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Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

Creating a Comprehensive Financial Plan for a Specialist Surgeon & Business Owner

A Yield Client Case Study

Est. Improved position at age 90 by ~$781k

Bucket company strategy Est. Improved position by up to $200k

Reduced ongoing Insurance costs by up to $60k p.a.

Reduced ongoing Accounting and Audit cost by $4,098

Our clients are a high-net-worth couple who were considering a variety of significant changes through deciding on a comprehensive financial plan.

Their overarching financial goal was to achieve a smooth transition to retirement, that optimised financial outcomes for them.

They were not big believers in superannuation. They did have a financial planner when they met with us, but felt they were too focused on investments and the approach was very passive. 

Overview – Creating a Comprehensive Financial Plan

A high-earning surgeon and business owner couple had made a number of savvy business decisions and had investment interests in property and shares.

They also had multiple entities that increased complexity and opportunity in how we could help them.

In addition to assisting them to transition to retirement, they wanted us to consider whether they should retain their current home as an investment once they moved into a new home they were building.

Furthermore, they wanted us to review the viability of purchasing a second farm to expand their business, either as well or instead of retaining the existing family home.

Part of this also involved advice on how they could achieve a secure transition of retirement, considerate of their SMSF and various other structures.

 

To really help these clients, we carried out the following:

  • A detailed analysis of their current position to illustrate how they were tracking towards their goals and we overlaid multiple strategies to assist them to improve their position. This included calculations for 12 different scenarios.
  • We defined what was most important to them and helped to show them how they could reduce risk and be debt free, while enjoying substantially more than they will ever need to live their desired lifestyle.
  • We did a comprehensive insurance assessment to improve their cost of cover, because they felt they were over insured and had been receiving conflicting advice on how competitive their cover was compared to the market.
  • We provided a highly bespoke investment solution, which worked with what they were already doing and comfortable with and added to it with complimentary strategies that helped reduce risk in some instances and diversify. 

Outcome

Given their strong income, we concluded that while they could probably afford to purchase the second farm and hold onto their current home, we recommended against it.

The reasoning being that our modelling showed that they did not need to take on additional risk to achieve their retirement objectives, but also the new house they were building was near their current property, which meant they would have a high concentration risk to the performance of the local area. It also resulted in non-deductible debt on the new home.

Our advice included the following:

  1. Super – they already had an SMSF and we showed them why it made sense for them to grow this, as well as providing a bespoke investment solution that worked for them and their risk profile. We also showed them how to reduce their accounting and audit costs by almost 2 /3’s or over $4,000 annually.
  2. Farm – we empowered them in their decision to expand their business and worked collaboratively with their Accountant to help them with how they structured it from a tax perspective, considerate of their financial planning goals.
  3. Structures – we considered their structures and where they had tax losses and recommended strategies to discuss with their Accountant, including a bucket company structure, that was projected to improve their position by $200,000. We now collaborate with their Accountants advice ongoing to ensure this remains a viable ongoing strategy. 
  4. Debt – our advice included a debt reduction strategy that tied to their core value of security in retirement.  
  5. Insurance – We provided a range of insurance options to reduce their cost to help empower them with their risk protection needs. The result was a reduction in premium of over $60,000 annually. 

Illustration of Outcomes – Comprehensive Financial Planning

The following graphs show the difference in terms of net financial position excluding family home and other lifestyle assets, based on a situation where the client continued down their current path against a scenario where they implement our recommendations.

There are two graphs, with one of the situations being where they retained their property and another where they sell it and implement our strategies.

In the scenario, where they sold their property we identified they’d be able to enter retirement without debt, whereas should they hold it they’d be required to take debt into retirement.

Important note regarding illustration: Our analysis was based on a set of assumptions, such as rates of return on investments, interest rates, inflation and current tax and superannuation legislation.

We always take a cautious approach when forecasting on figures to ensure that they are realistic and achievable.

projections for our comprehensive financial plan

This means that if our client were to outperform our assumption, she may be able to bridge the gap between what she wants and what we’ve assessed as achievable.

On the flip side, should she underperform the assumptions in our comprehensive financial plan, it could see her needing to work even longer.

 

Important Note
Produced with our client’s permission. The content of this case study has been based on a real-life client. Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.
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