A viral tip encouraging women to upload financial documents to artificial intelligence (AI) platforms is fast becoming a cautionary tale, with experts warning the risks may outweigh the insights.

Around 16.6% of Australians are using AI for financial decisions, with a further 30.9% planning to do so soon, according to Compare Club's AI Index, meaning nearly half the country is either using or preparing to use the technology to shape their finances.

Research out of Queensland also shows that almost half (45%) of young Queenslanders have followed financial advice from AI without consulting an expert, despite its limitations.

When this AI advice backfired

Against that backdrop, renowned American influencer and best-selling author Mel Robbins has come under fire for urging her 12.3 million followers to upload bank statements and financial information to AI platforms to seek out financial advice.

In a recent post to Instagram, the 57-year-old encouraged followers to turn to AI, specifically one of her sponsors, Microsoft Copilot, to get a better grasp on their money habits.

Under the guise of helping women take greater control of their finances, the creator of the 'Let them' theory urges women to upload a screenshot of their finances to get money advice from AI.

Robbins, who regularly shares that she was once $800,000 in debt, explained that 40% fewer women are adopting AI than men.

"Women, you cannot be left behind," she said in the post.

Her prompt for AI suggests saying: "I feel overwhelmed, behind or ashamed about my money, and I want help understanding what's actually going on without judgment... I'll share documents like bank statements, debt statements, bills and income info when you ask. If I'm not sure what to upload, start by telling me the three most helpful documents to share first."

Robbins was instantly inundated with a barrage of negative comments, including several people identifying as cybersecurity experts urging against AI for financial advice.

A US talk show has also lambasted Robbins for the post, pointing out she's not a financial expert, that she didn't recommend redacting private information before posting to AI and that anything used in AI is used to train AI and could be accessed by humans.

Why this AI money trend is taking off

But perhaps Robbins is just reading the room.

Despite experts warning of significant privacy and security risks, AI tools are increasingly being used for financial advice, including in Australia.

In fact, Vanguard's global chief economist Joe Davis warns that ChatGPT is now perhaps the largest financial advice provider in the world.

A survey from Cisco confirms that up to 29% of AI users were inputting account numbers and other financial information, despite the vast majority acknowledging that their data could be shared.

The statewide survey by RACQ Bank found 65.8% of Queenslanders aged 18-34 felt comfortable using AI for budgeting and savings tips, 31.1% turned to bots for investment recommendations and more than a quarter (26.8%) for debt management strategies.

What happens to your data once it's uploaded

Criminals are already finding ways to extract personal data from AI tools, raising the risk of identity theft and financial fraud.

Last year, Stanford University researchers studied six AI tools, concluding that society needs to weigh whether the potential gains in AI capabilities from training on chat data are worth the considerable loss of consumer privacy.

"We have hundreds of millions of people interacting with AI chatbots, which are collecting personal information for training, and almost no research has been conducted to examine the privacy practices for these emerging tools," says Jennifer King, Privacy and Data Policy Fellow at the Stanford Institute for Human-Centred AI.

These sorts of studies have led countless cybersecurity experts across the internet to warn people against sharing sensitive information, including financial data, saying AI systems can be accessed, leaked and used to train models or reviewed by humans, which could result in fraud or identity theft.

In one experiment, an AI agent hacked McKinsey's chatbot in just two hours, gaining full access to 728,000 files containing confidential client data.

Researchers have found that sensitive data shared with large language models can be stored, exposed in breaches or stolen through hidden cyberattacks.

Where AI can help, and where it falls short

The potential problems with AI aren't well understood yet.

Financial experts say that while AI is well suited to answering low-stakes questions to improve financial literacy, such as how compound interest works or how to create a budget, seeking financial advice, such as where to invest, is not a good idea.

The big problem is AI doesn't always get it right.

While it can be a great tool to solve technical problems, it still makes quite a few errors, so you need to know how to spot them, which typically requires technical knowledge, says Antony Selby, senior adviser at Sydney's Financial Spectrum.

As financial advisers point out, revealing personal or financial details is fraught, while AI cannot meet fiduciary obligations like a licensed adviser.

For adaptive advice that needs to suit an individual's circumstances, AI is precisely the wrong tool for the job, Selby says.

"For example, I tried Claude the other day by putting a case study in and asking what options are available to minimise capital gains tax. It quoted legislation that applies to relief for a divorce. Cash flow modelling may make incorrect assumptions, or forget a Medicare levy, or provide incorrect contribution caps," Selby says.

The warning from Australian regulators

Not surprisingly, the Australian Securities and Investments Commission (ASIC) also highlights concerns about the rapid adoption of AI within the financial services sector, noting the pace of adoption may outstrip responsible risk management, potentially exposing consumers to unforeseen risks.

The Office of the Australian Information Commissioner is another government body advocating against entering personal and particularly sensitive information due to the significant and complex privacy risks involved.

Robbins, meanwhile, opted not to delete the post, but did add a caveat in the comments section where she admits she could have been clearer about how she framed the example and the context around the prompt.

Robbins writes: "As with any technology or online tool, you should always be thoughtful and careful about the information you choose to share. We've since updated the language in the prompt to add more context and guidance so it's clearer for people using it themselves."

For Australians turning to AI to get ahead financially, the convenience is undeniable. But experts warn the wrong shortcut could end up costing far more than it saves.

Getting financial advice on a single issue sounds simple enough. You have a question about buying a home, aged care, insurance or retirement - and you want to pay for help without signing up to an ongoing service.

In practice, that can be hard and expensive.

"Many financial advisers do offer advice on a single topic, but not all do," says Sarah Abood, chief executive of the Financial Advice Association Australia (FAAA).

The need is widespread. Research from Investment Trends shows 11.8 million Australians have unmet financial needs, with 80% believing they could have benefited from professional financial advice.

"Australians are being left to manage major financial decisions without professional support," Abood says.

"Some are turning to unregulated social media or internet searches for answers, which carries a high risk of poor outcomes, including permanent capital loss and reliance on social security."

Cost is a major barrier. According to Adviser Ratings, median advice fees rose 86% between 2018 and 2024, climbing from $2510 to $4668.

That can come as a shock to consumers expecting to pay for a quick meeting or a simple answer.

But advisers say the real hurdle isn't the conversation itself; it's the legal and compliance work required behind the scenes.

What one-off advice actually means

One-off advice is not rare. Adviser Ratings data shows single-engagement advice made up 23% of client interactions in 2025, down slightly from 25% a year earlier.

That broadly matches the experience of Michael Sauer, a financial adviser and founder of Source Wealth, who says a quarter of his clients seek one-off advice each year.

Even so, he regularly hears the same question from prospective clients: can they simply pay for an hour of his time to deal with one issue?

"Unfortunately, that 'cash-for-answers' model isn't how financial advice works," Sauer says.

Financial advice generally falls into two broad categories: ongoing holistic advice and one-off advice.

Holistic advice takes a wider view of a client's finances and long-term goals, while one-off advice is usually narrower and tied to a specific issue or life event.

Even so, Sauer says the upfront fee is often similar whether a client wants one-off advice or an ongoing service, because much of the same fact-finding, strategy work and documentation needs to be done.

"The financial plan itself is really an enormous amount of work and that's primarily due to legislation," he says.

"Even if someone asks a simple question and you know the answer off the top of your head, you still must document it in a statement of advice (SOA). You have to prove it's in their best interests and show that you've compared a range of alternatives."

Can statements of advice be streamlined?

In Australia, advisers must provide an SOA - a legal document that allows clients to assess recommendations before acting.

"(SOAs) can be quite long and complex, and they will take several weeks generally to arrive," says Abood.

The Quality of Advice Review published December 2022, recommended replacing long statements of advice with shorter, more practical records of advice.

That could mean a short letter or email setting out recommendations instead of an 80-page document.

"If that were legally possible, the cost of advice could come down significantly," Sauer says.

He says advice will never be as cheap as some consumers might hope, because even simple questions often require research, due diligence and comparisons.

"But if advice documents were shorter and less complex, more people could be helped."

Sauer says one-off advice has become less common because a standalone plan with no ongoing service is generally less profitable.

"Adviser time is finite - you can only service a certain number of clients - so if your book is already full, you're probably going to focus on clients who want ongoing advice," he says.

While Sauer sees one-off advice as essential, Source Wealth is only able to offer it because he uses online questionnaires to collect client information, saving time and helping keep costs down.

Could a new class of adviser fill the gap?

The government's proposed new class of financial adviser is designed to give Australians access to simpler, lower-cost personal advice on limited issues such as superannuation, insurance and retirement income.

Sauer is cautiously supportive of the idea.

"Having someone who can provide factual information makes sense," he says. "That kind of model could also help advisers where a client isn't necessarily a good fit for holistic financial advice - but there are still details that need ironing out."

The risk, he says, is that providers must know when to refer someone on.

Retirement planning, for example, often involves more than just super. It can also affect a person's age pension, and advice that fails to take that broader picture into account could leave them worse off.

"As long as there's a clear understanding of when to refer clients on to qualified financial advisers, I think that approach could work well for all parties," he says.

Where consumers can turn now

For people who just want a straight answer, Sauer says there is still a gap in the market.

At one end are financial counsellors, who provide free, government-funded help for people in hardship, including with debt, budgeting and financial stress.

At the other are Australians who can afford a financial adviser or planner for tailored advice.

In between sits a large group of Australians with genuine questions, but no clear low-cost way to get personal advice.

"That gap in the middle is where there's no real 'pay per question' option at the moment," Sauer says.

For some Australians, their super fund may be the most practical place to start.

Super funds can already provide a range of free advice to members on issues tied to their account, including investment options, contributions, retirement income and insurance inside super.

That service, known as intra-fund advice, remains poorly understood. AMP research shows only one in 10 Australians know what it is, with awareness dropping to 7% among people aged 50 to 64. Yet most say they would use it if they knew it existed.

For now, that still leaves many Australians in an awkward position: their question may be too important to ignore, but not big enough to justify an ongoing advice relationship.

That is why one-off financial advice, while available, remains hard to access even though demand is widespread.

The number of licensed financial advisers has almost halved in the past seven years, falling from more than 30,000 to around 15,000 nationwide.

At the same time, households are facing more complex choices across super, retirement, aged care, tax and inheritances.

Research by Investment Trends shows 11.8 million Australians have unmet financial needs with 80% believing they could have benefited from financial advice.

"Many Australians are being left to manage major financial choices without professional support," says Sarah Abood, chief executive of Financial Advice Association Australia (FAAA).

"Some are turning to unregulated social media, or internet searches for solutions with high risks of permanent capital loss and dependence on social security."

That squeeze is driving a push to rebuild the adviser workforce, increasing the supply to meet the desperately needed demand. In a pre-Budget submission, the FAAA has put five fixes to the federal government to restore access to advice for consumers.

Making financial advice fees easier to claim at tax time

One of the biggest barriers for consumers is understanding whether advice fees are tax-deductible.

While some costs can be claimed, the rules are complicated and applied inconsistently, enough to put many people off seeking help altogether.

The FAAA wants to simplify the system by allowing full deductibility of both initial and ongoing advice fees where the advice relates to generating taxable income or involves tax financial advice.

"Without this change, it will remain extremely time consumer for financial advisers to navigate how the tax laws apply to their fees, which undermines making advice affordable for consumers," says Abood.

Faster and better advice through ATO access

The association is also pushing for advisers to gain access to the ATO portal.

This would allow them to retrieve tax information directly, eliminating weeks of paperwork, delays and back-and-forth emails.

For consumers, the benefits would be immediate: faster turnaround times, fewer errors and far less time spent hunting for old documents.

One adviser told the FAAA they spend an "obscene amount of time" helping clients track down basic tax information, especially retirees who no longer use an accountant or those less confident with technology.

"We are only asking for read-only access," says financial adviser David Sharpe. "It allows us advisers, with your permission of course, to go in and get the info we need without the back and forth."

Opening the door for more advisers

Another major focus of the submission is increasing the number of professional advisers entering and staying in the industry.

Currently, the pathway requires four steps:

• Completing an approved qualification that is limited to financial advice
• Completing a 1600-hour professional year
• Passing the financial adviser exam
• Maintaining ongoing professional education

The FAAA argues this system is too rigid and discourages new entrants.

Former financial services minister Stephen Jones has previously agreed, saying the current pathway is "not sustainable," noting that school leavers are not attracted to such a narrow study path and career changers face significant financial barriers.

Under the proposed reform, aspiring advisers could hold a degree in any discipline, provided they complete mandatory financial advice units.

With Jones's retirement, progress stalled but the FAAA says the need remains critical.

The FAAA is also calling for more grants and scholarships for new entrants and women, and for skilled migration pathways that allow experienced offshore professionals to come to Australia, complete accredited training and join the industry.

Cutting red tape without cutting consumer protection

The final two proposals aim to keep the public safe from financial misconduct without making advice even more expensive for consumers.

Right now, advisers must pay an annual ASIC levy to fund the regulator's work. But the FAAA argues the model is unfair because compliant advisers are being charged for investigations into people and firms they had no involvement with.

For example, if an unlicensed operator gives illegal advice, ASIC's enforcement costs are still funded by levies paid by law-abiding advisers.

Those costs ultimately show up in consumers' bills.

The FAAA wants the levy restructured so it's fairer and so money recovered from enforcement action is used to reduce the levy rather than flowing into government revenue.

This problem is magnified by the rising costs of the Compensation Scheme of Last Resort (CSLR), a program designed to ensure consumers are compensated when they lose money due to financial misconduct.

While the scheme is meant to protect the public, costs have blown out dramatically, and advisers are being hit with large bills for compensation related to failures they had no involvement in.

"These on-going costs are being imposed on the profession, despite the vast majority of financial advisers having no connection to the misconduct," the association argues.

"This situation is unjust, risks crippling small advice fir ms, and undermines the availability of affordable financial advice for Australian consumers."

Why this matters now

While advice does depend on one's situation, and consumers can get free advice elsewhere in some circumstances, research shows Australians are better off with advice than not.

With the Federal Budget expected to be handed down in May, the government will soon decide which reforms progress.

While there are more proposals on the table, the outcome affects more than the advice industry, but every Australian that does and doesn't get financial advice from here on.

Valvo was convicted last year of engaging in dishonest conduct after he stole $110,000 from clients' Wealthtrac superannuation accounts under the guise of adviser fee forms that authorised the withdrawal.

These withdrawals were not approved, signed or consented to by the clients; the signatures were reportedly sticky-taped on the documents.

The conduct impacted 12 clients and allegedly involved the creation of fictitious client file notes detailing conversations which purported to record some of his clients' consent to having the fees withdrawn.

Valvo was also charging most of the impacted clients monthly ongoing service fees at the same time, ASIC said.

The conduct occurred between July 2019 and January 2020. During this time, he was a representative of the now-defunct Nextgen Financial Group, where he joined in September 2013 and left in September 2021.

In 2023 ASIC was successful in having his assets frozen and he was barred from leaving the country. At that time, it was said he had tried to obtain as much as $750,000. In 2024, he was charged with 12 counts of dishonest conduct.

In May 2025 he was handed a three-year suspended sentence on the basis that he complies with a good behaviour bond for five years, pay a $20,000 fine, and make reparations to Oasis Fund Management.

Interestingly, in 2019 Valvo appeared on an episode of A Current Affair claiming that he himself had been the victim of a scam around the same time he was dipping into clients' super.

Valvo said he lost $50,000 through a fake trading platform. His family and friends also lost money from the scam.

He told the program that he had been "in the [financial planning] game for 35 years" and if an "influential financial adviser" like him couldn't spot a scam then "Joe Blow out there hasn't got a hope in hell."

While he was an adviser, Valvo was also performing as an MC, stand-up comic and celebrity impressionist. According to a talent site, he has over 40 years' experience and continues to work as both today.

Valvo is permanently banned from providing any financial services, controlling a financial services business, or working within a financial services business.

This article first appeared on Financial Standard

We explore the process, the costs involved and what to look for in an advisor.

On this episode of the Friends With Money podcast, Money's Tom Watson is joined by Sarah Abood, chief executive of the Financial Advice Association Australia (FAAA), to run through some of the most frequently asked questions about financial advice.

00:00 Introduction

01:09 Benefits of financial advice

05:07 Is advice worth it for younger Australians?

12:14 How much does advice cost?

14:02 Finding the right financial adviser

19:43 What to expect from the financial advice process

25:20 Final thoughts

Listen to this episode of Friends With Money

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Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

While our super nest eggs are healthier than ever, the real challenge is how to enjoy those hard-earned savings - splurging on the lifestyle we want today without the fear of running out of money for our needs tomorrow.

FORO, the fear of running out, leads many people to unnecessarily limit their spending, while they could be getting more out of their golden years.

For those in and approaching retirement, 'How much can I afford?' is the burning question. Closely followed by: 'How do I make it last?'

