Good morning everyone, and welcome back to Sugar Mama's Fireplay. I am your host financial planner, Anna Campbell, and as always, I'm here every Monday morning at five am, Rain, Hail or shine to help make sure that you start your week off on an informed, inspired and educated note when it comes to achieving all of those very important financial
goals and dreams. Now, this morning, we have a bit of a special episode because not only do we have adam Our Numero uno favorite mortgage broker who I know and trust for over eighteen years, but we actually have another colleague of mine, Richard Richard Nichols, who's also in fact a financial planner and also someone that I have known for pretty much the same amount of time as.
Well, because we used to work together.
So you are going to have essentially two financial planners on today's episode. I guess challenging each other and picking each other's brain and really exploring what options are available out there right now with the backing of a financial planner to help you get ahead of financial and seeing how important it is to have your mortgage broker and your financial planner and a certain degree of his course
to your accountant. All singing off the same page, so that you are actually smashing your financial goals and dreams and making the most of every single legal opportunity around you. As always to keep Asik happy, because that's very important to me. I must remind everyone that this is general advice only. Anything you may hear is purely factually based and for you to go and talk to a financial planner, a mortgage broker or an accountant. So please know this
is never personal advice, investment advice, strategic advice. All right, let us begin. Okay, good morning Richard, and good morning Adam.
Thank you so much for coming in today's.
Having us all right, so everyone of us is familiar with Adam McKay, who's you know, our favorite mortgage broker and obviously part of the Ask Adam series.
Richard, can you tell me a little bit about yourself and what you do?
Financial planner now for the best part of two decades here in Australia can probably tell them my accent, I'm not Australian by birth. I had a banking background in the UK and worked with you previously. Education qualifications, Masters and financial planning.
So I am all right working with a clients as a financial planner. For me, that was really important that I was in touch with my client's mortgage broker and of course their accountant, so that I knew exactly what we're doing, and I knew that they were getting great advice and they were on the right type of product and they were making the right progress with their financial goals.
Can you explain how you and Adam worked together for your clients to help them get ahead financially and how important that is as well.
I'd certainly agree with all of us needing to work together because a lot of the time, when you have multiple people advising someone, if those people don't speak without them ever being the intention the advice can come sometimes conflict because no one knows what the other one's doing or.
Saying one hundred percent. And what it annoys me the most is then balls get dropped and loopholes, like legal loopholes get missed, and that is just a huge waste of clients time and money because they're paying for this service, but they're not getting you know, the right advice and proactive advice. And point yeah, Adam, how would you how do you work with with Richard then, because obviously you do mind moorgage. You do my clients mortgages and investment
loans and so forth. Like I know how you and I work together, but how do you work with Richard?
Well, it's the bugbear of mine actually, really well, Richard, Richard's the Stones, So whenever he wants, wants me or needs me, you know, in relation to his clients, it's just it's just a yell out and were straight into.
It, and I actually love it. All jokes aside. It's productive. It's you know, we're not wasting any time, We're getting getting down to it, getting things done without having to you know, with external parties, I find sometimes that.
Oh it takes forever for someone to reply back to your return, your care that.
Or there's just this you know, unspoken or undercurrent of not wanting to work together because you know they would rather have that client's business holistically. So yeah, look, I love working with Richard and we worked really well together for twenty years.
Now.
Do you ever have conflicting opinions as to what the client should do? And if so, how do you deal with it?
Really? Sometimes not that often generally on the same page, but yeah, there's been times I think when we've had different views on how to structure something.
And that can come from licensing and as compliance what you can you determined to be a.
Sometimes what I think might work doesn't always work.
Yeah, but no, majority of the time we're on the same page and work well together and get things done quickly.
