Whether you already have a financial planner or are yet to see one, it’s worth understanding how advice can help you.
Here are five key questions to ask an adviser before this month ends.
1. WHAT HAPPENS ON JULY 1?
Westpac senior financial planner Diana Saad says everyone is going to feel the impact of July 1 changes, many of them announced in last month’s Federal Budget.
Increases in tax rates will hit higher-income earners, superannuation rule changes will affect employees, business owners and pre-retirees, while others will have to deal with changes to private health insurance rebates and medical expenses tax offsets.
Saad says people should check how the changes may affect them.
2. CAN I CUT MY TAX BILL?
Saad says financial planners cannot give accounting advice “but because we deal with the world of finance, we have to be aware of some of the tax implications”.
“We work out how much people can save as a result of their strategies. Is there an opportunity to be in a better tax position by prepaying margins loans and investment property loans, or through tax deductions such as paying income protection premiums 12 months in advance?”
June tax strategies that can help include bringing forward or delaying tax-deductible payments, paying for new business equipment or investment property maintenance, extra super contributions for business owners, or making donations to charities.
Impact Financial Coaching director Allan Ward says home office expenses can often be claimed “but you have to keep some records to justify it”.
3. IS MY FAMILY PROTECTED?
Life insurance is most important for people with young families and big debts such as mortgages, but it should be managed through life stages, Saad says.
“The vast majority of people I see for the first time do not have anywhere near enough. A lot of the time they just have default cover inside their super and do not know what they would need,” she says.
Life insurance, disability cover and even income protection insurance can often be bought through your super fund, which means you don’t pay for it from your household budget.
4. WHEN DO I THINK ABOUT RETIREMENT?
The earlier the better, but Saad says retirement planning becomes crucial from about age 55. This is the time when people can start to think about superannuation structures, beefing up their nest egg balances, and making sure they can make the most of the generous tax benefits in super.
A new financial year is a good time to start or strengthen a salary sacrifice strategy. “The earlier you start on super, the less stressful it is,” Saad says.
Ward says changing rules mean people aged under 60 can no longer be guaranteed an adequate pension when they retire. “There is a massive legislative risk. Who do you trust most to provide for your retirement – you or the government?” he says.
5. HOW CAN I CHANGE MY FINANCES IN THE YEAR AHEAD?
Ward says setting a short-term financial goal can give people a focus.
“People don’t want to think about something that’s going to happen in 20 or 30 years. But everybody I speak to says they could have managed their money better over the last 12 months.”
HOW TO FIND AN ADVISER
Ask family and friends for a recommendation.
Speak with your financial institution, which should have in-house advisers.
Visit the Financial Planning Association website for a list of advisers.
Talk to at least three different planners before choosing one.
Seek a certified financial planner, which is seen as an industry mark of excellence.