Challenger's Retirement Happiness Index research revealed two in five Australians aged over 60 rank running out of money as one of their top retirement concerns. To ensure confidence, comfort, and certainty are the bedrock of your golden years, here's your top retirement questions answered.

How much can I afford to spend?

A common rule of thumb is to spend four percent of your initial savings and then (often forgotten) increase with the cost of living. While this is an easy number to remember, it is the wrong answer for most Australians for two main reasons:

1. Spending is not constant across retirement

People tend to spend more in their early, active stage of retirement when they are travelling, enjoying new experiences, and pursuing hobbies. At older ages, while health costs increase, total spending declines (after adjusting for inflation). You can afford to spend more in early retirement because the costs are lower later.

2. The Age Pension is a valuable safety-net

While most retirees don't believe the Age Pension alone is enough, it provides a valuable backstop as you draw down your savings. This includes access to the health care card, which subsidises rising health costs for older Australians.

The means test on the Age Pension limits the amount that gets paid in early retirement - exactly what the super system was designed for. At older ages, more people get more Age Pension, so they can make their own savings last even longer. You will be spending even less of your own money.

How much does retirement cost?

While spending will decline in later retirement, what matters for retirees is the level of spending in the first place. This is where every retiree is different - you choose your own lifestyle (or adventure).

While there are some established standards on what people spend in retirement, these are just an average, and costs should be tailored to ensure you can continue to live your own preferred lifestyle.

Setting the right budget takes a little effort but shouldn't be hard work. The detailed budget function in ASIC's Moneysmart planner allows you to compare different categories of spending. This makes it easy to add lifestyle goals, like a holiday, to understand your real spending needs.

Retirement shouldn't be like winning the lottery, where the simple act of retiring increases what you can afford to spend. It is important to estimate both your wants and needs and ensure you have a secure source of income to ensure those needs are taken care of for life.

Should I leave the kids an inheritance?

Leaving some money for the children and grandchildren is important for many Australians. However, research suggests that less than one in three retirees want to leave their children a financial bequest beyond the family home.

For many retirees, the most important priority is funding their best retirement lifestyle, rather than accumulating wealth for the next generation, especially as we all live longer.

In practice, FORO actually means more retirees are leaving unplanned bequests to family members. This is because FORO has led to widespread underspending, having significant impacts on quality of retirement and Australia's economy.

Advice can be an important tool to unlock this challenge, ensuring you have lifetime income to give you confidence and certainty in your later years, alongside the capital flexibility to fund larger lifestyle purchases, such as an overseas holiday or that new caravan.

How can I manage FORO?

The key to managing FORO is to understand what running out means. For many, it is a fear of having to rely on the Age Pension. For others, it means having to ask the children to help.

A good plan is one that generates enough income so that if (and when) you are reliant on the Age Pension, you have enough additional income to cover your essential lifestyle. With a wider range of products being made available at super funds, this is getting easier to manage.

Using a small part of your retirement savings to set up a lifetime income stream, such as a lifetime annuity, means that you can focus on getting the most out of your savings. For many, this will provide either more or earlier access to the Age Pension, helping your savings last even longer.

Retirement can seem complicated and is often met with uncertainty. By taking some simple actions, such as seeking advice and being clear on your goals, you can ensure you step into retirement with confidence - living your best retirement lifestyle while knowing your needs will be taken care of for life.  With the peace of mind from solving FORO, you can enjoy the retirement you deserve.

The AMP commissions and insurance class action was commenced in the Federal Court of Victoria against AMP Financial Planning (AMPFP), Charter Financial Planning (Charter), Hillross Financial Services (Hillross), AMP and Resolution Life Australasia (formerly AMP Life) in 2020.

Shine Lawyers alleged the AMP advisers failed to act in clients' best interests by selling in-house life insurance products at inflated prices, thus failing to provide them with objective financial advice. It said AMP failed to implement systems and processes to ensure its authorised representatives complied with their duties to their clients.

AMP, which has since sold its financial advice and life insurance businesses, will pay $29 million to settle the matter.

"I am pleased that we have resolved another legacy legal matter as we focus on the future and on delivering for our customers and members," says AMP chief executive Alexis George.

Shine Lawyers said AMP "failed to inform their clients that they could obtain substantially equivalent or better insurance policies than the AMP life products from alternative insurers for lower premiums".

The class action was seeking compensation for excess premiums paid by group members, commissions paid on products and ongoing service fees charged to group members for services they did not receive between July 2014 to February 2021.

The settlement is subject to the finalisation and execution of a deed of settlement and approval by the Federal Court. AMP said in reaching a settlement, it makes no admission of liability.

AMP recently settled another class action brought against N.M. Superannuation, AMP Superannuation and AMP Services. The class action was brought on behalf of superannuation clients and their beneficiaries relating to fees charged to members of certain AMP superannuation funds, and the interest rates received, and fees charged, on cash-only fund options. It will pay a settlement amount of $120 million.

Shine Lawyers also filed a fresh class action against AMP in July, alleging AMP Superannuation has slugged members with excessive insurance fees.

This article first appeared in Financial Standard

The Actuaries Institute has released a new financial advice framework to help increase the uptake of financial advisers by clearly defining three levels of financial support.

At a glance

• Help: basic factual information, tools and calculators so people better understand various services and processes.
• Guidance: suggestions, "nudges" or directions based on a person's general circumstances.
• Advice: personalised, professional recommendations that consider a person's financial situation and goals.

Millions of Australians may soon find it easier to access financial support - whether that's a quick question about their super, some help planning for retirement, or comprehensive professional advice.

The Actuaries Institute has launched a new Help, Guidance and Advice (HGA) Framework to clarify what financial support consumers can receive - and what providers can legally offer without breaching financial advice laws.

"Our framework provides the architecture that will enable millions of people of all ages to receive support in different levels of complexity and that fits their individual needs," says Andrew Gale, chair of the HGA Working Group at the Actuaries Institute.

Gayle says the HGA framework is needed because existing regulations treat all financial advice as equally complex and fail to distinguish between what is simple guidance compared to comprehensive planning.

"Middle Australia stands to benefit most," says.

"Comprehensive advice is out of reach for many, but help, guidance and simple advice at pivotal moments can significantly improve people's financial wellbeing."

Three levels of financial support

Help: The "how do I do this?" level

Help refers to factual, non-personalised information - like how to roll over your super, fill out a withdrawal form or update insurance details.

It's the kind of support you'd expect from a call centre or online chat, practical but not tailored to your situation.

Help is low risk legally, as it doesn't count as financial advice. However, the information must still be accurate and current.

The Actuaries Institute warns that many consumers currently mistake Help for something more.

If a staff member explains how to switch investment options, a customer might take it as personal advice when it's actually just general information.

Guidance: The "what should I consider?" level

Guidance sits between Help and regulated Advice. It goes further by offering tailored scenarios or general suggestions based on the specific details of the customer.

Unlike Help, Guidance can factor in some personal details but doesn't recommend specific products.

Examples include retirement goals, budgeting, life insurance needs and using home equity as income without crossing into product advice.

It's often seen within online calculators or general planning tools that guide users through potential scenarios based on typical profiles such as age or income bracket.

In essence, Guidance asks: "What should I consider before making a decision?"

But without a definition of what is guidance, the Actuaries Institute argues advisers are at greater risk of encroaching on advice.

This leaves many only offering Help, concerned they could get in trouble if customers treat the general advice tools or nudges as definitive personal advice, leading to actions that may not be in their best financial interest.

Christine Cupitt, CEO of the Council of Life Insurers (CALI), says this results in customers ringing their call centres and not getting simple personalised answers to their questions.

"The challenge we face is that, in asking and understanding a little bit about our customers' circumstances, we move into the regulated personal advice space, and that comes with the kinds of requirements that apply to financial advisers."

Advice: The "what should I do?" level

Personal Advice is the most comprehensive - and most regulated - form of financial support.

It's based on a full understanding of your financial situation, goals and risk appetite, and must be delivered by a licensed provider.

Advice is heavily regulated under financial advice legislation. Financial services entities providing advice must ensure they meet all regulatory requirements, including providing access to an AFSL, adhering to the best interest duty and providing appropriate advice.

Some financial services providers, such as super funds, currently offer free intra-fund advice. This usually covers contributions, investment strategy and insurance but only as they relate to your super account.

Other providers offer full comprehensive advice, holistic and tailored to your entire financial situation.

It can cover everything from retirement planning and non-super investments to debt, insurance, government benefits and aged care.

However, the cost and availability, according to the Actuaries Institute, often restricts the service for many Australians.

A system under pressure

Australia's financial advice system is under strain.

Studies show those who get financial advice are better off financially.

But with the cost of comprehensive advice surging into the thousands and with only 15,500 financial advisers to service all of Australia, many Australians are left without financial support.

"We have a tsunami of retirees coming over the next decade, but many don't want or need or cannot afford full, comprehensive financial advice," says Gale.

"Giving them help and guidance on common issues - such as Age Pension entitlements, and how to think about paying down debt and moving superannuation to a retirement phase account - would allow them to retire with greater confidence."

Younger Australians also stand to benefit.

"Many would gain from greater help and guidance - on things like how to consolidate super accounts, better budgeting, and the amount and kind of life insurance they should consider," Gale says.

The Actuaries Institute's paper, Financial Advice Reform and Help, Guidance and Advice, was developed after extensive consultation with super funds, consumer groups, industry and professional bodies.

If adopted, the Institute argues the framework could expand the capacity of advisers, accountants, super funds and digital tools to support millions, including the estimated 710,000 Australians planning to retire in the next five years.

Why is financial planning so expensive? It's certainly out of reach for ordinary people.

I think the government should look into this and also provide the service at a lower fee, if not free.  - Edwin

Good one, Edwin. I am so happy to have a crack at answering your question.

The cost of financial advice nearly causes me to tear my hair out. I'll start with a financial adviser's perspective. The firm I started with my partners way back in 1983 provided fee-for-service advice. As time went by, compliance built up. This is to protect consumers, but it also costs consumers.

Today, an adviser must provide you with a statement of advice (SOA) to show that the adviser understands your situation in detail.

The problem? Well, a professional adviser will meet with you for a long appointment, then prepare the SOA. A professional adviser is on a very good salary, so the cost to the firm, including receptionists, licensing, rent, overheads, insurance and so on, means you are likely to pay $3000 for this service. Then there are ongoing costs of running the business, hence the costs for ongoing advice.

Free or subsidised advice would be great, but a firm needs to pay its bills or it goes bankrupt. Unfortunately, expecting our government to fund this is unreasonable. As a country we are running big enough deficits already. As a nation we are struggling to fund the existing health, infrastructure, education, defence, pensions and other services we all need.

This is an area where we need to self-help where we can. A great starting point is being organised with an asset register and a good budget.

Where it gets harder to avoid fees is if our personal affairs are more complex. A couple of decades ago, I could do this myself. Today, I see myself as a money GP. I'm pretty good across most money issues, but I need specialist help with tax and super. It is just too complex.

The government could help us all by making it simpler, but I don't see this happening. So I pay for a super specialist, who does nothing but super, and a tax specialist. They are worth every cent. At least the government gives us a tax deduction on these costs!

The hardest part of financial planning is not knowing what to do.

The key is sticking to it - consistently - when your emotions, habits and environment try to pull you in the opposite direction.

Why our brains struggle with balance

Behavioural finance [how psychological influences and biases affect the financial behaviours of investors] shows that our decisions are shaped less by cold logic and more by mental short-cuts and emotional triggers.

For example:
• Present bias: today's pleasures feel more valuable than tomorrow's gains.
• Loss aversion: we fear missing out now more than we value the benefit later.
• Lifestyle creep: income rises, spending quietly rises too.
• Herd behaviour: we copy others' financial moves, even if they do not match our goals.

These instincts evolved to help us survive - but in money, quick emotional decisions can work against our long-term wellbeing.

Finding the psychological sweet spot

The healthiest financial lives I've seen are not built on extreme sacrifice or reckless spending. They have a system where the important things are locked in first and the rest can be enjoyed guilt-free.

That might mean:
• Paying yourself first with automated transfers to investments, super or your mortgage.
• Setting aside a fun budget, so living today does not threaten your future.
• Linking your savings and investments to deeply personal outcomes - such as your children's security or the freedom to take a career break.
When your money goals connect to your values, sticking to the plan feels less like discipline and more like alignment.

Your adviser as your decision-making partner

Great advice is not just about projections and spreadsheets.

It is about having someone in your corner who knows your goals and behaviour patterns, and who can bridge the gap between logic and emotion.

A true decision-making partner will:
• Help you pause before making reactive or impulsive choices.
• Keep you anchored when markets or emotions are running high. Challenge you when you drift from the plan.
• Make complex trade-offs clear, so you can act with confidence.

When you work with an adviser like this, you are not handing over control - you are gaining a trusted ally who can help you to make better choices, more consistently.

Final thoughts

Balancing today and tomorrow is less about numbers and more about behaviour.

Build a system that protects your future, enjoy your life now without guilt, and surround yourself with the right guidance to keep both in harmony.

On this episode of the Friends With Money podcast, Money's Tom Watson is joined by William Moore, partner and head of private client advisory at Hall & Wilcox.

They run through some of the essential components of estate planning.

00:00 Introduction

01:45 Why you need a will and when to update it

04:51 Power of attorney

08:05 Superannuation and naming beneficiaries

12:17 Digital assets in estate planning

15:04 Tax implications for beneficiaries

18:43 Final Thoughts and Advice

20:28 Conclusion

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Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

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Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

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Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

But research by Association of Superannuation Funds of Australia released last year reveals that only 51 per cent of adult Australians, including around 60 per cent of those aged 65+, have consulted any source of information on preparing for retirement.

A key barrier is cost.

Fortunately for Australians, superannuation funds can provide a range of free financial advice to their members.

Usually the free advice relates specifically to the individual's investment with the super fund. They can talk through their different investment options; how they're tracking to their retirement; how to select them maximise their retirement income; and their voluntary contribution offerings.

They can also advise on the different insurance and income protection covers that may be available to the member.

Typically, superannuation fund members start by using online resources, such as retirement income calculators, and might then decide they want more specific advice, delivered by an advisor either in person, over the phone or via a web meeting.

All industry funds offer some form of free advice, and specifics can be found here.

AustralianSuper provides members with an over the phone, simple advice service as part of its administration fee.

"It's a great resource for members who want guidance around managing their retirement savings. This can include simple advice about making an investment choice, superannuation contributions, personal insurance or retirement income options," says Ross Ackland, AustralianSuper head of guidance and advice.

"We think that this type of advice provides the most value for members when it is used alongside the digital resources that we make available to members on our website, such as the range of tools and calculators that are available."

MLC offers a combination of personal advice and online calculators.

Personal advice includes access to financial coaches to provide general advice related to the member's superannuation and access to super advisers who offer advice on specific superannuation topics such as choosing how their super is invested and their retirement options.

It is also launching a new digital advice tool called Money View, which helps members understand their current financial situation, from basic budgeting through to seeing how much they might have in retirement. It can show what their home or investment property is worth, create budgets and set goals to see if the member is on track for their retirement aspirations.

AMP Super has had an intra-fund advice service, which is by in-house advisers. AMP describes it as "a particular type of personal advice that is simple, one-off, and given only in relation to [the member's] eligible AMP product".

"As this advice service is limited to the above areas, you will need to consider whether you have broader advice needs and if so, we can discuss an alternative advice process that best suits you," AMP says it its information guide about the service.

Individuals with more complex needs, such as wanting advice about investments outside of super, are likely to need more substantial advice and will have to pay for this.

A lot has happened since you replied to my letter back in 2009 and I would love your opinion on our situation now.

Hubby is now 60 and I'm 55, and we still live in country Victoria on our four-hectare fully owned property (now valued at $750,000).  

We fully own two rentals worth $350,000 each, rented at $320 and $330 a week (purchased in 2012 for $195,000 each, fully paid off in 2021 - they were great for tax when we both worked full-time). 

We bought a new car and used caravan about 10 years ago and enjoy travelling when we can. We spent most of last year on the road enjoying a Queensland winter, which was amazing.

Our son is now 31 and independent, although we have helped him buy some machinery in the past, most of which is repaid now (he does a lot of work for us, so not a priority). 

We are debt free, working part-time and earning a combined $100,000 or so a year, have $150,000 in Ubank and deposit $500 a month for the bonus interest (plus extra when available - in the past 12 months have deposited $46,000 in total.)  Hubby's super is $410,000, mine $105,000.

We would like to start travelling more and working less, but are wondering if selling the rentals and investing the cash would be a smarter option now.

After fees and costs, together they return about $16,000 a year, where interest would potentially return more without the headache of tenants and repairs, etc. Would love to know your thoughts. Thank you. - Karen

I always love hearing from readers who have been in contact in the past and I am very pleased to hear that things have gone so well for you, Karen.

