From the financial impact of green energy measures, the best tax minimisation strategies to queries on how to gift family members money, advisers certainly have their work cut out for them dishing out financial advice.
MLC Australia head of technical services Jenneke Mills predicts that tax cuts will be a hot topic this year as clients try and understand what’s in it for them.
“I think many clients, especially those under pressure with the current cost of living, will want to understand what it means for their cashflow and how these cuts could alleviate some pressure,” she tells Professional Planner.
“However, as advisers know and will be thinking about, the advice implications for many will go beyond cashflow, and the tax savings and rate changes themselves could facilitate strategies which really amplify the benefits even more.”
Superannuation, contribution strategies and retirement planning will also be hot topics. “As we know, there have been some changes to the contribution rules over the last few years, with the introduction of new and increased ways to contribute more super,” Mills says.
The concept of total super balance has also been introduced, which is a new eligibility criteria for certain types of super contributions, which highlight the importance of thinking about contribution opportunities with a long-term lens, to optimise retirement savings as well as estate planning outcomes.
“What I think is critical for advisers to be thinking about in relation to these changes, is not just the immediate contribution opportunities which arise, but the importance of considering a client’s broader circumstances before making contribution recommendations,” Mills says.
Meanwhile, the new Aged Care Act, which comes into effect on 1 July 2024, still has question marks over what the full obligations will be.
“The draft was released late last year, but we are still waiting the release of the report, with detailed recommendations on how means-testing should be amended to determine an aged care residents’ financial contribution to the cost of their care,” Mills says.
She also notes a spike in queries to provide financial assistance to family members and the various implications of doing so.
“This is a really complex area of advice, because not only are the potential implications so broad, but decisions are often made quite quickly to enable support to be rendered, and there can be a lot of emotion involved,” Mills says.
BT head of financial literacy and advocacy Bryan Ashenden also notes cost of living remains a key area heading into 2024, meaning that assistance with budgeting will be critical.
“With inflation coming down, but interest rates not falling as quickly, there will be discussion on a range of themes, including growth versus cash investments,” Ashenden says.
“People will want to know what potential tax cuts will mean, and how much clients can save. They will also want to know how they should best utilise whatever it is, such as extra mortgage repayments, versus investment considerations,” Ashenden says.
The pending passage of legislation through Parliament that cuts tax concessions for super funds with balances of $3 million is also expected to be a topic advisers may need to consider with higher balance clients.
“In particular, there will be questions on what can be done before the 1 July 2025 commencement to reduce impact, and questions from clients about whether it will impact them in the future,” Ashenden says.
He also predicts questions around the ramifications of owning commercial property in SMSFs and downsizer contributions.
And lastly, when the Quality of Advice Review reforms become law, there will be questions on how the changes might impact the adviser-client relationship, which would it be appropriate to get advice from a super fund, plus how and when might the reforms reduce the cost of advice to a client, he says.
