One of the most important considerations for a successful investment strategy is the Asset Allocation of a portfolio. The asset allocation of your portfolio will be the main determinant of the returns you can achieve and the associated risk. Whether you are a high income earner aiming to maximise the growth in your portfolio, a business owner seeking a diversified portfolio independent of your business assets, or a retiree requiring security of income against the corrosive effects of inflation – we can help you select an appropriate asset allocation. This asset allocation is designed to help you:

• Achieve your personal objectives
• Minimise tax
• Provide opportunities for growth
• Control risk
• Keep informed and in control

At McPhail HLG Financial Planning we build asset allocation recommendations on a disciplined platform of comprehensive research and risk and return analysis We also consider issues such as tax-efficiency, income requirements, growth potential and market trends. Most importantly the asset allocation will try to reflect the lifestyle outcome you are seeking to achieve from your portfolio. As a client, we tailor the advice to you and recommend the establishment of long term Strategic Asset Allocations based on your individual financial needs and objectives, your preferences and an assessment of your risk profile. A risk profile tests your willingness to withstand capital volatility in relations to return expectations.

We will generally recommend that investments are made through a portfolio of leading sector-specialist managed funds, using local and international managers. However depending on your requirements direct investments such as listed equities may also be utilised. Once a portfolio is established, we continue to provide you with pro-active advice on your portfolio on a regular basis.

Our reviews not only provide a succinct commentary and full review of the investments in your portfolio, but advice on recommended changes, opportunities, risks or any other fine-tuning that may be required. The Asset Allocation of your portfolio is also discussed with you at regular meetings with your personal adviser to ensure it remains appropriate. We are committed to keeping you up to date with current financial issues via client seminars featuring professional presenters, newsletters and detailed on-line information.

Reviewing options for budget management or optimising cashflow is an important component in any strategic financial plan.

Appropriate control of your budget helps you to understand your obligations and how to best direct your income meet your financial commitments and address your financial aspirations including:

• Management of expenses
• Wealth accumulation
• Providing for your family’s needs
• Reducing debt
• Minimising taxation liabilities

We have extensive experience working with clients to ensure that their efforts are translated into growth and financial security via tax-effectively structuring cashflow and wealth creation plans.

For those clients who have retired or are nearing retirement, we can assist in developing strategies to generate cashflow for lifestyle income needs. This can include generating income via a diversified investment portfolio, accessing Centrelink benefits and/or utilising superannuation benefits in a tax effective manner. Where appropriate, consideration is also given to allowing access to capital for additional spending requirements.

Where we manage investment portfolios for clients, we are committed to keeping you informed and up-to-date with accurate information regarding your portfolio. We can provide ongoing Portfolio Management and Reporting Services via recommended investment platforms, including:

• On-line access to secure account information at all times
• Investment transaction information – managed funds, shares, cash and deposits
• Summary of portfolio asset allocation
• Rate of return analysis – income and capital growth
• Realised and unrealised CGT information
• Consolidated tax reporting – interest, dividends, capital gains, franking credits

Our aim is to help our clients manage their sometimes complex affairs in a coordinated, efficient manner. We also like to ensure that you have access to data and information as required, and therefore the ability to make informed decisions.

Whilst often complex, with changing legislation a given, superannuation continues to be the Government’s preferred method for Australian’s to save for retirement. We can assist clients develop innovative strategies to build wealth whilst taking advantage of substantial tax concessions.

As part of your overall Financial Strategy, your personal adviser can help you develop strategies encompassing:

A detailed review of your existing arrangements

Implementation of the most tax-effective contribution strategies, including the structuring of business contributions and management of the contribution limits.

• Tax-intelligent investments
• Private pension strategies to generate tax-effective or tax-free income streams
• Asset protection options
• Personal tax-effective insurance strategies
• Establishing beneficiaries

Your superannuation strategies must always be reviewed in conjunction with your overall wealth management objectives and planning. The rules can be complex and penalties can be harsh. In addition, legislation is often changing and funds are preserved until you retire. So understanding the disadvantages of any particular strategy is as important as the advantages.

However, the significant advantages of a properly constructed superannuation strategy can be compelling. We strongly suggest you consult our experienced, professional advisers for personal advice in regard to these matters.

