Advice in action: The value of financial advice and property ownership

Refinancing bebefits

Advice in action: The value of financial advice and property ownership

For any homebuyer and property investor with debt a good strong financial plan provides peace of mind and ensures that the appropriate structures, insurances and strategies are in place. Below we have provided a case study to demonstrate the value of advice.

We work with extensive range of professionals – if you would like to review your life insurances, superannuation and investment strategy we are happy to provide an introduction.

Case Study

Chris and Jane (Alias) important life goals

Chris 46 ($130,000) and Jane 44 ($125,000)

Own home:                           $1,300,000            debt        $770,000               Chris Super:          $180,000

Investment Property1:       $300,000               debt        $150,000               Jane Super:           $180,000

Investment Property 2:      $530,000               debt        $350,000

Chris and Jane in their own right, are highly experienced and educated in their field of employment and well paid. They had started their journey of joining their finances and financial knowledge but there were still many holes in their financial plans that needed attention to achieve their true potential and clarity.

Short-Term (1-4 years)

  • They were unsure if their existing bank and lending accounts were structured well and wanted a review to clarify if the structure was right or could be improved
  • They wanted help to confirm they were financially tracking towards a comfortable retirement
  • They had a long-term relationship with an accountant, that did their annual tax returns, but they were not providing important advice on tax structures or strategies and wanted to know if there was a better way of being tax effective
  • They understood they had the capacity to buy more properties but not sure of where, and how to structure their existing finances and finances for the future purchase/s. Wanting to understand how their existing and future property could maximise their tax, provide retirement income in terms of projection of cash flow and how the property will be distributed in their estate planning

Medium-Term (4-10 years)

  • They felt that investing in property as a means to securitise their financial future but were unsure how to get clarity on achieving their long-term income from these assets. Wanting a clear vision of how they were tracking towards substituting their income through their assets
  • They felt that paying off their home loan was a long way away and wanted to feel assured they were on a path to pay it off, not wanting to change home or downsize at this point
  • Attain a feeling that they have made good financial decisions over the years and are now comfortable financially. Able to afford some luxuries like dining out, travel and not struggling to make ends meet when retired

Long-term (10 years plus)

  • Chris felt it was his responsibility as man of the house, that he should support his family and was comfortable to work longer if he could support Jane whilst raising their son James now 4-year-old (in his teens). Providing Jane the opportunity to work part-time, with income from assets and him maintaining well-paid employment
  • Closer to retirement have supporting income to feel no work or financial stress, and an opportunity for both work when or where they wanted
  • At Chris’ age 65 and Jane’s 63 retire (this was not their real wish they wanted it to be about 60, but had no clarity around how they were going to be able to do it)
  • After delving deeper and consideration we understood that they required $90,000 net income and have no mortgage to be financially comfortable
  • Comfort/able – that their assets and income would secure their retirement years, leaving a legacy of assets to their children upon death. More holidays and time with family

How the advisor approached a planned solution

Step 1 – GOALS: In a detailed Statement of Advice or Advice Plan Document, initially outlined the review of their existing superannuation, insurance and investments position, before working through the details of attaining their life goals. Goal attainment is an ongoing process and ongoing regular meetings are times when the changes of life/goals are discussed and new solutions or proactive opportunities are implemented.

Step 2 BUDGET: The client completed a budget planner outlining they had a capacity to save $8,000 per month after all expenses. Using their offset account as a bank hub (providing me viewing access) we employed forward budgeting and save first strategies to pay their home loan down faster by increasing their offset balance much more effectively. They will now pay off their home loan in 7 years.

Step 3 CASH FLOW: Working with a lending specialist we structured their loans to build further equity for their eminent investment property purchase, my analysis proved they could buy now. I also provided cash flow analysis of their assets cash flow, along with asset growth and income forecasting into retirement and beyond.

Step 4 DEBT: They restructured their existing loans to pay off personal mortgage debt efficiently, leaving access to funds readily available (for emergency and investment opportunity), whilst being as tax-effective as possible. Since the advice they have bought a property in their SMSF for $550,000 with 70% LVR, which will generate 4-5% rental yield in retirement. Equity available on their own home offset account at 2.8%, we have used to invest in assets that return distributions better than the loan plus growth, making them tax-effective and paying their loan off faster. Our main goal was to diversify and attain more assets for wealth creation and leverage was a large part of that capability.

Step 5 INSURANCE: They were both under-insured with poor default covers inside their superannuation, we applied for cover with one of the leading insurers after running quotes across multiple providers. Progressively as assets increase their level of cover will diminish, to a point they are projected to be self-insured by assets and income at age 57.

Step 6 SUPERANNUATION: After assessment their existing supers would be better leveraged with a SMSF and property. The advantage of the steady administration fee within SMSF of $2,500 was outweighing their current $3,000 and growing administration fees combined. After the purchase of the property noted above, we project capacity to buy another property in 4 years conservatively. We established an offset account and will look to draw down funds as investment opportunities arise. Their existing superannuation was projected to accumulate to $1,000,000 and generate $50,000 per year income. Now they are conservatively heading toward $1,700,000 and $85,000 per annum. We have used the offset funds to invest in products that generate 8% protected funding, further paying their loan down more effectively.

Step 7 ESTATE PLANNING: Chris and Jane’s existing basic Will had to be adjusted to meet the proper inheritance structuring requirements for their family. Creating a Testamentary Trust which now meets their children’s inheritance provision much more succinctly. We have also addressed effective inheritance tax protection structuring with their Will and insurances.

Step 8 TAX: We have now employed a number of tax-effective structures and strategies through investments and lending and will proactively implement relevant best practice tax strategies, as government and regulations change. Employment of the SMSF and large part of their retirement funding will enable them to pay 0% tax on income generated from the fund.

Step 9 INVESTMENTS: With a solid holistic investment strategy and structure they will now retire younger and with more income. Their diversity into strong growth areas for their property investments (and bought) we are concurrent acquiring low risk assets with strong-returns in off-market investments, shares, ETFs and managed funds to complement their goal timelines for funds access and income support.

Step 10 RETIREMENT: They had dreams to retire comfortably, pre-Calibre projections showed that after retiring at 65 they would run out of funds at age 82 living on $80,000 per year from their assets. Post-Calibre our plan will allow them to draw funds indefinitely with an income of $120,000 per annum, not even lowering the asset base. Allowing a great inheritance to children and ability to gift funds ‘pre-passing’ to family members. Overall, providing ability to do the things they want, example supporting family costs, holidays and family time.

Step 11 ADMINISTRATION: As a typical advice provider, as we went through applications and implementation, I store documentation in a secure cloud-based storage for ongoing recall and use in the future. IE Wills, Insurance Policies, SMSF statements, Investment statements, etc all in preparation for tax return simplicity, claims and future beneficiary use and guidance.

Step 12 REVIEWS: We have implemented several tax, investment and account structures, now ensuring that they will be meeting their true financial potential and objectives. No more stumbling through an unclear path with their future, as they now have the ability to bounce ideas off a professional, that provides them the best financial option at the time. We both come out of client meetings clear-headed and on task.


The objective brief has been met for Chris and Jane and with implementation of smart financial strategies; ongoing tax minimisation, financial efficiencies, ongoing life goal attainment, much larger asset and income generation up to and after retirement.

Chris and Jane now have a comprehensive plan in place that tackles all financial fundamentals and provides peace of mind for people that were looking for a clarity solution.

Anthony Landahl | Managing Director Equilibria Finance

This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.

Equilibria Finance is a mortgage broking practice specialising in delivering residential and commercial mortgage and business and asset finance solutions to the clients of financial advice and accounting practices.

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