decisions, we do not jump forward to a clean sheet of white paper and consider all information anew. No, we travel backwards into our memories and experiences – but not all of them, because not all memories are created and stored equally. And not all memories are real (yes, made-up memories really happen).

We do not store memories as they have occurred. We store them as we interpreted them at the time, which is why two people can have different recollections of the same event both vehemently believing they are right. Plus, we attach emotion to our memories meaning that a more emotional event will feature more heavily in our memory. That stands to reason, but it can also lead us to over-weighting one experience while discarding or ignoring another that may be equally or more relevant to the decision at hand.

In essence, we think, when we make decisions, that we are being rational, objective and well considered. When, in fact, quite often, we have formed the decision in our subconscious and everything else is a rationalisation after the fact. Our brains are almost too smart for us.

No one can completely overcome the flaws of the human brain (thought to be the most complex structure known to man). However, our aim, as your financial advisers, is to bring a balance of this type of awareness, robust analysis and empathy to better understand, identify and help implement a financial strategy that is tailored to you so that if we were all cats, Oreo can enjoy the letterbox and Molly can enjoy the fire.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today

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Why compliance is important

Why is compliance important?

This is Molly after we spoke to her about the importance of compliance.

For her, the rules are less complicated, do not pee inside! However, there are still consequences if she ignores them. Nevertheless, with one simple compliance statement, she nodded

We get it. For many, compliance can be a snooze-fest. Compliance statements lack the cracking page-turning pace of a John Grisham novel, but the rules we must meet are embedded in those pages. There are a lot of them because there are a lot of risks. Little is more personal to us than our money.

The rules, while necessary, are increasing in complexity, sometimes leaving us to feel that we are made to jump through the hoops of a bored bureaucrat’s design in some sort of bizarre other-worldly circus. Then again, what if we were to re-frame how we think about compliance? Familiar with the names Bernie Madoff and Melissa Caddick? Madoff died in prison about 12 months ago while serving a 150-year jail sentence for defrauding up to US $65 billion from his clients. He fooled some of the best.

Closer to home is Melissa Caddick. Many of us had heard of Caddick in 2020 when the Australian Securities and Investment Commission (ASIC) raided her home, froze her bank accounts and properties, and prevented her from leaving the country. Court documents revealed that Caddick’s fraud had started some 11 years earlier when she set up her financial firm without the necessary AFSL (Australian Financial Services Licence). An AFSL, issued by ASIC, is required for all those providing financial advice to clients or trading in financial products or markets. Among other things, an AFSL imposes ongoing conditions such as legal compliance, training and development as well as sufficient financial resources to carry on the approved business. It is a means of oversight in a complex and changing world.

Unlike advisers at The Investment Collective, neither Caddick nor her company had an AFSL. What Caddick appeared to have was an abundance of confidence, an enviable lifestyle (both leading to an impression of credibility) and a lack of remorse or regret about conning friends and loved ones out of their hard-earned cash. It also appears she played on certain biases, a key one was herd mentality bias (or an ‘everyone else is doing it’ strategy). As humans, we are social animals who want to be part of the herd. Confirmation bias was at play. From what we know, Caddick’s investors took her at her word, accepting Caddick’s after-the-fact confirmation about investments and trades that she had made on their behalf. It is estimated that Caddick defrauded approximately 72 investors of around $23 million. Among these investors were family and friends – people who both loved and trusted her and who perhaps aspired, at Caddick’s urging, to greater levels of financial success, increasing their vulnerability and decreasing their critical thinking. She created the perfect storm of deceit, desire and dependency by carefully controlling the information she disseminated to them. As for Madoff, he fooled some of the best, even when the reported returns were too good to be true.

The saying is true – “if it feels too good to be true, it probably is.” The reality is that investment markets go up and down, our needs change and although we might wish to be part of the herd, that does not allow for strategic differentiation and tailoring. The Investment Collective exists to ensure the integrity of your investments (but not to guarantee the outcome). Anyone who promises high returns with little to zero risk is not telling you the full story. Investment carries risk, but most aspects of our lives do.

At The Investment Collective, our advisers are registered with ASIC. This means that The Investment Collective holds an AFSL and as a condition of that, our advisers are appointed as authorised representatives. You can find the ASIC registration for each of our advisers at the following website.

Coming back to compliance, and speaking for myself, compliance sometimes makes me want to tear my hair out. There are two ways of looking at it; one is to characterise it as a costly, burdensome, bureaucratic exercise in box-ticking; the other is to consider it as simply ‘good business’.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Unpredictable stock market

Coping with the unpredictability of financial markets

Coping with the unpredictability of financial markets

There she sat, perfectly still with a look of concentration on her face – yes cats have facial expressions too!