You have built an excellent pool of assets in the 16 years since you wrote to me. I'm not surprised your four-hectare property is such a valuable asset, but delighted you have bought and paid off two investment properties, plus topped up your superannuation. Good job!

Obviously, as you work less, that $100,000 a year will diminish, but that is hardly a problem with the assets you have built up.

While property in most locations has been very good, it is more capital growth than income. I find residential property, after I take a realistic look at maintenance, insurance, agent fees, rates, possibly land tax and strata fees, a pretty poor income-producing asset.

I'd suggest a trip to your tax adviser. It is great you have significant capital gains in the two investment properties, but advice around CGT will be valuable, as would the effectiveness of adding any sale proceeds to super.

Pretty obviously, I'd doubt you would sell them both in the same financial year. Maybe selling one is not a bad starting plan anyway?

My wife and I are also planning the sale of an investment property to move to higher-yield, lower-maintenance assets, such as fixed interest, shares and our super. A real advantage of these investments is not only higher yield, but we can easily access small amounts of capital, which is impossible with property.

Property is still a very valuable part of the wealth-creation process, but less so as we age due to its generally lower income return and inflexibility. There is no point being the richest person in the graveyard.

In another 16 years, with some luck I will be 85. But thanks for contacting me again and I do wish you all the best with your investment decisions.

Frankly, I am not concerned for you. You've made good choices, and you are well diversified and well organised. I think our challenge as we age is health!

Over time, I have valued and benefited from working in firms where leadership includes multiple women - these teams have felt more inclusive and with more potential to progress as an individual.

Both senior women role models, and the impact of better gender diversity on leadership and team dynamics, improve organisational outcomes in my experience.

Investment teams have particularly suffered from low gender diversity.

When I completed the CFA program in 2001, I was told there were only two women in the Melbourne chapter before that year. When I went to my first investment briefing lunch in a fund manager boardroom, I was the only woman of around 30 attendees.

Today, that sort of occurrence is rare and noticed by more than just the sole woman in the room.

There remains a greater proportion of men in most investment teams, but there are more women today at all levels, and strong female participation in finance related degrees. While there is more to be done (example: recent gender pay gap data), this gives me encouragement total and senior female representation will continue to improve over time.

There is meaningful evidence teams with more diverse experiences and approaches, including on this single aspect of gender, have improved outcomes - be it boards, executive or investment teams. Indeed, diversity of thought and perspective is critical in investment decision making.

There is a constant challenge to find new ideas and to consider the potential risks that come with evolving and uncertain markets. This is why gender diversity in investment teams has been an area of specific research at Frontier for many years, and is a key aspect of our fund manager assessments.

International Women's Day is a good time to acknowledge strategies that positively impact advancement on gender diversity and equality. So, what have I seen have an impact when it comes to elevating the roles of women in investment?

Mentors

Mentoring is important, by senior women to other women, but also by and to men. These activities help develop women and widen perspectives beyond what is most familiar to an individual.

Environment

A cohort of senior women in a business means influence and opportunity is often organically more equally apportioned.

A culture and management philosophy that is supportive of women and their careers is highly impactful. Normalising and encouraging men to also take the opportunity to share family priorities is critical.

Momentum

Creating a team and a culture that includes women attracts more women.

This demonstrates an equitable path to the top exists, and more capable people will be drawn to that dynamic, including men. It also helps break cycles of unconscious bias and networks and expands the spheres of connection a business has for attracting new staff.

Grow the pipeline

Boosting the numbers of women in senior and decision-making roles requires growing the numbers of women in the industry.

Scholarship programs and even school leaver engagement can help steer young women into a career in investment.

Measure

Outside of monitoring participation rates, addressing issues such as the gender pay gap, which exists to some degree across virtually all industries and has many factors fuelling it, can only be impacted and understood by measurement and transparent reporting.

Over 30 years, there is much to recognise and celebrate. But there is still much to achieve.

International Women's Day has helped focus effort and bring more people into support, advocacy and action. Like strong long-term investment returns, good results don't happen by accident.

Critics put that down to a lack of financial literacy, but that can ring hollow when you consider the complexities involved and the risks of getting things wrong.

The stakes are high when making major financial decisions: markets change, products change, regulations change, as does tax. Keeping abreast of it is challenging no matter how financially literate you are, and getting professional advice may be the answer.

A study comparing the experience of advised clients versus unadvised clients found those who work with an adviser fare far better.

When asked how a financial adviser helped them, the top three reasons they gave were: reducing financial stress and worries; help getting the most out of a financial situation; and building a realistic plan for a comfortable retirement.

The research, conducted by the Financial Advice Association Australia (FAAA), found that clients of financial advisers reported higher levels of financial satisfaction despite the current economic uncertainties.

Its annual Value of Advice Index, which compares the personal experience of people who have worked with an adviser to those who haven't, found clients experienced less financial stress and had a clearer sense of purpose than those who were unadvised.

The responses were measured across four key metrics: quality of life, financial confidence, financial satisfaction, and their experience with their adviser.

David Sharpe, a certified financial planner and chair of the FAAA, says the results show measurable differences between those who navigate their financial journey alone and those 
who work with an adviser.

"The study was undertaken at a time when many people are experiencing cost-of-living pressures, from their supermarket shopping to their mortgage. In this environment, it is fantastic to see that those who work with a financial adviser feel more financially secure and able to face current challenges."

According to the study, four in five people who use an adviser are confident of solving most challenges and nine in 10 feel financially secure and tangibly better off.

Eighty per cent are less worried about money since receiving advice, 83% feel they cope better when faced with health issues and 49% say financial advice has positively impacted their family life.

In total, 94% of clients say they trust their adviser to act in their best interests, and 93% say their advisers helped them manage financial risks.

"The improvement in the Value of Advice Index is consistent across generations, with advised Gen Y, Gen X and Baby Boomer clients all reporting better quality of life, financial confidence and financial satisfaction when compared to non-advised Australians," says Sharpe.

Aren't financial planners just for wealthy people?

It also busts a number of myths, he says.

"We often hear that financial advice is only for the rich, but the study shows that nine in 10 clients earning $120,000 or less a year who work with financial advisers feel financially secure, which is higher than unadvised consumers on the same level of income."

The study shows that nine in 10 clients say the benefits outweigh the costs.

"We hope more Australians will recognise the value that financial advice can bring to them, in helping them manage their financial situation and provide peace of mind," says Sharpe.

It concludes by saying: "Overall, this year we have found that in times of uncertainty and hardship, financial advice delivers perhaps even more value, not only protecting finances but providing additional peace of mind and support in decision making."

How can I find a financial adviser?  

"Advisers tend to work with similar types of people, so in your social circles, if you've got a friend that trusts their adviser, it's likely you're going to feel comfortable with them, too," says

Marisa Broome, a certified financial planner and principal of Wealthadvice.

"But I wouldn't speak to just one financial adviser. We've always encouraged people to shop around because it's a personal relationship. Most advisers offer that first meeting for free, 
so you can spend half an hour with them to see whether you like them or not."

Once you have decided which financial adviser to use, you'll need to provide your financial details, such as assets and liabilities, as well as personal information.

"The adviser can't make good decisions or recommendations if they don't have all the information about you," says Broome. "Some advisers do it using technology, some send out bits of paper.

Some do it over several face-to face-meetings with the client. It's all part of building trust, knowing enough about the client so you can help them.

"A client may say they're a 'conservative' investor, but when you look at their wealth they've got millions of dollars in shares, and quite speculative shares, and they think that's conservative.

"Other people would think that's wild and risky. You've got to get to the bottom of what they want.

"Some people want to spend $150,000 a year and they've only got $150,000 in super. You've got to work out how they're going to get there. And winning Lotto is not necessarily a financial planning strategy.

"The adviser may not put the client in an industry super fund. They may want to put them in a wrap, or they may want to get them into an ongoing advice relationship, and if it's right for the client, that's fine.

"But for a lot of clients - someone with $500,000 in super - they probably just need to be in an industry fund."

What should I ask my financial planner?

When shopping around, Broome recommends you ask the adviser what their average client looks like. "Do you have clients that look like me? How do you look after them? Are you expecting me to be in an ongoing advice relationship with you? Are you prepared to have clients that you only see every few years?

"Not everybody needs to be in a complicated investment structure. Not everybody needs to see their adviser every year.

"But if an adviser is giving them full-on complicated investment advice and they need the client to make investment decisions, then maybe they need ongoing advice. But not everyone's wealthy enough to have that complexity."

Finally, you may be able to get a tax break too, says Broome.

"We've had a change in the ATO ruling on deductibility of advice fees. Ongoing fees have been deductible, but upfront fees were always part of the capital cost," he says.

"They're now deductible as they relate to tax - and super is a tax issue. So that's a positive."

For more information see moneysmart.gov.au.

For 75% of Australians, the high cost of living is their greatest concern. And while interest rates have remained stable over 2024, they have also remained higher for longer than many expected. Against this backdrop, 38% of Australians admit they are not on track to meet their long-term financial goals.

If money worries are on your mind, try implementing these practical steps to make 2025 the year you get back on track:

1. Get clear on your goals (and your expenses)

Almost three in five people say the reason they are off track is because they just can't seem to save any money. The solution to this is working out how much you can set aside each payday. Even a small amount saved will build over time, provided you are consistent and commit to saving it.

The government's Moneysmart website has some great calculators to help you set some savings goals. It also has an excellent budget planner to help you manage your expenses in the new year.

2. Use tax benefits to boost your retirement savings

Your employer contributes an amount equivalent to 11.5% of your pre-tax salary or wages into your super fund, which will increase to 12% from July 1, 2025. This helps you save for the long term. By salary sacrificing a bit extra from your pre-tax pay into your super, you can catch up on your long-term saving goals.

You can arrange for your employer to make additional super contributions on your behalf. These salary sacrifice contributions are generally taxed at only 15% (unless you earn over $250,000 a year), making them a very tax-effective way of saving.

Salary sacrifice is a recurring arrangement, so your employer will continue making the additional contributions until you ask them to stop. This can be a great way to save money for the long term, potentially without noticing it as much. For example, one strategy might be to revisit the government's recent Stage 3 tax cuts and ask your employer to salary sacrifice any additional take-home pay into your super.

3. Take advantage of unused carry-forward contributions

You may be eligible to contribute more than $30,000 at the 15% tax rate through carry-forward contributions if you have contributed less than your cap limit into super in any of the previous five financial years. This can be particularly beneficial if you have taken time out of the workforce, such as to care for a relative or due to ill health.

However, this option is only available if your total superannuation balance was less than $500,000 on June 30 of the previous financial year. To make this strategy effective, you also need to have sufficient taxable income.

4. Consider special provisions if you're approaching retirement

Even if you're older, there are options available to help you get your finances back on track for the long term, especially when you reduce your working hours or stop working altogether. These options include:

• Downsizer contribution: From the age of 55, you may be eligible to make a downsizer contribution of up to $300,000 to your super using the proceeds from the sale of your home. If you decide to sell and downsize into a smaller, more manageable property, this could provide an opportunity to top up your super tax-free, and you can also withdraw it tax-free later on. Both members of a couple can take advantage of this, making a total of $600,000 that can be contributed to super. Keep in mind that the Association of Superannuation Funds of Australia recommends a super balance of $690,000 per couple or $595,000 for a single person, so depending on your goals, this option could get you close.
• Transition to retirement (TTR): If you've turned 60 but haven't yet retired, it may be worth considering a TTR pension. This enables you to work full-time, withdraw up to 10% of your TTR pension account as a tax-free income stream, and continue to contribute to your super. TTR income stream payments can provide you with more cash flow to make additional contributions to super, such as salary sacrifice or personal contributions. This can boost your super tax-effectively if the contributions are higher than what you're drawing from the pension.

5. Get professional advice

Financial advice can be a game-changer. Our research shows that people who have received financial advice feel significantly more confident about managing their finances, ensuring they have enough money when they stop working, and achieving their financial goals.

For ongoing financial advice, it might be worth consulting a financial adviser. It's also important to note that the fees you pay for financial advice may be tax deductible, especially if they relate to managing your tax (such as salary sacrifice) or income-producing investments held outside your super. If the advice pertains to your super, you can also deduct the cost from your super balance.

If your financial needs are relatively straightforward, other advice options are available. For specific issues, you can seek one-off financial advice on topics such as managing debt or maximizing your super.

Many Australians who are retiring at 60 may have to potentially fund 30 years of life, possibly more.

Paul Keating introduced compulsory superannuation in 1992, so most Australians will have at least 30 years of superannuation savings available to them to fund their retirement. Most people would be surprised how little that amounts to, and how little income it generates.

The average superannuation balance for Australian males when they retire is $436,000, and for women $382,000. Invested at 5%, these two figures yield only $21,800 and $19,100 a year - clearly inadequate for even the most frugal of people.

Most Australians are severely underfunded when it comes to retirement.

Here are 10 things you should do before you retire.

1. Clear all debt and pay off the mortgage

This seems an obvious thing to do, yet it is not unusual for older people to carry debt.

Debt should be minimised, and a clear plan should be in place to pay it off as soon as possible.

2. Know how long your savings will last

Most people find themselves underfunded, particularly in times of low interest rates. If you require $100,000 a year to live and interest rates are 5%, you need $2 million in capital.

If interest rates halve, you need double the capital for the same income. If you have to dip into your capital to meet living expenses, have a clear idea of how long your capital will last.

As your capital diminishes, your interest earnings will fall accordingly. Make sure your super funds are topped up to the maximum.

3. Lower your cost of living   

Costs of living and inflation are both growing.

Successive Australian governments have altered the asset and income tests for aged pensions in an attempt to make Australians more responsible for funding their own retirements.

This trend is likely to continue. Currently, 30% of retirees in Australia are self-funded, while 70% draw a pension.

Twenty years ago, 80% were drawing a pension.

Lowering your costs of living will make funding your own retirement easier, so reduce expenses and preserve capital, particularly in times of low interest rates. Actuarial calculations are important.

4. Get on top of your estate planning

Dying intestate (without a will) creates huge problems for the next-of-kin.

Draw up a will and keep it current. Make sure your lawyer, accountant and executors have copies and make sure your family members know what your wishes are.

Simplify your family corporate structures, including family trusts.

Update lists of key personnel and login details for key bank accounts etc and let your spouse know all the key information.

Do family members know where your will is kept? Do your powers of attorney know your key issues?

5. Keep your advisors close

Make sure your lawyer and accountant know each other and understand their roles with regard to your financial affairs.

If your financial advisers are older than you, ask them to suggest colleagues to replace them. Ideally your principal advisors and doctors should be at least 20 years younger than you.

6. Maximise the value of the family home

Most people's biggest asset is their home. Explore options of selling your home, downsizing, and funding your retirement through the proceeds.

Retirees who work part-time can still make superannuation contributions, which attract lower tax rates.

However, be aware that selling your family home and buying a retirement villa will likely lead to more money in the bank, which may affect your aged pension.

There are superannuation advantages to downsizing.

7. Get legal advice before committing to retirement 

Have a good understanding the options available regarding retirement homes.

Many people find retirement homes give them peace of mind, but there can be large financial commitments involved.

Retirement living is a lifestyle choice but it can come at a substantial price. Take legal advice.

8. Know your aged care choices    

Whether you end up receiving care in your home or in a residential facility, the costs of aged care can be large.

An ACAS assessment must be done and a Centrelink form may have to be completed before a spot at an aged-care facility can be sought.

These are complicated and time-consuming. Research and financial planning done in advance is well worthwhile.

The worst time to start looking at aged-care options is when you are in hospital and doctors are adamant a return home is impossible. The aged-care process is complex; planning is essential.

9. Simplify your family/corporate structures    

Family companies and trusts may be useful during one's working life but diminish in usefulness after retirement.

Consider the ongoing importance of a trust once you have retired. Seek accounting and legal advice on the benefit of retaining such structures.

If you have a self-managed super fund consult your accountant to confirm that you have a corporate trustee, not an individual trustee.

Funds are frozen if an individual trustee dies; it can take months until a new trustee is appointed and funds unfrozen.

10. Beware of the next generations     

Being asked to help fund your grandchildren's education, or your children's lifestyles, can be difficult requests to turn down.

Do your best to ensure your children are responsible and have jobs that produce income streams to cover their own expenses.

However, new research has revealed that working with a financial adviser can drastically improve one's quality of life.

But if that's the case, why is hardly anyone using them?

According to the Value of Advice study by Financial Advice Association Australia (FAAA), an industry body for financial planners, over four in five of those using a financial adviser are confident of solving most challenges.

Some 80% are less worried about money since receiving financial advice, 83% feel they cope better when faced with health issues, and 49% say financial advice has positively impacted their family life.

David Sharpe, chair of the FAAA, says the results show measurable differences between those who navigate their financial journey alone and those who work with a professional financial adviser.

"It is well understood that financial wellbeing is connected with overall health and wellbeing," he says.

