Receive Financial Advice From A Big Institution If You Must, But Always Make Sure You Get A Second Opinion From Someone Smaller!!

Going to any large institution and asking their financial adviser for financial advice is not a bad idea.  You may even find that some organisations offer you a cheap or free initial financial plan but in the long term this may cost you dearly.

When you seek financial advice, it is important to note there are potentially four major sets of fees to be aware of: an initial financial advice fee, an implementation fee, investment product fees and ongoing financial advice fees.  Over the life of your investments, the investment product fees and ongoing financial advice fees can represent the major components of the total costs; particularly if the business owns or has a financial interest in the product they recommend.

When you get a second opinion, it may or may not be significantly different in terms of the original financial advice strategy offered, however from a cost perspective there could be an opportunity for significant long term fee savings.  Unfortunately, some of the large institutions spend a lot of time maximising shareholder returns and executive bonuses so in-house investment and superannuation options can sometimes be a recipe for long term financial disadvantage.  A smaller organisation can potentially be more cost effective and client focussed with a higher level of personalised service.

If you have a reasonable superannuation or investment balance, it has been our experience that with careful product and investment selection there can be an opportunity for significant long term fee savings from a second opinion.  The great thing about fee savings is that they are yours, tax free, to spend or save as you see fit for the rest of your life!

HOT TIP: It is difficult to know what you don’t know.  So why not take the opportunity now to do a stock take on your financial affairs and consider if you would reject fee savings if they could be made available to you?

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In A Red Hot Property Market Superannuation And Financial Advice May Help You Manage Capital Gains Tax?

In a red hot property market, many investors that are selling their investment property are finding they would benefit from a strategy to assist with optimising their capital gains tax situation.  For some, superannuation contributions might be a good option to consider if they have not left their run too late.

If you are planning to sell an investment property and there are capital gains involved, a good time to start planning is early in the financial year that the property is planned to be sold.  When it comes to capital gains, early planning is the key to a successful outcome so the sooner you start planning the better.

By all means have the conversation with your accountant as well but don’t rely on your accountant starting the conversation with you.  A good accountant will engage you on this issue in a timely manner but a mediocre one may not.  For a great outcome your financial adviser, your accountant and you should all be discussing this issue at the right time.

Visit our website to read our earlier blog about how superannuation could be used to reduce the overall tax liability from a property sale for someone who is self employed.  For those who are employees, salary sacrifice can be used in a similar way but earlier and more detailed planning is required.  It is important to note that in the case study, Brenda could have made additional superannuation contributions for further advantage!

We are currently helping a number of our new and existing clients to deal with this issue as they rotate out of property, but for those who are employees now is the perfect time to plan and with the right advice potentially maximise the opportunity for the coming financial year.

If you know someone else who should know about this issue, put them in touch with us as a matter of urgency.

HOT TIP: If you need help on this issue, act quickly to get financial advice and understand your options before it is too late.