Self managed super funds (SMSF) are becoming an increasingly popular choice for investors who want to have control over how their super is invested.

What is an SMSF?

An SMSF is a trust where money or assets are held and managed on behalf of up to four members to provide benefits for their retirement. Subject to certain exceptions, all members of an SMSF must be trustees of the SMSF or directors of the SMSF corporate trustee.

Why establish an SMSF?

Three key reasons for establishing your own SMSF are control, flexibility and investment choice. As trustee of your fund, you decide on your fund’s investment strategy and choose in what your fund’s assets are invested. This means you can tailor your fund’s investments to suit members’ specific needs. The range of investments your fund make is expansive, although investments are subject to some limitations and legal restrictions. Like all super funds, an SMSF receives concessional tax treatment. The top tax rate for the investment earnings of your SMSF is 15%. It’s important to note that this tax concession is only available if your fund complies with all the rules and regulations that apply to SMSFs (a ‘complying fund’).

Understanding the rules and obligations of an SMSF

As a trustee, you need to consider your fund’s investment philosophy. Investing successfully takes time, effort and discipline.

• How will you spread your money to manage risk?
• How long will you give an investment to prove itself?
• What’s an acceptable rate of return?
• How much risk are you willing to take with members’ retirement savings?

Another important consideration is your fund’s performance – how is it performing relative to other funds after expenses? If it’s not doing better, or at least as well, you may want to consider using a professional to manage your fund. Rules and obligations applying to SMSFs are complex. And even if you employ specialists to help you with investment strategy, compliance and administration (particularly with Australian Taxation Office requirements), you are still legally responsible for making sure your fund complies with all the rules under superannuation law.

Investments

To help ensure that the assets of an SMSF will be available to provide retirement income, SMSFs are restricted in the investments they can make.

If you’re thinking of leaving your current public offer fund to start up a SMSF to get better returns or other benefits, you should discuss your options in detail with your financial adviser. It’s important that you know your obligations for running an SMSF from an administrative and compliance perspective. The rules associated with the super regime are complex and subject to change and the opportunities and effects will differ based on your personal circumstances. Nevertheless the benefits to you and your family may be substantial.

For the majority of clients, properly structured, tax-effective investment strategies will make a significant difference to your future net wealth position. Our significant experience in advising the clients allows us to develop tailored investment strategies incorporating both financial strategy (and structure) and investment strategy (asset allocation).

Working in conjunction with your Accountant, your adviser will ensure your financial strategy is consistent with your objectives and takes full advantage of tax effective structuring of your affairs. Components of such strategies may include:

• Superannuation contribution and pension strategies
• Geared or leveraged investments
• Family Trust structures
• Self-managed superannuation strategies
• Tax effective estate plans and intergenerational wealth transfer
• Philanthropy

An appropriate investment strategy can then be developed to help improve your net investment returns. For example, this may be achieved by taking full advantage of:

• Prevailing tax legislation, concessions or incentives
• Structuring of assets and income
• Deferral of capital gains
• Dividend imputation
• Depreciation allowances and other deductions
• Tax-deferred or tax-free income

As with all areas of our advisory services, we remain committed to providing you with a premium level of service and advice to ensure at all times your portfolio remains appropriate to the needs of you and your family.

Our team specialises in financial planning for young professionals seeking to create investment portfolios and accumulate wealth.

As with all our advisory services, a comprehensive wealth creation strategy begins with a confidential discussion to review your circumstances and outline some of the options available you.

Once we have agreed to work together, the first step is to help you develop goals and objectives to determine your vision for your financial future. You can then expect us to provide you with a personalised and ongoing advice service that is targeted to your wealth creation goals.

Your personal, experienced advisor will help guide and inform you to take full advantage of your opportunities and address questions such as:

• What is the best way to structure my investments to reduce tax?
• How do I take advantage of superannuation to save for retirement?
• Should I borrow to invest? And if so, how?
• How do I reduce debt more quickly?
• How can I protect my growing level of assets?

The best strategy will be determined by your objectives and concerns, your required investment returns, current asset and income base, amount of capital or surplus income available, acceptance of risk, liquidity needs, family relationships and values. Some options may include:

• Regular investment savings strategies
• Geared investments into shares or property assets
• Diversified portfolios of high growth assets
• Aggressive superannuation investment options
• Self-managed superannuation strategies

A well-constructed financial plan has two parts – wealth creation and wealth preservation. Wealth preservation helps you protect your ability to create wealth. Wealth creation is the part of your financial plan that helps you build the assets to meet your financial goals. Your goals may include saving for your children’s education or a future overseas holiday, or having enough money to live comfortably when you retire.

