Latest / TFS WealthCast / Good Income. Where’s the Wealth?

Transcript

Good Income. Where’s the Wealth? · TFS WealthCast

• 0:04
  SPEAKER_01: It's the TFS Podcast.
• 0:06
  SPEAKER_01: The money cost gets real.
• 0:08
  SPEAKER_01: Financial freedom is more than just a goal.
• 0:12
  SPEAKER_01: Without further ado, let's dive in.
• 0:16
  SPEAKER_01: Hi guys, and welcome to another episode of the TFS Worldcast.
• 0:20
  SPEAKER_01: And today we are talking about financial planning.
• 0:25
  SPEAKER_01: An overall conversation on financial planning with none other than Sonali Rodrigo, one of our founders and CWO.
• 0:34
  SPEAKER_01: Welcome to the episode, Sunali.
• 0:36
  SPEAKER_01: It's been a while.
• 0:37
  SPEAKER_00: It's been a while, long time, Vishy, since it got hijacked by the Gen Z.
• 0:41
  SPEAKER_00: So yeah, good to be back again.
• 0:44
  SPEAKER_01: Nice to have you back, ma'am.
• 0:46
  SPEAKER_01: So Sunali, today's episode, we're just going to touch on financial planning.
• 0:50
  SPEAKER_01: Uh, what is financial planning?
• 0:51
  SPEAKER_01: How a financial planner can help individuals, and who is financial planning for?
• 0:58
  SPEAKER_01: Right?
• 0:58
  SPEAKER_01: Uh, so Sonari, how how many people do you meet genuinely that think financial planning isn't for them?
• 1:05
  SPEAKER_00: A lot of people.
• 1:06
  SPEAKER_00: Because they they don't really know what a financial planner can do.
• 1:10
  SPEAKER_00: So they just naturally assume I'm not wealthy enough or I don't have any investments, or I'll just think about it later, or you know, um, yeah, there's a lot of people who don't know that there is a genuine need in their lives for financial planning.
• 1:26
  SPEAKER_00: So quite a quite a lot.
• 1:28
  SPEAKER_00: Yeah.
• 1:29
  SPEAKER_00: But um, it's really not about how much money you have, it's about making better decisions with the money that you actually have.
• 1:38
  SPEAKER_00: So it's not how much of it, it's more so understanding, being financially literate enough to do smart things with the money so that you can have it working better for you, essentially.
• 1:50
  SPEAKER_00: So I would say anyone who deals with money really needs to see a financial planner, um, just so that they can look through their options and yeah, see what other options are there for them.
• 2:01
  SPEAKER_00: Yeah.
• 2:02
  SPEAKER_01: Exactly.
• 2:02
  SPEAKER_01: So so basically a financial planner can open up the doors for individuals to do more with their money.
• 2:08
  SPEAKER_00: For sure, for sure.
• 2:09
  SPEAKER_00: Because you don't know what you don't know, right?
• 2:11
  SPEAKER_00: So um we get a lot of customers coming through the door, they're like, Oh, I didn't know that you could do that.
• 2:17
  SPEAKER_00: So, like, if I had a dollar for every time I had someone say that, I'd be pretty rich right now.
• 2:23
  SPEAKER_00: Because, yeah, so I mean, if you can learn a few things from Chat GPT and Google and all of that, but um, I mean, we've spent years learning and honing the craft, so there's gotta be something more to it.
• 2:38
  SPEAKER_00: You've got to admit, right?
• 2:39
  SPEAKER_01: And and and how how like to become a financial planner, how how long?
• 2:44
  SPEAKER_00: Oh, there's a hell of a lot of hoops to jump through right now.
• 2:46
  SPEAKER_00: Previously, long time ago, it was probably a lot easier, but um, there's a lot more barriers to entry, there's education requirements that you have to work under someone for a number of years to gain practical experience.
• 2:59
  SPEAKER_00: So there's a lot that goes into becoming a planner, so you you are able to see a lot as well, uh, different clients' circumstances.
• 3:07
  SPEAKER_00: So, yes, it's not just a matter of deciding one day I'll be a planner.
• 3:11
  SPEAKER_01: So and how long have you been a financial planner for?
• 3:16
  SPEAKER_00: Oh, I started in the industry in 2007, so nearly 20 years now, yeah.
• 3:23
  SPEAKER_01: All right, so what is financial planning?
• 3:26
  SPEAKER_01: So, how would you explain financial planning to someone who has no idea where to start?
• 3:31
  SPEAKER_00: So, think of your finances as a big puzzle, right?
• 3:36
  SPEAKER_00: There are lots of pieces.
• 3:37
  SPEAKER_00: So there'll be your income, your mortgage, your superinsurance, um, planning for your retirement, family commitments, tax, kids, school fees, all of that, right?
• 3:49
  SPEAKER_00: So all of those pieces, and then on top of that, there'll be things you want to do.
• 3:54
  SPEAKER_00: You might want to buy a car, go on holiday, you know, help out with your parents, whatever it is, right?
• 4:00
  SPEAKER_00: So financial planning is about putting all of those pieces together in a way that it makes sense, basically, right?
• 4:07
  SPEAKER_00: So that's the easiest way to explain it.
• 4:09
  SPEAKER_00: So, where are you now?
• 4:11
  SPEAKER_00: Where do you want to be?
• 4:12
  SPEAKER_00: And what are the decisions that we can make today between those two points to get you there, basically?
• 4:19
  SPEAKER_00: So um, that's where we come in.
• 4:22
  SPEAKER_00: So it's not about selling a product, like that is very much secondary to what we do in planning, right?
• 4:29
  SPEAKER_00: So products are really tools that we can use to execute the strategy.
• 4:33
  SPEAKER_00: The strategy is the most important part, right?
• 4:35
  SPEAKER_00: So um without a plan, money will just disappear, right?
• 4:40
  SPEAKER_00: You'll live from paycheck to paycheck.
• 4:42
  SPEAKER_00: But with a plan, you can really, you know, plan smart and do good things with it.
• 4:46
  SPEAKER_00: So yeah.
• 4:47
  SPEAKER_01: Uh so you touched a bit on tax there, right?
