Anne: Hello and welcome to the Super Insider Australian Retirement Trust Podcast, which is all about everything you need to know to make the most of your super. My name is Anne Fuchs, and I'm the Executive General Manager of Advice, Guidance, and Education at Australian Retirement Trust. And as the EGM of Advice, Guidance, and Education, I'm thrilled to be discussing financial advice today.
But before we do that, as a very good and compliant podcast, I want to remind our listeners that what they're listening to today is general advice only. You'll need to consider whether it's right for you.
Garth Collingwood joins me today from River City Financial Planning. Welcome, Garth.
Garth: Thank you, Anne. It's good to see you.
Anne: This is a very relaxed environment where we discuss all things related to super, retirement, investments, advice, and strategies. We’re thrilled you're here because you look after so many of our members' retirement planning needs.
Garth: It's an absolute pleasure, Anne. And they sleep very soundly at night.
Anne: That's great. Tell us a quick little who you are and your business.
Garth: We're River City Financial Planning, a small boutique planning advice business based in Brisbane. I've been planning for about 20-odd years. We specialise in retirement planning, superannuation, and Centrelink – along those lines.
Anne: And after all those years, even though you look very young, sir, you are very experienced, and after all the years of doing the financial advice that you have, particularly with retirement planning, is there one constant question that you get asked?
Garth: ‘How much do I need to retire’ or ‘can I afford to retire now’ undoubtedly, are some those questions that keep coming through. It plays on people's minds. As soon as an article goes through the media, suddenly, it'll be ‘I've just been told I need X amount of dollars. Therefore, where am I? How's it going to play out?’
Anne: Yes, okay. Well, for many of our members, seeing a financial adviser is very daunting. I often joke with some members; it would probably feel like a combination of marriage counselling and the dentist. That's what they're worried about. That's why we're having this podcast today: we want to show Australians that going to an adviser is the opposite of that. There are great financial advisers out there. So, someone shows up and says, ‘Do I have enough money to retire on?’
Garth: Yes.
Anne: What do you think they expect when they walk in for the first time to an adviser? What should they be expecting when they come in?
Garth: They need to understand that there is no set figure that everyone should have. Everyone's different. People retire at various ages. People spend different amounts of money. When they come in to see a financial adviser, they're going to sit down, and we're just going to chat and work out exactly what it is they are after. Not many people know precisely why they might be seeking advice. Maybe it’s a recent event in their lives that has driven them in. Or they've been compelled to. For other people it might be an event coming down the track where they're suddenly thinking, right, the mortgage is paid off, and kids are starting to feed themselves; when can I transition to the next phase of my life? So, they'll typically come in, and we'll start by just having a chat, and from our point of view, we have to understand what it is. There is there's no one size fits all. Everything you're doing is tailored to the individual. Some people might be extremely risk averse, but it might be because of experiences they've had in the past. From there, you're trying to go through all the different concepts. So, there'll be a lot of different levels of knowledge.
As an example, not long ago, a noise came from my car's front end. It started to get louder, so I jumped on Google, and, you know, we've all got the vast array of knowledge in our pockets now. As I went through it, I thought it was probably this, or a CV joint, or a bearing, right? And I thought about spending a Saturday doing it myself. But I ended up going straight to a mechanic straight off the bat. They didn't even have to lift the hood. They said, ‘Yep, that'll be the right front suspension, which is precisely what it was. And that's the difference between reading about something and getting bombarded with information and opinions, versus speaking to someone who actually knows what they're doing.
Anne: And you help people retire day in, day out. Because most people only retire once in their lives. But you've retired hundreds of people.
Garth: Thousands, I'd put it at.
Anne: Thousands! Another thing people worry about, Garth, is the cost of advice. Is it going to be expensive? Can I afford it? Am I rich enough? How am I going to pay for it? That's an elephant in the room. So, let's talk about it.
Garth: Every step of the way, you're going to know the costs before you have to pay them. So, if you're seeking advice, you might ring up your super fund, or you might ring up an adviser; we’re the first step. Typically, after that, it's about speaking to them. It could be an appointment where you come in, or it might be a phone-based appointment. Whatever it might be, the costs will be disclosed to you then.