Wealth preservation (risk insurance) helps you protect your ability to create this wealth. Your wealth creation plan will be based on the assumption you will stay healthy and live to a certain age. But there may be unforeseen circumstances which can impact your plans. Risk insurance may help you to continue meeting your financial goals if you lose your ability to work or suffer a serious illness.

Why have risk insurance?

It’s not something anyone likes to think about. But life’s uncertain. You might not always have the luxury of the income you currently have. You could fall sick or have an accident. But when that happens, you don’t have to eat into the wealth you’ve worked hard to create.

That’s why a sound financial plan will help you create wealth and preserve it. Your financial adviser can help you structure your financial plan so that if you’re not able to work, you can still maintain your standard of living and keep your investments. Your financial plan is all about helping you keep control of your wealth, so you can make the most of it when you retire. It should also ensure your family is taken care of when you are no longer around to take care of them. Ultimately, your financial plan is about providing you and your family with peace of mind.

Risk insurance shifts the financial burden created by personal risks to insurers who can afford to cover them by pooling the premiums paid by their customers. It provides peace of mind that you and your family are financially secure. Risk insurance may pay an ongoing income or lump sum if you can’t work because you’re temporarily or permanently disabled, or if you die. Different insurance for different needs.

Life Insurance

Life insurance can provide financial protection for your dependants if you die. The cost depends on the type of cover you choose. You should review your cover regularly to ensure you are not under- or over-insured. The most appropriate policy is one that strikes a balance between how much premium you can afford to pay and favourable policy conditions. Life insurance can be used to repay debts, cover your dependants for the loss of your income and/or secure your business.

Total and Permanent Disability (TPD)

TPD is additional to life insurance cover. It pays a lump sum if you can’t ever work again because of illness or injury. TPD can be used to repay your debts, cover medical expenses, capital gains tax liabilities and cover your dependants for the loss of your income.

The precise definition of TPD and the conditions that must be met to receive compensation vary considerably between insurance companies. So it’s important you understand the conditions under which the insurance company will pay a claim before taking out TPD cover.

Income Protection

An income protection policy can generally pay you up to 75% of your monthly income if you can’t work due to illness or injury until your 65th birthday.

Trauma Insurance

Trauma insurance pays a lump sum if you suffer a specified traumatic event such as the diagnosis of cancer or coronary disease.

The benefit is paid when diagnosis is confirmed, not when you die of the condition. This is important because it means you and your family have a lump sum you can use at your discretion, when you most need it. You could use it to pay for additional medical care, or to pay off the mortgage to relieve the financial pressure on your family.

Things you should consider

You need to be sure you aren’t over-insured – or worse still, under-insured. The type and amount of risk insurance you may need depends on a number of factors such as:

• Your personal financial circumstances and objectives
• Your lifestyle needs
• How many dependants you have
• Your age.

As your wealth grows and personal circumstances change, your need for insurance cover may also change, so it’s important to review your insurance cover regularly. Your financial adviser can help you assess your insurance needs as part of your overall financial plan.

Planning for a successful retirement encompasses a broad range of issues. For the majority of our clients key themes will be financial security, sufficient income for your desired lifestyle expenses. Additionally, access to capital for holidays, updating the car or helping out the grandkids, and peace of mind may be important to you.

With many of our clients either retired or close to retirement, your personal adviser can provide you with expert advice and answer some of the questions you may have:

• Will my current investments be enough to cover my retirement needs?
• What level of capital do I need to maintain my current standard of living?
• Can I afford early retirement?
• What is the best way for me to achieve my retirement goals?
• How do I take advantage of all the superannuation tax benefits available to me?
• How do I minimise tax?
• What Centrelink or other Government benefits are available?
• How do I manage risk?

We understand that impending retirement can often create uncertainty, concern and stress. For those who have spent an entire career building a business, fulfilling the expectations of a professional vocation or providing for your family, retirement can seem like the great unknown. However it will often be an incredible time of fulfillment, enjoyment, adventure, community involvement and family. The dreams are yours.