• 4:50
  SPEAKER_01: So there are individuals out there, or some individuals who might be listening to this podcast episode going, oh, I'm good with money, I know how to budget.
• 4:57
  SPEAKER_01: And I have my accountant who can help me save on tax, right?
• 5:01
  SPEAKER_01: So, how is it different?
• 5:03
  SPEAKER_01: Uh, how like how how can a financial planner help these individuals who think they're good at budgeting or who have an accountant to help them save tax?
• 5:13
  SPEAKER_01: But what differentiates a financial planner?
• 5:15
  SPEAKER_00: So, what you mentioned are two parts of the puzzle that I spoke about, right?
• 5:19
  SPEAKER_00: So, your budget will help you manage your cash flow.
• 5:22
  SPEAKER_00: You know what's coming in, what's going out, and then if you're good at budgeting, great, right?
• 5:27
  SPEAKER_00: That's one part of it.
• 5:28
  SPEAKER_00: Tick.
• 5:29
  SPEAKER_00: Your accountant usually helps you look at things like tax compliance, things like that.
• 5:35
  SPEAKER_00: And they typically tend to be backward looking.
• 5:38
  SPEAKER_00: So you go to your accountant after the year is done most of the time.
• 5:42
  SPEAKER_00: I mean, there are people who try and plan a bit in advance, but um, majority of people will see their accountant after the financial year is done, right?
• 5:50
  SPEAKER_00: And they will help you with the taxes and things like that.
• 5:52
  SPEAKER_00: So, again, another part of the bigger financial puzzle.
• 5:56
  SPEAKER_00: But with the financial planner, we look forward.
• 5:59
  SPEAKER_00: We look at what your goals are, what you want to do.
• 6:02
  SPEAKER_00: We look at things like super, right?
• 6:05
  SPEAKER_00: Because super is a huge asset that you sit on, but a lot of people aren't even aware of it, right?
• 6:11
  SPEAKER_00: We look at, you know, um, if you want to buy a property, how do you go about doing that?
• 6:16
  SPEAKER_00: Is it with all of these things?
• 6:18
  SPEAKER_00: We look at um, do you want to invest in property or other asset classes or diversification, things like that?
• 6:25
  SPEAKER_00: And with all of that, then we look at, okay, we are doing all of this, but are you adequately protected if something goes wrong?
• 6:32
  SPEAKER_00: We look at the risk mitigations of all your strategies that we are going to put through.
• 6:37
  SPEAKER_00: And then we also talk about things like retirement.
• 6:40
  SPEAKER_00: Would you have enough to retire on?
• 6:41
  SPEAKER_00: So there's a lot of things that we look at on top of what an accountant would look at, and having just a budget is not going to solve any of these other things that I told you about.
• 6:52
  SPEAKER_00: So those two are ticks, those are part of a bigger plan, basically.
• 6:59
  SPEAKER_00: Yeah.
• 7:00
  SPEAKER_01: And of course, a financial planner works closely with an individual's accountant, right?
• 7:04
  SPEAKER_01: They don't take all the accounting exactly.
• 7:07
  SPEAKER_00: So financial planners are not accountants.
• 7:09
  SPEAKER_00: We do have to go through mandatory tax training and things like that.
• 7:13
  SPEAKER_00: So we do understand part of it, but we will work closely with the person's accountant so that everyone's on the same page, that um, you know, the strategies are all working together as they should.
• 7:24
  SPEAKER_00: So, any say, for example, tax reductions you're entitled to.
• 7:27
  SPEAKER_00: Sometimes we talk to the person's accountant and we go through all of those things without the client having to, you know, understand or like really have to, you know, sort of go between, act like the go-between.
• 7:39
  SPEAKER_00: So um, yeah, we're all on one page working towards a common goal, basically.
• 7:43
  SPEAKER_01: Yeah, we look at an individual's balance sheet, right?
• 7:46
  SPEAKER_01: Yeah, when as a financial planner would look at look at the individual as a whole, not just the balance sheet.
• 7:51
  SPEAKER_01: We look at their lifestyle, yeah, family.
• 7:54
  SPEAKER_00: We're working with human beings, right?
• 7:56
  SPEAKER_00: Sometimes what's mathematically smart is not really what the person wants to do, also.
• 8:01
  SPEAKER_00: So we have to account for things like that, individual biases like that as well.
• 8:06
  SPEAKER_00: So we take all of that into account, not just the numbers.
• 8:09
  SPEAKER_00: Yeah.
• 8:10
  SPEAKER_01: Exactly.
• 8:11
  SPEAKER_01: So now now, uh, so now I'm sure there are individuals who are thinking, okay, these are things a financial planner can do.
• 8:18
  SPEAKER_01: Okay, before I ask you the next question, uh, if you could list down some of the top services that a financial planner helps clients with.
• 8:26
  SPEAKER_00: I think the first one is probably mindset and goal setting.
• 8:30
  SPEAKER_00: Because if you're not in the correct mindset, whatever we kind of you know discuss in our meetings and put as a plan together, you wouldn't go and execute, right?
• 8:40
  SPEAKER_00: So you have to be in the correct mindset.
• 8:42
  SPEAKER_00: If you're a couple, both parties need to be on the same page, at least to a certain extent, um, to make it work.
• 8:49
  SPEAKER_00: Then we also look at like budgeting if you need help with cash flow budgeting, things like that.
• 8:54
  SPEAKER_00: We'll do that.
• 8:54
  SPEAKER_00: We'll look at your super, we'll look at your insurance, we'll look at investments, retirement planning, estate planning.
• 9:00
  SPEAKER_00: So the whole, like the whole financial house.
• 9:04
  SPEAKER_00: So not just one part of it.
• 9:05
  SPEAKER_00: We'll look at things like SMSF, is it suitable for you?
• 9:09
  SPEAKER_00: Um, with your mortgage, we'll look at things like debt reduction.
• 9:13
  SPEAKER_00: Um, how do you pay off your mortgage sooner?
• 9:15
  SPEAKER_00: What do you do with it?