Quietly, patiently, she waited. What was making that rustling sound in the bushes? Was it a plaything? Was it something she could eat? Or was it merely something to be toyed with for her amusement? With her body on high alert, she poked her nose forward for a closer look, but she had to protect herself too. It was compelling, too compelling to just walk away. She had to be certain, was it friend, foe, food or simple frivolity? At last, we see it, a dinosaur (or, to you and me, a skink). The hapless creature shed its tail but she was too smart for that. She knew where the
real prize lay.

Molly’s commitment to finding out what was in the bushes, and her willingness to sit and wait, got me thinking about the parallels between Molly’s behaviour and human behaviour.

Molly needed to be certain. And so do we. The human brain is wired for survival. Its number one priority is to keep us alive and to do so, it constantly scans for threats. But our brain, in its little black box (our heads), has no direct contact with the outside world. Instead, it must wait for signals from our senses and then make lightning-fast decisions about whether something is a threat to us or not. Uncertainty, by its very nature, is a threat to the brain.

How then, as humans, do we cope with the unpredictability of financial markets, let alone life itself when our brains find uncertainty so difficult? As humans, we are generally better able to cope with bad news than we are with the anticipation of bad news. Why? Because when we know, we can act. A recent study showed that participants who had a 50:50 chance of getting a painful electric shock had higher stress responses than those who knew for certain they’d receive an electrical shock. It’s the fear, the unknown and the anticipation that causes anxiety or stress.

But there are some useful tips that can help:

  1. Simply knowing that our brain dislikes uncertainty is a start. When we are uncertain, different parts of our brain are playing tug of war and that uncomfortable feeling we get is perfectly natural. Did you know that excitement and anxiety trigger similar physiological effects? We can wrestle back control by naming and reframing our emotions. That doesn’t change the external world, but it can change the way we view it.
  2. Knowing that markets are volatile, uncertain, complex and ambiguous is also important. We work with you for long term benefit. What happens daily shouldn’t derail your long term strategy. In 2002 Steven Bradbury won the 1000m Olympic Skating by sticking to his game plan even as he was almost lapped by his four leading competitors. Like Molly with her skink, Steven’s commitment to his strategy ultimately saw him get his prize.
  3. Speaking to your financial adviser. We can’t predict the future, nor can we give you the certainty you crave, but we can draw on our experience. We have experts who watch the markets for a living. That doesn’t mean we have superpowers to pick the super stocks, but it does give us, and you, an edge. And, sometimes, just being able to talk through your concerns can help.

In the financial markets and indeed the world, nothing is fail-safe. But your investment and your trust are as serious to us as that skink was to Molly.

After her successful slaying of the dinosaur, Molly was able to retreat to the comfort of her easy chair for blissful sleep. We hope you can too.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Thoughts in mind when investing

Understanding investment biases

Why do we have investment biases?

As he took the turn, he was edging ever closer to his idyllic cottage. It had been a tough week and he was looking forward to relaxing and unwinding. And then it happened, he ran out of petrol. On a country road, with no petrol stations for a couple of kilometres, he came unstuck, figuratively and literally. The cursing began, followed by a good kicking of the tyres; he wondered how he could have been so stupid. Why didn’t he check the petrol tank before leaving? He’d meant to do it, but he’d forgotten.

He was unaware that the brain’s thinking centre (the pre-frontal cortex) which sits right behind our forehead, has limited capacity, a capacity that we can increase and improve upon, but only with focussed practice. We only get so many good decision-making hours a day (and this will vary by individual).

The man’s week had been tough. Waking up exhausted, he deliberated over which tie to wear, what to pack for his weekend away, whether he’d leave straight from work or come home first, whether to have the muffin or the toast for breakfast, carefully weighing up the pros and cons of each decision. These decisions, though small, were eating into his limited brain capacity, at the same time lowering both his judgement and his tolerance.

Every decision we make, every piece of self-control we exercise (like denying ourselves chocolate to eat a raw carrot instead), no matter how big or small, chips away at that powerhouse in our head.

The brain supports us by giving us shortcuts. We can call them heuristics, stereotyping, assumptions or biases. In essence, if we have a brain, we are biased. We need these biases, assumptions and beliefs to help us navigate the estimated 11 million pieces of stimuli we receive every day (most of it without our conscious awareness). But biases also have their pitfalls. It is estimated there are around 200 cognitive biases, but let’s take a look at three of them:

Overconfidence bias

This includes a self-belief in one’s ability to pick the right stocks and to time entry and exit into the market or certain stocks. Yes, a level of confidence is good and certainly, things won’t go our way all the time, but overconfidence bias can leave us blinded to contrary indicators or red flags. In this way, it can be akin to confirmation bias (where we only consider information that supports our beliefs or assumptions and discount the rest).

