I have been a financial adviser for about 20 years, and met with quite literally hundreds of clients in all stages of life and with differing financial needs. It has always been fascinating to learn how people think and act in respect of their wealth. The financial planning process itself is pretty straightforward – confirm and clarify objectives and develop strategies, structures and investments that will help meet the objectives of our clients. As such, for me, it is the interaction with clients that I find interesting and sometimes still surprising. Listening to a client, and confirming back to them your understanding of their objectives and preferences is of course paramount in this process.

However, when I think of what I’ve actually spent most of my time discussing with them, it pretty much comes down to the same things, time and time again:

• Spend less than you earn.
• Invest surplus income in quality assets which generate income.
• Review those assets on a regular basis.
• Structure your financial affairs as simply as possible, but no simpler.

When it comes to investments:

• As a financial adviser my ‘value proposition’ does not include ‘shooting out the lights’ on investment returns (quite frankly, if I could do that on a consistent longer term basis, I wouldn’t need a day job!)
• Risk always equals return.
• We don’t want to avoid risk. However, we need to properly assess the risks and ensure we are appropriately compensated for them.

My aim is always the same. To place my client in a position to make an informed decision. It’s always their decision, I’m simply looking to provide constructive input.

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.

Last week the Victorian Government introduced Stage 4 restrictions in an attempt to mitigate the spread of the COVID-19 virus throughout the community. Never before has the state experienced such a level of disruption to business, communities, and individuals. In this situation, and given the circumstances which contributed to it, a level of disquiet, frustration, and anger are absolutely understandable. Whether this lockdown strategy will be successful or indeed worth the price, remains to be seen.

That said, with all the negativity abounds, it’s important to be mindful of focusing on what we can individually and collectively control. What we can actually control comes down to what we think and what we do (including how we choose to react to events). That’s it! How we think will inform the priorities we choose and in turn, will impact on the choices we make.

The outcome of this will also depend on our perspective. Denying, or arguing against the reality of our situation may help us to ‘let off steam,’ however, it may also serve to hinder acceptance of a reality that individually we can’t control.

Life’s difficult, and at the moment it seems more difficult. However, accepting that life is difficult allows you to move towards opportunities for growth, learning and gratitude. The other aspect of perspective is a heightened sense of gratitude. Sure, freedoms that we may have previously taken for granted have been suspended, however, I had a good night’s sleep, warm and safe in my bed and in the morning had a warm shower and a full breakfast!

The final aspect of perspective is to know that all things end, and this certainly will also. It can be difficult to see this ending whilst we’re still very much in the middle of it, but it will end.

In the meantime, look for opportunities for growth and learn to remain optimistic knowing that we will get to the ‘the other side of this bridge’.

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.

Isn’t it interesting how life forces you to adapt?

Over the last several months, the  COVD-19 situation has spun off many examples of how we’ve been obliged to adapt. However, the one example that I’m specifically thinking of is adapting to ‘virtual meetings’ with clients using ZOOM.

Now, I’ve been aware of ZOOM for some time. I’ve occasionally participated in a ZOOM meeting (organised by someone else), and I have thought to myself, every now and again, ‘I really must find out more about this ZOOM thing…some day.’

Well, that day arrived with a thud in mid-March when, following Government direction, we went from having zero staff working remotely to having 90% of staff working remotely. That presented us with a challenge. A significant aspect of our value proposition to clients involves meeting with them on a regular basis to review their circumstances and preferences and to make any adjustments to their strategy as may be required. These sorts of meetings are best held in person. In the first week or so I tried to replicate these meetings via telephone calls. But of course, now you can’t see your client and you can’t share written reports or data with them.

Then I started watching YouTube videos about ZOOM, and they helped, a little. I only really started to make progress in my understanding of, and comfort with, ZOOM by just trying different things and asking work colleagues lots of ‘dumb’ questions.

So now only a few weeks later I’m feeling pretty proficient at using it. I can now readily organise meetings, adjust the security settings, share a screen, as well as recording the meeting. I particularly enjoy personalising my virtual background (my favourite is the standard beach back-drop.)