• 9:16
  SPEAKER_00: Do you allocate all your surplus funds into the mortgage, or do you alongside that do an investment strategy?
• 9:23
  SPEAKER_00: So we look at all of those things and do modeling to show you exactly what it'll end up being.
• 9:28
  SPEAKER_00: So yeah.
• 9:29
  SPEAKER_01: Yeah.
• 9:30
  SPEAKER_01: So who is financial for, right?
• 9:33
  SPEAKER_01: So what's the biggest myth that you uh would like to bust today in terms of what people think financial planning, uh who people think financial planning planner is for, for example, might think, oh, I don't need financial planning, I'm not on high income.
• 9:50
  SPEAKER_00: A lot of people think you're right, that financial planning is only for rich people.
• 9:54
  SPEAKER_00: It's really not.
• 9:55
  SPEAKER_00: Like let's say for somebody earning, I don't know, say 50 to 100 to 150,000, right?
• 10:02
  SPEAKER_00: You might have a mortgage, you might have young kids, you might have limited savings, things like that.
• 10:07
  SPEAKER_00: It's sometimes it's more important that a person like that gets good advice, right?
• 10:13
  SPEAKER_00: Because you have limited resources.
• 10:15
  SPEAKER_00: So then what every financial decision matters, then, right?
• 10:19
  SPEAKER_00: So what do you do with that money?
• 10:20
  SPEAKER_00: We allocate each dollar that it has a job to do, then, and then you make the most of it.
• 10:26
  SPEAKER_00: So it's really not for the rich people.
• 10:29
  SPEAKER_00: Of course, they need different kinds of advice, different ways to plan and things like that, but definitely not just for rich people, it's for everyone, like I said before.
• 10:38
  SPEAKER_01: So there are different levels of advice a financial planner would give depending on the type of client.
• 10:44
  SPEAKER_00: Yeah, so just because a situation is not complex or simple, there are things you might not have thought about.
• 10:50
  SPEAKER_00: So, like even a simple thing like getting a 30-year mortgage, like a lot of uh TFS lending customers would get mortgages, and then that'll be the end of it.
• 11:00
  SPEAKER_00: But um, at TFS, that's something that I personally don't like doing.
• 11:05
  SPEAKER_00: We are saying, okay, here's your mortgage, buy.
• 11:07
  SPEAKER_00: No, we don't want to do that because if you've got kids, if you've you know now taken on a huge mortgage where a huge chunk of your money will go each month, what happens if you can't work?
• 11:19
  SPEAKER_00: What happens if your income is not coming in?
• 11:21
  SPEAKER_00: And then what happens if the bank is not gonna be, you know, if they're not charity, they're not gonna be like, yeah, that's okay, you pay us when you feel like it.
• 11:29
  SPEAKER_00: So we need to have you know a plan in place so that if something happens, you can take care of your mortgage, your living expenses, your kids, your spouse who's depending on you.
• 11:38
  SPEAKER_00: So we have to think about all of those things.
• 11:40
  SPEAKER_00: So even a simple situation like that.
• 11:42
  SPEAKER_00: I'm not talking about how much money you have or anything.
• 11:44
  SPEAKER_00: I'm literally talking about did you take a mortgage?
• 11:47
  SPEAKER_00: Are you protected if something happens?
• 11:49
  SPEAKER_00: You know, so yeah, so that's another area that we look at um as from part of insurance planning.
• 11:56
  SPEAKER_00: So yeah.
• 11:57
  SPEAKER_00: Is that is that a typical age that uh individuals should be at to talk to a financial planner or no, it depends on the person's circumstances, right?
• 12:09
  SPEAKER_00: So say you know, you might have someone who's young, single, doing a good job.
• 12:15
  SPEAKER_00: You'd think, oh yeah, it's all good.
• 12:17
  SPEAKER_00: Um, I don't have a mortgage, I don't, you know, need planning.
• 12:21
  SPEAKER_00: But think about it this way.
• 12:23
  SPEAKER_00: Now, if you're doing a job, chances are your your parents are older, right?
• 12:30
  SPEAKER_00: If something happened to you, say you didn't die and you were disabled, for example, are you going to then go back to your parents and be like, hey, look after me now?
• 12:39
  SPEAKER_00: You know, you can't.
• 12:40
  SPEAKER_00: So you have to even think of things like that.
• 12:42
  SPEAKER_00: So you'd think in that situation, I don't have a mortgage, I don't have dependence, it's really not a big deal.
• 12:48
  SPEAKER_00: But if something were to happen to you, then what happens?
• 12:51
  SPEAKER_00: You're expecting your parents to step in and look after.
• 12:54
  SPEAKER_00: So there are very simple things we can do for those kinds of people that with very little um how do you say, outflow from their end that we can put a plan in place that you know covers all of those risks?
• 13:07
  SPEAKER_00: So um, yeah, so it's for everyone, really.
• 13:10
  SPEAKER_00: Yeah.
• 13:11
  SPEAKER_01: So for an individual like that, right?
• 13:13
  SPEAKER_01: Um, let's also talk about, you know, okay, the everyday, everyday aussies who are on PYG incomes, right?
• 13:21
  SPEAKER_01: Can financial planners help individuals like this?
• 13:25
  SPEAKER_00: So everyday aussies on PAYG, you'll have a steady paycheck coming in, right?
• 13:31
  SPEAKER_00: And then let's say you have a budget and then you're sorted, you're paying your mortgage, you're contributing to super, you're raising a family.
• 13:38
  SPEAKER_00: All good.
• 13:39
  SPEAKER_00: On paper, you're doing everything right, right?
• 13:42
  SPEAKER_00: But have you ever stopped to ask, okay, I've got income coming in?
• 13:46
  SPEAKER_00: There's a little bit of a surplus, there may or may not be.
• 13:49
  SPEAKER_00: Um, what do I do with that money?
• 13:51
  SPEAKER_00: Do I pay off my mortgage?
• 13:53
  SPEAKER_00: Is that the most obvious thing to do, or is there a better way that I could utilize this surplus to, while paying off my mortgage, do something else?
• 14:01
  SPEAKER_00: Am I looking at my super?
• 14:03
  SPEAKER_00: Is it structured correctly?
