The following is a small sample of real client case studies which illustrate the diversity of FM Financial Solutions capabilities.
Names and specific financial information are not provided to protect our clients’ privacy.
Case No. 1Young Professional Couple
A highly paid young professional couple came to us for some guidance to help them get their financial affairs in order prior to starting a family and to design a plan aimed at increasing the potential for them to secure and grow their already sound financial position.
We assisted them to put in place a cash management mechanism to help them increase their savings. We then helped them to implement a contingency plan via a comprehensive life insurance portfolio, which thanks to our firm’s policy of rebating commissions in the form of lower premiums, resulted in them paying over $6,000 per year less in premium. The purpose of this plan being to ensure that significant illness or disability did not de-rail their lifestyle and financial goals and importantly protected their young family from having to make unpalatable decisions.
We also identified with them that it was important that if either of them passed away prematurely that family assets remained in the family regardless of future changes to the surviving partner’s relationship status or circumstances, and that tax was minimised. If both of them passed away prematurely that their baby would be more likely to be cared for by guardians they had nominated, and that their family assets, including life insurance proceeds were structured appropriately to maximise the benefits for their child.
We recommended that they engage a specialist Estate Planning lawyer to draft the recommended legal documents and that they use a superannuation fund that would pay the anti-detriment payment (return of contributions tax) to maximise the level of benefits paid to beneficiaries. The implementation of this advice has provided our clients with a much higher level of comfort and security that their child (and future children) would be financially very well provided for.
Our other recommendations included consolidating the couple’s multiple superannuation funds to improve ongoing management of this important investment vehicle. The implementation of individual, well diversified investment portfolios within their superannuation accounts was designed to compound returns over time and reduce risk. We also recommended a tax efficient strategy to increase their superannuation balances and advice to reduce their outstanding mortgage debt.
We believe that the most value our clients received from engaging us was having a PLAN in place that they could understand and use to help them increase the certainty that their financial future would be assured.
Case No. 2Single doctor
A medical professional engaged us to assist him to get this financial house in better order. Issues included multiple superannuation funds and a lack of a structured investment strategy. He had successfully accrued significant assets, but now needed some professional assistance and guidance in how to structure his assets and invest to ensure future financial security.
We consolidated the majority of his superannuation assets into two new accounts, one a Transition to Retirement Pension, consisting predominately of tax free-free money, the other a Super Account (consisting predominately of taxable money). He was also advised to add to these accounts.
Our strategy was also to retain the status of an existing Government super plan in order to avoid compromising the ability to commence an indexed life-time pension in the future.
The result was the commencement of a close-to tax-free pension or income stream, which did not add to his already significant salary income as a doctor, and consolidation of multiple superannuation accounts into two funds, one in the Pension phase, the other in the Accumulation phase. In addition we deployed a very diversified and defensively focused portfolio in each of the new accounts, designed to generate CPI+3% returns with very low volatility.
Now our client has a greatly simplified set of arrangements. He is maximising the available tax concessions and has in place an investment strategy which should provide him with greater certainty of growing his wealth and minimising the RISK of loss.
Case No. 3Small Business Clients
Very successful small business clients approached us with complex existing arrangements, including a Self Managed Super Fund (SMSF), Investment Company, Family Trust and an Operating Company. However, what was missing was some direction in how to build their wealth outside their business and the fact that they had no family wealth succession plan in place.
We simplified their entities by closing their SMSF (which had been an unnecessarily complex vehicle for them). We then established individual diversified investment portfolios in their new superannuation funds, as well as in their investment company and in their new family trust. We also worked with them so that they better understood their business and investment entities, as well as the tax implications of placing investments in their new Super Fund, Family Trust and Investment Company.
We also recommended that they put in place a family wealth succession plan designed to ensure that their chosen beneficiaries, namely each other and their young children, would benefit in the event that they passed away prematurely. This provided our clients with a greater level of certainty that their hard earned wealth would remain in their family.
Case No. 4Couple, one member not able to work
A couple came to us after one member had been made redundant and he had decided that it was time to retire. The other member was unable to work due to a physical condition that caused him great pain.
We re-structured their significant assets, including superannuation so that one member of the couple was able to secure the FULL rate of Disability Support Pension or DSP (which pays the same benefit as the Age Pension), while the other member was paid a tax-free income stream from a portion of his superannuation benefits. We also ensured that the superannuation fund of the recipient of the DSP was made unrestricted non-preserved, so that even while he was under preservation age he would be able to access his superannuation, if needed.
In the future, even with the significant assets they have worked hard to accrue, when the older member of the couple is eligible, he will receive the FULL rate of Age Pension, while his partner continues to receive the FULL rate of DSP. Our advice resulted in excess of $30,000pa of income being generated from a source other than their investment capital, hence reducing their capital longevity risk.
As a result, our clients have been able to live a comfortable life, undertake renovations to their beautiful home and importantly, do not need to worry about their financial security.