There have been a couple of not many, thank goodness, but there was one incident in particular. I wouldn't say incident, but there was a situation. And you may not be able to remember this because it's going back I think twelve years ago, but a client of mine and yours wanted to borrow an extremely large amount of money to buy a property. And I had didn't actually flag this with you yet I was and in fact you actually
called me and said, I've just met with them. I can do it, it's fine, but I'm actually really worried. I think this is really dangerous what they're doing. And I was so relieved that you called me and said that, because I was like, I was thinking the same thing as well. And then of course I could then go to the client and say, look, I think this is a bad move what you're about to do, and I think you're going to alf under a huge amount of pressure and stress and taking on an unnecessary risk out
of interest. Do you still do that? And do you do that together? When you go actually, I think this is you know your to close.
The wind absolutely as recent as two weeks ago. I think we won't go into the detail.
But yeah, of course absolutely.
And then that's the core part of our roles being acting responsibly and in best interest duty for our clients.
You have to I often think that as a financial planner, sometimes my value to my clients came from stopping them from doing something disastrous. Then looking at all the money I saved them in tax, how much interest I say them, how much time?
I say them, perhaps I grew their.
Share portfolios or in their porfolios or the superannuation portfolios. Was actually stopping them from making a monumental stuff up. You know, people, if I think forget about that, there to say hang on, stop, this is you're not looking at this the right way.
You need to consider this.
That and that.
And you know, would you agree with that you've stopped clients from doing things that potentially were fraught with danger.
Yeah, definitely, because you see that other clients who have friends that are in certainly in the property development business, and you know there's opportunities that get discussed between friends and then they come to you going, oh, look, we want to get into this. It's costing this amount of money to borrow, and you're like, really do you really want to? You know, put yourself under that type of pressure.
And you can see things as a financial plannert that other people can't see. And you know, I think especially when you get a hot tip from a friend, you know, down at say the local pub or you know, sitting at a taxi, sometimes you know, you can kind of get caught up in the moment and you know, emotions to fiologic as Tom says. You know, you just think, oh yeah, I've got to do that, and the kind of panic sets in. But then you need that sort
of educated and formed experience. Financial planet steps and goes okay or right, hang on, let's just look at the whole picture here and weigh up the risks. Are you
really willing to take that much risk? Exactly as you said, Sometimes I know with myself clients, you've got like a hot tip, I'd say, well, all right, let's allocate two percent or five percent of the portfolio for that, and nine times out of ten, they'd come back to me with their tail between their legs, going, yeah, doubled in value, but I didn't get the tip to sell, so now it's worth close to nothing.
So would you agree with zone? Like that happens a lot.
We have the benefit of being, to a certain extent unemotional in how we explain things to our clients. We can pay a bit of Devil's advocate as well. Go, well, that's the plus side of it, and that's what you're focusing on. But what about this side? What happens if it doesn't work out? What then? What's your solution? How are you going to deal with that? And I think that's powerful that we can have those both sides of the conversation with them.
Yeah, there's financial literacy as well for clients. You know, some clients we might have very high financial literacy. Some are very low and they come in you know, Yeah, it was at a barbecue last week and our friends bought this two million all the house. We want to do that. Okay, what's going to cost you X per month? Can you afford that? In no way?
Yeah, they're not they're.
Not aware of the costs of borrowing or repayments, and you know that they're just they're quite quite relaxed with it, and they need guidance because otherwise they will get themselves in trouble.
And that financial literacy can be a double edged sword anyway, true, because you'll have clients that are consider themselves financially quite literate, but then you look at the time of the risks they're trying to take. You know, they tend to be more comfortable with risk, and that can always sometimes be to their detriment.
I'm so glad you said that, because I would see that a lot with crypto, particularly when it's kicked off, and you know, they'd do a course on crypto and think they were, you know, experts, and they didn't actually understand essentially they were gambling with their retirement savings and the risks that they were taking on. But you know, they you almost get this inflated sense of financial literacy which actually isn't isn't there. I mean it's a huge problem.
What are your thoughts, both of you on financial planners that can do you know, your mortgage and mortgage brokers that can do your financial planning, Like do you think it's you know, Jack of all trades master or nothing.
Is that what you think?
Yeah? I could, technically, if I did the courses, etc. Become a mortgage broken now. But how would I duplicate twenty years of experience? Impossible? You know, I'll stay in my lane, and I'm pretty happy in that lane.