• 14:04
  SPEAKER_00: Like I said, a lot of people don't pay attention to it, right?
• 14:08
  SPEAKER_00: So, super, it's a mandatory thing for your employer to contribute to when you start work.
• 14:13
  SPEAKER_00: So let's say you start work at 20 and you're like, oh, retirement is so far away, and it's, you know, I can't be bothered.
• 14:19
  SPEAKER_00: But what you don't understand is there are options inside a super fund that you can invest in.
• 14:25
  SPEAKER_00: So usually, if you don't pay any attention to it, you might be in one of those default options, which may or may not be suitable for you.
• 14:32
  SPEAKER_00: You have the advantage of time on your hands.
• 14:36
  SPEAKER_00: You have about, say, 40, 50 years to retire.
• 14:39
  SPEAKER_00: Make use of that time, make use of the compounding growth you can get in super and make smart decisions with what you have in your superannuation, right?
• 14:48
  SPEAKER_00: Don't be like, oh, I'm just too young, there's nothing much in it.
• 14:51
  SPEAKER_00: Whatever little you have, if you're smart, you can make it grow to a lot more, right?
• 14:55
  SPEAKER_02: Yeah.
• 14:55
  SPEAKER_00: So it's so for PAYG, getting back to your question, think things, things like that.
• 15:02
  SPEAKER_00: Then if you have a mortgage and kids, insurance is something that is absolutely critical, right?
• 15:07
  SPEAKER_00: We'll talk about it in detail.
• 15:09
  SPEAKER_00: I really do want to get um uh people educated about it because not enough is being said about it, I think.
• 15:16
  SPEAKER_00: Um, and then also, so think about a PAYG person, they can work till they're say 65, 70.
• 15:22
  SPEAKER_00: What happens when that paycheck stops?
• 15:25
  SPEAKER_00: Are you gonna be debt free?
• 15:27
  SPEAKER_00: Are you gonna have enough to retire on?
• 15:30
  SPEAKER_00: Because in Australia, a lot of people live longer now, so you have to almost have say you retired at 60 and say your life expectancy is 90.
• 15:42
  SPEAKER_00: You have 30 years that you need to fund without a steady POYG check coming in.
• 15:48
  SPEAKER_00: So you really have to think about it, right?
• 15:50
  SPEAKER_00: Otherwise, you'll be entirely dependent on the government, and then that can well, we know how the government's going in Australia, so that may you know may not be a good thing.
• 16:00
  SPEAKER_00: So um, why not, when you have the choice, make the correct um choices, really?
• 16:06
  SPEAKER_01: Yeah.
• 16:07
  SPEAKER_01: So you you touched a bit on uh an interesting point there.
• 16:10
  SPEAKER_01: So when you spoke about super, you said there are different investment options inside a super, right?
• 16:15
  SPEAKER_01: And now that's news to me because up until a few weeks ago when Joshua joined TFS, uh financial planner, I I didn't really know that there were investment options.
• 16:27
  SPEAKER_00: Maybe I should have done some education in here.
• 16:31
  SPEAKER_01: Um and I'm pretty sure most of the people listening to this podcast episode, if they're on pay by G income, they wouldn't have known that they have investment options inside a super.
• 16:42
  SPEAKER_01: So can they also reach out to a financial planner to understand how they can diversify these investment options as well?
• 16:49
  SPEAKER_00: For sure.
• 16:50
  SPEAKER_00: The first step would be to reach out to your superanimation fund, right?
• 16:54
  SPEAKER_00: Find out, get the latest statement.
• 16:56
  SPEAKER_00: That'll give you all you need to do.
• 16:58
  SPEAKER_01: So you can just log in online and check it, right?
• 17:00
  SPEAKER_00: Yeah.
• 17:00
  SPEAKER_00: Um, most of them have apps nowadays.
• 17:02
  SPEAKER_00: So log in online, have a look at what you're invested in, how much money you have.
• 17:08
  SPEAKER_00: Also, another thing to check is whether your employee is contributing on time.
• 17:12
  SPEAKER_00: Now, you know, after 1st of July, employers need to do every month they have to do, so it's not as bad as it was before.
• 17:19
  SPEAKER_00: Um, there are also fees in there.
• 17:21
  SPEAKER_00: So have a look at what fees are being taken off, have a look at um potentially default insurance that might be there, right?
• 17:28
  SPEAKER_00: So there are lots of things in there that will give you a good picture.
• 17:32
  SPEAKER_00: Then from there, you can start asking the questions.
• 17:35
  SPEAKER_00: What has this investment option done over the last year, three years, five years since inception?
• 17:40
  SPEAKER_00: You can see the performance.
• 17:41
  SPEAKER_00: Then you can see whether it ties in with the stage of life you're at and whether it's worth it.
• 17:46
  SPEAKER_00: Can you take more risk or should you be taking less risk, depending on um how far away you are to retirement?
• 17:52
  SPEAKER_00: So, yeah, things like that.
• 17:54
  SPEAKER_00: So, and then if you still are not clear enough or you have questions or need more clarity, you can reach out to a financial advisor and they'll be happy to help.
• 18:02
  SPEAKER_01: Yeah, I'm just gonna keep uh hopping on this topic a bit more.
• 18:06
  SPEAKER_01: You you mentioned insurance in the super.
• 18:08
  SPEAKER_01: Yeah, to deliver a bit more on insurance.
• 18:11
  SPEAKER_00: Sometimes, depending on the type of fund you're in, there's an automatic level of cover that gets allocated.
• 18:19
  SPEAKER_00: So, this is some it's very difficult sometimes.
• 18:21
  SPEAKER_00: So, because of this insurance, a lot of the time when we talk about insurance with clients, they go, Oh yeah, I'm sorted, my super has insurance.
• 18:27
  SPEAKER_00: But then I have to then probe and go, how much insurance is that enough for you?
• 18:31
  SPEAKER_00: Is that too much for you?
• 18:33
  SPEAKER_00: You know, so you need to be aware of what insurance cover is in there.
• 18:37
  SPEAKER_00: They tend to have life TPD and income protection in the super.
