NewsRetirement Planning Planning For Retirement

Why it is Important to Plan Your Retirement

Whether you call it financial planning or retirement planning, it is never too early to start thinking ahead, especially if you plan on staying in the Perth area. While we can’t provide advice in blog posts, we can provide you with some general information regarding the planning of your retirement. Just remember that you need to call one of the financial advisors in our Perth office for individual advice.

Why is it so Important to Plan Your Retirement?

Once again, we can’t give anything that constitutes advice. What we can tell you, though, is that there is plenty of research suggesting that those who plan their retirements with specific goals are more likely to fulfil those goals than those who don’t have any goals. *

In a social or lifestyle sense, retirement goals may include lifelong learning, avenues for social engagement and intergenerational connections. Financially speaking, our retirement planners will work with you to set a retirement date and a retirement income. Then, it’s a matter of organising your finances to help you get there.

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NewsRetirement Planning Downsizing Pros And Cons

Pros and Cons of Downsizing

One of the biggest questions in retirement planning, especially in a market like that in Perth, is whether to downsize or stay in your family home.

Remember that we can’t give any individual advice here because everyone’s situation is different. So, don’t constitute any of what we are saying as “advice.” That being said, here are some factors to consider when thinking about downsizing.

The Numbers: Who is Downsizing?

Our parent company, AMP, has some pertinent numbers on their website. According to research cited on the AMP website, approximately 25% of Australians between the ages of 55 and 64 relocated in the last five years. (1)

Four popular reasons were cited. 23% said they wanted to live in a smaller home. 22% said they moved for family reasons. 20% said they moved because they wanted a lifestyle change. 23% said they moved for reasons related to health. (2)

Pros and Cons

Ideally, downsizers who move into a smaller home enjoy their lives, happily ever after. They have less maintenance and smaller monthly bills because there is less space. They may have a nice addition to their “nest egg” from the profit of selling their old home and buying a smaller, less expensive one. They find it easier to get around. Some even opt for “sea change” and its more relaxed lifestyle.

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Financial PlannersNews Industry Definition of Financial Advice

AMP Chief Questions Industry Definition of “Financial Advice”

At Approved Financial Planners, we offer financial planning and other services to residents in the Perth area and across WA. We now have the benefit of having AMP Australia as a parent company. We chose to partner with AMP because they embody the same commitment to professional, ethical service that we do.

We are on the side of high standards for the entire financial planning and financial advising industry, making AMP the perfect parent company for us. Consequently, we were proud to hear of remarks made by AMP Limited CEO Craig Meller recently, addressing what our industry currently defines as “financial advice.”

Mr Meller was speaking about vertical integration, a model practised by AMP. During the speech, the subject of financial advice arose. He questioned the nature of financial advice as practised by many in the industry. According to Mr Meller, “Too many…self-interested parties…dumb down the definition of financial advice to (only include) product selection.” *

Mr Meller would go on to opine that this kind of “advice” was usually meant to “justify a certain position” and that it is “a million miles away from where the true value of advice lies.” *

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Financial PlannersNewsSuperannuation Fund Invest SMSF In Property

Financial Planner Urges Caution when Investing SMSFs in Property

Self Managed Superannuation Funds (SMSFs) are being used to invest in property by many in the Perth area. However, a financial planner in Sydney is of the opinion that those planning to invest their SMSFs in property should be very careful and make sure they know whether or not their advice is impartial. *

Sydney financial planner and accountant Michael Hutton warns that investors should seek impartial advice instead of merely accepting advice from someone who is trying to make a sale. Mr Hutton is of the opinion that many of those who are entrusted with helping their clients maximise their SMSFs are forgetting that the SMSF is a long-term investment strategy that is meant to provide a better lifestyle during retirement. *

Mr Hutton believes that investment property works best as a long term investment and that rental yield on investment properties tends to be too low to offer immediate cash flow. He is also of the opinion that gearing a property can cause problems further down the line. He would rather that an investor enter retirement debt-free and that their retirement funds should be generated by solid assets. *

One problem that Mr Hutton feels investors and advisors fail to consider with investment property is that illiquid assets such as property can be difficult to unload at the proper time. He also points out that conveyancing costs stamp duty are incurred when transferring a property to a beneficiary. *

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Financial PlannersNewsSuperannuation Fund AMP Explores Expansion of Self Managed Super Fund Network

AMP Explores Expansion of Self Managed Super Fund Network

The outlook for self managed superannuation fund (SMSF) advisors in our Perth office and their clients could soon be even better than it already is. Our parent company, AMP, recently announced that they are considering further expansion of their SMSF network. They are exploring the possibility of acquiring more offerings if they can consolidate current technology platforms. *

According to the head of SMSF at AMP, Natasha Fenech, “We will always consider acquisitions because it is part of our growth agenda.” While she did mention acquisitions, she also remarked that her main focus for the last six months has been “on organic growth and driving back to basics.” *

Ms Fenech is of the opinion that it is important for AMP to avoid administrative platform duplication and move towards what she calls a “unified technology solution.” Ms Fenech aspires to unify platforms across the “back end” of AMP into one consolidated platform. Currently, AMP has five brands of SMSF: AMP, Multiport, YourSMSF, Cavendish and Ascend. *

What This Means to You

While we will always provide the financial advice that is the most appropriate for your individual situation, we also look forward to the privilege of offering even more SMSF products from our parent company, AMP.