Loss aversion

Our brain is more geared towards avoiding loss than towards chasing gains. A loss aversion bias could result in us not acting at all, standing on the sidelines with our cash ‘safely’ in the bank or channelling our hard earned savings into a risk-averse portfolio when, to fund our wants and dreams, we need a growth geared portfolio (which appropriately assesses and balances risk).

Anchoring bias

If I asked you whether the man’s car would cost more or less than $500 to refill with a new green energy petrol that’s brand new to the market, your guess will likely be influenced by the $500 as it’s the first piece of information you’ve been given. If I tell you that it’s only $200, it will likely seem cheap. But, if I’d anchored you at $100, $200 would seem like a bad deal and you may back away.

Any of these biases (plus the other estimated 197 of them) can cost you money.

Investing can be very personal and therefore very difficult. When things are difficult, the emotional part of our brain (the limbic system) usually comes into play. Our emotional and executive brains co-exist, but when one is active, the other is not. It’s like the rider and the elephant. The rider (the executive brain) thinks it’s in charge. But if that elephant (the emotional brain) wants to go running through the jungle, the rider is next to powerless to stop it.

Here’s where your financial advisor comes in. Backed by a team, and by each other, they are skilled in understanding your circumstances, your goals, your risk appetite, the markets and the best strategy for you. Our robust research and processes are designed, as much as possible, to guard against cognitive bias to improve decision-making and present you with objective options and advice. And, they are trained elephant tamers. Their role is to clear the path, manage the emotion and allow the rider to regain control.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Man placing coins

Why is Molly so lucky?

We rescued our cat, Molly, from the RSCPA about 10 years ago. When we found her, she was in a large cage with about a dozen other cats waiting for their forever home. Some of those cats paraded around the cage, jumping around and darting from one spot to the other proactively seeking out their new owners. Molly, by contrast, was passive. There she was, curled up and snoozing towards the back of the cage near the litter trays. My wife, Kathy, was immediately drawn to her. Why? She looked lonely, dejected and without hope. Molly’s world changed that day, in what was perhaps Molly’s version of a very positive black swan event.

Fast forward about 10 years, and here’s a typical morning for Molly, sprawled out on one of our deck chairs catching the morning sun with a full belly and a contented peace.

Molly the cat

Why am I telling you this? Well, while it’s impossible to know for sure, Molly’s behaviour suggests she spends most of her time in the present moment, simply enjoying what that moment brings. But she remains attentive to possible threats and if a threat arises, she has a strategy, run inside to safety!

While Molly’s life may be simpler than ours, we can draw some interesting parallels.

Unlike Molly, humans spend very little time in the present moment. Instead, we spend most of our waking hours in time travel, ruminating on the past or worrying about the future. There are good evolutionary reasons for this. Principally, we’re wired for survival, making us sensitive to threat (which, in the modern day world, might include stock market fluctuations), and attuned to reward, particularly near term reward. You see, our brains have shiny new object syndrome in that they like newness and novelty. Giving into it feels great but usually only fleetingly, and then we want the next shiny new thing. It’s pernicious, powerful and entirely controllable, with conscious effort.

What does this mean for me? Saving and investing for retirement is a long term goal that our brains, developed over thousands of years, aren’t well suited to. Sticking to our longer term objectives, especially when it means deferring instant gratification, can be hard. For example, thousands of years ago one of the most precious resources was food (still is). However, we could only use what we could consume as saving it was nigh on impossible. We humans, have a natural instinct to consume.

In terms of human evolution, the discipline of saving and investing is a relatively new concept and it is alien to our natural instincts. This creates tension between our natural instincts and our rational decision making. We know what we should do, but it’s easy to fall into the trap of doing what we want to do, unless we have help.

Working with an adviser to clarify and quantify your long term financial objectives and putting in place strategies, structures and investments that help you achieve your longer term financial goals, such as retirement, can help override our natural impulses to consume all that we have today. Plus, our process of regular reviews can help to satisfy the shiny new object part of our brain. You see, achieving goals or milestones can give us the same sense of reward as instant gratification.

So, like Molly, we can have the best of both worlds, enjoying the present moment knowing that we have a safety net in place. For Molly, it’s the ability to run inside; for us, it’s financial security and empowerment.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Person completing their taxes

Who is the typical Australian taxpayer?

Remember the heady days of 2019? They were pre-COVID with fewer restrictions on our movement and a greater ability to get together.

Reminiscing about those pre-COVID days took me back to a large group dinner at a restaurant in which 100 people came together to celebrate. It was a day of freedom, fun and frivolity. The drinks flowed, whether one drank water or wine, the food was plentiful, the jokes – some a little risqué, some corny – added to the convivial atmosphere.  Then came the bill, with a side order of complication.  While some had lived large, others had supped on salad. This large group, in various states of sobriety, needed to decide how to split the bill. The fair thing might be for each to pay for their own consumption but even that was complicated. Some couldn’t really afford to pay.