• 18:41
  SPEAKER_00: It can be very minimal levels of cover that you know, maybe your employer set up like a group cover or something like that at some point and it's just continued or something like that.
• 18:51
  SPEAKER_01: So are these turned on by uh default, or does some have a lot of time turned on by default?
• 18:57
  SPEAKER_00: You do have the option of going in and increasing it if you want to, but again, you have it's best that you get an advisor to review it because let's face it, like with life cover, if you die, you die and you get a benefit, right?
• 19:10
  SPEAKER_00: Whoever you've nominated.
• 19:12
  SPEAKER_00: But there are other types of cover that the definition of disability matters, right?
• 19:17
  SPEAKER_00: So uh, you know, um, a simple example would be like one insurance policy might say to be considered disabled, you have to have lost the use of both your arms and both your legs, or whatever.
• 19:29
  SPEAKER_00: And then another one might say, Oh, if you use lose the use of you know one limb or whatever it is, you're considered disabled.
• 19:37
  SPEAKER_01: It's just an example of break break fingers, it depends.
• 19:41
  SPEAKER_00: Depends on yeah.
• 19:42
  SPEAKER_00: So that's what I'm trying to illustrate.
• 19:43
  SPEAKER_00: The definitions can vary drastically between um funds, right?
• 19:49
  SPEAKER_00: So it's best that you have someone who knows what they're doing, have a look at it and see whether it's sort of because sometimes the levels of cover and the premium that you pay might be very similar.
• 19:59
  SPEAKER_00: So then why would you go for like a really hard definition when you can satisfy it easily with the same sort of you know premium that you pay?
• 20:06
  SPEAKER_00: So it's best that you get someone to look at it and then provide the necessary advice and say, yes, continue on or move it over, or you know, we can then advise appropriate.
• 20:17
  SPEAKER_01: And also bonus point, you know, if people have a financial planner and something does happen and it's not done right, they can always blame the financial planner for not doing it right.
• 20:27
  SPEAKER_01: People love blaming it.
• 20:29
  SPEAKER_00: I don't know, no comment on that.
• 20:33
  SPEAKER_01: All right, so so okay, now that's that's uh one piece of the pie, right?
• 20:37
  SPEAKER_01: The pay y work, but also we've got same uh self-employed business owners.
• 20:43
  SPEAKER_01: So, how can financial planners help business owners?
• 20:47
  SPEAKER_00: So, business owners have their own set of you know financial problems, really, right?
• 20:54
  SPEAKER_00: So I see a lot of business owners sometimes they don't pay themselves super, they think the business they're gonna sell it, and that's their retirement pot.
• 21:02
  SPEAKER_00: Um, there might be, you know, you might be working with partners, and then um one partner might pass away, and then there are issues there about who's gonna step in, and then all sorts of things, right?
• 21:14
  SPEAKER_00: So that they have their own unique set of circumstances that needs specialist advice.
• 21:19
  SPEAKER_00: So um, and a lot of the time their asset is concentrated in the business, like that's their asset, basically, right?
• 21:28
  SPEAKER_00: So sometimes we work with business owners, we'll we'll I I think building and investing in the business is one thing, but alongside that, you should have your personal wealth creation as well, those should go hand in hand.
• 21:41
  SPEAKER_00: So we usually work with business owners to do just that, right?
• 21:44
  SPEAKER_01: So on that, uh, sorry to disturb, but I think you'll anyway, you're gonna touch on this.
• 21:48
  SPEAKER_01: That's why I want to put the question out there.
• 21:50
  SPEAKER_01: So, what are some of the most common mistakes you see business owners make with their personal uh finances as well?
• 21:57
  SPEAKER_00: Yeah, so like I said, a lot of the Invest back into the business, and that's all they have, right?
• 22:03
  SPEAKER_00: But then markets change, industries change, AI is developing really fast.
• 22:08
  SPEAKER_00: Like you don't know what's going to happen to the business.
• 22:11
  SPEAKER_00: You're putting all your eggs in that basket, right?
• 22:13
  SPEAKER_00: So you really I a lot of business owners do that, and then they forget about you know topping up their supers, they forget about everything else and concentrate just on that.
• 22:23
  SPEAKER_00: So I think that it can be part of a retirement plan, it should not be the retirement plan essentially.
• 22:30
  SPEAKER_00: You should have other things going along in tandem that can work together so that you know by the time you retire, you'll be in a good spot.
• 22:38
  SPEAKER_01: Uh so Sunara, now touching on supers, now you've got retail super funds, you've got industry super funds, and then you've got SMSF, right?
• 22:44
  SPEAKER_01: Self-managed super funds.
• 22:46
  SPEAKER_01: So for business owners who think, Oh, I need an S uh SMSF, self-managed super fund, right?
• 22:53
  SPEAKER_01: Or even for pay by G individuals who think why I need a self-managed super fund.
• 22:57
  SPEAKER_01: What advice do you have for individuals like that?
• 23:00
  SPEAKER_00: Like you really need to understand why you need an SMSF.
• 23:03
  SPEAKER_00: I've had a lot of customers come and say, Oh, I want to do an SMSF because my friend does it, and I want to do property through it.
• 23:10
  SPEAKER_00: But then you have to see how much money you have in there first.
• 23:14
  SPEAKER_00: Do you understand your responsibilities and how much time you'll have to spend on this?
• 23:18
  SPEAKER_00: And then you'll have you.
• 23:21
  SPEAKER_00: I also talk to them about, okay, what is it?
• 23:24
  SPEAKER_00: Yes, buying a property is fine, but what is it that you're not getting out of your current setup that you want to get out of here, right?
• 23:32
  SPEAKER_00: So ultimately, it's to provide retirement benefits for when you retire, right?
• 23:38
  SPEAKER_00: So whether it be invested in a property or shares or managed funds or bonds or whatever it is, you want to make sure that you get to a level by the time you retire, the level that you want.
• 23:48
  SPEAKER_00: So do you really need an SMSF to do it, or can you do it where you are?
• 23:52
  SPEAKER_00: Is it just the investment options you're looking for?