I'm sure there are some good operators that do it, but for me, it's very few.
Yeah, I mean, you're you can only focus on so much. Interestingly, I got I was at an event in Japan a couple of weeks ago, and I got parked next to a billionaire and this billionaire was like, no one was talking to him, and I got puck tented. I was like, this is an amazing opportunity to speak to someone who's got incredible insights and knowledge and experience. And I asked him and I was like, what is the number one best advice you would give to anyone that wants to
get ahead in their career or with their business. And he said it was the most amazing advice. He said, don't do what you love, do what you can specialize in. He said, don't try and do all these other different things. He goes, just do what you do well and can specialize in and that's your niche and just pretty much hone in on that and that was all his advice. And I walked away thinking, but then I was like, actually, know that is brilliant. Don't try and like be it
all because it can't possibly do. There's only certain amount of brain cells, there's only amount of so much more time in the day. And also when I think about the mortgage market, every time you and I speak, and we speak a lot, there's something different going on in the industry.
And that's just your industry.
My industry and richest industry is hectic as well, Like you can't possibly keep your finger on the pulse. All right, Richard, I want to ask you some questions really about financial planning because I'm now focusing purely on the financial ligacy with Sugar Mama and YouTube and my next book and obviously the podcast and the social media and keynotes, so I don't look after clients individually anymore. I'm more about trying to, I guess, build up that financial literacy across
the country and across the world. You are taking on clients, you are seeing clients every day. What are you seeing as the most helpful financial strategy. With the rising post of living, rising interest rates, you know obviously the financial stress and pressure. What are you seeing is the most popular strategy that you are using with your clients at the moment to reduce costs, reduce costs and just as it, keep your head above water, but also still keep on working on those financial.
Goals to reduce costs. We touched on this earlier with speaking to your lender seeing if you can sharpen those interest rates. That's certainly one way you can review your budget, but I think just rining down a budget isn't really the best way to get a grasp on you're spending because it's nine times out of ten it won't be what you're actually spending.
This is what I say.
I say a budget is just a flaky piece of paper. It's a flaking intention going yes, I'm going to spend this much on grocries, this much on my mobile, and your membership unless you're sticking to it, is useless.
I think your best starting point rather than doing that, is to track your spending honestly for the next four weeks and then going back and reviewing that and seeing where your money is going and where you can actually reduce because you know, if you're going to the working every day, the amount of money you can just spend on for a for all things around the office, you know, coffee here, lunch here, getting a snack here. You know, you add all those up and it can end up
being quite a fair bit. But without knowing that, without actually going to the effort of seeing where your money is being spent over say a four week period, it's hard to think back and well hard to then adjust your spending to reduce that. I think reviewing things like your insurances can make sense.
That's a really interesting one. How you know, I've had a couple of dms from people recently on Instagram saying I'm paying so much per month in you know, my income protection policy and my trauma policy. You know, I'm tempted to cut it to save some money. And obviously I'm like, don't do that. You need to go get advice straight away because you know, potentially putting yourself under a huge risk. And they actually maybe other options where
you can speak to an insurance company. If I was that person calling you saying, hey, Richard, I'm paying like three hundred dollars a month of my income protection. Things are starting to get really tight under the premise of general advice, Like, what would you be saying back to me.
I would be going back and re quoting with your existing insurer. You are starting to see more and more now where insurers are offering better rates. They've repriced their products, and they're offering better rates to new customers. So I had it with a recent client where their life and TPD had gone up by about thirty percent in year. We saw the renewer come through, and just out of interest, I re quoted at exactly the same client as a new customer. It was thirty percent less.
Wow.
The downside is you have to go through the underwriting process again.
Yeah, and of course.
If you've had a change in health that's also a problem as well.
But I think there is definite savings to be had on your personal insurances just by either re quoting with your existing insurer or looking at someone else. It's the same with your home and contents. My home and contents went up massively this year. I won't name who the insurer was, but you rang them, they wouldn't do anything by switching. I saved twenty five percent just by switching to a different insurer like the light.
That's huge.
