Recent ASIC research shows that only one quarter of Australians have received financial advice in the past, but 41% intend to seek it in the future. One factor was cost, with 35% believing such advice was too expensive, whilst another impediment was a lack of trust, unsurprising given the results of the recent Haynes Royal Commission.
These sentiments, however, fly in the face of the experience of retirees who have used advisers both before and after retirement, with a very high satisfaction rating.
It may be that it is only by having this experience that the true value can be measured. Here’s how Cheryl and Fiona’s discussion on Account-Based Pensions helped them plan regular income after full-time work.
Growth and decumulation at work
Cheryl and Fiona, 61 and 64, are excited to get started on their retirement plans to volunteer, take more frequent holidays and dine with friends on a weekly basis. They’ve worked long and hard over the years to achieve these goals, but with the cessation of their working income fast approaching, they’re a little nervous about how they will manage their money in retirement. They’ve been contemplating taking their super out and putting it in the bank, maybe some in a term deposit, but interest rates are really low, and having some available for regular withdrawals. They have concerns at managing their savings when they have always had regular payments coming in to meet their expenses.
Luckily Cheryl and Fiona decide to ask for some advice around what other options may be available to them that have worked for others in retirement. An experienced Retirement Essentials Adviser was able to explain exactly how an account-based pension could fit their needs.
Account-based pensions utilise superannuation savings to perform the dual benefits of:
- continuing to invest in a range of diversified portfolios of assets for short term security and/or long-term growth,
at the same time as
- making regular payments to the bank account that can mimic the income payments of a wage.
This results in easier money management in retirement, and the potential for your investments to last longer compared to investing only in cash. Timing is critical. This option was only available to Cheryl and Fiona because they had not yet withdrawn their superannuation. Superannuation has some strict rules around what you can and cannot do, and they may not have been able to get all of their super into an account-based pension if they had withdrawn it without first seeking advice.
Put simply, a 45-minute consult has given Cheryl and Fiona the confidence and understanding to decide whether switching their superannuation from accumulation to an account based pension was the right thing for them to do. The price of this consultation was $150, so they both felt that they had received great value for money.
Back to financial advice basics
So what is financial advice and how do you know if you need it?
There are many differences in the types of advice on offer, the price tag, and what you can reasonably expect to receive.
Advice falls into two broad categories – general and personal. ‘General’ advice is information which helps consumers understand financial products, services, rules and processes. It does not take your particular individual situation into account, but may be able to provide enough education to help make more informed decisions about the choices available.
‘Personal’ financial advice is related to your personal financial situation and needs, which may include recommendations or a tailored financial plan. Such detailed advice may be charged at up to $3000-$5000
Advisers must hold a AFS licence issued by Australian Securities Investment Commission (ASIC) or work for an organisation which holds such a licence. Advisers must also meet professional standards and keep their credentials up to date. ASIC maintains a financial advisers register where you can check the qualifications, experience and licence details as well as any possible misdemeanours of the adviser.
Meeting the needs of our members
With decades of experience in the financial services sector, the team at Retirement Essentials wanted to create an advice solution which would tackle the ‘big four’ issues that were highlighted in the final report of the Haynes Royal Commission. These were:
- Conflict of interest
- Need for low fees
And that’s exactly what we’ve done with our 45-minute general advice consultations.
So if you have a financial worry and want to learn more about ways of solving it, or simply wish to feel more in control of your own financial future, call us today and make a time to discuss, and decide what’s best for you.
This article is provided by Retirement Essentials Representative Number: 001260855. We are an authorised representative of SuperEd Pty Ltd ABN 88 118 480 907 AFSL #468859. This information is not intended as financial product advice, legal advice or taxation advice. It does not take into account your personal situation, goals or needs and you should assess your own financial situation, consider if the information is suitable for you and ensure you read the relevant Product Disclosure Statement (PDS) if you choose to make any changes to your financial situation. It is always advisable to consult a financial adviser before making financial decisions.