Financial advice: it’s like satnav for your super
Can you confidently drive off into the sunset knowing your superannuation has enough in the tank? Discover the value of advice and how the right kind can steer you in the right direction to your best possible retirement.
Is your super able to keep up with life in the slow lane?
As you approach the crest of your working life and look down the open road towards retirement, the question isn’t ”are we there yet?”, it’s will your superannuation get you ”there”. In other words, have you got enough in the tank?
Before you drive off into the sunset, it pays to have a reliable roadmap to retirement, and that’s where the value of financial advice can help. Think of it as your superannuation satnav, able to pilot you to Dreamsville. Population: you.
It’s time to buckle up and embark on three unique journeys of people just like you, modelled by CoreData in research commissioned by Sunsuper, and see how each is at least $197,000 better off throughout their retirement.
Open the tabs below to discover more.
The value of advice: Lisa is $213,000 better off throughout her retirement because she sought financial advice.
Lisa, 58, single, registered nurse transitioning to retirement
Over the past few years, Lisa has worked as a senior, full-time nurse. Now she feels it is the right time to step back and transition to her retirement and independence. After speaking with her financial adviser, Lisa is on track to ease back on her working hours now and retire fully at age 65.
Click the numbered markers to follow Lisa’s journey.
Immediately
Transfers super balance of $250,000 into a Sunsuper Transition to Retirement (TTR) Income Account.
The value of advice for Lisa is a comfortable retirement, with more super, and less government reliance.
What is the value of advice for Lisa from age 58 until retirement – age 65?
$
Lisa paid for financial advice:
$3,000
up front +
$1,500
each year from age 58 until she retires at 65
What is the value of advice for Lisa from age 58 until life expectancy – age 87?
$
Lisa paid for financial advice:
$3,000
up front +
$1,500
each year from age 58 until her life expectancy of 87
| Age | 58 |
| Retirement age | 65 |
| Family | Single, empty nester |
| Income | $60,000 p.a. |
| Living expenses | $35,000 p.a. |
| Additional expenses | $5,000 for two holidays every year |
| Superannuation balance | $250,000 |
| Non-super financial investments | $30,000 |
| Home | Yes, with $150,000 mortgage |
| Investment property | Yes, with $200,000 mortgage |
| Other liabilities | $10,000 credit card |
| Insurance | $29,000 Sunsuper default life + TPD insurance cover |
| Future lump sum | $100,000 inheritance in ten years |
Advised vs Unadvised
Advised
Lisa advised:
Lisa paid significantly less tax over her lifetime.
Lisa didn’t reduce her spending in retirement and also paid for two holidays each year.
Lisa retired at age 65, comfortable that she had enough in savings.
VS
Unadvised
Lisa unadvised:
Had Lisa not sought financial advice, she would have paid more tax and interest.
Lisa would have experienced more financial pressure during retirement as she would have had fewer financial assets to utilise.
The value of advice: David and Jenny are $695,000 better off throughout their retirement because they sought financial advice.
Couple, David and Jenny, both 60, close to retirement
David and Jenny are both 60 and close to retirement. David is a self-employed tradesperson, and Jenny is a part-time teacher. They are comfortable moving into retirement, but when David is suddenly forced to retire early due to an injury, they seek financial advice.
Click the numbered markers to follow their journey.
Immediately
Pay off car loan with money in bank account.
The value of advice gives David and Jenny a diverse and secure future, even with David having to retire early.
What is the value of advice for David and Jenny from age 60 until Jenny’s retirement – age 65?
$
David and Jenny paid for financial advice:
$3,000
up front +
$1,500
each year from age 60 until Jenny retires at 65
What is the value of advice for David and Jenny from age 60 until age 88?
$
David and Jenny paid for financial advice:
$3,000
up front +
$1,500
each year from age 60 until Jenny’s life expectancy at 90
| David | Jenny | |
|---|---|---|
| Age | David: 60 | Jenny: 60 |
| Family | David and Jenny: Three adult children with grandchildren | |
| Income | David: $180,000 p.a. (self-employed) | Jenny: $60,000 p.a. |
| Living expenses | David and Jenny: $55,000 together p.a. | |
| Additional expenses | David and Jenny: $8,000 together for yearly holidays in retirement | |
| Value of business | David: $700,000 | Jenny: - |
| Superannuation balance | David: $100,000 | Jenny: $250,000 |
| Non-super financial investments | David: $100,000 | Jenny: $50,000 |
| Home | David and Jenny: Yes | |
| Investment property | David and Jenny: Yes, with $350,000 mortgage | |
| Other liabilities | David and Jenny: $10,000 car loan | |
| Insurance | David: $25,000 Sunsuper default life + TPD insurance cover | Jenny: $25,000 Sunsuper default life + TPD insurance cover |
Advised vs Unadvised
Advised
David and Jenny advised:
Jenny was still able to retire at 65 even though her husband was forced into early retirement.