Our planning process has been specifically designed to help you understand the options available, and to help you prioritise your goals and address your concerns. We will help you develop and implement appropriate strategies to:

• Provide for your income needs
• Properly structure your investments
• Manage the risk of inflation on your portfolio or running out of money
• Minimise current and future tax liabilities and,
• Help with the transfer of your wealth to future generations of your family.

As a trusted advisor we are committed to helping you manage your financial strategies throughout your retirement. We will help to ensure that if your needs do change, or if the legislative environment changes, you have the peace of mind that you have the best possible strategies in place.

Estate planning is about more than just preparing a valid Will. It’s about making sure your family is provided for and that your assets go where you want them to after you die. A good estate plan can:

• Ensure the ownership and control of your assets passes to your intended beneficiaries in the right proportions
• Minimise the tax impact on your estate and beneficiaries
• Ensure your estate is administered in a cost efficient and timely manner
• Protect assets if a beneficiary is involved in any legal difficulties (for example, bankruptcy or divorce) or under a legal disability.

Essentially, a good estate plan can provide you with peace of mind and help avoid potential complications for your beneficiaries.

Working out what you need

Firstly, have you considered whether you’ve accumulated enough assets to provide for your family and pay off debts if you die? If you think there’s a shortfall, your financial adviser will be able to suggest some ways for you to make up the shortfall. Have you also thought about who will inherit which assets and in what proportions?

If you’re sick or injured and unable to control your investments, have you chosen someone to manage your affairs for you?

You should review your estate planning needs on a regular basis and particularly when an important event occurs such as:

• Marriage
• Marital breakdown
• The birth of a child
• The death of a relative you have provided for
• Starting work
• Changing jobs
• Retirement

Each of these events can be a life-changing experience for you and your family and should prompt you to think about your estate planning needs and objectives. Estate planning is an important part of your overall financial plan and you shouldn’t leave it until it’s too late.

As our lives have become more complicated, the need for a greater number of professional services has arisen. As your financial partner, we ensure all aspects of your financial affairs are covered, either through our highly-skilled team at McPhails or through a personalised referral to a provider we know and trust. At McPhail HLG Financial Planning, we are fortunate to have close working relationships with a network of professionals including:

• Accountants
• Lawyers
• Stockbrokers
• Finance Brokers
• Lenders
• Aged Care Consultants
• Estate Planning Specialists

To save you time, ensure a smooth transition and make sure everyone is acting towards the same goal, we are more than happy to act as your intermediary with these service providers.

Your family is important to you, regardless of what stage in life they are at. You only want the best for them and to help and support them in times of needs. You may be thinking of:

Major concerns to consider are:

• How to generate wealth planning strategies
• Ensuring the financial security of family members, inheritance, succession planning and wealth transfer
• Philanthropic management
• Trust and Estate Planning

You are establishing and building your career and perhaps starting a family. The big question is how best to set your financial path to achieve all you want in life. You may be looking at:

Major issues to consider are:

• How to set a budget
• How not to get caught in the ‘Credit trap’
• How to save for holidays, travel, new car, furniture
• How to put away some money for the future
• Compound Interest

This is your consolidation stage – achieving a comfortable lifestyle and thinking about managing your long-term future.
You are likely to focus on:

Major issues to consider are:

• Can we get by on a single wage and save the other?
• How to remain out of the ‘Credit trap’
• How to save for holidays, travel, new car and build wealth
• How to put away some money for the future
• Life Insurance
• Estate Planning
• Superannuation funding gets serious

With 20 years of retirement ahead of you, your priorities will depend on how well you have prepared. Your main concerns may be:

Major issues to consider are:

• How to build wealth in superannuation for a tax free retirement income
• Transition to Retirement income after age 55 and definitely after age 60
• How to save for holidays travel, new car and build wealth
• How to put some money away for the future
• Life Insurance
• Estate Planning

This is the time to indulge in hobbies or travel, enjoy your family and prepare for transferring your wealth. You may be thinking of:

Major concerns to consider are:

• What to do with all your spare time now that you are no longer working
• How to enjoy your tax free retirement income
• How to enjoy travel and other enjoyable pastimes
• Estate Planning
• Funeral plans and possibly gaining Centrelink benefits