Who needs financial planning?

The fallout of the Financial Services Royal Commission raised the question for consumers of how they can get financial advice they can trust. And for funds, there may be questions about how much effort and focus should be given to financial planning given the lack of consumer confidence.  Is there real value in offering members financial advice?  And who is best placed to deliver it?

If you ask Ben, one of Industry Fund Services’ financial planners – or a recent client of his – the answers to these questions are easy.

Ben recently saved a member around $70,000 in tax and structured his retirement savings to last an extra 20 years, enabling him to retire early to care for his ill wife.

But on hearing his client’s situation, Ben knew this approach would put a big dent in his retirement savings.  Ben set about exploring other options and modelling alternative solutions.

After assessing the options and implications of each, Ben recommended a strategy which comprised:

• drawing a pension from his super instead of taking a lump sum
• continuing to service the mortgage from the pension rather than paying it off
• waiting until age 60 and then paying out the remaining mortgage when he can access his super tax-free.

This resulted in:

• approximately 75% reduction in tax by drawing a retirement income until reaching the age of 60 years rather than taking a lump sum
• a greater retirement savings pool that would last until age 92 instead of age 72. This was the result of a strategy that prevented his super being eroded by a huge tax bill and mortgage payout.

Ben says “it’s very rewarding, especially in cases like this, to see how much better off our members can be with the help of financial planning.

Trying to wade through regulations and taxation on their own can be complex and can potentially be costly if they get it wrong.”

Industry Fund Services partners with several industry super funds to provide financial planning for their members.

We are committed to ensuring that advice is in the best interests of members, and our robust operating model and focus on ethical standards, support this.

IFS licensed financial planners have never received product commissions and our planners are regularly reviewed to make sure that the right processes are being followed.

If you’re a member seeking financial advice, visit us at ifs.net.au to see if your super fund has an IFS licensed planner.

This article is issued by Industry Fund Services ABN 54 007 016 195, AFSL 232514. 

It contains general information only and has been prepared without taking into account your objectives, financial situations or needs.  The above case study aims to illustrate the potential benefits of seeking financial advice. The financial strategy and tax savings in the case study and any outcomes of seeking financial advice will differ depending on your personal financial situation. If you wish to seek financial advice, please discuss this with your financial planner before agreeing to advice.