EASING PRESSURE
While the Olivers have no immediate plans to stop working, Duncan expects them to start winding the business up within the next two years. When they finally call it quits and shut up shop, Duncan recommends the Olivers retain two years’ income in cash as a buffer against any future downturns.
“It also means they won’t have to sell any assets to maintain their income,” says Duncan.
With none of their three grown-up children remotely interested in taking over the reins of the meat business, he says a future exit strategy will be less about goodwill and more a question of maximising the sale of the business premises – the proceeds of which will go into super.
“But the beauty of a transition-to-retirement strategy is that it takes the pressure off selling the business,” says Duncan.“It allows them to finally take time off from the business without worrying about lost income.”
THE PLANNER
John Duncan
Director/Financial adviser – Unity Partners Brisbane, Queensland
An authorised representative of FYG Planning, Duncan’s qualifications include a Diploma in Financial Planning and a Bachelor of Business majoring in banking, finance and accounting. A financial adviser since the mid 1990s, Duncan has been a CFP for more than 10 years and was admitted to the prestigious Personal Investormagazine “Masterclass”, which showcased the Top 50 financial planners in Australia. Duncan specialises in strategies for pre- and post- retirement, wealth accumulation and wealth protection. He co-founded Unity Partners in 2007 following almost a decade as a senior financial planner with Wilson HTM.
Advice structure
The firm has gravitated towards a fee-for- service model. While commissions are still paid on life and income protection insurance, they’re typically dialled back to zero on all other products.
“Our main aim is based on getting clients from A to B with the least amount of risk, and providing market returns after fees,” says Duncan. Clients pay a fee commensurate with the volume and complexity of advice being prepared. In the case of the Olivers, this is currently $4000 annually.
History
Madge and Frank Oliver made initial contact with Duncan in May 2008 following a referral from a self-employed friend who’d been an ongoing client of Unity Partners for some time. While they’d been using a share broker to buy/ sell shares on their behalf, it was concerns over how to prepare for pending retirement that led the Olivers to seek guidance from a financial adviser. While the Olivers were some years away from retirement, they wanted to know what their options were, and how they would be best structured around the family butchery they’d operated for more than 25 years.
Strategy
Having written financial planners off as useless, due to a bad experience many years ago, the Olivers needed to have their faith restored before they could proceed on two key elements: 1) Guidance on how to successfully transfer into retirement, and 2) the role that a diversified super strategy – within the right tax structure – would play in delivering that outcome.
FINANCIAL SITUATION
Fee for advice in first year: $5000
Annual fee for advice now: $4000
Net debt: Rental property $104,000
Family home: Macgregor $500,000
Other investments
Rental property – Cleveland business premises: $450,000
Coorparoo $800,000
Super Self-managed super fund: $530,000
NOTE: Net asset position at start: $1,676,000 (ex family home)
Current net asset position: $1,806,000 (ex family home)
