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  • Writer's pictureAndre Dirckze

Helping a couple of high-net-worth business owners with their retirement

Patricia and Michael are successful business owners and high net worth individuals (HNWI). They are a married couple in their late 40's who initially contacted us with the intention of upgrading their principal place of residence and to see how they were tracking toward retirement.

The couple were also interested in assessing their insurance coverage and getting advise on how to invest the money they had available for retirement.


Patricia and Michael own their main residence in Elwood, Melbourne, a farm on Victoria's Mornington Peninsula along with a house in the Colorado (USA). When we first met Patricia and Michael, they had accumulated approximately $600,000 in cash and had another $400,000 coming to them from the sale of equipment, which they wanted advice on how to put these fund to good use.

They were keen on upgrading the family home in the near future, and were concerned about how this may affect their retirement.

Michael and Patricia both had insurance cover at the time they employed our services. We reviewed and deemed Michael's level of insurance to be adequate for his objectives and fit in with his exit the business. Patricia's insurance cover was also considered adequate, however we were able to find a comparable policy with a lower premium through a different insurer.

Overview – Funds Allocation & Debt Restructuring 

Patricia and Michael had done a terrific job in acquiring numerous of assets and resources. With the priority of upgrading their family home, they understood the importance of deploying these funds towards strategies to help boost their retirement.

The WE. Advisory team were asked to present Patricia and Michael with options that were best suited to their desired lifestyle. These included strategic tax advice, debt reduction advice, such as repaying their division 7A business loans, and assisting them in making wise investments decisions. We evaluated their situation in light of the business structures they already had in place and assisted them in investing through their family trust, bucket company, and SMSF.

It was fortunate they had access to a large amount of capital ready to invest and this drastically reduced the time required build their retirement nest egg. We provided Patricia and Michael with the opportunity diversify their current investment holdings, through our private Wealth arm, with unique targeted investments that suited the current market conditions. In order to expediate their transition to retirement, we maximised Patricia and Michaels Super contributions to bolster their current super holdings.

Debt reduction Strategy:

We advised Patricia and Michael to pay off their credit card debt at an interest rate of 18% In order to save up to $7,400 in interest. They could then use the money anyway they saw fit.

We explained to Michael & Patricia the benefits of paying back their Division 7A loans as early as possible and gave them a debt-reduction strategy to help them do so. This included accumulating funds for investment in their bucket company.

We determined that the interest rate on their house loan was higher than it needed to be and suggested restructuring their debt to lower interest costs and increase the ratio of tax-deductible to non-deductible debt.

Superannuation Growth Strategy:

Michael and Patricia's Superannuation balance when they first came to us was slightly below what we would have expected for someone in their life stage. So we recommended they increase concessional contributions to the maximum and show them how to divert their cash flow to make also improve their tax position.

Helping them save $4,832 each per annum or combined $9,664.00. The benefit of using the concessionally tax environment coupled with compounding will significantly boost their retirement savings.

We worked with their accountants in relation a potential capital gain on an overseas property with maintance problems, it was decided sell the property and trigger the capital gains, and redeploy the funds while the currency exchange rates were favourable.

Insurance  Strategy:

As part of their exit strategies, we recently reviewed Michael's personal and company insurance coverage and advised him to hold the policies.

Patricia Agreed switching to a less expensive alternative insurance plan, and she was teh right course of action in doing so, saving $4,825.44 in the first year.

Investment Strategy:

We encouraged them to invest the money they had saved using a family trust and an established bucket company. W e used a different approach for each entity while considering tax consequences for each entity as well.

Using the control and flexibility a Self-Managed Super Fund (SMSF) has to offer, we invested their funds in vehicles that ordinary super funds don't offer.

Retirement Strategy:

Before our advice the couple had a projected retirement income of approximately $240,000 per annum. Our advice provides them with the option of retiring slightly earlier or enjoying the tax free income, and upgrading the family home.

With the knowledge that they should have $440,000 or more in additional financial assets for their retirement as a result of our advice, Michael & Patricia are confident about their future. Highlighting the value of good financial advice.

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