And clients love ZOOM! In fact, I look after some clients whom I think we might never see in our offices again. They can get all they need out of our meetings without ever leaving the comfort and safety of their home. Of course, as I mentioned above, sometimes you just need to sit across the table from someone, but going forward I really do think that ZOOM meetings are going to represent a significant part of our interaction with clients.

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.

Recently, I saw the alter-ego of Barry Humphries, Dame Edna Everage, in performance at the Melbourne Arts Centre. It was, as you might expect, a deliciously irreverent, and ‘politically incorrect’ show played to a capacity audience of some two and a half thousand people.

While enjoying the show I was wondering about the fact that here’s an 85 year old, who apparently ‘retired’ from the business 5 years ago, up there on stage for over 2 hours. What was also very evident was the sheer joy that the Dame exuded – you could see that she was enjoying herself immensely, and, I’m assuming, hadn’t returned to the stage because she’d run out of money!

So what does ’retirement’ mean anyway? It’s clearly different to the retirement of earlier generations where it generally meant stopping work altogether and pursuing interests in travel, social activities and more time with family.

As an aside, do you know why the age of 65 was selected as the ‘retirement age’? It dates back to 1880 when the German Chancellor, Otto von Bismarck, introduced a social security system to his country. He selected that age because he knew that most Germans would either not reach age 65 or if they did, wouldn’t live much past it. So the social security system wouldn’t really cost much!

Nowadays, retirement will generally include travel, social activities and family but also, for many people, some form of ‘work’. In conversations we have with our clients we increasingly learn of preferences people have to keep working for a few days a week – but at something that gives them pleasure and for which any income earnt is simply a ‘bonus’.

Clearly, retirement means different things to different people and there’s no right or wrong. Our role as your financial adviser is to help build and structure your wealth such as to provide you with ‘options’ in terms of pursuing whatever retirement may mean for you.

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.

Over the years I’ve lost count of the number of conversations I’ve had with clients about money; how they think and feel about it, how much they might need and so on.

It seems to me that there’s really only one value of money, and that is that money gives you options – more money, more options, less money fewer options.

Interestingly, having more money, and therefore more options, doesn’t seem to mean much more than that. In my experience, it doesn’t mean you’re smarter, funnier, or even better looking than anyone else. It simply means you have more options.

Having more money also doesn’t seem to mean that you’ll choose the right option. A large part of what we do as financial advisers is to help our clients confirm and clarify their objectives, and help them to work out what their realistic options are. I underscore ‘realistic’ because sometimes we need to confirm to clients that some options simply are not realistic, or if achievable, may have ‘unintended consequences’.

As an adviser, I’m never, ever, going to tell a client how to spend their money – that’s just rude! The end result I’m seeking to achieve is to ensure my client has a clear understanding of what their realistic options are, and how to achieve them, such that they can make informed decisions.

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.

There are currently NO ‘death duties’ in Australia, all Australian states having abolished them back in 1979.

However, there are taxes that may be payable as a consequence of death. In other words ‘if it walks like a duck, and sounds like a duck…it’s a duck, isn’t it’?

There are several of these but the one I want to focus on today is the potential tax that’s embedded in your superannuation benefits. It’s embedded in a way that you might not even see unless you know what you’re looking for.

To see ‘this duck’ you need to first understand that your super benefits are categorised as either ‘taxable benefits’ or ‘tax-free benefits.’

The first is ‘taxable benefits.’ These include benefits arising from salary sacrifice contributions, personally deductible contributions or employer contributions (i.e. the 9.5% super guarantee). Essentially, any benefits arising from contributions on which someone’s received a concession (read ‘tax deduction’). Whether there’s any tax actually due on these benefits depends on who receives them. If at the death of the super account holder the taxable benefit is paid to a spouse or dependent child, for example, no tax is payable. The logic being that the benefit is actually helping someone who was directly dependent on the deceased; this being one of the purposes of superannuation. If on the other hand, the taxable benefit is paid to an adult child who is not financially dependent on the deceased, tax of up to 16.5 % (or more) may be applied. The logic being that superannuation was never designed to benefit individuals who were not financially dependent on the decease and, as such, the Government wants to ‘claw back’ some of the concessions (read ‘tax deduction’) that were received by the deceased.

