OUR 1ST ANNUAL FINANCIAL PLANNER REVIEW


Planning is bringing the future into the present, so that you can do something about it now - Alan Lakein

I AM excited about this process because normally I'd look at a lot of this on my own.


Having someone else review our financials, who has an unbiased viewpoint AND has so much more knowledge than I do about government and super regulations, made me excited to do this session.

First up I needed to send through the following details so the FP could review our current situation and simulate what our balances were for the end of the financial year. This was to look at any potential salary sacrificing to max out and review where we stand with the overall 8-year plan.

  • Last year's tax returns

  • Current mortgage balances

  • Current property valuations

  • Current super balances

  • Salary sacrifice contributions

  • Last payslips


Next up the FP sent through a short video running through the numbers they collated from the documents I sent, with an updated overall plan and some questions they had that I could cover before our appointed planning meeting. The video was about 20 minutes long and I loved it! I could then save this video for future reference.

I sent through some more information they requested, personal shares we owned so that they can see the value, as well as the super balance from my current employer. I scheduled an online appointment, as the FP is in Townsville and I am in Sydney. I am such a nerd and booked the last timeslot on a weeknight so that I might go over the designated 1.5 hours and not have to wrap it up if we still were talking. We booked 6.30 pm and poor FP was going to have a late night!



Meeting day arrived and we zoomed at the designated time. Hubby was in the background but was happy to let me have the meeting. The FP shared his screen and we went through the current balances for this year. We discussed the differences in salary sacrificing. I am currently having my employer deduct $1250 per month to salary sacrifice and my net pay was reduced by about $900 per month (a tax saving of $350pm). Whilst this has been great because it's automated, unfortunately, I cannot request my employer to have this payment moved to my nominated super fund. It needs to go to the company one. For context, I have kept the company nominated fund MLC as I receive free Income Protection insurance and for the moment the saving is worth it. I would prefer to move this salary sacrifice amount to our SMSF, that is the ETFs we have, AND I can control how much goes in to ensure I max out completely and also any 'carry forward' we do. SO, starting July 2021 I will cancel my employer deducting the salary sacrifice and I will do as an after-tax contribution as a monthly reoccurring into our SMSF. When it reaches $3000, I will buy more ETFs (60/40 split). Since we have a few years worth of 'carry forward' that we can utilise, I will aggressively squirrel away as much as possible into the SMSF as above. As we are close to the preservation age (7-8 years away) our main source of investing is through our Super/Retirement fund.


The amazing bonus of doing it this way is that I have a potential $8000 pa as a tax refund come tax time. This could be reinvested OR used for our travel fund.


Most people don't plan to fail, they fail to plan - John L Beckley

He also discussed some potential 'shuffling' of personal investments into the superfund to capture as much tax benefit as possible and also keep the super fund moving upwards. Below is our progress. The 'green' tagged line (smallest line) is our current status <May21 $397k>. This only represents our super account and as you can see by Jan 2029 the projected value is $1.78m. There are a few $300k jumps that we are thinking of (1st one is like a debt recycling process and the 2nd $300k is the potential to sell our home, pay off our IP, and put the surplus into Super).

The beauty of these discussions is that it's fluid and we can see if there are any other creative ways to move upwards. It gets pretty steep in some areas and at present, we are below the line!



This leads me to his suggestion, and I guess planting the seed of another area we can tap into. Some background - you see my husband's parents made him at the ripe old age of 25 buy CBA shares a few decades ago and they have been dividend reinvested ever since. The FP mentioned a possibility of 'in specie'. My initial reaction was whaaaaattttt … sounds like a biology term! Anyway, it was exciting to learn about … basically, we could move CBA shares to the SMSF and have it be a salary sacrifice type of activity which would also give a tax refund that you could reinvest back into the fund (or spend on travel as my husband and the FP suggested ... ummmm). I also asked about capital gains and then I was blown away, you can choose which shares you decide to move 'in specie' to the SMSF so that you transfer shares that are close to the current market price and avoid CG or transfer high and low priced purchased shares to negate the GC … Crazyyyy….!!!!! Have I lost you yet? Don't worry I am still getting my head around this one and will do more research for the next financial year to see if we want to 'in specie' a portion, as hubby's super contributions have been dismal and this could help boost his up!

'in specie' - An asset transfer is a process of transferring something of value (such as managed investments or listed securities) from one person or place to another. You may be considering moving an investment or asset between different structures of ownership. For example, you can move certain assets from a personal capacity into a trust"

https://legalvision.com.au/what-is-an-in-specie-transfer/


To finalise the meeting, we agreed that:

  1. I will salary sacrifice $2000 per month and buy ETFs

  2. 60/40 ETF split to remain as is

  3. I have homework (is it weird to say I was thrilled?), I will collate ALL the dividend reinvested shares that hubby has had over the last 27 years and table them with the prices and quantity of shares so that if we do decide to 'in specie' we can pick/choose the most beneficial ones

  4. Have our tax returns for FY21 done as early as possible

  5. Have our SMSF FY21 done as early as possible so that we can see exactly the 'carry forward' balances for both of us


Final thought

I know a lot of the community are Personal Finance DIY'ers and I am totally for that and love doing my own finances. However, I do believe we are potentially missing out on the knowledge of someone who does this day in and day out. Someone who has a network of professionals and updates to know when changes occur and has so many life experiences from different clients. Our first year with the FP is a cost of $7000 / couple and the second and subsequent years will be 1% of the value of our super fund (so for 2nd year it will be approx $4000 / couple). This is a lot of money AND I don't think you should just pay that for generic advice. On the flip side, some of the suggestions the FP has come up with, regarding tax deductions and rebating the commission from our life insurances has paid for the fee and then some.

I believe you NEED to still ask hundreds of questions and have multiple scenarios simulated. I believe you need to KNOW and CONTROL your numbers (refer to the Finance 4 U series posts). I believe that if you ask the questions they will answer them and then some. Remember they love this stuff perhaps even more than you do. When they know you're interested they will share.

An FP is not there to perform miracles without your participation. They can save you tax, set you up for your future self to be better structured. Our goal is to NEVER pay tax again once we transition to retirement AND have enough passive income for $150,000 pa and never run out. I can read dozens of books and learn from social posts/podcasts/ YouTube, BUT they are not tailored to my life and what is going on in my world, especially leading into the last decade of my working life.

As always, you DO you :-)

Financial planning is nothing without financial doing

The financial planning team I use is Money Over 50 - Geared for anyone over 45-ish (oldest in a couple). Michael has been so informative and given us some great areas to hack into so that we have more $$'s go to our retirement fund.


Anyone under 45 could refer to Life Sherpa as a great option. Vince and his team are awesome and can tailor your fees to what you need at the stage of life you are in.


Both have a 'discovery session' that is free so that you can see how they fit for you (I interviewed both, and others, over the years 😀) as it is important that they 'fit' your lifestyle and goals - refer to this post for more information).



#retirementplanning #financialplanner #financialplanning #financialfreedom