How wellbeing and financial advice are linked

This connection was displayed by the FAAA's Value of Advice Index, which compared three groups: those who don't use an adviser, those that do, and those who work with a professional who has a Certified Financial Planner (CFP) qualification - a professional standard for financial planners.

The responses were measured across four key metrics - quality of life, financial confidence, financial satisfaction, and their experience with their adviser.

What it found was that those that use a financial adviser were significantly better off than those that don't, while CFP professionals were more influential than advisers without the qualification.

Clearly, the benefit from advice is there.

However, AMP's latest Financial Wellness report found only one in 20 are seeking help from a financial adviser. So, where's the disconnect?

Can a financial adviser really help?

Part of the problem is the damage that's been done to the financial advice industry - some of it self-inflicted. However, there are also many misconceptions about what financial advisers do and who it's for.

Sharpe says the study busted several myths. Firstly, that financial advice is only for the rich.

"The study shows that nine in 10 clients earning $120,000 or less per year who work with financial advisers feel financially secure which is higher than unadvised consumers on the same level of income," he says.

Another one is that financial advisers lack objectivity.

Many who are stressed often turn to trusted friends and family members before approaching an adviser.

Yet the FAAA study found more than nine in 10 clients of financial advisers report they trust their financial adviser to act in their best interests.

One popular misconception, says Sharpe, is that the cost of financial advice is more than it is worth.  But again, nine in 10 clients say the benefits outweigh the costs.

"We hope more Australians will recognise the value that financial advice can bring to them, in helping them manage their financial situation and provide peace of mind," he says.

Financial advice across the generations

Another common myth is that financial advice is only for older Australians approaching retirement. While it's generally a good idea that retirees do engage an adviser, advice is often invaluable through one's life.

Significantly, the improvement in the Value of Advice Index remained across generations, with advised Gen Y, Gen X, and Baby Boomer clients all reporting better quality of life, financial confidence, and financial satisfaction, when compared to non-advised Australians.

Unsurprisingly, there are age-based differences in the way Australians want advice to be delivered.

For example, Gen Y are more likely to expect digital engagement from their adviser than Baby Boomers.

Gen Y are also seeking education as well as advice. Those with an adviser are significantly more likely than older generations to describe the advice relationship as a form of self-improvement.

A flexible experience including a mix of digital and in-person interaction is twice as likely to be important to Gen Y than older generations, the study found.

The bottom line

When asked how a financial adviser helped them, the top three survey responses were:

• building a realistic plan for a comfortable retirement 
• help to get the most out of a current financial situation 
• reducing financial stress and worries.

At a time when interest rates are soaring and bills are flooding in, when all the myths are dispelled, who wouldn't want that?

I feel as if I'm between a rock and a hard place. I have enough assets to prevent me from getting the pension, but not enough to create an economic engine to pay me a passive income in retirement.

I'm 53, married (28 years!) to a 51-year-old. We own our own home, have no debts and have three young adult children who live at home and are studying at uni.

Our super is $820,000 combined and we have a $330,000 share portfolio that generates $870 a month in passive income, which is automatically reinvested. 

We add $1000 a month to the portfolio and $1000 a month in pre-tax contributions split between our super accounts.

We are blessed, I know, and I'm thankful for what we have, but we hope to retire in seven years, and I just don't know if we are going to get to the place where super and passive income will be enough to live on.

I'm not sure my health will let me work much longer than that. Do I distribute my assets to my kids now so I can get a pension later? I don't know what else to do.

It keeps me up at night. Am I worrying needlessly? - Michael

Well, Michael, in this highly volatile world we live in, I think we all worry a bit. The positive aspect of worrying about our money is that, unlike global issues, we all can take action. At least our money is in our control.

First up, though, let's take distributing assets to the kids at this point in time off the table. I have a simple rule about this: ensure your and your wife's financial security come first, then help the kids.

Let's take a rough look, financially, at where your assets could be in around seven years. For the sake of this exercise, I'll use a historically conservative 5%pa return for both your shares and super.

As you know, returns from super for many decades have, on average, been around 9%pa. Shares, including dividends, for centuries have averaged a bit over 10%pa.

There are few guarantees in life (except, as the old saying goes, death and taxes), but history says that by using a 5% return we can be pretty confident your assets will also cover inflation over time. In other words, we are looking at your real purchasing power.

I suspect the $1000 you add to super may be on top of employer contributions.

If that is the case, this estimate is way below what you will have: your current super balance, plus $1000 a month, is projected to be about $1.25 million and your shares (excluding the $870 per month) around $562,000. So, in seven years, a realistic projection is about $1.8 million.

Our planet could be hit by an asteroid or some dreadful plague for all I know, but at age 60, with this amount in super and shares, it would not be a silly plan to draw out, say, 5% a year, meaning you would have around $90,000 a year to spend, pretty much tax free due to super pension rules and franked dividends.

If more than that is required, pop along and see a professional adviser.

A logical strategy is to draw down on your funds and plan towards a part age pension as you approach 67. In the decades past that, you could draw down on your assets, which, incidentally, is the whole idea. Being the richest person in the graveyard doesn't make much sense.

As you build towards and start enjoying financial independence, later is the time to consider help for the kids.

Many things may happen to your life and work. You may work longer, receive an inheritance and so on.

I feel strongly that you should build your assets, not give them away to the kids now, thinking about a pension at age 67.

Please take professional advice to map out your financial future before you think seriously about this. The day will come when it makes sense to help the kids, but today, in my opinion, is not the day.

In seven years, if about $90,000 a year in today's money will allow you to live as you wish, I'd lower your money worry level. Just keep investing.

This week on the Friends With Money Podcast, financial expert Michelle Baltazar and aged care specialist Caroline Rees tackle your questions about:

• Key considerations for making informed decisions
• Funding options to navigate the financial aspects
• Tax implications to understand the financial landscape
• Getting started on the planning process

Disclaimer: Caroline Rees is a financial adviser with Telstra Super Financial Planning Pty Ltd ABN 74 097 777 725 AFS Licence No. 218705. TelstraSuper Financial Planning provides  financial advice service to members of TelstraSuper ABN 85 502 108 833. Telstra Super Pty Ltd ABN 86 007 422 522 is the trustee of TelstraSuper and wholly owns TelstraSuper Financial Planning  Advice that Jeremy gives is of a general nature and does not take into account the particular circumstances or needs of any specific person and because of that, you should consider your own circumstances before acting on any advice. If you are considering acquiring a financial product from TelstraSuper you should read the relevant product disclosure statement and target market determination before making a decision which are available at  www.telstrasuper.com.au.

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Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

Is a financial advisor the missing piece to your financial puzzle, or is that an unnecessary cost?

This week on the Friends With Money podcast, Money's Michelle Baltazar is joined by financial advisor Jeremy Lack from Telstra Super as they debunk the myths about seeking comprehensive financial planning. Tune in to find out:

• The hidden benefits of financial advice (beyond just investments and taxes)
• The ideal times in life to seek professional guidance
• Top tips for keeping your financial plan on track
• What to expect when it comes to the cost of financial advice

Listen to this episode of Friends With Money

Listen on Apple Podcasts

Listen on Spotify

Watch on YouTube for closed captions

Subscribe to Friends With Money

Subscribe wherever you get your podcasts

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

One payout of about $145,000 related to inappropriate personal financial advice provided to a victim from Sydney.

The Australian Financial Complaints Authority (AFCA) found the fraudulent adviser provided deceitful advice and convinced the victim she was investing in a property that was to be built. The adviser stole the money and fled the country, leaving her and her family in a difficult financial situation that led to applying for a financial hardship loan to meet their mortgage repayments.

Another couple from Sydney's Hills District was paid $150,000 in compensation after receiving bad superannuation advice.

AFCA found the advice was not tailored to reflect the couple's circumstances or goals. The adviser also poorly explained the risks failed to consider alternatives.

A man from the Northern Beaches received about $17,000 in compensation after taking out a large loan on the advice of his accountant to invest in a scheme he was told had "guaranteed returns".

The claimant invested $200,000 he believed was allocated to international bonds. After the first year, he stopped receiving payments and did not hear from the company's managing director.

More than $50,000 was paid to a couple from Queensland who were advised by a mortgage broker to take out a loan that was inappropriate for their circumstances.

The victims exhausted all other avenues and waited up to five years for a resolution.

CSLR chief executive David Berry says while the financial services industry works toward the betterment of their clients, it's unfortunate that there are a small few who take advantage of the trust bestowed on them.

"Ensuring some basic consumer protections works to lift trust in the financial services industry and the professions that support it. This crucial safety net for victims of financial services misconduct is now in place and those who have experienced financial loss through no fault of their own are being compensated," he says.

The CSLR provides up to $150,000 in compensation to eligible consumers.

"It is important to note that the vast majority of people in the financial services industry act ethically and in the best interests of their clients," says Berry.

"The CSLR is a genuine last resort for misconduct only, not for poor performing investments or people who ignore good advice and take undue investment risks."

This article first appeared on Financial Standard

AFCA announced on May 28 that the administrator of DASS has 21 days to reply to the proposal.

AFCA expects the expulsion to take effect on and from June 30, 2024 pending its board's consideration of any submissions.

When ASIC cancelled DASS's licence in 2023, it was required to be an AFCA member until at least April 8, 2024. This was also the last chance for victims to register a complaint with AFCA.

"The AFCA board will consider any submissions made by Dixon Advisory at its next board meeting on June 20, 2024, before making its final decision," AFCA said.

"AFCA can only accept complaints about firms that are current members of the AFCA scheme. Once an AFCA member is expelled, AFCA cannot accept any new complaints against that former member, however the expulsion of a member does not prevent AFCA from considering and finalising complaints received prior to the member being expelled."

AFCA received a total of 2492 complaints related to DASS at the end of April.

The Financial Advice Association Australia (FAAA) chief executive Sarah Abood said the membership has been extended twice despite the fact the company went into administration in January 2022.

"This meant that complaints by former clients could continue to be made and would continue to be eligible for compensation from the Compensation Scheme of Last Resort (CSLR), considerably increasing the potential cost of the scheme to financial advisers well beyond the actuarial estimates," she said.

"Ending the membership of Dixons as proposed, effective on June 30, 2024, represents an appropriate and fair outcome for consumers, providing them with ample time to lodge a claim, as well as recognising that the profession is funding the compensation."

Also commenting, on LinkedIn FAAA chair David Sharpe wrote: "Let's be clear though - this isn't success with CSLR. It simply makes a bad situation arising from the legislation less bad."

"Ultimate success lies with Minister Jones to fix the mess of the CSLR that forces small business and individual advisers to have to pay for the actions of a subsidiary of a currently listed corporation."

This article first appeared on Financial Standard

This prohibition extends to any role within a financial services business, including positions as an officer, manager, employee, or contractor.

However, he has the right to appeal to the Administrative Appeals Tribunal for a review of the decision.

Gordon, who was an adviser and director of Refocus Financial Group between 2015 and 2018, was found to have misappropriated funds deposited by clients for property development purposes.

He diverted these funds without authorisation from his clients' SMSF accounts to cover personal debts, personal expenses, and business expenses of Refocus.

Following an ASIC investigation, he appeared before the Maroochydore District Court and entered pleas of guilty to nine counts of fraud totalling $652,500.

He was sentenced to six years imprisonment with eligibility for parole after one and a half years.

In sentencing Gordon, the presiding judge condemned his actions as "deliberate, fraudulent and unforgiveable given his position of trust" and noted that his conduct involved people's livelihood.

The judge also highlighted his lack of effort to make restitution to his victims.

Under the Corporations Act and the National Consumer Credit Protection Act, ASIC may permanently ban a person from the financial services and credit industries if they are convicted of fraud.

This article first appeared on Financial Standard

Adele Baaini, while working as a representative for licensee AAN Wealth Management, has been banned from entering financial services.

ASIC's investigation found that she rendered personal advice to 121 clients in circumstances where she knew that she did not meet the prescribed education and training standard.

Baaini worked at AMP Financial Planning between July 2011 and January 2012. She then went on to work at Affinia Financial Services for about three years and jumped to NAB as senior financial adviser for over a year.

Between June 2017 and June 2023, she was employed at NAB as a business development manager, according to her LinkedIn profile.

ASIC said Baaini engaged in "dishonest conduct and failed to act with integrity and sound judgment" and was "not a fit and proper person" with respect to working as an adviser.

ASIC also found that she was not adequately trained or competent to provide financial services and is likely to contravene credit legislation and financial services legislation.

The permanent ban also includes preventing Baiini controlling any entity that carries a financial services business, performing a function involved in the carrying on of a financial business or engaging in credit activities.

Baaini has the right to appeal to the Administrative Appeals Tribunal to review ASIC's decision.

This article first appeared on Financial Standard

The Colonial First State research found that unadvised Australians are likely to fare worse than their advised counterparts in a number of different ways, including when they elect to retire and the enjoyment they get in retirement.

Just over half of those who have never received financial advice agree that they're currently enjoying their retirement, compared to three-quarters of retirees who received advice. Those who don't get advice are also half as likely to retire at the time of their choosing.

Kelly Power, chief executive of Colonial First State Superannuation, says that when it comes to seeking advice, the earlier it's done the better the outcome.

"We know that if you engage early and see an advisor you typically save more for retirement through making additional contributions, allocating your assets more appropriately with an investment strategy that's optimised for your age and maximising your tax benefits and pension entitlements.

"All of that together typically leads to feeling more prepared and feeling more financially confident coming into retirement."

Despite the potential benefits, Colonial First State found that only a third of Australians would seek out retirement planning help from their superannuation fund, with many admitting that they felt embarrassed or afraid to reach out.

"Finding out how much money you need, when you need it, working out when you'll stop working - these are all very personal matters," Power says.

"In many cases people aren't comfortable talking about them openly so we do find that there's a sense of concern in asking for help or knowing where to go for help."

How much do Australians need to retire?

Another area that Colonial First State identified which highlights the information gap between advised and unadvised Australians is the money needed to retire.

Survey respondents were asked to estimate how much money they believed they would need to save for a comfortable retirement. The average figure among all respondents was $1.6 million, whereas the average for people who had never received financial advice was $2 million.

Both of these estimates are far higher than the most recent figures published by the Association of Superannuation Funds of Australia (ASFA) in its most recent Retirement Standard though.

ASFA calculates that the average Australian will currently need a lump sum of $690,000 (for a couple) or $595,000 (for a single) at the age of 67 to fund a comfortable retirement. This assumes that retirees own their own home, that all of the capital will be drawn down and that they will receive a part pension.

While Power notes that everyone's situation will be different, she says that it is beneficial for pre-retirees to know what they'll need in the way of a nest egg.

"I think it's important that everyone has a view of how much they need to live a comfortable retirement so that they can take steps early to prepare. Whether that's strategies like taking more risk on in their portfolio, or making additional top ups or spousal contributions."

"It is very personal, but being aware of education tools like Moneysmart and the calculators that we provide can be useful, as is seeking some help so that you can really start to implement the strategies to maximise your benefits in the lead up to retirement."

What type of advice is available through super?

For those who do want to seek help in regards to their retirement planning, one of the challenges is the kind of financial advice they can obtain.

Super funds can currently provide their members with free resources like calculators and webinars, as well as simple advice on topics like investment mix and voluntary contributions related to the super held with that specific fund.

For more comprehensive advice on topics like paying off debt or consolidating multiple super funds though, Australians are currently required to pay for the services of a financial advisor set up through their super fund, or externally.

Power says that Colonial First State receives thousands of calls each month from members looking for advice, many of which it is unable to provide help with under existing rules. Questions like 'How much should I put into an allocated pension?' or 'I have two super funds, should I bring them together?'.

"We can't provide answers to those questions because that falls into personal advice. You would have to go through a full advice process which has an associated cost, and in many cases these members can't afford to pay $5,000 for that advice.

"So that's really where the changes that the government's contemplating in tranche two of their package, they have to address those areas directly. So allowing super funds to be able to have conversations with members and help them navigate those complexities."

The government introduced the first tranche of legislation related to its financial advice reforms last month and is in the process of preparing its next stage of legislation that will, in part, give expand the role super funds currently have in providing their members with advice.

Challenger's inaugural Retirement Happiness Index, in collaboration with independent research house YouGov, conducted the study of over 1000 Australians over the age of 60 to delve into the intricacies of retirement happiness.

The study, which took into account a range of factors such as mental and physical health, social connections, purpose, and financial wellbeing, revealed a score of 70 for Australians over 60.

Notably, activities and hobbies scored the highest (79.5) followed by mental health (77.6).

Physical health (61.5) and financial stability (56.3) were flagged as areas with the most potential for improvement in enhancing overall wellbeing.

More than two in three (66%) Australians over 60 said they would be much happier if they didn't have to worry about their finances in retirement, while more than 70% believe that a guaranteed income in retirement would significantly boost happiness, with more than 40% strongly agreeing.

Challenger chief executive, customer Mandy Mannix noted that it was fantastic to see that the majority of Australians were enjoying or expecting a happy, healthy retirement.