• 23:55
  SPEAKER_00: So sometimes people might be in like an industry fund and they'll they'll be like, Oh, I want to invest in direct shares, but you don't have to have an SMSF to invest in direct shares through your super.
• 24:04
  SPEAKER_00: You can there are other platforms in your supers that you can do.
• 24:08
  SPEAKER_00: So you I usually just talk them through it.
• 24:11
  SPEAKER_00: There's no reason to do an SMSF unless, you know, yeah.
• 24:17
  SPEAKER_00: So we've got certain criteria that we go through.
• 24:19
  SPEAKER_00: I don't want to sort of get into the advice part of it here, but um, yeah, it's a it's a it's a larger conversation that we have then because yeah, I don't want to set it up for anyone who comes through the door.
• 24:31
  SPEAKER_00: There's a lot of responsibility that goes through it.
• 24:33
  SPEAKER_00: You lose a lot of consumer protections by doing that, so it has to be a very much an informed decision to set up an SMSF.
• 24:41
  SPEAKER_00: So not everyone should.
• 24:43
  SPEAKER_01: Okay.
• 24:43
  SPEAKER_01: Yeah.
• 24:44
  SPEAKER_01: So now so now you know we mentioned you know there are three types of uh supers.
• 24:48
  SPEAKER_01: You've got your retail supers, your industry super funds, and then your self-managed super funds.
• 24:53
  SPEAKER_01: Could you give give us like an like a simple explanation of what each type is?
• 24:58
  SPEAKER_00: Yeah, so industry funds, say for example, I don't know, um, Host Plus.
• 25:03
  SPEAKER_00: It's for people in certain industries, that's your default super, essentially.
• 25:08
  SPEAKER_00: And they have a fairly simple investment menu, and your employer contributes to it, and away we go.
• 25:17
  SPEAKER_00: But retail super funds are a little more diverse, they have pre-mixed investment options, they might have direct shares, like I said.
• 25:27
  SPEAKER_00: You can invest in exchange traded funds.
• 25:29
  SPEAKER_00: There's a there's like a platform you can log in and there's more functionality.
• 25:34
  SPEAKER_00: Of course, there's more fees sometimes.
• 25:37
  SPEAKER_00: Um, so you have to compare and see what the fees are like as well.
• 25:40
  SPEAKER_00: Um, but yeah, so retail funds a little bit more sophisticated, maybe for a little bit more of a higher balance.
• 25:47
  SPEAKER_00: Um, and then SMSF, like I said, you have to have a substantial balance and a good enough reason to set it up.
• 25:53
  SPEAKER_00: So um, those are the sort of like three types of funds that people, you know, like starting out, I see a lot of people, you know, just chuck it into the industry super, and then um middle-age, you sort of look at what other options are there, basically.
• 26:10
  SPEAKER_01: Uh so smaller, let's let's uh let's talk about the elephant in the room, right?
• 26:14
  SPEAKER_01: What are the costs involved?
• 26:17
  SPEAKER_00: The costs.
• 26:18
  SPEAKER_00: So here's the thing now with mortgage brokers, I think a lot of people know the lender pays a commission for placing the loan.
• 26:25
  SPEAKER_00: So we usually don't charge the client for that.
• 26:28
  SPEAKER_00: But with financial advice, all of that stopped a couple of years ago.
• 26:33
  SPEAKER_00: So now the advisers are remunerated by the clients.
• 26:37
  SPEAKER_00: So you pay a fee for the advice that you get, and then it's clearly outlined in the meetings and things before we give the advice.
• 26:47
  SPEAKER_00: And then if you agree to it, then you will get a statement of advice that'll outline our advice to the customer.
• 26:54
  SPEAKER_00: It'll talk about the benefits, the risks, the other strategies that we considered for you, um, and then clear outline of the costs, when they are paid, how they're paid, how your advice is remunerated, all of that is in there, right?
• 27:10
  SPEAKER_00: So then yeah, you make an informed decision and then you pretty much pay the advisor.
• 27:15
  SPEAKER_00: If there is an implementation fee that is required, you pay that, and yeah.
• 27:20
  SPEAKER_01: Um, depending on the complexity of the client's requirements, that's how the cost will be calculated.
• 27:26
  SPEAKER_00: Yes.
• 27:26
  SPEAKER_00: So sometimes, say for an insurance review, um, yeah, most of the time we charge a very nominal fee, starting from about$500.
• 27:36
  SPEAKER_00: Um, and then if you go ahead with the insurance, sometimes we weigh that off as well.
• 27:41
  SPEAKER_00: So um, I don't think people should get worried or scared about the cost of advice.
• 27:47
  SPEAKER_00: The first meeting is always free.
• 27:49
  SPEAKER_00: So uh come have a chat because then we can see whether we can help you.
• 27:54
  SPEAKER_00: The point I'm trying to make is yes, you pay for advice because obviously you're not a child, nothing comes free.
• 27:59
  SPEAKER_00: Um, it's just the same as if you went to a doctor or a lawyer or an accountant, they charge for their time.
• 28:05
  SPEAKER_00: So, similarly, with financial advisors, we charge for our time.
• 28:11
  SPEAKER_00: Yeah.
• 28:13
  SPEAKER_00: Right.
• 28:13
  SPEAKER_00: So it depends on the work that is involved and how much time we will spend on it.
• 28:18
  SPEAKER_00: But I think what you should do is flip the conversation.
• 28:22
  SPEAKER_00: What is the value that the advisor can create for you?
• 28:26
  SPEAKER_00: So if the advice that we provide will enable you to position your retirement correctly, to protect your family, to restructure your strategy and or to even sometimes stop making you making major financial mistakes, right?
• 28:41
  SPEAKER_00: So it's sometimes it's not about you can't attribute a dollar value sometimes, you know.
• 28:46
  SPEAKER_00: Sometimes it's the clarity you get talking to an advisor and knowing exactly what is happening when and how.
• 28:52
  SPEAKER_01: And also, like I know your advisors have to do a lot of paperwork.
• 28:55
  SPEAKER_00: Oh, yeah, fun times.
• 28:57
  SPEAKER_00: Um, um, yeah, but we've got you know some help with like AI and stuff to do a little bit of the paperwork quicker now.
