Value of Advice for your best retirement - Part 1
In the first of a three-part series, join Sunsuper's Head of Advice and Retirement, Anne Fuchs, and National Education Manager, Joshua van Gestel, as they look at recent modelling research that examines the material impact good financial advice can have on a case study of a single female nurse wanting to cut back on her working hours as she eases into retirement.
Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super and the things that could affect your financial dreams now and in future with Sunsuper's chief economist Brian Parker and head of advice and retirement Anne Fuchs.
Anne Fuchs: Hello and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering money markets, investing, your Superannuation and helping you reach your retirement dreams. Today I'm with Joshua Van Gestel.
Joshua van Gestel: Hello Anne, good to be back.
Anne Fuchs: Good to have you here. You're our national education manager here at Sunsuper-
Joshua van Gestel: I am.
Anne Fuchs: And you are the best at giving member presentations-
Joshua van Gestel: Thank you.
Anne Fuchs: Education seminars. And for our listeners that don't know me, my name is Anne Fuchs and I head up Advice and Retirement here at Sunsuper. The team and I work every day to make sure our members are getting the right financial advice to meet their retirement needs and dreams. Josh, I have a favour to ask you.
Joshua van Gestel: Yes Anne.
Anne Fuchs: Normally at this point in the podcast, our mutual friend ...
Joshua van Gestel: Mr. Parker.
Anne Fuchs: Mr. Parker is doing his best to keep in good with legal risk and compliance but-
Joshua van Gestel: That's right. So, before we get started it's important that anyone listening know that what we're talking about today is general information only and any advice doesn't take into account in your personal situation. So, you should consider what we're talking about and think about your own circumstances. And if you do want to add on, act on any of this, then please seek some advice by either calling us on 13 11 84 or you can also get a copy of our Product Disclosure Statement from our website.
Anne Fuchs: Fabulous. Well today we are talking about something that I'm incredibly proud of here at Sunsuper that we've done. We've commissioned a piece of independent advice looking at typical member scenarios and the impact, the material impact financial advice had to their retirement outcomes. We've worked with an organization, an independent research organization, very well respected, called Core Data and they've put these numbers together with us to help our members identify, I guess themselves in these stories.
Joshua van Gestel: Yeah, and that's great to actually have you in the hot seat today, Anne, I must admit that for me, going out and presenting seminars and talking to our members day after day to actually see the impact, the positive impact that good advice can have on their lives is a big part of what I love and why I do what I do. But can you take us a bit more deeper into what the research was actually about?
Anne Fuchs: Well, yeah, yeah, sure. It's, and sorry if I just cut you off there, Josh.
Joshua van Gestel: Not at all.
Anne Fuchs: Not at all, I'm not used to being interviewed I confess, I'm normally doing the interviewing, it's a bit strange. But I think the first thing, one of the reasons why we did this research is that it is focused on ordinary Australians. There is a perception, I think amongst the community that financial advice is for rich people, wealthy people. And actually my personal view is that it's great to get financial advice if you're rich, but it's only going to make you richer. Where if you're an ordinary Australian, it's incredibly important that you maximize your-
Joshua van Gestel: Absolutely.
Anne Fuchs: Yeah. You've worked hard your whole life, you deserve to optimize those retirement savings. And so this is where these case studies, we've built them so that our members can look at them, see themselves in the stories, and then know what they should be thinking about and then contacting us.
Joshua van Gestel: So I'll get you to explain a bit more about the case studies in a moment and the impact that good advice made in those case studies. But I thought it's probably worth us quickly going back to some of the qualitative research that we've done in the past when we've asked Australians who have received financial advice about the difference that it made to their lives.
Anne Fuchs: Yeah, I think, so confidence is incredibly important. 80% of people we spoke to that had the confidence to make good quality financial decisions, which I think is, you know, a big part of navigating, accumulating and protecting your wealth. I think the number, 79%, that sounds about right, they felt that they had more control over their money, 80% felt more secure. So I think 77% felt they were more prepared for their retirement and 80% had peace of mind. So what you're hearing is a big chunk, a big proportion of the people we spoke to had got advice, had the sleep at night factor, which Brian rates very highly.
Joshua van Gestel: Which was something I was actually going to mention, absolutely. And so the latest research is slightly different in that it's actually giving us some hard numbers around the dollar value improvement that good financial advice can make to your retirement, and we're talking in some cases, hundreds of thousands.
Anne Fuchs: Correct, yeah. It can be really compelling numbers. So it's all about, at the core of it is around, it's no point having money again at the end folks view of the world if you're not going to spend it. So what do you actually want to do with your money? These stories are about members spending their money, having great lives, having holidays, empowering themselves and their families. Better protection, so when something or if something goes wrong, they're looked after. Paying less tax, I've never met anyone that wants to pay more tax and they're feeling secure in retirement, just great, really great outcomes.
Joshua van Gestel: So, I think all of this is really wonderful, but what I really love about this research is that it's actually very tangible. That we're talking about case studies that people can relate to and that they can understand. So maybe Anne, we dive into one of the case studies and look at the difference that it made for someone's retirement.