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Financial PlannersNews Raise Educational Standards for Financial Planners

Should ASIC Raise Educational Standards for Financial Planners? We Say Yes.

Financial planners and advisers in Perth and across Australia were quite interested in a recent statement from Senator Mathias Cormann, Minister for Finance and Acting Minister for Financial Services. According to Senator Cormann, the Australian Securities and Investment Commission (ASIC) is legally empowered to decide when and how to raise the minimum educational standards for all financial planners according to its own criteria. *

Senator Cormann made the statement in a radio interview in Sydney when asked about the Government’s recent changes to legislation known as “FOFA” or “Future of Financial Advice.” Many within the industry have criticised current conditions as allowing people to complete a four day course and then call themselves “financial planners.” *

Senator Cormann not only said that the Government is interested in raising educational standards for financial planners, but that ASIC could also raise the standards if they wished. According to Senator Cormann, “ASIC actually has the responsibility to set the minimum educational standards.” Senator Cormann then encouraged ASIC to raise standards if they feel it is appropriate. *

Senator Cormann said that the Government is working hard to “lift professional, ethical and educational standards” for financial advisers and that the Government is also working on an “enhanced public register of financial advisers.” *

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Financial PlannersNews Reform of Educational Requirements for Financial Planners

FPA Proposes Reform of Educational Requirements for Financial Planners to Parliamentary Joint Committee

If the Financial Planning Association of Australia (FPA) has anything to say about it, the educational standards for financial planners and advisers, in Perth and across Australia, are about to receive a boost. As far as we are concerned, it can’t happen fast enough.

Approved Financial Planners and AMP

We would like to give a little background. Approved Financial Planners and our parent company, AMP, are on the record as being in favour of educational reform for the financial services industry. We have felt for a long time that the standards for entering the industry, both in Perth and nationally, are not stringent enough.

AMP has internal standards that are far more stringent than industry minimums. That is one of the main reasons we decided to partner with them. We feel that it is our responsibility to educate ourselves fully about the products we offer and about how our decisions affect our clients’ well-being.

One of the sadder parts of being a financial adviser in Perth is listening to clients tell us how other financial advisers had mismanaged their funds, either out of ignorance or out of a lack of ethics. We find both of these situations to be unacceptable.

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Financial PlannersNewsSuperannuation Fund High Superannuation Fees

Are Your Superannuation Fees Too High?

One of the advantages to hiring a financial advisor is that they can take a complete look at your finances and find out if you are “leaking” anywhere. If you are in a city like Perth, with a high cost of living, your margin for financial error is smaller and you may benefit greatly from getting sound financial advice.

While the superannuation contribution freeze is taking up a lot of news space, recently published a report in which it said that Australians currently pay an average of $1300 in superannuation fees per year, for a national total of $20 billion.

This works out to 1.2% per year of total balancers. According to a report by the Grattan Institute called “Super Sting,” the average 50 year-old in a high-cost fund will lose $80,000 to superannuation fees by retirement day when compared to a lower cost fund. The same report said a thirty year old will lose $250,000 by the time they retire compared to a lower cost fund.

The Australian Superannuation Funds Association currently estimates that singles who retire at 65 and die at 85 will need to retire with a balance of $544,000 to provide $57,195 per year to live on. They recommend that couples have a balance of $744,000, providing $41,830 each.

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NewsSuperannuation Fund Freeze Employers’ Contributions To Superannuation Funds

What Does the Superannuation Freeze Mean to You?

Competent, professional financial planning has just become more important for our Perth clients and across Australia. The recent decision by the Government to freeze employers’ contributions to superannuation funds until 2021 is going to cost the average worker a lot of money. Most of all, though, it is going to reduce the “margin for error” that Australians had for managing their super investments.

The current compulsory contribution by employers is 9.5%. It was scheduled to rise to 12% in 2019-20 via yearly increases. Now, it is scheduled to stay at 9.5% until 2021, when it will be raised 0.5% to 10%. Then, it will continue to rise 0.5% each year until it finally reaches 12% in 2025.*

According to John Brogden, chief of Financial Services Council, the freeze will cost Australians $128 billion in superannuation contributions. In other words, Australians will have $128 billion less to retire on than they would have without the freeze.

What it Means to You

First of all, we can’t give advice on a blog because everyone’s situation is different. Consequently, what we are going to say will be general in nature and can’t be interpreted as individual advice.

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Financial PlannersNews Developing a Financial Plan for Your Family

Developing a Financial Plan for Your Family

If you are new to financial planning, don’t feel bad; you have company. There are plenty of people in WA who haven’t taken control of their finances yet. Luckily, Approved Financial Planners can get you started on the right path.

Recently, the Financial Planners Association of Australia published a blog post discussing how to develop a financial plan and what factors should be taken into consideration. All of the factors they cited are factors that we like to take into consideration when helping a family develop a financial plan. Here are five crucial factors that we consider.

Your Priorities

Everyone’s situation is different. Everyone has different dreams and goals. Everyone is starting from a different position. Some people want to create more family time now. Some want to ensure their family’s future. Many figure out a way to carve out a good future without sacrificing their entire present.

Your Cash Flow

Since it is called “financial” planning, your financial position will mean a lot concerning the direction and scope of your plan. How much money do you currently make? How much can you afford to invest? Do you have a “buffer” in case something forced you to go without income?

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