Now, you may wonder why people came to dinner if they couldn’t afford to pay but what if the restaurant was Scotty’s Famous Restaurant (aka our Federal Government) and the diners were taxpayers paying for government services via taxation. How does Scotty do it?

Each year, the ATO distils tax information from 14.7 million people into a profile of 100 Australian taxpayers.  It’s a nice way of making information more digestible by converting a percentage to real numbers.

So, let’s take a closer look at the merry 100 diners in Scotty’s Famous Restaurant. But, before we do, as with pre-COVID days, the numbers are from 2018/2019 because:

(a)  We can’t have 100 diners together in a restaurant anymore (at least, not in Victoria) and some state borders remain closed.

(b)  The bill is paid after the meal or, to put in in tax terms, we pay tax after the end of the financial year; and

(c)  Some people reach for their wallets a little slower than others, submitting their tax returns late.

As you can see from the illustration below, Scotty’s Famous Restaurant has drawn people from all over Australia.

Breakdown of 100 Australian Taxpayers

The split of diners is fairly representative of the population split in Australia.

But, the number of diners at the table only represents bums on seats. It doesn’t tell us what each has paid or consumed. Some will pay more than others and Scotty’s Famous Restaurant isn’t just famous for its food. It’s famous for its payment method. High income earners pay more than low or no income earners. Why? Because our tax system is predicated on the same principle as our health system, the healthy subsidise the sick, and the high income earners subsidise the lower income earners.

So, how did our diners pay? Nine people paid 48% of the bill while 25 paid no tax.  Some felt that was unfair until the discussion at the table turned to the broader contribution each diner makes to society. Why should a nurse, a teacher, an ambulance driver or a police officer earn less than an engineer, architect or top footy player? 25 of our diners were happy to be earning income while out dining, ten of these operate a business in their own name, while the remaining 15 earn rental income (only 6 enjoy a rental profit).

Scotty knows that paying the bill can spoil a good dinner so he plans in advance and asks for money upfront. Eighty of our diners paid too much and received refunds, while 13 people didn’t pay enough and, not willing to do the dishes, they had to pay more. The remaining seven of our diners, we can call them Goldilocks, paid exactly the right amount.

So, who paid what exactly?  Nine of our diners paid 48% of the bill. Yes, that’s right. Ending the restaurant parable for a moment and returning to real life, 48% of income tax is paid by 9% of taxpayers. The next 31% of taxpayers paid 40% of all net tax while 25% of 14.7 million taxpayers paid no net tax.

We hope you enjoyed this visit to Scotty’s Famous Restaurant. While the restaurant itself is a fantasy, the numbers are a reality and perhaps remind us of the contributions we make, whether monetary or otherwise, are also investments both for our own future and the future strength of Scotty’s Famous Restaurant, aka the great fertile food and cultural bowl we know as Australia.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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Two people shaking hands

The value of trust

Melissa Caddick was a Sydney based fraudster who went missing late last year. Her foot, still secure within her sports shoe, recently washed up on a beach.

Melissa held herself out to be a financial planner, and over several years, weaved an elaborate web of deceit designed to entrap friends and family into investing through her. However, Melissa’s only ‘investment’ was in herself, using investor funds to establish and maintain a lavish lifestyle.

In carrying out her charade she assumed the identity of another, genuine, financial adviser. And it was only when this financial adviser reported the misuse of her identity to the Australian Securities and Investment Commission (ASIC) that the charade finally unravelled.

Melissa was very successful in duping many people out of a lot of money over an extended period of time. How is that possible? A simple check on the ASIC website would have exposed her, but no-one bothered to check. They trusted her, they wanted to believe, and if truth be told, they were greedy to participate in the ‘fabulous returns’ that Melissa seemed to be able to achieve for her investors.

Trust is a very fragile ‘creature’. Once it’s been lost, it’s almost impossible to restore. It’s a fundamental aspect of a relationship that you’d have with a real financial adviser. I’ll often say to a prospective new client, “I’d like to earn your trust”. What I mean by this is that I don’t assume that someone is going to trust me simply because I’ve asked them to. I wouldn’t! I expect to be able to demonstrate through my actions that their trust has been earnt by way of me aiming to deliver tangible and verifiable results. Sometimes this means telling clients things that they’d rather not hear; this investment didn’t perform as we would have liked, but these did; you don’t have enough capital to retire, your fees will need to increase. However, these are all examples of being transparent and correctly managing people’s expectations which is an integral part of trust.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

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