If fees to financial planners were tax deductible would you see one?

Financial Planner

By Erryn Langley

Advisers are rallying around the prospect of upfront financial planning advice fees becoming tax deductible after the ATO announced a review of Tax Determination 95/60 recently.

The financial planning profession has faced some significant challengers over the past 10 years and more so in recent years. So much so, the number of licenced financial planners has fallen from 31,000 down to just under 16,000. No other profession has experienced such a loss of members, and with nearly 50% of financial planning members exiting in such a short period of time, government and other organisations are reviewing what went wrong and what they can now do to rebuild the profession.

Whilst the numbers have dropped significantly, most people, even the financial planners who have remained, believe the regulatory changes were necessary to move the financial planning industry away from a sales-driven culture into a profession focused on client needs and objectives first and foremost and making sure the client’s best interest are always placed at the forefront of any advice being provided.

Even so, with so many advisors leaving the profession, it has now resulted in more Australians finding it difficult to afford financial planning advice. With the increased regulatory burden placed on financial planners, their workload has tripled over the last 5 years, and with fewer financial planners able to provide advice, it is no wonder financial planning fees have increased. It is believed the average fee being charged across Australia is approximately $3,580 per client per annum. This means some advisors are charging less and some are charging more than the $3,580 per annum but one thing is for sure, this increase in fees and likely future increases, is likely to place financial planning advice outside of the reach of most everyday Australians.

As such, the federal government, has once again, placed the idea of taxdeductible financial planning fees back on the table. This is exciting news for financial planners and clients alike and may be what is needed to enable more Australians to seek advice and help the profession encourage a new wave of financial planners to join the profession. Under an existing tax rule, a fee paid by investors for the creation of a financial plan isn’t tax deductible. However, the Australian Taxation Office (ATO) recently said it was reviewing this rule contained in Tax Determination 95/60.

Financial Planning Association of Australia (FPA) CEO, Sarah Abood, has welcomed the review after lobbying hard for the ATO to reconsider the ruling. One of the quickest and easiest ways to make quality financial advice more affordable for consumers would be to make it “taxdeductible in full”, she said.

“The ATO’s commitment to issue a new Tax Determination – indicating its willingness to modernise its long-standing view on this important issue – will provide more certainty to our members and the broader community of Australians who benefit from comprehensive financial advice,” she said.

(The amount is lower for older parents as they have less time until retirement, lower expected debt, higher super savings, and spend less time looking after children.)

Tax write-off would boost advice seeking

Warren Strybosch, Founder of the Find Group of companies including Find Wealth and Find Retirement, recently stated that affordability is a genuine concern. “We need to find a way to make advice more affordable. The problem is that our costs are being driven up by forces outside of our control. We are doing what we can do reduce costs but there is only so much that can be done. The government needs to step in and make this change. Only then will we start to address the issue of advice and affordability, Strybosch says.

We are excited about the opportunities that this change could provide our profession and will keep you posted in future articles if in fact this proposal becomes legislation, as a profession all Financial Planners want to see that Financial Planning is affordable for all Australians, as the evidence suggest that seeking financial planning advice can pay off. The Financial Services Council estimates that professional advice can leave people better off in retirement by as much as $91,000 or more.

Whatever your goals and ambitions, it’s really important to get moving now and start planning for your best financial future.

Erryn Langley

1300 557 144 | erryn@findwealth.com.au www.findwealth.com.au

Financial Planning is offered via Find Wealth Pty Ltd ACN 140 585 075 t/a Find Wealth. Find Wealth is a Corporate Authorised Representative (No 468091) of Alliance Wealth Pty Ltd ABN 93 161 647 007 (AFSL No. 449221).Part of the Centrepoint Alliance group https://www.centrepointalliance.com.au/

Erryn Langley is Authorised representative (No.1269525) of Alliance Wealth Pty Ltd.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-todate information. No warranty is given in respect of the information provided and accordingly neither Alliance Wealth nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.

Nature

By Kayte Kitchen

This is the fifth of five publications where we have been running a series of sensory experiences in nature.

Each experience will take about 10 mins and you are encouraged to read through the instructions before you commence your time in nature to maximise your experience.

Find a spot outside where you can sit or lie down comfortably. This could be in your backyard, your local reserve or in a national park. You may like the familiarity of the same place you have practised before or you may like to try somewhere new.

Take a few moments to regulate your breathing and settle into your position. For this breathing exercise, we will follow a pattern of 4 counts in, holding for 7 and then exhaling for 8.

Follow this pattern, allow it to take all of your focus and to help you unwind. Repeat for a few minutes.

Allow your breathing to find its natural rhythm once more.

For the next 5 mins we are going to practise tuning into all of our senses while we do a slow walk. You may only move a few metres within the 5 mins, the point of the exercise being to tune in to your senses of sight, smell, hearing and feeling as you go. Draw your attention to the details, get in close to nature, take time to experience the full experience of each moment.

You are trying to slow down your senses, slow down your experience. Try not to allow distractions to come into your mind, be fully present to the experience. If you do get distracted, don’t stop, just tune back in and continue.