"A better retirement is about so much more than finances but having a degree of confidence that your savings will last plays an important role.

"Almost half of respondents identify financial security as an area they wish to improve, highlighting the work we must do as an industry to safeguard retirees' golden years and foster a better, happier retirement.

"Reassuringly retirees felt their happiness would improve with access to the right financial education, as well as support through financial advice and a regular income to enjoy a safe, stable retirement. This would empower retirees with the confidence to spend and capacity to pursue their passions."

Rising living costs and affordability were growing concerns though, with two in three Australians over 60 saying it impacted their confidence that they would have enough money for retirement.

Unadvised Australians were more likely to report cost-of-living as having a significant impact on their financial security (39%) compared to those who have received financial advice (25%).

"We know the fear of outliving savings is a growing concern among older Australians," Mannix says.

"Providing retirees with the confidence to convert their retirement savings into a regular income can materially improve their quality of life, supporting better retirement outcomes as well as benefiting broader society and the Australian economy."

This article first appeared on Financial Standard.

In February 2018, the Melbourne-based wealth manager was ordered by the Federal Court not to carry on or be involved in a financial services business for 10 years.

At the same time, the court ordered WRM and its related companies, Yes FP and Jeca Holdings, to pay $7.15 million for providing 'fast cash' to financially vulnerable clients, which was followed with inappropriate advice.

Fuoco was also fined a penalty of $650,000 for his involvement.

ASIC now alleges that between March 2019 and April 2023, in contravention of these orders, Fuoco was involved in carrying on a financial services business via five companies.

These include State Advice, Ansa Finance, AFSL Group, About Advice, and Advice Now.

ASIC is now seeking orders against Fuoco for contempt of court.

If Fuoco is found liable, the court can impose penalties which may include a fine, asset sequestration or a term of imprisonment.

Just last year, Fuoco was convicted and fined for his involvement in two companies while still being banned.

The corporate regulator found that Fuoco was running Financial Circle from August 2017 to September 2018, despite being disqualified from managing corporations for two and a half years in 2016.

Because of the investigation, Financial Circle's AFSL and credit licenses were cancelled in November 2018, and the company was fined $9 million.

ASIC called the Financial Circle case a "sequel" to the WRM [injunction] proceedings of 2017.

The current matter has not yet been listed for its first appearance in the Federal Court.

This article first appeared on Financial Standard

After all, reaching out to a licensed financial planner makes sense if you're keen to put a proactive plan in place for your wealth.

However, David Sharpe, chair of the Financial Advice Association Australia (FAAA), says various life events tend to act as triggers that get us thinking about financial advice. Two such milestones include:

• Approaching retirement - we may leave speaking to an adviser until retirement is just around the corner, though Sharpe says, "It's best to plan five to 10 years out."
• Starting a family - there's a lot to plan for when a new baby is on the way, and Sharpe believes seeing a planner can ensure your family "can manage cashflow and is protected in the event of the unexpected." 

Sharpe adds that it may be worth speaking with a financial planner on other occasions, such as:

• when an elderly parent requires aged care
• following divorce
• changing jobs or experiencing a significant pay change (either up or down)
• if you come into unexpected wealth, be an inheritance or an insurance payout.

It's a broad list, but Sharpe notes, "The data shows the sooner you engage a professional adviser, the better the outcome."

What about advice offered by my super fund?

With many superannuation funds offering free or low cost advice to fund members, is it still worth speaking with a financial planner?

Sharpe believes so.

"A number of super funds employ financial advisers because they understand the difference that professional advice can make for their members," he says.

"Many super funds who don't have internal financial advisers, have agreements to refer their members to professional advisers."

Rather than diluting the need for advice, Sharpe says, that super fund advisers can help identify the need for members to seek professional advice.

Plenty of upsides

Teaming with a financial planner can deliver upsides. According to Sharpe, "People who work with a financial adviser report a better quality of life and more financial confidence and resilience."

He's definitely onto something.

Research in the US shows consumers who partner with financial advisers are more likely to report happiness, confidence, and stability in their financial and personal lives.

And a separate global study found that close to three in five advised clients are highly satisfied with their wealth, compared to two in five unadvised consumers.

It may be the case that money can't buy happiness, but being in control of your money can help.

What about the cost?

While quality financial advice could deliver rewards, the stumbling block can be the cost.

An Adviser Ratings survey found that for 80% of Australians who want financial advice, the price is simply too steep, with the median cost of advice sitting at $3,710. Different advisers charge different fees, so shopping around is one way to save.

Even so, David Sharpe says, "Ultimately, the cost is only a problem if you aren't getting value. An adviser has an ethical duty to add value for the fees they charge."

He adds that the value of advice can be tangible such as returns on investments or tax savings.

But sometimes the benefits are intangible, potentially coming in the form of peace of mind knowing  your finances are aligned with your life goals.

How can you find a financial adviser?

If you're interested in meeting with a financial adviser, the most important step is to check that they are licensed.

One way to find out is by heading to ASIC MoneySmart's choosing a financial adviser tool. Scroll down and you can search by postcode to find a licensed adviser near you.

The FAAA recommends partnering with financial advisers who are also members of professional associations. These advisers have committed to upholding high professional standards and a rigorous code of ethics.

The FAAA website also has a find a planner tool that lets you look for a professional in your neighbourhood.

Last month, David Mario Valvo of Sydney was ordered by the Federal Court to surrender his passport while his assets and those of his business, Your Financial Freedom, were frozen.

ASIC is investigating fees charged to the super funds of Valvo's former clients between January 2015 and September 2021.

It's previously been reported that Valvo is alleged to have faked client signatures, including sticky taping them to authorisation forms, to illegally obtain as much as $750,000.

Interestingly, Valvo was the victim of a scam himself during this time.

In 2019 Valvo told A Current Affair how he lost $50,000 through a fake trading platform. According to his interview with A Current Affair, some of his loved ones including his wife and best friend also lost money.

He told the program that he had been "in the [financial planning] game for 35 years" and if an "influential financial adviser" like him couldn't spot a scam then "Joe Blow out there hasn't got a hope in hell".

According to ASIC's Financial Adviser Register, Valvo was licensed by NextGen Financial Group at the time of the alleged conduct.

In September 2021 he moved to We Are Gen Y before ceasing on December 30, 2021.

Valvo's ASIC FAR record dates back to 2007 when he was licensed through Insignia Platforms - no relation to Insignia Financial.

It also shows that in 2019 and 2020 Valvo failed to meet the annual CPD requirements of 40 hours.

ASIC's investigation is ongoing and the next hearing in the case is set for September 29.

The regulator is asking that anyone who had super invested with Valvo or his business and who have concerns about fees paid come forward.

The website for Your Financial Freedom now simply bears an image of Valvo and contact details, describing him as a comedian.

A separate website shows he works as an MC, comedian and impressionist and describes Valvo as "the Man of a Thousand Voices".

This article first appeared on Financial Standard

Reader question

Dear Paul,

I owe about $800,000 on my mortgage, currently fixed at 3%.

It comes off the fixed rate in October. Should I refix now or wait and see how the Reserve Bank moves next?

Our budget is tight, and I'm not sure how many more interest rate increases we can bear. - Jonathan

Reader question

This is really stretching my very flawed crystal ball, Jonathan.

As you know, economists are seeking to read the tea leaves of our economy and the global economy as best they can, but their interest rate predictions vary widely.

The problem is that we are trying to answer a question that has myriad variables. Inflation is the obvious one and unemployment is another. Then we turn to geopolitics, including the war in Ukraine and China's trade policy, and the price of our key exports, such as iron ore. Then we need to add in our weather patterns and our farmers' production.

Throw all that and a whole heap more, such as consumer sentiment, into a blender and out comes an answer regarding interest rates. The trouble is that if any of the guesses we make about all, or some, of the above are wrong, our answer on interest rates will be wrong. The Reserve Bank has my sympathy.

So, I think we need to leave guessing about interest rates alone and focus on you.

If, after shopping around, you can fix your loan at a rate you can afford, then that can hardly be a bad decision. Rates may go up or down, but you have repayments you can afford.

What I would absolutely be doing is trying to build some reserves. As you look at your budget, are there any savings, any expenses, you can cut out?

Equally, is there any chance you or your partner can bring in a bit of extra income? Just about all of us have had moments when we feared we could lose our home.

That happened to us in early 1990 as our mortgage soared. It was not pleasant, but our car had to go and we got a very cheap replacement. We scrounged savings on food, with no entertainment or holidays. I have to say it was not much fun, but things were brighter a few years later.

Preserving our home was our first priority and we were very glad we sacrificed to do that.

My husband is 68 and would like to retire soon. Should we pay off our mortgage (under $300,000) with his super?

We have no other income streams, around $370,000 in super, around $25,000 in savings and no other assets.

We would eventually sell and downsize. I'm still working part-time and earn around $350 a week, but I'm only 57, so I can't retire yet. - Suzi

Interesting question, Suzi. I can only provide you with a broad look at the key factual issues around your decision.

For expert, personal advice, I would want you to see a professional financial adviser. A chat to your super fund may help - it is likely to offer member advice or be able to refer you to a reputable adviser.

The facts here, though, are both simple and complex.

The simple bits are that if you take $300,000 out of super to pay down your mortgage, you are depriving yourself of a tax-effective pool of money to fund your retirement once you downsize.

You would also reduce your access to cash to the remaining $70,000 in super and $25,000 in savings.

This is the more complex bit. Will super earn more than the interest you pay on your mortgage?

Over the decades, a good, low-cost, balanced-type super fund has been earning members, on average, more than 8% a year. Your mortgage is costing you, perhaps, around 6%?

To take all this information and make it personal to you, start with a chat to your super fund.

But if I was in your shoes and planning to downsize, thereby getting rid of my mortgage, the last thing I would be touching, except for an annual income stream to live on, would be my super.

Minister for financial services Stephen Jones today unveiled a number of reforms that aim to remove the red tape that is restricting Australians from accessing financial advice. Jones has accepted many of QAR chair Michelle Levy's recommendations either fully or in principle.

Eliminating many bugbears for financial advisers, the Safe Harbour Steps will be removed from the Best Interest Duty. Consultations remain so as to determine the implementation details and the implications of adopting the remaining parts of Recommendation 5, Jones said.

Ongoing fee renewal and consent requirements will be streamlined into a single form, and the requirement to provide a fee disclosure statement will be removed, as per Recommendation 8.

Statements of Advice (SoAs) will be replaced with an advice record that is more fit-for-purpose, with consultation to determine the final design of the replacement, accepted in principle as part of Recommendation 9.

Jones promises there will be more flexibility to how Financial Service Guides (FSGs) will be provided (Recommendation 10), while standardised consumer consent requirements will be introduced to classify a consumer as a wholesale or sophisticated client (accepted in principle as per Recommendation 11).

More details about the replacement SoA and the Financial Adviser Code of Ethics will be released in due course.

As for conflicted remuneration, Jones accepted many components of Recommendation 13, whereby some exemptions to the ban on conflicted remuneration will either be simplified or removed.

Jones said "clarifying that monetary or non-monetary benefits given by a client are not conflicted remuneration along with the removal of consequential exceptions", in accepting Recommendations 13.1 and 13.3.

Under Recommendation 13.4, the exception to conflicted remuneration rules when issuing financial products where advice has not been provided in the previous 12 month is to be removed. The exception to conflicted remuneration rules for agents or employees of Australian Authorised Deposit-Taking Institutions (Recommendation 13.5) will also be removed.

Life, general and consumer credit insurance commissions (Recommendations 13.7 - 13.9) will have to provide standardised consumer consent requirements.

Jones will defer the review of time-sharing schemes (Recommendation 13.6), until Treasury's review into the regulatory framework for managed investment schemes.

A boon for super funds

Superannuation funds will be given more leeway to provide retirement advice and information to their members, as accepted in principle as part of Recommendation 6.

Levy said trustees should be able to provide personal advice to their members about their interests in the fund, including when they are transitioning to retirement.

"In doing so, trustees will be required to take into account the member's personal circumstances, including their family situation and social security entitlements if that is relevant to the advice. Superannuation fund trustees should have the power to decide how to charge members for personal advice they provide to members and the restrictions on collective charging of fees should be removed," she said.

"The new best interests duty would be a true fiduciary duty that reflects the general law and will not include a safe harbour. This duty will apply only to financial advisers (relevant providers)."

Jones said trustees will be provided with legal clarity around current practices for the payment of adviser service fees (accepted in principle Recommendation 7).

Further to making advice more accessible, Jones will broaden the definition of personal advice (Recommendation 1) and remove the general advice warning (Recommendation 2).

Non-relevant providers will be able to provide personal advice (Recommendation 3) and the Good Advice Duty will be implemented.

Under Recommendation 4, the Good Advice Duty applies to all relevant providers (qualified advisers) who provide personal advice and Non-Relevant Providers such as advice firms or financial institutions.

Design and Distribution Obligations (Recommendations 12.1 and 12.2) will be reworked to "limit the exception to the requirement to take reasonable steps to ensure the distribution of a financial product is consistent with its target market to personal advice provided by relevant providers."

When personal advice is provided by non-relevant providers, the AFSLs will be required to comply with the distribution obligations and take reasonable steps to ensure the financial product is only recommended in accordance with the target market determination.

"Government consultation will test how these proposals might operate under different advice models, including digital advice models, and across sectors. Consultation will also consider practical policy design and implementation issues, including in relation to consumer protections," Jones said.

"The government will issue its final response on the Delivering Better Financial Outcomes package later in 2023."

No going back

In adopting the bulk of the recommendations immediately, Jones flagged that the government will legislate in the second half of 2023 and early 2024.

"Of the 22 recommendations, the government will adopt 14 recommendations in full or in principle today. We are also not ruling out any recommendations and will finalise our position on the remaining recommendations before the end of the year," he said.

"We will progress the implementation of these recommendations through three streams of work."

The first stream comprises removing the Safe Harbour Steps and cumbersome paperwork - with Jones saying that fixing financial advice and helping five million Australians, at or approaching retirement, gain access to more retirement income advice - require the highest urgency.

"Over the past decade or so, the financial advice sector has undergone significant change. In response to, sadly, bad practice in the sector, financial advice has become heavily regulated over this time period," he said.

"These reforms often targeted a specific part of the problem. Conflicts of interest. Poorly qualified advisers. And a culture of salesmanship instead of a fiduciary relationship. We aren't going back to those bad days."

More than 10,000 advisers have left the industry since 2019. As at May 10, there were 15,993 practising advisers.

"The Quality of Advice review found that the median ongoing advice fee has increased by 41% between 2018 and 2021. So, while the reforms have been effective in protecting Australians from bad advice, it has also shielded them from helpful advice," he said.

"It would be bad enough if Australians simply got no advice."

Stream Two expands super fund access to retirement income advice.

"In the coming weeks, Treasury will work with industry to finalise the details for how these recommendations can be effectively implemented," he said.

Issues to consider include the scope of advice allowable for a fund; education standards required for an employee or representative; and holding representatives to an appropriate duty.

Stream Three will examine the role for other institutions such as banks and insurers.

"As Treasury is working on implementing the recommendation for superannuation funds to provide more advice, it will explore with industry what would be required to tailor the model for other institutions," he said.

This article first appeared on Financial Standard

An ASIC delegate found that the couple carried on a financial services business without holding an AFS licence from July 2015 until May 2021.

Richard Marshall advised clients of his company, RT Marshall, many of whom were elderly, to open margin lending accounts, appointing himself or his wife as an authorised person to trade shares on behalf of those clients.

He then arranged for shares to be traded on client accounts by instructing his wife to execute the share trades on behalf of clients. The clients were charged substantial fees for these services, ranging from $3000 to $20,000 per client, per financial year, ASIC said.

Further, the ASIC delegate was satisfied there was evidence that Richard Marshall withdrew money from a deceased client's estate without authority. He then failed to refund the money to the deceased's estate when requested to do so.

ASIC concluded that Richard Marshall's conduct demonstrated that he wasn't a fit and proper person to provide financial services.

The ban prevents the couple from providing any financial service, controlling an entity that carries on a financial services business and performing any function involved in carrying on a financial services business.

Both of the Marshalls have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

This article first appeared on Financial Standard

My 82-year-old mother is selling her home and moving in with my sister. Mum would like to gift money to each of her six adult children.  

What are the rules and implications regarding her aged pension? How much can she gift? And how much should she invest and where? Thank you. - Tanya

Good on your mum.

I am not sure whether to laugh or cry when I see people grimly hanging onto money in excess of their reasonable needs. My wife and I often have a chuckle about this.

Statistically, one of us is likely to live to 90 or older (probably my wife!), and I while am sure that our three adult children would appreciate an inheritance when they are 70, it seems ridiculous to us. The world has changed. We are living longer and we need to change our views towards the transition of money to our kids.