After you've met with your fund, the adviser, or whoever is helping you, they will go through the next steps with you. Typically, it's going to be drawing up a statement of advice. In some cases, it might be a matter of, well, nothing to be done at this stage, but pop back in when you want to chat. But if they have to proceed to draw up advice, they'll disclose to you exactly what those fees will be. For most people, it's based on the scope of the work. If it's relatively simple, it might cost a lot less than something that’s quite complicated. Some super funds look after their members directly, and things like that.
Anne: Yes, through the simple intra-fund advice we have at Australian Retirement Trust, you know, advice on your account. But, if you're doing broader comprehensive advice, you can pay for the retirement planning advice about your account through an external financial adviser or by deducting a fee from your super fund account.
Garth: Yes, typically, most people prefer to have it deducted from their super; that's when the fund allows it. Some people like to pay upfront themselves, out of their pocket. There'll be options at every step of the way. You're not getting locked into anything. You know the fees, and you will work with the adviser to find the best way to cover that cost.
Anne: And how do you think advisers determine whether a client, or an individual, needs one-off, moment-in-time, type advice or they might need something more ongoing, like, that type of concept where ‘I need to be held to account’ kind of scenario.
Garth: It may well be that someone's looking at a single event where they want to sit down, something's changed, or they've seen something on the news about salary sacrifice. They want to understand what that is. Are they getting the most out of it? From our point of view, we might be looking at saying, yes, we can do this; we can set it in motion. There's no need necessarily to pay for ongoing advice, or to seek regular advice on this sort of strategy, and we'll be upfront with them and let them know that. For other people, particularly those approaching retirement, many factors will come into play about whether or not they want to seek advice regularly.
Anne: Like what type of things?
Garth: Personal circumstances change, legislation changes. It might be investment markets are choppy, and you want to speak to someone to understand exactly what's happening. For most people, knowing that there's someone who can play devil's advocate for you can help you make those decisions, that seems to be a lot of the value that many people get.
Anne: And look, I have to say this: a lot of the work advisers do is talking people out of making bad financial decisions, like switching to cash at the worst possible time in a market cycle.
Garth: Yes. And that's what it comes back to, just having someone to talk and go through it with you and put it in perspective for you.
Anne: Garth, tell me, so we've spoken a lot about super, but the world of financial advice is a big one. So, what else can a financial adviser help the ordinary person with?
Garth: When we're giving advice to someone, we're not looking just at super we're looking at things or tax minimisation, investment planning, investments outside of super, estate planning, cashflow, what you're living off, all those kinds of things.
You're drawing on a different range of subjects that you're going to bring together to give someone a plan, or a strategy, that's going to maximise the …
Anne: What they’re entitled to, probably.
Garth: Oh, Centrelink is a big one. Every dollar you get from Centrelink, or DVA, is a dollar of your own that you don't have to spend. And for some people it might be a simple as ‘I want a dollar a fortnight so that I'll get access to the health care card.’ Going through those options for people, and helping them understand how it's assessed, and what their entitlements may be, down the track, or, imminently, retiring, gives them a lot of peace of mind.
Anne: Is there any particular thing in relation to the typical kind of person that retirement planning, tax, estate planning, things that just the ordinary person needs to be alive to, or thinking about where advice can really help?
Garth: The big one is, there are a lot of tax benefits one can gain from superannuation and they change constantly. And to be honest, most people are taking advantage of it. And if you're not, you need to keep up. So, without a doubt, anything to do with that – superannuation, salary sacrificing, spouse contributions - if you've got a non-working spouse. There are a lot of carrots out there designed to get you to look after your own retirement to ultimately, from the government's point of view, save them money in terms of the amount of Age Pension they pay out. The more you have, the less they pay.
Superannuation is not a short-term thing. It's your life savings, and it's there for the rest of your life and your spouse's life thereafter, for most people. It doesn't bode well for rash decisions in the short term, and it can be quite costly.
Anne: Are there any highlights you've had with someone that has come in and they're like, ‘I'm never going to have enough money to retire.’ Have you got a nice story stuck in your mind that you think our listeners, or viewers, would love to understand to bring to life what you do?