Anne Fuchs: Well, I think, maybe we go through the independent woman case study. I think that harks back to a previous podcast series we did about the retirement security for women and the importance of women taking control of their financial situation. So we picked a notional, a fictional member, and we called her Lisa. She's independent, she's 58 years old, she's single. However, she has two adult children that have moved out of home and now her focus is for the first time in a really long time herself and thinking about what retirement looks like for her.
Joshua van Gestel: And Lisa is very typical. I must say of a lot of members that we do meet when we're going around the country presenting seminars. So, what were Lisa's goals for her retirement?
Anne Fuchs: Well, Lisa has been a career nurse, senior full time registered nurse and it's a really hard job, physically demanding, emotionally challenging. And to be blunt, she's just tired. She's been doing it a really, really long time and she decided she needs to step back for her own wellbeing. And so, she's trying to work out from a financial advice perspective, how can she meet her retirement goals, but take the step back that she needs for herself and her wellbeing?
Joshua van Gestel: So, in looking at Lisa's case, there was then some very clear advice that was recommended. Can you take us through some of those pieces of advice?
Anne Fuchs: Yes, I can. And I think I used this terminology a lot about it not being rocket science, that financial advice isn't rocket science per se. So, the simple steps, the advice that was given to her included opening up a transition to retirement account from her Superannuation fund. She had an investment property and the advice was to sell that property and then salary sacrifice back into Superannuation. And Josh, for our listeners who want to know more about salary sacrifice, we've had an episode with Josh on before talking about salary sacrifice and what it can do for your super. And also the other last piece of financial advice was that she was fortunate to inherit a small amount of money from a relative, and so how she was to invest that money.
Joshua van Gestel: So, this isn't something that would be foreign to many of our listeners. And as we said earlier, some of these case studies we actually saw significant improvements into the hundreds of thousands of dollars. So what was it that we actually saw as the outcomes for Lisa or in this case study?
Anne Fuchs: So, if I asked you Josh, would you pay $3,000 initially and then one and a half thousand dollars every year to have $200,000 more in retirement, start working part-time and be able to draw down an extra $12,000 a year from your super account, do you think that's a good deal?
Joshua van Gestel: Absolutely. And at the same time, you've probably given me a lot of peace of mind and comfort.
Anne Fuchs: Exactly. So there is the whole wellbeing factor, which you rightly touched on there, that this member Lisa is being able to, yes, she's $200,000 better off as a consequence. And yes, she's able to draw down the $12,000 a year, but what I love about this story is this woman who has given herself as a nurse, the emotional impact that would have on her, she's put herself last her whole life, she gets to step back and has four days a week for herself. And I think that to me, almost is you know, you can't put a price on the impact that financial advice has to her.
Joshua van Gestel: And I would say, and I know I've reflected on this a bit and that sort of what comes up with doing podcasts like this that I reflect on the number of people, I only hear good advice stories when our members come and speak to me at seminars. But I also hear lots of stories from people like Lisa who probably to a point you made earlier, get very scared about financial advice, not realizing that actually it's small steps and maybe a different perspective that can really shift things quite dramatically.
Anne Fuchs: Correct. And I think probably pointing out too that they think they can't afford it, and I wanted to highlight to our listeners, that if Lisa sounds like you, that you are thinking about how can you start winding down from work, do something to fast track your retirement savings because you're not comfortable that there's enough in there, then contacting us at Sunsuper is a great place to start because you can, if you need that comprehensive financial advice, if you work with an external financial advisor who is registered with Sunsuper and that advice is around your Sunsuper account, you can have that fee that Lisa, you pay the $3,000 I made mention of earlier, paid out of your Sunsuper account. So it's not that you're having to fund that out of your back pocket. So I wanted to highlight that, don't think that you can't afford it. If that, that retirement planning advice is about Sunsuper and building your retirement dreams, that, that financial advice fee can be funded out of your Sunsuper account. So that's I guess all I probably wanted to finish up on, Josh.
Joshua van Gestel: Well, can I say thank you for letting me sit in Brian's seat. It is a very big seat to fill-
Anne Fuchs: It is.
Joshua van Gestel: One that's quite comfortable actually. But, can I maybe be a bit forward and suggest that we come together again at another point and talk about another case study and really look at another situation where we can make a substantial difference to someone who just follows some simple financial advice and some very valuable advice.
Anne Fuchs: Great, that sounds lovely. I would love to do that with you, Josh. And our listeners, thank you again for listening. We appreciate your loyalty and we look forward to you joining us again soon. Thanks.
Voice-over: This has been the New School of Super. For information and inspiration to help you plan your future, manage your super and enjoy your retirement, visit sunsuper.com.au/thedreamproject. Or if you've got a superannuation or investment question you'd like Brian and Anne to discuss, then get in touch at newschoolofsuper.com for it to feature in one of our future New School of Super podcasts.
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