Rule 1, though, is very important. First, ensure you are financially secure and that you have a financial plan for the path to death. This includes possible aged care and high-care accommodation costs. If you have this plan covered, then help the kids when they most need financial help. That is rarely when they are 70!

Tanya, with your mum any gifts are dealt with under the harsh-sounding "deprivation provisions".

There is much commonsense here. Giving a pile of unwanted money to the kids, then getting a full pension, is not a bad-sounding strategy (as long as the kids don't blow the money).

There is a limit of $10,000 a year, with a $30,000 limit over five years. Anything she gives away above these limits is calculated as being her asset and the income test applies.

The key here is how much money your mother receives and how much she wishes to gift. If it were $10,000 in year one, no problem, but $1666 for each of the six of you is not exactly a fortune.

If she has sold her house for a large sum, I'd seek professional financial advice. Houses are so expensive these days, she may be better off investing sensibly, gifting surplus funds to the six of you and not worrying about the pension.

I do appreciate how much people can value the pension. Technically, your mum could go to the casino and lose the lot and keep her pension. I do see people doing really stupid things to keep the pension, but the amount she has received will dictate the path she takes.

But that comes at a cost, one that most Australians find unaffordable.

Numerous government reviews of the financial services system have been made over the past three decades. The latest, the Quality of Advice Review, announced in March, aims to assess how the regulatory framework could deliver better outcomes for consumers.

It will investigate whether there are opportunities to streamline and simplify regulatory compliance to reduce costs and duplication; to improve the clarity of documents; and whether parts of the regulatory framework have created unintended consequences.

Actuary Michael Rice says the current financial advice regime is in crisis.

"While there is now much improved consumer protection, the heavily bureaucratic legislation pertaining to advice, together with the ultra-cautious approach of the regulators, is a severe hindrance to the industry delivering sound financial advice at a fair price for most Australians," he says in his submission.

"Ironically, legislation and regulations aimed at protecting consumers have contributed to a situation where many Australians do not receive financial advice. Many of these people have poor finances and suffer because of the absence of any professional guidance."

While the original intention of the Financial Services Reform (FSR) legislation was to allow single-issue advice, "this has been thwarted by the regulator applying the same heavy compliance requirements to this type of advice as for the far more complex comprehensive advice plan," he says.

Regulatory burden

The legislation requires an adviser to know, and to consider, their client's overall financial needs even if only dealing with a small part of those interests.

"This was not the intention of the original FSR legislation, and it has restricted people from delivering simple forms of financial advice electronically at low costs (and with low risks) to consumers," says Rice. "The desire not to fall foul of ASIC usually takes preference over delivering a sound, value-for-money outcome for consumers."

As a result, few ordinary Australians can afford to purchase the financial advice they need.

"This is a major problem for the significant number of Australians moving into retirement. They need advice if they are to optimise their retirement incomes - which will be highly valuable for them as well as being to the benefit of the Australian economy."

Rice has had a long, distinguished career as an actuary. He was the founder and CEO of the research firm Rice Warner. Last year it was bought by Deloitte.

A report prepared by the firm in 2020 for the Financial Services Council on the future of financial advice reforms included research by KPMG showing that a financial plan cost more than $5000 to produce. Administrative changes could cut that by about $2000.

However, in his submission Rice says it does not bring the cost of a financial plan down to levels most consumers would find palatable, and more fundamental change is needed.

"Several surveys have shown that most consumers will not pay more than a few hundred dollars for each piece of advice. Conversely, wealthier Australians have substantial assets to protect or have high income that will generate future savings. In these cases, they value financial advice and will pay a sizable fee for it."

To broaden the uptake of financial advice in the community, he argues that consumers should be able to access simple advice for one-off amounts under $500 and some forms of comprehensive advice for less than $1500.

He proposes a new risk-based model:
• Simple (low risk);
• Comprehensive (medium risk); and
• Complex (high risk).

Rice says there would still be a need for specific controls for advice in specialist areas that are either highly complex or high risk, or both. All the above forms would be licensed and monitored by ASIC.

Risk-based approach

The current policy requiring advisers to hold a degree in financial planning is an attempt to raise industry standards, says Rice. "However, this step is not necessary to develop standards for many forms of advice. It will also lead to a shortage of advisers in due course and adds significant cost."

The flaws with the system are:

• New entrant advisers must obtain a degree in financial planning. This requirement limits the pool of future advisers as many people trained in associated professions, such as accounting or actuarial science, will not want to study for a further three years, particularly as the financial planning degree is less valuable than their existing qualification.
• A specialist degree is not needed to deliver many forms of advice. Many advisers specialise in areas where there are already existing educational facilities. For example, a stockbroker needs to know about retail investments; they do not need to know anything about life insurance.
• A degree in financial planning is not necessary to deliver many forms of simple advice. An appropriate qualification is needed, but this need not be a degree.

"If we move to a risk-based structure, the educational requirements can be tailored appropriately," he says.

For example:

• Simple - demonstrate skills in compound interest, basic accounting functions and statistics. The qualifications of accountants and actuaries are automatically accepted.
• Comprehensive - tertiary qualification that includes some of these topics - accounting, actuarial science, economics, finance, statistics and behavioural finance.
• Complex - as above, and backed by further education in financial planning (probably a series of diploma courses or a specialist degree in financial planning).

When providing specialist advice, an adviser would need to demonstrate skills in areas such as aged care, life insurance, stockbroking, self-managed super and retirement planning.

This approach would be analogous to medical services, says Rice.

"In financial services we assume every financial adviser is a competent surgeon and every consumer has a complex medical procedure that they need to have. Whereas in the medical profession, you have a whole series of professionals like paramedics, nurses, GPs and surgeons, and you go to the right one, whereas in financial services it is all or nothing."

Currently, all advisers need to do a full analysis of a consumer's financial needs when delivering simple advice. "Provided the advice is likely to make the consumer better off, it should be possible to deliver most simple advice using digital engagement, akin to the current treatment of intra-fund advice," says Rice.

He says financial advisers will continue to deal with wealthier individuals for comprehensive or complex advice, but the model may help them expand their services to more consumers. "They could substitute simple advice for some clients rather than turning them away as happens today."

Industry challenge

Sarah Abood, the CEO of the Financial Planning Association (FPA), says the decline in the number of planners is a serious concern as it coincides with a period of high demand for advice.

"Demographic change is driving increased demand, with the number of Australians over 65, a key trigger for financial advice, due to peak between now and 2027, according to the ABS," says Abood.

She attributes it to older advisers retiring or selling their businesses, plus the withdrawal of the banks from offering planning services, following the financial services royal commission.

"In addition, the legislation requiring planners to pass the FASEA exam by September 30, 2022, and the requirement to have a specific university degree qualification by January 2026, has seen a number of planners decide to leave the profession," says Abood.

"Planners are also dealing with an extremely complex regulatory environment, having to spend more and more time generating lengthy paperwork and filling out forms (often the same forms multiple times in the same year), which is also playing a role in the decisions by financial planners to leave the profession."

Abood says these demands have been the main driver for increasing the cost for financial advice. "The current regulatory settings are adding unnecessary cost and complexity to the financial advice process, at a detriment to those who need advice.

"As well as making advice more expensive than it should be, the regulatory environment is making advice harder for Australians to understand."

The FPA's data suggests the cost of producing a financial plan for new clients rose more than 15% over the 2020 calendar year, on top of the 10% increase during 2019. "It has continued to rise since - according to a study done last year by KPMG, the average cost of advice is now $3660."

The FPA has been calling for a number of reforms to address the complex, overlapping and contradictory regulations, codes and rules that now govern the provision of financial advice.

In its submission to the Quality of Advice Review, it has endorsed five key themes for improving the affordability and accessibility of advice for consumers: recognising the professionalism of financial planners; easier-to-understand documentation; achieving regulatory certainty; improving sustainability of the profession; and facilitating open data and innovation.

Easier for consumers

Xavier O'Halloran, director of Super Consumers, says the current regulatory setting exists for a good reason. "It's there to provide quality and safe advice to those seeking it."

A national survey conducted by Super Consumers of those over 45 found it was only wealthier consumers who relied on financial professionals. "They want trained professionals to help them and tend to have the financial resources to pay for them.

"It requires us to think about what role the design of the financial system and the government can play in making it easier for consumers to navigate," says O' Halloran. "We need to make retirement planning easier. To do this, we need solutions that make sure everyone can get a good outcome from the retirement system regardless of wealth or financial knowledge.

"Our key recommendation is that the government be tasked with connecting up Australia's public retirement services and tools through a single portal to provide quality, impartial guidance, delivered via digital channels with in-person and over-the-phone support as required."

He says the government should merge important information sources like the ATO, Centrelink and MoneySmart and go further to help people understand the types of products and strategies that will help them manage the financial risks they face in retirement.

"This will help people experience the benefits of shopping around and it will help people navigate their different needs as they manage private savings, government support and household financial needs."

How to find an advisor

The Financial Planning Association's Sarah Abood recommends you check that your financial planner has the right qualifications and experience.

"The lead professional designation for financial planners is the CFP (certified financial planner). This designation is recognised globally as the gold standard for advisers. Those with this qualification have completed extensive additional education and training and commit to the highest ethical standards.

"Look for someone you're comfortable with and can work with over the long term. It's best to meet with them first - many financial planners offer a free initial meeting. It's an opportunity to ask questions, and a good planner will listen carefully, answer your questions clearly and explain what kind of advice they can offer you."

There are a variety of ways planners structure their fees. "The cost depends on the complexity of the client's situation, as well as the method the planner uses. The fees might include an upfront fee to identify the client's needs, develop a financial plan and implement their recommendations. Separately, there may be ongoing fees if clients choose a review service."

Also check the government's MoneySmart website (moneysmart.gov.au/financial-advice). It has information and tools that are essential for anyone seeking advice.

It recommends you do the following:

• Make sure your financial adviser has an Australian financial services (AFS) licence or is an authorised representative. Check their qualifications on the financial advisers register. 
• Decide what you want from the advice. Do you want help with investing money, budgeting or planning for retirement?
• Read your adviser's financial services guide to learn about their fees and services, and how they deal with complaints.
• Compare the fees charged by different advisers, to make sure you're getting a good deal.
• Be careful about how much access your adviser has to your investment accounts.
• Talk to your adviser if you're unhappy with their advice.

What the definitions mean

According to Rice Warner, the broad legal definitions used by the regulator ASIC and the industry are:

• Education - helping consumers understand topics (for example, what is an equity or what taxes apply to superannuation?)
• Information - providing facts about products or services (such as setting out the fees on a product). Any provision of information should not offer any recommendation or statement of opinion intended to influence the client.
• Financial product advice - this is what is regulated by legislation and regulation, and it's advice that evaluates, compares or makes recommendations about one or more financial products. 
• Financial products - these are financial instruments or services defined as such in the legislation. Not all financial instruments are financial products - for example, mortgages are not.
• General advice - this is advice provided without using personal information about the consumer (even if you know something about the consumer). Giving out a product disclosure statement (PDS) without any commentary on a product's merits is "information" but telling someone, say, that the investment is suitable for superannuation is "general advice".
• Personal advice - this is advice provided in relation to specific issues after considering personal information about the consumer.
• Scaled advice - personal advice about one or more topics (but is not expected to be comprehensive, only specific to a topic).
• Intra-fund advice - scaled advice about one or more topics, which includes personal information about the consumer and their interest in a single super fund in which they are already a member.
• Comprehensive advice - considers all the personal circumstances of a consumer.

A perplexing issue for Katherine and Guy is who to appoint as Roman's trustee, because managing his care can be full-on. They put off drawing up an ongoing care plan in their will, but when Katherine found out she had breast cancer, they decided they had to act.

Instead of leaving Roman a lump sum or the house in their will, they need to protect the funds to provide an income to support Roman as he ages. He has severe spina bifida and an intellectual disability and is incontinent. He uses a wheelchair.

The National Disability Insurance Scheme (NDIS) has really helped, giving Roman care services and freeing up Katherine's caring role for several hours on certain days, but NDIS doesn't provide accommodation or food.

Disability pension

Roman has turned 18 and qualifies for a government disability pension, but it won't cover all his needs. It pays $503.50 a fortnight for 18- to 20-year-olds and $987.60 for those who are 21 or older.

Katherine and Guy want Roman to have extra income to help pay for his accommodation, therapies, food, medical emergencies and recreation. But the funds could disqualify him from the disability pension because of its assets and income test.

Roman loves his computer and electronic gadgets that connect him to his friends through chat rooms and has passions such as basketball. He is much loved by his parents and his healthy, neuro-typical brother and sister. He lives at home, but he could live in supported housing as an adult.

"There's a lot to weigh up. It can be emotional and difficult," says Susan Bonnici, a senior estate planning solicitor at Equity Trustees, a company that offers professional trustee services. "But once you get the conversation going and put something in place, it gives people peace of mind."

Bonnici says it is a struggle for people to find the time to make a plan.

"Disability is such a wide-ranging term and there are so many varieties. This means that no one-size solution fits all."

Special disability trust

There are several options for Roman. Perhaps the best one is to set up a special disability trust (SDT). These were introduced by the government in 2006 for families to put aside money to fund primarily medical care and accommodation needs for someone with a severe disability.

SDTs allow some limited spending - $13,000 for 2022-23 - on discretionary items, such as food, clothing and recreation.

One of the advantages of an SDT is that Roman can still receive his government disability pension if the SDT has assets of $724,550 or less. (It's indexed annually on July 1 along with the discretionary limit.)

The government gives beneficiaries an assets test exemption, but to qualify they need to follow the rules and reporting requirements of an SDT.

The income from the SDT isn't counted for social security benefits providing it is used for care, accommodation, discretionary spending and maintenance of the trust.

The NDIS is not means-tested for assets or income.

Special disability trusts can be set up by parents while they are living or as part of a will. A working will is important so parents' wishes are set out for their child with a disability.

A combination of strategies can work well for parents, says Bonnici. A single strategy could be too limiting, but combining a couple of different ways to support a child could give more flexibility.

Testamentary trust

Two-thirds of the 4.4 million Australians living with a disability don't have a severe condition and could manage their own finances. Their parents can set up a testamentary trust in their will.

"A lot of people with a disability are extremely capable of managing their own affairs," says Bonnici, whose daughter lives with a rare disability. "Parents understand what their child's abilities and disabilities are."

A testamentary trust allows an appointed trustee to distribute income and lump sums when needed in a sustainable manner.

"It is a good idea that flexibility is built into the will," says Bonnici.

But unlike SDTs, assets in a testamentary trust will count towards the income and asset test for disability pension and other social security benefits.

If a child is vulnerable to being ripped off by someone who could take over their assets, parents might need to be more prescriptive in the testamentary trust, so the money is protected and lasts.

Testamentary trusts don't have the same strict constraints as an SDT and can be useful to provide a fund for other expenses that can't be put in an SDT.

If your child with a disability could manage their own finances, parents could gift the money to them without a trust structure. But always check how a direct gift will affect social security benefits.

Some parents leave their superannuation benefits to their children as it is the biggest asset after their home. Some funds can pay out an ongoing pension to their child.

Choosing a trustee

The hardest and most important decision when setting up a trust, says Bonnici, is who to appoint as the trustee.

"It's really tricky because a lot of people don't want to burden people with the care and the responsibility of being a trustee."

Often parents appoint their other children or family members or friends as trustees because they know the child and understand their needs. Also, they don't charge fees.

Bonnici says trustees should have a genuine connection with the person and an understanding of their needs.

They also need enough time and resources to carry out the role effectively as well as understanding the regulations and compliance requirements of the trust. The role does require financial and investment skills.

Katherine and Guy want their other children to be Roman's trustees but worry about their busy lives, especially when they have children of their own.

Bonnici says appointing trustees for the duration of the beneficiary's life can be challenging as you don't know what will happen. She has had clients whose beneficiary outlives their siblings.

She recommends a back-up plan or adding trustees if something does happen to a single trustee.

Choosing trustees who are independent can be a way to make sure they serve the best interests of the person with a disability.

Conflict of interest

The Department of Human Services's (DHS) guide to looking after a child with a disability says that family members as trustees may have a conflict of interest because they often stand to benefit from whatever funds are left over after the death of the person with a disability.

It says that while many family members will do a good job, the DHS urges families to discuss the issue carefully, pointing out that you don't know who their partners will be.

Private trustee companies can be a good choice, says the DHS, because they have the experience. They do not know the person and have to rely on other people providing information as a basis for deciding where to use the available funds.

It is important to consider the fees before you start setting up a trust directly or through your will. Setting up a trust involves legal and accounting fees. If you use a trust company, there are ongoing fees that can be based on the assets under management.

Also, there are accountant fees to prepare accounts and tax returns.

I'm writing on behalf of my 85-year-old father. After 60 years of living in his home, the upkeep and maintenance are too much and he's selling it. He's mobile and has decided to travel and stay with his son.