Keep in mind that for someone who is already accessing their super via a pension (e.g. someone over the age of 65), the distinction between ‘taxable’ and ‘tax-free’ benefits is irrelevant. Any and all amounts paid to them, while they are alive, are tax-free in their hands.

However, it’s when this person dies that the ‘taxable’ benefits could turn into a ‘death duty’ (as noted above, depending on who receives it.)

For example, earlier this year I met a lovely gentleman in his early 70’s who was on his death bed. He had no partner and only one adult son who was not financially dependent on him. He possibly only had a few days, perhaps weeks to live and wanted to know if there was anything he should do while he was still alive to reduce tax payable by his son (his sole heir). As it happens, he had about $200,000 in his super account balance consisting entirely of taxable benefits.

My advice to him was to immediately contact his super fund and arrange for the full redemption of his super paid into his personal bank account. As noted above, any and all payments received from super in respect of a person over age 65 are tax-free ‘in their hands’, in other words, while they are alive. This simple action saved his son about $33,000 in ‘death duties.’

Keep in mind that this can be a tricky area, and there’s a bit more to what I’ve described above, so it’s important to seek out the right advice.

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.

As a financial adviser I have yet to come across anyone who actually wants to move into aged care.

The prospect of moving out of the family home and leaving behind the comfort and familiarity of one’s home is truly daunting. It’s always a step closer to ‘the end’ as no one ever moves from aged care back to home. As a result, many people simply do not wish to discuss the subject…until they have to.

Many of the conversations I have had regarding the finances of an elder family member follow an ‘incident’, such as ‘Dad falling over in the bathroom’. It then becomes glaringly obvious that the individual simply cannot remain in the family home.

In such a scenario, planning how to fund the upfront and ongoing costs associated with moving into aged care is often ‘done on the run’, which is unfortunate because it’s a ‘financial labyrinth’.

Typically, people tend to only plan for upfront costs (which usually range anywhere between $300,000 to $1,000,000). However, there is a myriad of ongoing costs that can run into the tens of thousands of dollars per year as well as the ever-increasing costs associated with moving into aged care.

As you may be aware, a Royal Commission into Aged Care was commissioned in October last year and is currently hearing submissions. Some of these are truly heartbreaking. The Commission is due to hand down its recommendations early in 2020 and if the recent Hayne Commission into financial planning is any guide, regulation and compliance in the sector will increase, followed closely by expenses.

I’d encourage people to have the conversations about aged care and if necessary, speak to your Investment Collective adviser. We can help.

I’ve been a financial adviser for about twenty years now. I still get a ‘buzz’ out of making a positive difference in people’s lives by helping them achieve what’s important to them. The foundation blocks of my own understanding of financial planning were taught to me by my parents. They didn’t call it financial planning of course. It was just about how they conducted their own lives and the advice they would give to my siblings and I. Advice that was underscored by their own actions. They worked hard, they never spent more than they earned and they invested for the longer term in ‘real assets’ that they understood. Perhaps not all that ‘sexy’, but it worked for them. I assumed all parents were like mine, teaching their kids the basics of financial planning. Of course, many parents were like that. But not all. And if kids weren’t learning it from their parents, they certainly weren’t learning it at school.

Last year I had the opportunity to revisit my old secondary school, Mazenod College in Mulgrave, Melbourne. It had been decades since I was last there and the facilities the current students body enjoys are far and away better than in my day. Instead of a footy field that turned into a quagmire during winter, the boys make use of a ‘synthetic’ footy field. There’s state of the art cooking facilities to rival the MasterChef set to teach the boys how to cook. However, what doesn’t seem to have changed much is the curriculum. Financial planning 101 still doesn’t get taught.

I think this is a material shortcoming in the education we’re providing to our children. We teach them a trade or a professional, but we provide them with virtually no tools to help them manage their own money and achieve financial independence.

