Developing a Comprehensive Financial Plan for a Surgeon and Business Owner

Our clients are a high-net-worth couple who wanted to make a number of significant changes by developing a comprehensive financial plan.

A WE. Case Study

​1. Forecast improved position at age 90 by $2.25mil (Improved Leaving a legacy)

2. Bucket Company Stratgey Improved position by up to $320K

​​3. Reduced ongoing Accounting & Audit cost by $4,382

4. Reduced ongoing Insurance costs by up to 48K p.a

Their overarching financial goal was to make a smooth transition to retirement that maximised their financial outcomes.

They were not big fans of superannuation. When they met with us, they did have a financial planner, but they felt they were too focused on investments and the approach was too passive.

Overview - Putting Together a Comprehensive Financial Plan

A high-earning surgeon and business owner couple had made a number of wise business decisions and held property and share portfolio.

They also had multiple entities, which increased the complexity and opportunity for us to assist them. In addition to assisting them with their retirement transition, they requested that we consider whether they should keep their current home as an investment once they moved into a new home they were building.

They also wanted us to look into the feasibility of purchasing a second farm to expand their business, either in addition to or instead of keeping 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 truly assist these clients, we did the following:

- A detailed analysis of their current position to show how they were progressing towards their goals, with multiple strategies overlayed to help them improve their position. Calculations for 8 different scenarios were included.

• We helped them define what was most important to them and demonstrated how they could reduce risk and be debt-free while enjoying far more than they will ever need to live their desired lifestyle.

• We performed a comprehensive insurance assessment to reduce their insurance costs because they believed they were overinsured and had received conflicting advice on how competitive their coverage was in comparison to the market.

• We provided a highly customised investment solution that combined what they were already doing and comfortable with, with complementary strategies that helped reduce risk and diversify in some cases.

Outcome

Given their high income, we concluded that, while they could probably afford to buy the second farm while keeping their current home, we advised against it.

Our modelling showed that they did not need to take on additional risk to achieve their retirement goals, but the new house they were building was close to 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 from the purchase of a new home.

Our recommendations included the following:

We showed them why it made sense for them to grow their SMSF while also providing a bespoke investment solution that worked for them and their risk profile. We also showed them how to cut their accounting and audit costs by nearly two-thirds, or more than $4,000 per year.

Farm - we supported them in their decision to expand their business and collaborated with their accountant to help them structure it tax-wise while keeping their financial goals in mind.

Structures - We looked at their structures and where they had tax losses and recommended strategies to discuss with their accountant, such as a bucket company structure, which was projected to improve their position by $320,000. We are now working with their accountants to ensure that this is a viable long-term strategy.

Debt - Our advice included a debt reduction strategy that was linked to their core value of retirement security.

Insurance - We provided a variety of insurance options to help them reduce their costs and empower them with their risk protection requirements. As a result, the annual premium was reduced by more than $47,000.

Outcomes Illustration - Comprehensive Financial Planning

The graphs below show the difference in net financial position, excluding the family home and other lifestyle assets, between the client continuing on their current path and implementing our recommendations.

There are two graphs, one with them keeping their property and the other with them selling it and implementing our strategies.

In the scenario below, if they sell their property, they will be able to enter retirement debt-free, whereas if they keep it (IE: graph above), they will be forced to take debt into retirement.

Our projections are based on a number of assumptions, including investment return rates, interest rates, inflation, and current tax and superannuation legislation. When forecasting figures, we always take a conservative approach to ensure that they are realistic and achievable.

This means that if our client outperforms our expectations, they may be able to bridge the gap between what they want and what we believe is achievable.

On the other hand, if they underperform our assumptions, they may need to work longer; however, for these clients, this should not be an issue because they intend to work longer than we've estimated they need to anyway by some time.

Important Reminder

This article was produced with the consent of our client. This case study's material was inspired by a real-life client. The advice offered here is merely general in nature and does not take into account your goals, needs, or financial position. This material shouldn't be regarded as exhaustive and doesn't represent financial or legal advice. Before relying on any content, you should consult a professional for legal, financial, or other advice.