My father has $10,000 in savings, and had $100,000 invested through a financial planner in a super account with shares and managed funds that ticked away, with a revised plan to swap out two shares in August/September 2021.

Unfortunately, the financial planner retired and transferred the file to a new planner. Suddenly, in December 2021, his portfolio was completely sold off and an annuity purchased, paying him $590 a month, so he would run out of money in several years. 

He didn't realise anything had changed, and had not requested any change to the structure. 

I read the latest letter and could not comprehend why the new planner changed his portfolio, which maintained dividends, paid a small income and paid the planner a very small fee - as opposed to Dad running out of money!

We called the planner and questioned the change, and to set up a meeting, but he couldn't meet that week, and later called to say he could no longer manage the account.

Unfortunately, these changes came to light in March 2022, when I looked at options to put the maximum allowed funds from the sale of the house into his super account, and later change it to AustralianSuper. We are also aware of the 4% drawdown every year.

My father is stressed he will lose his full pension.

Is there a fallback position based on unsound planner advice and lack of consultation (which may have been blamed on COVID)? My father has had no meetings with the planner for years, with the exception of an ad hoc one- or two-minute call. - Jen

Jen, the information you have provided me about your dad's experience with a financial planner is really bad.

The royal commission into the banking, superannuation and financial services industry would have been keen to hear about it.

But your dad's situation - the original planner retiring and a second planner making the changes, then no longer managing your dad's portfolio - does not leave you alone. Changing a client's portfolio from shares to an annuity, or anything else for that matter, without authority is outrageous.

I'd suggest you call the financial planning business and lodge a complaint. The advisers, retired or not, are required to keep a detailed file on your dad. This file will cover why changes were made.

How changes could be made after a very short phone call is beyond me. If the response is not satisfactory, then you should lodge a complaint with the Australian Financial Complaints Authority (AFCA). You have strong rights here. I strongly suggest you start with a complaint to the financial planners.

Now we move to the sale of the house. If he does sell, he will be assessed under the single non-homeowner assets test. He can have more than $800,000 in assets and still get some pension.

Here we move into a great deal of complexity when it comes to investments, maximising his income while minimising tax and also seeking to maintain a pension.

One key fact is how much the house will sell for, but there are many others. You and your dad really need to sit down for several hours with a fee-charging adviser and get all the facts on the table: how much income your dad needs, his views on estate planning, getting a will in place, maximising his pension and so on.

I appreciate your dad has had one bad experience, but since the royal commission, the focus on the quality of advice, training and standards has broadly improved. Chat to friends, your accountant or your dad's super fund and find a professional, fee-charging advisor.

This week on the Friends With Money podcast, Money's senior journalist Nicola Field and financial adviser Anne Graham join Money's Julia Newbould to discuss the question: When it comes to financial matters, are women left behind when it comes to income, superannuation, and confidence in investing? They discuss:

• Why focus on women and finance?
• What should women be doing to get in control of their financial well-being?
• Is it ever too late to improve your financial situation?
• Why is it important to get advice on your current financial position?
• Are younger women managing money better today than in the past?
• What's the best money advice for women today?

Listen to this episode of Friends With Money

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I'm 39 with two children, aged 19 and 13 and I'm on a disability support pension.

My husband works one day a week and is my full-time carer - he receives carer's payments from Centrelink.

I'm saddened to say that my dad passed away in May and my mother passed away in early June. I lost both of them in just 17 days. My hurt is beyond words.  

After the sale of my parents' house, I would inherit about $400,000.

I simply cannot refuse to take this money, but if I accept it Centrelink will stop my DSP and my husband's carer payments. My monthly prescription medication for my disability is $153 plus regular doctor visits. 

My 19-year-old daughter is not talking to us and can't be trusted since she left us to move to the US. She is married and has no plans to come back to Australia.

Can I give my son all the funds without affecting our Centrelink payments? Can I put my inheritance into my husband's super since I don't work?

I still have my super with REST. I used to work at a department store but due to my disability, I quit last year. - Paula

Paula, you have been having a tough time. My commiserations about losing both your parents, in particular in such a short period of time.

We have three children, now in their 20s and 30s, so I can also imagine how distressing a rift between parents and a child must be. As your daughter matures, my hopes are that you are able to reconnect in a positive way.

Then on top of that you have had to retire from work due to your disability.

In terms of your life, though, the inheritance of some $400,000 is a life-changing amount of money. I do understand the impact it will have on your disability payments and also your husband's carer payments, but let's look at the positives.

I will need you to talk to your super fund, as I do not have the detailed knowledge of your situation to give any specific advice.

I would not be surprised if between you and your husband you were able to add this amount to your two funds, but it is essential to get the details correct.

If you were to do that and the fund continued to earn around 6% to 8% a year, as super funds have done for decades, then the $400,000 would earn you some $24,000 to $32,000 a year on average. That really is a significant amount.

But we need to consider if superannuation is your best option.

First, no, you can't give it to your son. Pension payments have "deprivation" provisions if you give it away like this.

Regardless of that, giving a huge amount of money to a 13-year-old makes little sense to me. Imagine if you had done that with your daughter? Also, you say you can't refuse the money, but why would you? Such a large amount, sensibly invested, should provide returns well beyond government payments.

In terms of getting rid of it, you could blow it on lifestyle spending in no time all. Sadly, I have seen this done to preserve pensions, but this seems to me to be madness.

About the "least worst" way of getting rid of money without impacting government benefits is to upgrade your family home, put in a new kitchen and so on. This is not "deprivation" of your assets; it is a personal choice. Your home will be an exempt asset.

But even investing in your own home, or a better home, just to protect a pension seems really crazy to me if you do not need a new home and your current place is in good condition. If you had a mortgage, paying that off could be a good money decision and reduce your pension assessable assets.

These personal and investment decisions I must leave to you. But my general advice is very clear.

Work out your best plan for this money, including your home and possible necessary renovations. Then chat to your super fund and check your options there. Seek independent advice if you think that would help.

My best wishes to you and your family.

Social media is the wild west of financial information and, according to ASIC, it's an "area of big concern".

At a recent joint parliamentary committee, ASIC said that the rise of finfluencers giving unlicensed financial advice on social media platforms was a big topic.

ASIC is keeping an eye on social media influencers who provide content that may stray into the realms of providing financial advice, and if that advice is being provided without a licence.

What is FinTok?

The arm of TikTok, dubbed FinTok, is growing rapidly. The hashtag #PersonalFinance has amassed over 4 billion views, #FinTok more than 340 million and young budding investors are tuning in to learn about everything from cryptocurrency, stock trading and tax tips.

As finfluencers become more prevalent, the corporate regulator has expressed its concern about unlicensed financial advice online because consumers lack any legal protection (aside from the usual platform guidelines and, at a stretch, statutory misleading or deceptive conduct).

What's the problem?

As shown by the banking industry Royal Commission, having a licence didn't exactly stop gross negligence and misconduct, however, since the beginning of the pandemic, complaints to ASIC about unlicensed financial advice on social media have sky-rocketed. The advice is targeted to unsophisticated investors, hoping to make a quick buck.

The rise of finfluencers and social trading also contributes to the herd momentum in speculative stocks, however, we'll leave that issue for another day.

Back to #finfluencing, the short version of the issues is as follows:

• If the influencer recommends a financial product, this will come within ASIC's bailiwick.
• If such advice is provided without an Australian Financial Services Licence (AFSL), the individual could be found to be given unlicensed advice and be prosecuted by ASIC.
• Holding yourself out as a financial adviser without an AFSL can lead to a fine of up to $133,200 and a possible prison sentence of up to five years.

Given there are a lot of scams and misinformation about products and trading strategies, ASIC is currently monitoring and potentially prosecuting unlicensed investment advice online. If your business involves providing advice online that could be considered financial advice, or you're planning to delve into that in the future, you should consider if it's appropriate for you to hold an AFSL.

You'll need to establish that you are competent to carry on the kind of financial services business specified in your application, that you have sufficient financial resources to carry on the proposed business and that you can meet the other obligations of an AFSL (such as training, compliance, insurance and dispute resolution).

If you're receiving that advice, tread with caution. You may be protected by consumer law in some instances, but that's not an easy route.

This article first appeared on FS Advice

After seeing a gap in the market needing advice as they navigate their life stages, Glen Hare and business partner Jessica Brady built on their experience working for big financial firms and formed Fox and Hare, their own financial planning business targeting millennials like themselves.

So, what do financial advisers offer millennials?

In this episode of Friends With Money, Julia Newbould is joined by Glen Hare to talk about his business and how starting those important financial conversations is helping his clients to reach their wealth management goals.

I'll be 63 this year and likely to continue to work until who knows when.

But I'm looking at moving interstate to live with my partner, who has his own properties. We do not plan on amalgamating our finances.

I'm considering using my super to pay off my $120,000 mortgage, which will leave me with no super, but I would use rent from the property and contribute towards my super with work I hope to gain in my new state.

Is it wise? It would be a weight off my mind having the mortgage paid off.

Thanks for any advice in advance. I used to watch you on TV back in the day. - Glenda

TV was certainly back in the day for me, Glenda. I hosted the Money TV show throughout its lifetime from 1993 to about 2002.

That was really good fun. It was basically just the four big TV channels back then and we used to get a huge audience at 8pm on a Wednesday.

Money was not spoken about much back then and I think the TV show did help by giving a big boost to people's knowledge. Its success also led to far more coverage of money issues, which is terrific.

We are ageing along similar lines. I'm 66 this year, with adult kids and grandkids - it's all quite amazing.

I'd better get back to your question. Here we might have to have a bit of a squabble. I don't want you to pull money out of super to pay off your mortgage. I hope your mortgage is costing you under 3%, and maybe closer to 2.5%.

Your rent will cover this easily and the fact that you have interest payments means it comes off the mortgage interest you receive for tax purposes. So the actual after-tax cost of your mortgage is very low.

Then we turn to your super. Make sure you are in a large, well-managed, solidly performing super fund with low fees. I would expect your average returns over the past decade to be over 8%pa.

Let's think about this.

Do you want to have $120,000 in super with the potential to earn really good returns or pay down your mortgage, which effectively means that you are earning, after the tax benefit, barely 2%.

If super plods along at its historic average, you are likely to be throwing away some 6% a year, or over $6000 of your hard-earned money.

Look, I get the peace of mind argument about paying off your mortgage, but I can't have you throwing away "free" money without you and I having a debate. The sleep-at-night test is critical, but personally I would lose sleep at night knowing I was chucking money out the window.

Your call, but I know what I would do in your shoes. And that would not be paying off the mortgage. That can be done at any time in the future.

I inherited $150,000 from my dad and don't know what would be the best way to invest it.

I'm 58 years old and have been a stay-at-home mum to four children until two years ago when I started with a department store as a casual. I probably earn around $18,000 a year and have $2000 in super so far. 

I recently separated from my husband and am living with my adult son in a rental unit.

As my weekly wage isn't consistent, and some weeks it's less than in others, I find myself dipping into my inheritance when I have bigger payments like rent. 

I would like to be able to work for at least another 10 years and would like to have some sort of nest egg. Any tips, please? - Jacqueline

That is a wonderful legacy from your dad, Jacqueline.

Life is expensive and I am not surprised you are dipping into your pot of money from time to time.

I'm sure you have done a budget, but the first step is only to draw on that money in a planned fashion. Dipping into it as needed is sure to see it disappear.

This is very dependent on your health and personal situation, but one solution to protect your capital is to consider working some more hours and using your income to cover expenses. If that is not possible, then I'd love you to have a yearly budget with planned drawdowns from your capital.

This could also allow you to invest for the longer term. An example may help. Let's say you needed an extra $5000 a year from your capital. Leaving, say, $30,000 in your bank account would cover that for many years and allow you to invest around $120,000 for the longer term.

A low-cost income-style fund is something you could consider for all or part of the $120,000. An income fund is a mix of investments. Returns depend on the mix of assets and level of risk.

Many professional managers such as Perpetual offer these. A low-cost example is the Vanguard Conservative Index Fund. Its annual fee is 0.29%, which is very low indeed. Its annual returns have averaged a bit over 6% for the past 10 years.

You should do your own research and if in doubt seek personal advice, but my thinking is that if you were earning around 4% or 5% on around $100,000, it would give you a really good chance of protecting your capital into the future.

I think a bit of research and a couple of phone calls to managers such as Vanguard would help you here.

Around 2014 I wrote to you asking if I would be able to retire financially at 50 as a single man with no commitments to spend more time tending my gardens and chickens.

Well, the world has spun dramatically of late: I now have a beautiful wife and three-year-old daughter. We hope to move closer to her parents near Cambridge, England, in the coming years.

My question is, can I keep my house here if I move overseas?

I believe the rules have changed but cannot get a straight answer. And I'll ask elsewhere about the logistics of sending 30 chickens abroad! - Glen

Goodness, Glen, life has really evolved for you!

And with a beautiful wife and a three-year-old you sound as if you are in a happy place. Cambridge is such a pretty spot, if a bit chilly in winter, but it is a great plan to live near your wife's parents. I agree you'll need to look into the chickens issue. Aussie chooks would have a heart attack if they saw snow, so I suggest you buy local chickens when you settle down.

It is not often I get to have a laugh about chooks, but given my zero expertise in that area we'd better move onto your house.

Sure, you can keep it and, given the historic long-term performance of well-located property in Australia, it makes a fair bit of sense for you and your chooks.

The only reason I recommend that people sell a home is to buy another. This also applies to your plans in the UK. If you need the money to buy there, fair enough.

If you don't or you may return to your Aussie home, personally, I'd keep it.

Where I suspect you are having trouble getting a straight answer is some really complex stuff that will involve whether you are a British citizen, whether you will buy in the UK and so on. As I understand it, the UK taxes its citizens on worldwide assets.

This gets way above my pay grade and you need an international tax expert.

Whether you become a "non-resident" for Australian tax purposes is also no doubt muddying the water. A tax expert will quickly sort this all out.

But you can most certainly keep your home if that works best for you. I'm sure the chooks will be most pleased. Great to hear from you again, let me know how it goes.

Ask Paul: Where are they now? 

Have you had a question answered by Paul Clitheroe? Email money@moneymag.com.au to give us an update on your situation.

I am a 62-year-old single woman and was forced to leave my job in 2017 after serious, chronic bullying. I was a clinical nurse specialist in palliative care. I was not in a very good place or head space in 2017, and lived off my income protection and took money from super, as I still have a mortgage. I tried to work part-time but was not well enough. 

In 2018, I saw a psychiatrist and was diagnosed with depression. In January 2019, my darling brother was diagnosed with terminal cancer and he died in February 2020. So last year I became acutely depressed and the psychiatrist recommended medical retirement. I applied for and was granted the disability support pension in December last year. 

I am on the Central Coast of NSW but don't wish to stay here. I have a sister in far north Queensland, and friends in Newcastle and Tasmania.

I have a mortgage of $250,000 on a house valued at $620,000. I have no other debt and only $100,000 in super. I want to downsize and move so that I don't need a mortgage.

Also I am desperate to go caravanning ASAP with my dogs. I always wanted to do this on retirement, and now don't want to wait. I am researching vans at the moment. I want to travel indefinitely and also hope to find my next home as I travel. 

My dilemma is that I initially thought I would sell and invest the money indefinitely while I travel. But returns are so poor - less than half of real estate growth.

Should I keep the house? I can get $500 a week, which would continue the mortgage repayments at more than the minimum amount. I would refinance on a lower rate.

I can't find a better option in view of the poor return on investment accounts.

I would love your advice, please. - Lou

Lou, you have been through some very difficult times and my commiserations on the death of your brother.

I have no skills in the area of mental health, but I do hear you clearly when you say you are desperately keen to go caravanning with your dogs indefinitely, so I think we should focus on this as your primary goal.

You should also have the age pension in your sights for when you turn 67. Here home ownership is very important as it is an exempt asset in regard to getting the maximum pension.

I am really against you selling your house right now for a few reasons. Firstly, a home is your ultimate long-term security.

Secondly, property on the Central Coast is booming, both in value and rent. If you were to sell and immediately buy something smaller in, say, Newcastle or Tasmania, I am fine with that, but I think this would add a lot of stress and delay your caravanning adventure. Thirdly, as you say, investment returns from things like cash at the bank are very low.

Finally, there is the "exempt asset" issue that a home brings to your eventual age pension application.

Until you find your long-term home as you travel, I think your idea of renting your present place and using that for living expenses makes a lot of sense. No one really knows where the property market is going, but with the Central Coast's popularity and population growth it is hard not to have a positive outlook on values in that area.

In your situation, I'd keep your home, rent it and work out where you want to live at leisure.

My wife and I are 79 and 84 respectively. I have only five years left, according to medical advice. We have recently downsized to an apartment and sold our home of 50-plus years. 

We both have a more than adequate superannuation income (she takes only half of the original amount) leaving us with a surplus each month.

