Case study 1 – Small business
Mike* was referred to us to look at possible retirement strategies. He was 60 years old, a small business owner with strong cash flow and $300,000 in super.
During the initial interview it was discovered that Mike was in business with Gary. Gary was young and married with a lot of debt and no assets. Mike was older, had a wife and a big home unencumbered.
In order to grow their business, Mike and Gary were about to take out a bank loan. The bank would take a personal guarantee from Mike which was secured by personal assets, including his home.
There was no buy/sell agreement or any funding arrangements in the event of either partner’s Death, Total and Permanent Disablement or Critical Illness. It was pointed out to Mike and his wife Judy that should Mike die, Judy was now in business with Gary with no documented exit strategy. Additionally, as a result of the loan guarantee, should the company be unable to meet its debts and require liquidation, Judy stood to lose the family home as well as Mike and the business asset.
Mike was referred back to his accountants for them to re-examine business structures and asset & debt positions, manage taxation implications, value the business, brief us as on the outcomes and help manage funded succession & restructuring. Mike was referred to his existing solicitor to establish the appropriate business agreements, including Buy/Sell and Partnership documentation. Mike and Judy saw great value and harmony in this multi-professional aligned approach.
Whilst ultimately important, and the reason for the initial approach, the investment and management of Mike and Judy’s superannuation monies and retirement funding became secondary to the most pressing issue. Once the required protection strategies were in place, we were able to recommend and implement a long term investment plan that both clients were comfortable with.
Case study 2 – Retiree
Paul* and Donna* came to us with simple instructions “Help us draw an income to support our retirement lifestyle and don’t lose our money!”
As with most things in life what appears simple at first can often be deceiving. It wasn’t the instructions that were hard, but, due mainly to previously poor experiences in financial advice, Paul and Donna required a lot of reasons to trust again.
The journey began with open and honest dialogue on what they wanted to achieve and direct feedback from us on what we thought we could or couldn’t do. After an initial appointment of around 1 ½ hours it was agreed that we would adjourn to allow us to put together a brief summary of what our advice might look like.
At our 2nd meeting we presented some strategy points for consideration to Paul and Donna. These included various investment options to cater for income and growth, a focus to increase their centrelink allowance and a desire to address their Estate Planning requirements. We also had a full and frank discussion on fees and service standards.
Two weeks later we proceeded to plan preparation and presentation and ultimately to implementation. That was seven years ago. We were able to increase their total disposable income, reduce their annual tax liability and plan for their eventual demise with structures that would last well beyond their lifetimes.
Today, via a continued on-going review and education process Paul and Donna remain strong advocates of our family first approach. In fact, we now look after both their adult Son and adult Daughter’s financial positions.
*Names have been changed