• 29:04
  SPEAKER_00: So that's all that's now, but yeah.
• 29:06
  SPEAKER_00: Oh, yeah.
• 29:08
  SPEAKER_01: I can imagine.
• 29:09
  SPEAKER_00: Yeah, yeah.
• 29:10
  SPEAKER_00: So what I typically ask clients to do is look at it um like almost like a three-lens approach.
• 29:17
  SPEAKER_00: So can does your financial position improve because of the advice?
• 29:22
  SPEAKER_00: Are some of the risks that you're currently taking mitigated or reduced because of the advice?
• 29:27
  SPEAKER_00: And can we give you like clarity and confidence about your future, right?
• 29:33
  SPEAKER_00: So if the answer is yes, then yes, there is value created there by the advice, right?
• 29:38
  SPEAKER_00: So then you have to weigh that up with the cost that you would pay.
• 29:42
  SPEAKER_00: Sometimes, well, a lot of the time, the customers understand, yes, well, that's great.
• 29:48
  SPEAKER_00: Like by getting this advice, I'm improving my financial position so much, it's a no-brainer, then, right?
• 29:54
  SPEAKER_00: So it's not just the cost you need to think about immediately.
• 29:58
  SPEAKER_00: You need to also understand the value that you're getting out of it.
• 30:01
  SPEAKER_00: Now, the value that one person might get out of it might not be the same as the other person because it entirely depends on what you want to do and what your goals are, right?
• 30:10
  SPEAKER_00: So um it's like it's not about how complex it is, it's just basically if you're getting clarity about your financials and you're confident to make the decisions that you're doing, yeah, I think it's worth it.
• 30:24
  SPEAKER_01: Yeah, yeah.
• 30:25
  SPEAKER_01: And also, I've heard that uh I should have heard uh Josh mentioning this as well.
• 30:33
  SPEAKER_01: Uh financial planners can be paid out of an individual's super, so they don't really have to yes.
• 30:39
  SPEAKER_00: If we talk about retirement planning, if we um are doing modeling in relation to that, if we give advice in relation to the super, all of that, yes, in some instances we can get paid through the super fund.
• 30:52
  SPEAKER_00: So it doesn't have to come out of pocket, yeah.
• 30:55
  SPEAKER_00: But I need to say it is your money that you're paying, right?
• 30:59
  SPEAKER_00: So when you're paying uh an advisor through your super, your super balance goes down.
• 31:04
  SPEAKER_00: So then your advisor should be looking at things, ways, strategies to make it go up as well from the other side, right?
• 31:13
  SPEAKER_02: So improving it.
• 31:15
  SPEAKER_00: It has to be a net benefit, yeah.
• 31:17
  SPEAKER_00: It has to be a net benefit for the customer, yeah.
• 31:20
  SPEAKER_01: All right, so now let's talk about the TFS difference.
• 31:25
  SPEAKER_01: You know, because we recently uh introduced financial planning to everyone, previously it was only done for a selected few under the radar because I but see the thing is the problem is this we have to spend a lot of time, not even just the paperwork, it's more about spending a lot of time with the customers, understanding what they want to do, and that and I don't want to do it in a rushed manner, right?
• 31:50
  SPEAKER_00: I mean, you would have seen even Joshua, he spends a lot of time, he spends full and he gets like a lot of advisors do only one meeting, but you've seen Josh, he goes on just about like three, because the point is to really understand the customer, it's not a one-size-fits-all approach at all, because people are in different stages of life, they they have different goals, they have all of that.
• 32:14
  SPEAKER_00: So, um, when that happens, there's only so many clients that you can take on, right?
• 32:19
  SPEAKER_00: You can't have everyone on, so that's why now that we've got Joshua on board, we can take on a few more clients.
• 32:26
  SPEAKER_00: Um, and then yeah, because you have to sort of you know do your best for that.
• 32:30
  SPEAKER_00: So, yeah, now we do have financial planning, yeah.
• 32:34
  SPEAKER_01: So one would say financial planners actually like financial therapists because sometimes it is, right?
• 32:40
  SPEAKER_00: So, like I've had, I don't know, women who are getting separated, like yeah, like marriage breakdowns, kids getting married before going out with uh you know a new person.
• 32:54
  SPEAKER_00: Okay, what do I do?
• 32:55
  SPEAKER_00: Right.
• 32:56
  SPEAKER_00: So I've had clients who have been divorced before who are worried about you know having a new relationship.
• 33:04
  SPEAKER_00: What do we need to do?
• 33:05
  SPEAKER_00: There's so many things there, right?
• 33:07
  SPEAKER_00: That uh impact your financial house, so that you need to, you know, have a lot okay.
• 33:19
  SPEAKER_01: So Sonari, now now remember when we started the episode, you said financial planning we help uh clients pay out pay off their debt sooner, right?
• 33:31
  SPEAKER_01: Which goes which goes against what mortgage brokers do.
• 33:34
  SPEAKER_01: They want that they mean that we want to keep the clients for as long as possible.
• 33:40
  SPEAKER_01: But what is the PFS value proposition?
• 33:43
  SPEAKER_01: Why why why did we decide okay, let by introducing financial planning to our clients, even though you know we've got clients on mortgages, we want to help them get on their it's sooner, right?
• 33:54
  SPEAKER_01: So they can maybe get another home loan and buy an investment property, grow their wealth.
• 33:58
  SPEAKER_01: I think that's pretty much answered the question.
• 34:00
  SPEAKER_00: But I want to get it not necessarily just that though, because see, yes, we would what I want to look at is so is like I was saying before, if the client has a surplus, do we then use that to pay off debt, or do we use part of it to pay off debt and do something else into investments?
• 34:19
  SPEAKER_00: Then you have to see, okay, based on their risk profile, what are the investments that we're going to, you know, put the money towards?
• 34:25
  SPEAKER_00: Then we have to see what the return is likely to be.
• 34:28
  SPEAKER_00: Then is that going to be better than paying off the debt?
• 34:30
  SPEAKER_00: Like there's so many things to to model out and see, right?