Gosh, I probably should get Tom to give you a call because we have his life, TPD, trauma and income protection all bundled together in the one policy and it's obviously gone up after our mortgage, daycare, groceries. That's our fourth gest expense. And I mean, when you're looking at cutting things, a lot of people think about cutting out, is it?
I mean?
And there are so many other options. You can take out a few benefits within the pol to help bring down the premiums are there are lots of things.
Strinkly benefit period, you know, depending on how old you are. You know, if you're in your late late forties, early fifties, a five year benefit period might be sufficient because if you if you've been claiming on or receiving a benefit five years, the odds are you weren't going back to work, Yeah, and that means your TPD policy would possibly pay out as well. We shall then bridge that gap between five to vibe.
What are your thoughts about structuring then insurances through your superannuation so it's not coming directly out of your back pocket, it's being at least paid by super.
Life in TPD. I don't mind that as a strategy because effectively you've got pre tax dollars paying those those premiums. There is a bit of a tax issue on the TPD payout potentially. Got to be bear in mind. I'm not a massive fan of income protection through SUPER unless cash flow is tasting that. Because income protection premiums are tax deductible. Depending on your marginal rate, you're going to get a fair chunk back when you do your tax returns and traw me. Well, while you could put that
through SUPER, the problem with that is you could. You could Yeah, indeed it could pay it. You could meet the trauma definition and it could pay. Actually, fun don't meet the condition of release's stuck in SUPER.
So all right, I am going to grab a copy of Thom's policy and send it over to you to have a little look at it and see if you can help us out, because it's it's obviously it's an instant saving if and I know that Tom hasn't a change.
As far as I know, are going to go one direction.
Well if you if it makes sense that it will not make sense, it's shocking, But if it's cheaper to look at taking out a new policy. You know, these savings really do add up.
Indeed, you also might find you have more cover than you need. Yeah, you know, because you know, typically take out a level of cover based on where we are financially at that period of time. As we get older, we're getting close from close to retirement, so that need for cover should go down, not up.
And that's why you need to have a financial plant that you see on a regular basis, because they should be looking at this going. You know what, we can save you one hundred dollars a month by reducing your life policy from a million dollars out of five hundred, you're not pretty much most of your mortgage off. People really, I think forget about that ongoing service that comes from financial planning and they're constantly working.
For you and your goals.
Now, as we were out today's episode, can you share with us five great practical steps that our listeners can follow today to help improve their financial wellbeing.
I think number one would be the stay three tax cuts that are coming. Yeah, you know, that's going to give people an extra chunk of money anywhere from you know, if you're on that fifty thousand dollars a year mark, nine hundred do dollars. I think it is you're up to if you're on the one twenty one hundred and twenty grand a year, then it's like a couple of
two and a half thousand. I think taking advantage of those and doing something with that money rather than it's sort of disappearing into the lifestyle creat Yeah indeed, you know, I either use that money's a pay extra, a few mortgage, put it into super fund, your own little sort of investment account, do something with that that sort of leg
up that we're getting, make it count. Yeah, indeed, I think that's certainly I'm starting to discuss that more and more with clients now because obviously it's lie ones earlier stressed around the corner. There's other things you can probably look at as well to maybe reduce some costs. Look at your credit cards. You know a lot of cards have those annual fees because of the add ons you get, like travel insurance or lounge passes, that type of thing.
If you're not going on overseas holidays as much, why be paying four hundred bucks for a year for that card? You know, get a card without the annual fee.
What are your thoughts of Super innuation at a time like this. I mean, if I think back, say three four years ago, I was you know, I'd always be encouraging people to consider if they could afford it, and it sat in alignment to their financial goals, you know, sacrificing or even after tax contributions for some people.
What do you like, Where do you sit with that?
I think salary sacrificing is if you can do it, you should. Yeah. You know, again, you're paying fifteen percent rather than your marginal rate. You know, if you're if you're at the forty percent marginal rate and you put money into Super at fifteen you're already making the twenty five percent return day one on the contribution. Yeah, and it's something that you pat yourself on the back boor when you get to retirement.
