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Selfies, hashtags & financial advice

An unlikely combination? Perhaps. But this trio’s commonality lies in the fact that the latter (solid and simple financial advice) is trending; it’s on the rise. While still some way off the uber-trending ubiquity of the first two, people are hungry for financial confidence. #interesting #seewhatwedidthere #readon.

 

What’s clear is this … as a population, Australians have a real appetite for financial fluency and retirement preparedness. In 2015 it was predicted that over 2.5 million Australians would seek financial advice in the next two years1. Trending, indeed. Were you one of them? And if not, is it time to think about it now?

The fact is, financial advisers and financial advice can change lives for the better. The value of advice can go a long way to helping you not only achieve your dreams in retirement but also live comfortably RN - that’s millennial-speak for "right now".

To make a more pointed case and give further context, Sunsuper commissioned research to investigate the value of financial advice2.

In summary, we found that the value of advice
= enhanced wellbeing

In fact, of those currently advised...

  • Increased confidence

    Increased
    confidence

    80% believe advice has given them more confidence in making financial decisions.

  • Increased confidence

    Feel more
    secure

    80% feel financially more secure (compared to 47% never advised).

  • Increased confidence

    More cash
    for hobbies

    79% have enough money to pay for recreational activities they want to do (compared to 39% never advised)

  • Increased confidence

    Prepared for
    retirement

    77% believe advice has helped them feel prepared for retirement.

  • Increased confidence

    Better retirement
    expectations

    72% have a better understanding of what to expect in retirement because they sought advice.

  • Increased confidence

    Budgeting and
    saving regularly

    64% follow a budget and save regularly (compared to 47% never advised).

Financial advice for wherever you are in life

And the story continues. Our research modelled some scenarios around milestones that most Australians experience over their lifetime. It showed that advice could contribute to sustaining a higher quality of life, greater peace of mind, and being better prepared for retirement.

Select the tabs below and explore our case studies.

Adam and Mara:
Keeping their heads down

Adam 33 years old, Nurse
Mara 36 years old, IT Project Manager

Adam and Mara are married, in good health, and have two young children. Their careers are starting to take off, their lives are busy, and consequently they are time poor.

 
Lifestyle goals: children in private school, regular family holidays.
Financial goals: finance school fees and holidays, pay down debts, grow investments.

Current Situation

Joint Income: $161,160
Savings: 23%
Expenses: $124,328
Assets: $731,000
Liabilities: $405,000
Risk appetite: Growth
Insurance: Private health, life, total & permanent disablement income protection

Advice received

Adam and Mara’s financial adviser aimed to allow them to plan for known future discretionary spending. The adviser optimised their debt to reduce interest and create surplus funds for children’s school fees and annual holidays.

Action Plan

Adam and Mara's financial adviser recommended they:

  • Withdraw $8k from bank now to pay down credit card.
  • Draw down $47k on home loan to pay out remaining high interest.
  • Start gearing loan using home equity; draw down $20k p.a. for 5 years to add to managed fund.
  • Make withdrawals as required from geared investment to cover school fees.
  • Review super, if justifiable consider consolidation.
  • Implement trauma cover ($50k each) for short term until income protection cover commences.
  • Review insurances in super, retain if adequate.
  • Allocate surplus to home loan.

The value of advice

Staying on their current path without advice sees Adam and Mara falling short of their personal and financial goals. Acting on the advice they received sees them sustaining a higher quality of life, having greater peace of mind about their finances, and feeling better prepared for retirement.

Speak to an adviser

Call us on 13 11 84 to find out more about the many ways you can get advice from a financial adviser through Sunsuper.

Net lifestyle improvements after implementing advice:

The value of advice for Adam and Mara: Children in private school for additional 6 years, years of trauma cover increased by 32, holidays taken prior to retirement increased by 6, NPM of total outflows (expenditure) increased by $369,128, NPV of total inflows (income) increased by $129,849, assets at retirement (present value) increased by $54,720, net benefit at retirement increased by $239,185.
This research was conducted by CoreData on behalf of Sunsuper in December 2016.

Amanda and John:
On the home straight

Amanda 53 years old, Accountant
John 54 years old, Plumber

Amanda and John are married, in good health, and have two non-dependent children. While they are now at the peak of their careers, retirement is clearly on their horizon.

 
Lifestyle goals: travel regularly, retire at 65, and enjoy the journey.
Financial goals: make a final push for wealth accumulation but in a considered manner, enjoy a financially comfortable retirement, and look after children in will.

Current Situation

Joint Income: $191,400
Savings: 15%
Expenses: $162,627
Assets: $1,883,000
Liabilities: $648,000
Risk appetite: Defensive
Insurance: Private health, life (default only), income protection (default only)

Advice received

The advice Amanda and John received aimed to allow them to better plan for retirement, manage their debt and optimise their risk strategy, giving them peace of mind and the flexibility to travel each year.