So, in the last few months I started doing my little bit to remedy this situation.  I’ve started seeking out opportunities to present my version of ‘Financial Planning 101’ to secondary school students. To date I’ve presented to students at Huntingtower School and St Michael’s Grammar, both in Melbourne. My version of ‘Financial Planning 101’ includes the financial process as we deliver it here at the Investment Collective; a consideration of what really drives residential property prices; basic investment principles, as well as ‘4 easy steps to becoming a millionaire’. This last topic garnered particular attention.

I reckon that if one or two kids comes away with a heightened curiosity and an interest in their own financial planning, I’ve achieved something!  I get a lot of personal satisfaction out of it, and am keen to continue, so if you’d like me to present to your school, please drop me a line at robert_syben@investmentcollective.com.au.

Recently, I did something I haven’t done in 40 years. I went back to my old high school – Mazenod College in Mulgrave, Melbourne. I’d received an invitation from the ‘Mazenod Old Collegians Association’ to join a tour of the school. For the most part, I had fond memories of my years at Mazenod College and decided it was about time I went back and have a look at how it had changed.

And boy had it changed! I was truly amazed at the range of facilities now in place at the school. An enormous indoor basketball stadium stood on the spot where there once stood a yellow portable classroom which our class occupied for a couple of dreary months during the winter of 1974. Gone was the uneven, muddy footy field, replaced by immaculate looking synthetic grass. Apparently it ‘only cost $1 million’…gulp! There was a state of the art library, including a 300 seat theatre complex. There was even a building dedicated to providing students with cooking classes, which looked like a set from MasterChef.

I asked, Sean, our tour guide (an ‘old boy’ himself) whether the curriculum itself had also changed. Sean proceeded to rattle off a range of subjects. ’Is Financial Planning 101 on the curriculum, Sean?’, I asked. Sean looked at me, paused for a few seconds and replied, ‘well no, not as such, but we do offer Accounting’.

That was my cue. I stepped onto my ‘soapbox’ and shared with him my experience of 20 years in financial planning. That many, many people are essentially ‘illiterate’ when it comes to their own financial planning. They leave school with a trade or a profession, but not the first clue about managing their own money and taking responsibility for achieving their financial goals. And the problem can be sourced back to their education. Many school curriculums include worthwhile and useful subjects (and quite a few useless ones). However, to my mind, we’re providing our children with a disservice if we don’t provide them with the knowledge and tools to manage their own money. Many people, after they’ve left school, recognise the gap and seek to redress it. And some of those find their way to financial planners, like The Investment Collective where the focus if not only on establishing a personalised financial plan and reviewing it on a regular basis but bringing people up ‘the learning curve’ in their understanding of personal finance and investments

Sean was pretty interested in all of this and asked me whether I’d be interested in speaking to some of the students on Financial Planning 101. ‘Absolutely’ I replied.

If you would like to learn more about personal financial planning or any of our other services, please contact us today.

In any review of a client’s circumstances and strategy, as their adviser, I am invariably going to ask the following question, ‘how much are you spending’? What I’m trying to confirm is whether a client has enough money coming in to pay for what they tell me is important to them, now and into the future.

You may find this strange, but most people don’t really know how much they are spending. Sure, most will have an idea (often the wrong idea), and some (the minority) will have detailed it out on a spreadsheet.

However, an accurate and truthful answer to the question is critical. Without it, we have no real way of knowing how successful, or otherwise, the strategies we’ve put in place are likely to be. We also have no real way of identifying additional resources that may be applied to help to achieve outcomes we’re looking for.

So, what’s the best way of working it out? Well, as noted above, some people maintain detailed spreadsheets. This is fine, but generally more than required. A simple review of monthly credit card and bank account statements (over say a 6 month period), will give most people a sense of where the money is going. Personally, I use Quicken software in which I record all credit cards and banking transactions to help me monitor the cash flows of my little household (my wife hates this!).

Knowing where the money’s going, may not sound particularly exciting, however, it’s absolutely a fundamental part of planning for your financial future.

If you would like to learn more about our personal financial planning services, please contact us today. One of our advisers would be delighted to speak with you.

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.