Assets include a share portfolio of $600,000 (mainly banks) and income greater than $23,000pa. We have had our shares for 40-plus years and seen a few ups and downs. 

The problem is what to do with $460,000 now in a bank. The possibilities are to invest in: 
• Exchange traded funds (ETFs), such as Vanguard (VAS) or Betashares A200 (directly). 
• Argo or AFIC. 
• Invest through a vehicle such as Stockspot or InvestSMART. 

Of course, the ASX might suffer a major downturn during the next four to five years. However, our children (and my wife) do not have to sell at a loss. They could wait for the market to rebound.

I am assuming that they have the wit to hold these assets as sources of income (I hope I am right in assuming that shares, etc, are not subject to the capital gains tax until sold).

What are your thoughts? - Geoff

Firstly, Geoff, I am really sorry to hear about your medical advice. Hopefully medical advances will see your time extended.

As a long-term investor, you've seen it all. You know as well as I do that good returns come from sensible assets held over the long term.

I burst out laughing at your comment that you expect your family to have the wits to hold these assets in market downturns and enjoy the income over time. My suspicion is they have learnt from you and I am sure they will do this!

Frankly, you have provided a list of really sensible ideas and one I cannot add much value to.

Sure, we could have a fun debate about some private equity or a focus on particular investment themes, but investing via low-cost ETFs or a listed investment company like Argo or AFIC makes complete sense to me.

I am chair of InvestSMART, so I'll leave that alone, but I can say that whether it's InvestSMART or a similar company, holding a mix of ETFs in a single portfolio is a sound concept.

I do like the idea of you diversifying from a mainly bank portfolio - any of your suggestions will do this.

Thanks for getting in touch. I really enjoying hearing from people who have done well with long-term investments. Best wishes to you and your family.

We have recently inherited around $500,000. With this we have paid out our mortgage and some credit cards.

We don't seem to see eye-to-eye on what to do with the balance of the money, as he is now panicking that we have no money to retire on. He has around $300,000 in super and I have around $264,000.

We have three investment properties, one of which we are in the process of selling, as there has been no capital growth but the income on it has been steady.

It has also been a great tax deduction over the years. He thinks the debt on the investment properties should have been paid out a long time ago and can't see why we should keep that debt.  

I have to say I am getting lost in what to do with the balance of the funds. We also have around $20,000 each in shares. Do I concentrate on paying off the debts or split the funds between super and savings?

Your thoughts would be appreciated. I just can't see the forest for the trees at the moment. - Luisa

For any couple, maintaining harmony over financial issues is not easy. The trick, of course, is compromise. Hopefully selling one investment property is the start of that. Obviously your debt levels will immediately drop and your cash levels will go up.

Let's move back from the trees and look at the forest, which I must say is in great shape. After the sale of the property, you will have two investment properties, which I assume are going okay.

Thanks to the inheritance you are mortgage-free, you have no credit card debt and you have a combined $564,000 in superannuation and $40,000 in shares. Things look very good to me.

Even better, you are only 50, so I suspect you will have at least another decade to add to your wealth. Firstly, top up your super via salary sacrifice to the maximum $25,000 each ($27,500 from July 1).

This is just wealth-creation magic. You no longer have mortgage repayments, so you can do this. You only pay 15% tax on the contributions, so it is not that painful as it comes out of your pre-tax income.

Then you can debate the wisdom of paying down debt on the two remaining investment properties. I hope your mortgage is in the high 2% to mid 3% range.

Hopefully your husband sees that this is not a big impost and hopefully it is covered by the rent. If you chose to put your savings towards reducing this debt, then that is fine. But do remember that by paying off a 3% mortgage you are earning 3% on your money.

History shows super earns a much higher rate than this, plus there's the 15% tax rate on your contributions. History does indicate that investing money in super and then using that to pay off your mortgages is likely to give you a better result in a decade or so.

Luisa, there are no guarantees in life, and I do turn to logic when it comes to money.

But relationships and happiness are far more important. So, if the "super versus pay off loans" issue was adding stress to my relationship, I'd agree to pay down the loans. Paying off debt costing you around 3% is probably not the very best decision, but it is still a good one!

The critical factor here is that you save consistently for the rest of your working life. Compound returns and time will be the solution to a comfortable retirement.

I am 49 years old. Our house has been paid off for about three or four years now.

As I am quite a conservative sort of guy, I tend to save money rather than blow it all. 

So for a number of years I have continued to pay the mortgage, so to speak, into a savings account and on top of that I put further savings away where possible.

So I now have $300,000 sitting idle in an account.

It kills me to think that I have wasted so much time and possibly missed out on compounding the growth of our savings and yet I still do not know what to do with the money: buy a house and rent it out, exchange traded funds, etc.

I need to get something in place so I can stop worrying about it. 

Any words of wisdom would be much appreciated. - Clint

G'day Clint, and welcome to the "problem" in this most unusual time in history.

First, though, congratulations on paying off your mortgage and then continuing to save, plus a bit. The fact that you "save money rather than blow it all" is the real secret to wealth creation.

We all hear plenty of get-rich-quick ideas and any number of people telling us how rich we would be "if only we had" invested in property or shares years ago, or backed Twilight Payment, the winner of the last Melbourne Cup. But the world of success with money does not belong to the dreamers; it belongs to those who create surplus capital by saving and then investing it wisely.

Now, back to the "problem" of today. Basically, the world is awash with cash. Our banking system, along with banks around the world, simply cannot lend the vast pools of cash they hold.

With our Reserve Bank buying back government bonds and also providing very low-cost loans to lenders, plus the fact that billions of dollars are being poured out via all sorts of pandemic relief, our banks are flush.

As Shayne Elliott, CEO of ANZ Bank, said late in 2020: "There is all this liquidity flushing around" but "people don't want it". He went on to say, quite correctly, that money is essentially free today.

Pretty obviously, ANZ, or any bank, would have a large queue if it was handing out free money. What he is referring to is that Covid-19 has made individuals very cautious. So we put rainy day money in the bank.

Add this to the additional money many are not spending on travel (in 2019 Australians bought 11 million return airfares), the inability to go out during lockdowns, closed interstate borders, and a very restricted 2020 and you get a very large pot of money waiting to go somewhere.

Your money, like that of so many other people, sits there wondering about the future.

Incidentally, I should say that some of our money is sitting with yours, earning next to nothing in interest as we also ponder the future. For us, though, spare cash earning very little is a necessary part of our lives. I turn 66 this year and one thing I do know is that investment risk is mitigated by time and we have less of that.

Also, as we move into semi-retirement, it is important to hold rainy day money. We will continue to get market ups and downs, and the last thing we need is to find ourselves in a downturn needing to sell assets to fund our lifestyle.

But you are in a very different position. At 49, I imagine you have many years left in the workplace and the ability to keep saving. My question to you is quite simple: do you think property and shares, our most obvious investment areas, are likely to be worth more or less in, say, 20 years?

My view is they will be worth more.

This I base on one simple fact: demand. Demand is created by individuals and families. If I felt our population would fall over the next two decades, I would be reluctant to own property anywhere but in our most dynamic job growth areas. You would need to choose shares with caution.

However, barring a really dreadful event, such as the bubonic plague of the 1340s, which is said to have killed up to half the population in places such as Venice, or our planet being hit by an asteroid, the most commonsense prediction is a growing world population. In Australia, our population is predicted to grow by another 10 million or so over the next 30 years. Our biggest cities, Sydney and Melbourne, are predicted to each have a population of more than eight million.

So while I have no idea what will happen next with our COVID-19 crisis, one thing history tells me is that we and our economy will recover. Markets are pretty hot and we are sure to get some lumps and bumps along the way, but with a long-term view I agree you should invest that money.

First, I'd top up your super via salary sacrifice with the maximum concessional contribution of $25,000 a year ($27,500 from July 1). Iam sure you are in a large, low-cost fund, but do check its performance.

Then I cannot call the next decision for you.

Frankly, I am pretty unfussed whether you buy a well-located investment property or buy shares via a low-cost ETF or manager such as Vanguard. I do support diversification so, as a homeowner, diversifying into shares makes a lot of sense. Well-located property and shares are both likely to do well over the decades. Historically, cash is likely to be your worst asset.

The catch is that most - though not all - finance professionals expect to be paid.

So, it's about knowing which services will give you the most bang for your buck and provide you with help in the areas you need it most.

Financial planners 

The role of financial planners, or advisers, is to help you set and achieve personal goals. The advice can be as broad as building lifetime wealth or can focus on single issues such as managing a redundancy payout.

According to Rice Warner, one in four Australians has received professional financial advice at some point, and plenty more (41% of us) would like to do the same. However, for one in three people the key stumbling block is the cost.

Some planners base their costs on a percentage of the money you invest. Increasingly, though, the industry is moving towards fees for service. According to the Financial Planning Association (FPA) it can cost between $2500 and $3500 to set up a personal financial plan, followed by annual fees of $3000 to $3500.

More affordable options are available. The national franchise FinChoice, for instance, offers various service packages starting from $1650 annually. If you don't want to commit to a package, fees of up to $330 an hour apply.

Is it money well spent? 

Research suggests that partnering with a financial adviser can pay off. The Financial Services Council estimates that professional advice can leave people better off in retirement by as much as $91,000.

And it's not just about improving your fiscal wellbeing. Separate studies suggest people who receive ongoing advice have higher levels of personal happiness and greater peace of mind and are less likely to argue with their partner about money.

Do the due diligence 

For all the potential benefits of financial advice, it's critical to be selective about who you entrust to manage your money.

Dante De Gori, CEO of the FPA, says use of the terms "financial planner" and "financial adviser" are restricted by law to people who are authorised to provide advice and are listed on the financial adviser register of the Australian Securities and Investments Commission (ASIC).

This latter aspect is important because advisers listed on the register must meet professional education and experience standards and adhere to a code of ethics. Check if your adviser appears on the register by using the online search function on the MoneySmart website. You can search using either an adviser's name or their Australian financial services licence (AFSL). If the adviser is registered, the register lists their qualifications and what type of advice they're able to provide.

In addition, the FPA website (fpa.com.au) has a "Find a planner" directory that shows if a financial adviser is a current member.

Check if your adviser is the real deal

The need for consumers to check an adviser's credentials has been thrown into the spotlight with the recent case of missing Sydney woman Melissa Caddick.

Caddick is alleged to have siphoned off $25 million of her clients' money while acting as their financial adviser. But Caddick was unlicensed, and reportedly used someone else's AFSL without consent.

A quick online check shows that neither Caddick nor her company Maliver Pty Ltd are listed on ASIC's financial adviser register. If investors had run the AFSL number Caddick was using through the financial adviser register's search function, they would have seen that she didn't hold a licence in her own name, and this may at least have prompted further questions.

Financial coaches 

Costs can put financial advice out of the ballpark for many people. If you just need a little help budgeting or sticking with a savings plan, a financial coach can be a more affordable solution.

Coaching comes in various forms, from one-on-one sessions to online courses and workshops. There are no hard and fast rules about the cost. A shop-around shows you may pay $165 monthly or up to around $360 for each face-to-face session.

While plenty of licensed financial planners offer this service, coaching in itself is a largely unregulated industry. As long as a coach doesn't provide tailored financial advice about where to invest your money - and isn't selling financial products like super or insurance - they may not need an AFSL.

That being the case, check  what you're getting for your money. It's not a bad idea to enquire about paying for one or two sessions to see if it's right for you, rather than committing upfront to an entire program of coaching.

What about robo advice?

Robo advice is pitched at low-cost, automated investing rather than all-encompassing tailored financial advice.

The process starts by sharing details about yourself, your attitude to risk and your investment goals with the robo adviser - often via an online questionnaire. From here, a ready-made portfolio (typically exchange traded funds) will be recommended based on your goals and risk tolerance.

Part of the appeal of robo advice is that the platform you choose automatically rebalances your portfolio over time. So, as long as your circumstances don't change, your investment mix continues to reflect your needs. As this is all done through computer algorithms, the cost of robo-advice is far lower than in-person financial advice.

With Stockspot, for instance, you'll need $2000 to get started, and monthly fees of $5.50 apply on balances of $10,000 or less. Robo adviser Six Park has a minimum investment of $5000, with monthly fees of $9.95 if you have $5000-$19,999 invested.

Robo advice isn't just for individuals. It can also be an option for self-managed super funds. And while an ASIC survey found only 1% of respondents use digital advice at present, it is an area that's expected to grow.

Accountants 

Chances are you use an accountant for help at tax time, but this member of your professional team can offer much more.

Rick Albertini,  managing partner with Brentnalls SA, an Adelaide-based chartered accounting and advisery firm, says accountants help in understanding structures, how taxes work, how to maximise your returns after tax, and how to plan for retirement.

They can also help with  the use of investment companies and trusts as well as providing advice around growing a business.

Accountants usually charge hourly fees, though Albertini says, "more and more we're seeing a fixed-fee arrangement".

When selecting an accountant, the two leading professional designations to look for are "chartered accountant" (CA) and "certified practising accountant" (CPA). Albertini recommends checking these qualifications through the industry bodies CPA Australia or CA ANZ. "All the information is available publicly, and everyone can contact these bodies for the validity of qualifications," he says.

Setting up a DIY super fund

Unless your accountant has an AFSL (and some do), they cannot provide advice about financial products. This matters if you're thinking about setting up a self-managed super fund (SMSF).

Albertini says that without an AFSL, an accountant cannot advise a client to establish an SMSF, but can help administer it as long as the client has received separate independent advice from a financial planner.

"When a client asks an accountant who doesn't have an AFSL to establish an SMSF, the client must first obtain a statement of advice from a qualified financial planner who has an AFSL," he says. The statement will set out the benefits of using an SMSF, and from here your accountant can help set up the fund.

Building a strong team of money experts can take time, and it may mean trying  a few different people before you find the ones you're comfortable with. But it can give you the advantage of collective expertise to get more from your money - and your life.

Is your tax agent registered?

If you're relying on your accountant for help with a tax return, they must be registered with the Tax Practitioners Board (TPB).

Rick Albertini, of Brentnalls SA, points out that only registered agents have the ability to lodge tax returns on a client's behalf.

In fact, the tax office warns that only registered tax agents can charge a fee to prepare and lodge your tax return.

Check that your tax adviser is a registered agent at tpb.gov.au.

Financial counsellors

If you're struggling with debt or battling to make ends meet, professional help is available at no cost.

Financial Counselling Australia (FCA) says there are about 800 financial counsellors across the country, mostly operating through community organisations and government agencies.

Counsellors operate under a licensing exemption from ASIC, which prohibits them from charging fees or receiving third-party commissions. Instead, they are funded by federal and state governments. As a spokesperson for FCA says, "the service is free so that people in acute financial difficulty can get professional advice without conflict of interest".

Financial counsellors must hold a diploma of financial counselling, which gives them expertise across consumer and bankruptcy laws and industry hardship codes. So, along with strategies to help you manage debt, counsellors can also negotiate with creditors on your behalf.

To access a financial counsellor, contact the National Debt Helpline on 1800 007 007. A counsellor will assess your situation and provide free advice. If the matter is complex, you may be referred to a face-to-face service.

Buying a property: solicitor versus conveyancer

The paperwork needed to formally transfer a property from seller to buyer can be formidable. In theory, there's nothing to stop you doing it yourself, though it's not recommended unless you have a legal background.

That leaves the choice between a conveyancer, who specialises in property transfers, and a solicitor, who has broader legal knowledge. Importantly, this choice doesn't apply in Queensland or the ACT, where only solicitors are permitted to do conveyancing work.

As with all professional services, conveyancing costs depend on the complexity of the transaction. A conveyancer can be more affordable than a solicitor, potentially with a flat fee ranging upwards from around $700 for a straightforward transaction.

A solicitor is more likely to charge by the hour, and that can see the cost climb higher depending on who you use. The difference is that if the deal is complex, or if complications arise during the settlement, your solicitor is able to offer detailed legal advice.

If you use a conveyancer, look for someone with membership of the Australian Institute of Conveyancers, which promotes best practice and ethical standards.

Best deal on a mortgage 

Your home loan is likely to be the biggest debt you'll ever take on, and while red-hot deals abound, sifting through hundreds of loans isn't an option for most of us. That's why a mortgage broker may deserve a place on your team of money experts.

The role of a broker is to help you get the best possible deal. But a good broker can help you save even more. "An experienced broker is committed to making sure their client is always getting a great rate - not just when the loan first settles," says Susan Mitchell, CEO of Mortgage Choice.

"A great broker will contact each client's lender on an annual basis to try and negotiate a rate discount on their behalf."

These potential rate savings can add up to thousands of dollars over the life of a loan. Even better, you shouldn't have to pay for your broker's services - the lender pays them a commission.

It's worth asking a broker about the number of lenders they work with. "By choosing a broker with access to a broad panel of banks and non-banks, consumers are much more likely to secure a home loan that combines the features they need with a competitive interest rate," says Mitchell.