• 34:35
  SPEAKER_00: So, yes, if the client wants to be debt-free, then we just concentrate on that.
• 34:41
  SPEAKER_00: But if they are like, okay, what do I do with this money?
• 34:44
  SPEAKER_00: Do I pay it off?
• 34:45
  SPEAKER_00: Do I do this?
• 34:46
  SPEAKER_00: Do I put two super?
• 34:47
  SPEAKER_00: What do we do?
• 34:48
  SPEAKER_00: Then we can compare and see what's the best option for them.
• 34:51
  SPEAKER_00: There's no, again, like it's not just always about paying down the debt.
• 34:55
  SPEAKER_00: The client might be open enough to go tell me what the right thing to do is here.
• 35:00
  SPEAKER_00: Do I pay it off?
• 35:01
  SPEAKER_00: I'm okay to carry the debt for a couple of years if there is a better use of my money.
• 35:06
  SPEAKER_00: So then we'll compare and then we'll give the appropriate advice.
• 35:09
  SPEAKER_01: Maximize the return.
• 35:10
  SPEAKER_01: That's right.
• 35:11
  SPEAKER_01: Make company work for them basically.
• 35:12
  SPEAKER_00: Yeah.
• 35:13
  SPEAKER_00: So it also depends on their risk profile.
• 35:15
  SPEAKER_00: If we can't, you know, go and put it into like really high returns without you know being okay with some level of volatility.
• 35:23
  SPEAKER_00: So then, you know, so it's a conversation we need to have.
• 35:26
  SPEAKER_00: So again, everything is a conversation with virtual, as you can see, because you have to work together with the customers, and everyone is so different.
• 35:35
  SPEAKER_00: Everyone brings into the conversation their experiences with money, how they grew up, how their parents treated money.
• 35:43
  SPEAKER_00: Did they worry about money all the time?
• 35:46
  SPEAKER_00: Were they in you know a place of abundance?
• 35:49
  SPEAKER_00: Like all of that plays into these conversations, right?
• 35:53
  SPEAKER_00: So you might get customers who are so worried about money, they just want to put it in the bank account and not touch it, right?
• 35:59
  SPEAKER_00: So then you there's a bit of education there.
• 36:01
  SPEAKER_00: Okay, well, you have to at least keep up with inflation.
• 36:04
  SPEAKER_00: Or so, you know, there's a lot of things that depending on the customer situation that we have to work through.
• 36:09
  SPEAKER_00: Yeah, awesome.
• 36:10
  SPEAKER_01: Thank you, Sunari, so much for uh doing this episode with us.
• 36:15
  SPEAKER_01: We we touched on a lot of avenues of financial planning, and we will definitely be doing more episodes.
• 36:21
  SPEAKER_00: Yeah, I think it'd be good to go in depth on in depth on each of those ones because it's hard to sort of put all of it into like a 30-minute you know conversation, right?
• 36:32
  SPEAKER_00: There's a lot to it, so yeah, happy to do a few more of these.
• 36:36
  SPEAKER_01: Awesome.
• 36:36
  SPEAKER_01: So sort of close things off, you know, if you could uh explain financial planning to someone who's financially illiterate, how would you dumb it down to them?
• 36:49
  SPEAKER_00: Like I said before, it's like a jigsaw puzzle.
• 36:51
  SPEAKER_00: You have to put it all right.
• 36:53
  SPEAKER_00: If you put put higgly piglety like that, it will not give a good picture.
• 36:58
  SPEAKER_00: So if you put it and fit it in correctly, then yeah, you get a great picture.
• 37:03
  SPEAKER_01: So, one last question for Sunali.
• 37:05
  SPEAKER_01: So, Sunali, one thing every listener should do this week for their finances, go.
• 37:10
  SPEAKER_00: How many seconds do I have?
• 37:14
  SPEAKER_00: So, I I think the main thing is you need to know your numbers, right?
• 37:18
  SPEAKER_00: You need to have clarity.
• 37:19
  SPEAKER_00: I think you and Charin would have just said this 10,000 times in your podcasts about budgeting, looking back at the numbers and seeing where your money, well, how much is coming in, how much is going out, what do I own, what do I owe, right?
• 37:35
  SPEAKER_00: Write it down.
• 37:36
  SPEAKER_00: You you'll be amazed at the clarity you get out of doing that.
• 37:41
  SPEAKER_00: Then, like I said before, have a look at your super, see where it's at, how much you have, how it's invested.
• 37:47
  SPEAKER_00: Do you have any other insurances?
• 37:48
  SPEAKER_00: Do you have any other investments?
• 37:50
  SPEAKER_00: Put it all down on paper.
• 37:52
  SPEAKER_00: Then you can ask yourself if I continue like this for the next 10 years, is this gonna take me to where I want to be?
• 38:01
  SPEAKER_01: Or if your answer is I don't know, well, marry someone who's uh yeah, I thought I thought you were gonna say marry someone who's financially literate, like Pramu married you.
• 38:10
  SPEAKER_00: No, I I think yes, that too, but I disagree with one partner have being financially literate and the other one not knowing what's going on.
• 38:19
  SPEAKER_00: We'll talk about it in another podcast because it's if the relationship breaks down, you don't know whether you're sitting or standing.
• 38:25
  SPEAKER_00: That is so not the way to go.
• 38:27
  SPEAKER_00: Please don't do that.
• 38:29
  SPEAKER_00: We need to know what's going on.
• 38:31
  SPEAKER_00: So yeah.
• 38:32
  SPEAKER_01: Awesome.
• 38:33
  SPEAKER_01: Thank you, Sunali, and thank you guys for tuning in.
• 38:35
  SPEAKER_01: And we'll catch you guys on the next episode of the TFS Weltcast.
• 38:38
  SPEAKER_00: Thank you for having me.
• 38:40
  SPEAKER_01: Thank you for tuning in to another episode of the TFS Podcast, where we turn knowledge into action and big goals into real results.
• 38:50
  SPEAKER_01: Now, don't forget to like and subscribe and share this episode with someone working towards their next financial step.
• 39:00
  SPEAKER_01: Now, with that being said, until next time, keep building.