Garth: There are people who will touch base, I’m thinking of one in particular, and they’ll come in about a decade before they retire. And we’ll sit down, and their perception of a financial adviser was, coming in, was to do with investment markets and returns and things like that. We were able to strip it back and say, ‘Look, what are we spending, what are we living off?’ They were person of meagre means. They'd been through a family separation and were trying to get their life back on track. We put them on a path whereby they'd have more control of their future, more savings, things on salary sacrifice, every $1 of take-home pay they gave up they were effectively putting $1.30 into their super. What that did was mean that they could afford to retire a bit earlier.
As we were going along, the rules changed. We had to tailor it. You know, you've always got to keep readjusting as the rules change. But we got there in the end, and they were thankful, but I was like, ‘No you did this, you were the one that went without. You put the savings aside, understood the investment risk, and continued to go through the ups and downs.’ All of that experience, knowing what they were living off, having gone through market movements, meant that they were in a position to retire when they did. They’re still a very happy client, and I've just got a soft spot in my heart because it was a long-term win. They applied themselves and those little things added up in the end.
Anne: Do you know why I love that story? Because a lot of people think that advice is for the very wealthy. But that story's great because they were probably, as you said, financially stretched, and in a position where they didn't feel they were particularly affluent; you can coach them through so that they could maximise their retirement.
Garth: And they were so proud of the fact that they were sticking with it. And that's just always stuck with me. That's why we do it.
Anne: So, final question: what are the key strategies that you talk to clients about as they're preparing for retirement?
Garth: Superannuation is everyone's focus as they approach retirement. I’d start by understanding what that looks like. Is an off-the-rack solution appropriate? Are you comfortable with that? What are our savings? What are we spending? Let's get an idea of what we live off now. Many surveys say people need ‘X’ or ‘Y’ in retirement for a comfortable lifestyle. The reality is that for most people, it comes back to what they spend while they're working.
So, gauging that, salary sacrificing, reviewing insurance, if they're in a position where kids have grown up and left, there's no debt anymore. Look at where that sits along the way, making sure estate planning things are up to scratch. To be honest, although you might be on the home stretch in retirement, it tends to be where stress can really play an impact in your life, particularly health wise. All those things drawn together put people on the path they need to be. So, what date can I retire? Well, it's a personal choice. It's not financial. But you need the confidence to make that decision. And if you know in yourself what you've been living off, what you're comfortable with, then you're more empowered to make that kind of decision when you want to.
Anne: Yes, it's a conscious, deliberate decision, which many people don't feel particularly empowered about regarding money.
Garth: As you know, it's a jargony industry, and it's not designed to be picked up easily. It tends to get more complicated over time. So even from our point of view, just being able to explain things and it might not be advice at all. It might be, right, I've read this, or I've read this - what does it mean? And just sitting down and going, okay, let's go through it.
Anne: So, Garth, I think probably, hopefully, we've busted a few myths today where, you know, our listeners or viewers might be thinking, well, advice isn't for me because I'm not rich enough. Or advice isn't for me because I can't afford it. Or advice isn't for me because I don’t understand, I'm not fancy enough. But you've myth-busted all of those.
Garth: If you've got finances, you can benefit from advice. And it's about something other than ‘How much have I got?’ Most people will have super, and it's almost heartbreaking when people come to you when they retire. If you have done this for the last 10 years, you've given up a bit of a fortnight, a week, a month, salary sacrifice. You know, the results are almost immeasurable. I've never had a person who regretted looking at their super long before they needed to access it.
Anne: That's incredibly powerful. The analogy I often use is the sunscreen. There's no point putting on sunscreen in your sixties.
Garth: I like it.
Anne: Did you like that? Yes, well, I can say that with my Irish skin. It's been marvellous having you on the show, Garth. Thank you for everything you do - looking after many of our retiring members well, and with confidence. And thank you for educating the Super Insider community about what it's like to go to a financial adviser and how a financial adviser can help.
Garth: We're not all scary. I urge everyone to chat with their super fund or a financial adviser. Thank you very much for having me.
Anne: Garth, it's been fantastic. If you enjoyed this episode, we'd love you to write us and leave a review to be the first to hear about future episodes. Make sure you follow or subscribe to Super Insider. You'll find the link in the show notes wherever you get your podcasts. Thank you for listening to Super Insider, and we hope you can join us again next time.
This transcript has been edited for length and clarity.