Action Plan

Amanda and John’s financial adviser recommended they:

  • Withdraw $18k from bank now to eliminate car loan.
  • Start a holiday/travel fund with $5k p.a. from from surplus cash flow, indexed.
  • Start salary sacrificing to super with surplus cash flow, 50% each.
  • Review super, if justifiable consider consolidation.
  • Increase exisiting life and total permanent disablement insurance in super to cover debts and income needs.
  • Take out new income protection cover outside super for 75% of salary; cancel Income Protection in super.
  • Implement trauma cover ($50k each) for short term until new Income Protection cover commences.
  • Consider at regular review: transition to retirement pensions at age 60, increase salary sacrifice if limits permit, any surplus to home loan.

The value of advice

Staying on their current path without advice sees Amanda and John without protection for unexpected events and not servicing their debt effectively.

Acting on the advice they received means they can look forward to a financially comfortable retirement, and, once they die, setting up their family for greater financial security.

Retaining an investment property means their assets at retirement are lower than pre-retirement; however, their expenditure lowers dramatically late in retirement and the strategy serves their desire to pass on wealth to their family.

Net lifestyle improvements after implementing advice:

The value of advice for Amanda and John: Interest paid reduced by $1,798, years of trauma cover increased by 10 years, holidays taken prior to life expectancy increased by 17, NPV of total outflows (expenditure) increased by $57,629, NPV of total inflows (income) increased by $23,748, assets at retirement (present value) increased by $76,379, net benefit at life expectancy $78,028.

Speak to an adviser

Call us on 13 11 84 to find out more about the many ways you can get advice from a financial adviser through Sunsuper.

This research was conducted by CoreData on behalf of Sunsuper in December 2016.

Lou and Jocelyn:
Living their retirement dreams

Jou 68 years old, retired
Jocelyn 68 years old, retired

Lou and Jocelyn are married, in average health, and have three non-dependent children. They have both transitioned into full retirement.

 
Lifestyle goals: avoid being a burden to children, travel and enjoy retirement as fully as possible.
Financial goals: pay off debt, leave inheritance for children, pay required medical costs, manage concern over longevity risk.

Current Situation

Joint Income: $49,900 p.a.
Savings: (29%) (drawdown)
Expenses: $64,250
Assets: $2,323,000
Liabilities: $50,000
Risk appetite: Conservative
Insurance: Private health

Advice received

The advice Lou and Jocelyn received aimed to help them sustain their simple but comfortable lifestyle while ensuring their money lasts through retirement without relying on the full government age pension or selling assets they hope to eventually leave to their children.

Action Plan

Lou and Jocelyn's financial adviser recommended they:

  • Withdraw $25k from bank and $25k from investments to eliminate debts.
  • Start a holiday/travel fund with $5k p.a. from from surplus cash flow, indexed.
  • Reduce living expenses to $49k p.a. (+ $5kp.a. holiday fund) for longevity of assets to keep investment property for beneficiaries.
  • An alternative advice option for Lou and Jocelyn (not included in the modelling results) would be to sell the investment property to eliminate debt, surplus to managed fun to provide liquidity for income needs from age 79 onwards, leave capital for beneficiaries, meet living expenses, and increase age pension amount compared to retaining property.

The value of advice

Staying on their current path without advice sees Lou and Jocelyn relying on the age pension for half their retirement. Acting on the advice they received will ensure their assets will last through their life, and allow them to live comfortably and provide for their children in their will.

Speak to an adviser

Call us on 13 11 84 to find out more about the many ways you can get advice from a financial adviser through Sunsuper.

Net lifestyle improvements after implementing advice:

The value of advice for Lou and Jocelyn: Assets at life expectancy (present value) increased by $32,117, holidays taken post retirement increased by 11 trips, NPV of total outflows (expenditure) increased by $2,276, NPV of total inflows (income), interest paid reduced by $47,250, net benefit at life expectancy increased by $7,237.
This research was conducted by CoreData on behalf of Sunsuper in December 2016.

Where to next?

So, whether it’s seeking out some initial guidance on how to play the long game and still maintain your lifestyle or edging closer to your time in the sun and celebratory #legsorhotdogs by the beach selfie, the right time to start thinking about seeking financial advice could be right now. It’s never too soon or too late. In general, those who receive advice feel they are “well” in life, thanks to an increased sense of financial literacy and understanding. They also believe that the advice received is worth more than what it costs.

Even if you don’t know what to ask or how to prepare for your first advice meeting, don’t worry. We’ve put together a little introduction, something to help you get ready, get set and get wise on your financial future.

Here's what you can expect

1 Investment Trends, Financial advice report 2015.
2 Research conducted by CoreData on behalf of Sunsuper, December 2016.

Talk to your financial adviser or get some advice through Sunsuper

Depending on your advice needs, we can answer most of your questions over the phone. To get the conversation started, just fill in your details and we’ll be in touch.

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