Advisers urged to look beyond tax

Effective communication and concentrating on client’s needs apart from tax are the most important factors planners must focus on as the demand for tax effective investment advice in the lead up to June 30 intensifies, according to senior partner at the Argyle Partnership, Peter Bobbin.

He feels it is imperative when dealing with tax issues to communicate properly with clients in a very skilled sense. Speaking at the Macquarie end of financial year investment presentation, Bobbin used the different explanations of the concept of borrowing to invest to illustrate the point.

“One way to describe ‘borrowing to buy’ is enhancing your investment portfolio. A way to describe negative gearing is a tax effective way of engaging investments. A way to describe margin lending or instalments is a way to develop your portfolio beyond what you might currently assess,” he said.

“Another way to describe those very same three things — ‘borrowing to buy’ is borrowing, negative gearing is how to lose money tax effectively, and margin lending is how to borrow more money than you can otherwise afford,” he added.

With growing emphasis on tax effective strategies, Bobbin stressed the importance for financial planners to give priority to explaining the overall merits of the investment opportunity being examined, rather than concentrating heavily on the tax implications of the product. This is because clients will engage in certain strategies with tax advantages to achieve the after tax benefits they will give rise to as opposed to the immediate tax savings.