David sold his business once forced into retirement and invested proceeds into superannuation.
Both were able to live comfortably and take annual holidays.
VS
Unadvised
David and Jenny unadvised:
Had David and Jenny not sought financial advice, they would have been unable to leave a sizeable inheritance.
They would have retained their investment property into retirement which would have carried more financial risk and higher management burden.
The value of advice: Susan and Kevin are $197,000 better off throughout their retirement because they sought financial advice.
Susan and Kevin, early 70s, enjoying retirement
Susan and Kevin are both in their early 70s and enjoying the fact that things are winding down. Kevin’s desire to manage his investments has taken a back seat and he is unsure if their current savings are enough to maintain their lifestyle and leave a bequest to fund their grandchildren’s private schooling.
Click the numbered markers to follow their journey.
Immediately
Wind-up self-managed super fund and transfer $450,000 balance to Sunsuper.
The value of advice for Susan and Kevin means they can maintain their lifestyle while putting away something for their grandchildren.
What is the value of advice for Susan and Kevin from their early 70s to life expectancy?
$
Susan and Kevin paid a one-off fee of
$2,000
for financial advice
| Susan | Kevin | |
|---|---|---|
| Age | Susan: 70 | Kevin: 72 |
| Family | Susan and Kevin: Three adult children with five grandchildren | |
| Living expenses | Susan and Kevin: $45,000 together p.a. | |
| Additional expenses | Susan and Kevin: $5,000 p.a. in retirement for holidays | |
| Superannuation balance - SMSF | Susan and Kevin: $450,000 p.a. together | |
| Non-super financial investments | Susan & Kevin: $20,000 together | |
| Home | Susan and Kevin: Yes | |
| Additional funds | Susan and Kevin: Receive $400,000 from downsizing their home | |
Advised vs Unadvised
Advised
Susan and Kevin advised:
Susan and Kevin were comfortably able to take annual holidays, as their Sunsuper Retirement income account worked hard for them.
They could leave more than $300,000 as a bequest for their grandchildren.
Closing their self-managed super fund (SMSF), and rolling into Sunsuper allowed them to focus more on enjoying their retirement.
VS
Unadvised
Susan and Kevin unadvised:
Had Susan and Kevin not sought financial advice, they would have been unable to meet their bequest goal, so their grandchildren could not have attended private school.
They would have retained their self-managed super fund (SMSF), leaving them having to manage their own super.
Scenarios Developed
- Developed by CoreData
- Three scenarios created to reflect the financial circumstances of ordinary Australians, as informed by our research experience, ABS data and in conjunction with Sunsuper.
Advice Provided
- All three scenarios provided with mock ‘financial advice’ by a qualified CFP® Professional (a CoreData employee).
Scenarios Modelled
- An external paraplanner then modelled the three sets of scenarios with XPLAN, with and without the financial advice provided.
- The differences between the unadvised and advised models for each of the three scenarios was then analysed.
Consistent Return
- Superannuation funds & banks do not earn a different rate of return between the advised and unadvised scenario.
Consistent Livelihood
- The advised scenarios do not earn a greater livelihood from employment by switching jobs, etc.
Consistent Living Expenses
- Living expenses (excluding insurance & advice) is assumed to be the same in both the advised and unadvised scenarios.
Excess Income Distributed to Bank Account
- In both the advised and unadvised scenarios, income (net of expenses and salary sacrifice) is distributed to bank account, unless specified otherwise through advice.
Cost of Advice
- The cost of advice was assumed in advance for each scenario based on the breadth of advice and whether an ongoing relationship was relevant. This is obviously only expensed in the advised scenario.
Conservative Outlook
- The model has erred to conservative estimates by assuming the advised households are not advised to take on more risk.
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