OnePath urges keeping it simple
Simple approaches often work best for financial planners dealing with clients, according to OnePath national technical manager, Graeme Colley.
Presenting OnePath's top investment and tax strategies for the 2012 financial year in Sydney yesterday, Colley said it's often the simple approaches that work best in order for financial planners to provide clients with the right advice.
"The use-by date from some strategies has expired, but new approaches are appearing in the dawn of the new financial year," he said.
According to Colley, one of the difficulties facing financial specialists is a misunderstanding of contribution caps on superannuation funds.
It's a misunderstanding that allows clients to fall into the trap of unwanted tax on their final super payout.
"What we're seeing in many financial practices is that clients end up paying excessive contribution tax simply because they've gotten wrong advice," he said
Currently, the non-concessional contribution (NCC) cap is placed at $150,000 per year, but Colley said many clients aren't aware that unless they make it clear to the tax office that the extra contributions being made to their super fund aren't an NCC, they may have to pay an excessive contribution tax.
Late reporting of excessive NCCs is another issue that may result in a client being heavily taxed once they hit retirement.
"Once the contribution has been paid, in most cases you won't be able to get it back from the tax office," Colley said.
"One way members can reduce their super tax is by simply changing the title of their extra contributions from non-concessional to concessional in their tax notice."
Another issue raised at the briefing was the need for clients to be aware of the difference in insurance premiums when consolidating super, particularly when it comes to issues of cover.
"It may be that while you were covered for Total and Permanent Disability in one fund, you may either not be covered in the other, or may be covered for considerably less" Colley said.
Recommended for you
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