It's amazing how many people will get really creative to try and save tax and you know, push the envelope and really right under our nose is one of the most powerful asset bases to build wealth and to save a huge amount of tax over the long run.
Oh indeed, you know, so you're getting a deduction effectively to put it into a concessionally taxed environment. You know, you paid fifteen percent tax on earnings rather than your marginal rate ten to fifteen on capital gains depending on how long you've owned it for, and once you turn sixty or sixty five you can doal tax free.
All right, I have one last question for you on that note of superinnuation. Then, for anyone that is approaching retirement or actually wants to think about some realistic retirement plans and goals, what advice could you give those listeners right now?
Depending on your balance, go on to your MIGV website, have a look at what your carry forward contributions concessional contributions are, because you may find that you've got a lot that you can get in pre tax, but that sort of window is closing slowly closing on you because if you have more than a five hundred thousand dollars balance, you can't do that. Yeah, so something like that is
really important. But generally speaking, you want to try and get as much as you can into super in the lead up to retirement.
Yeah.
People don't realize how I mean, it's the outside of our home and for some people actually be worth more than their home.
You know.
Superinnuation is essentially your investment portfolio is locked away. It's going to end up being, for most of us, thanks to super Guarantee, the biggest financial asset that we will ever own in our lifetime. And what gets monitored gets made. You know, that's how you build substantial.
Well, and that super Guarantee goes up again July one as well. Yeah, yeah, twelve percent.
All right, Richard and Adam, both of you, thank you so much for coming in, and you just quickly explain to listeners if they want to. You know, they love hearing your voice, love hearing the wise advice that you've just instilled and imprinted.
In all of us.
Right now, How do people get in product? Do you offer consultations?
Do you charge? How does it actually work?
Does?
How does someone work with you?
If they're like, okay, I need to get two brains like Adams and Richards onto my finances.
I'm a little bit different to Adam and how we operate. We the best thing would be to an arrange an initial consultation. There's no for your cost involved in that. But if we do go down the advice route, we work on a service basis, so we do charge a fee because we don't investment commissions have been outlawed for some time now, so we work on a pure fee for service basis, which I think is a better way to operate.
Oh absolutely, I've been working off that business model before it even came in. I think it's the only way to be able to help people. And what's the process involved? Do I would I call you and book an appointment?
Do you charge for that? How long does it take to get formal advice back from you? If I want to proceed? Can you just quick took me through the process.
Well? Yeah, the first thing was for us to make contact via email or via over the phone. Those details on our website here. We would arrange. I'd have a normally have a brief chat with someone over the phone first, just get a bit of a gauge as to what they're looking for. We then send out a fact fine information gathering tool also in the name address usets liabilities,
income expensive. That's that type of thing prior to making that initial appointment, because I'm conscious that people do make an effort to come and see us, and I don't really want that first appointment, you know, half a bit to be an information gathering exercise. If I can get a snapshot of their situation before they come in. It allows me to prepare discussion points for when we meet so that they ensure that they get the most out of that initial time that we spend together.
I think it's a brilliant idea, Like you hit the ground running and actually you can have a really productive, powerful conversation where you talk about in all sorts of different concepts and ideas and risks and you know, strategies perticentire that could be considered as part of you know, some formal advice.
Indeed, that initial appointments is you know, it's an opportunity for us to explain a bit more about who we are, what we do, how we do things, and an opportunity for the cli't do this aim. But most importantly, I think it's an opportunity for us to gauge how we interact. Yeah, because you go and see ten advisors, we should all roughly say the same thing, you know, reduce your debt,
reduce your tax. Invest Now they may recommend different vehicles to do that, but if you're going to see ten people that say the same thing, you want to choose the one that you get on with the most field trust, because financial planning is very much a personal relationship and you only know you track into your sort of circle
of influence like minded people. Yeah, and I think you know, you don't have a you know, you don't have a doctor, you don't not you don't have a you know, alloy that Like, it's a similar situation that you want to make sure that you gel on that personal level as well.
What's the relationship We last twenty years and you want to make sure that person inspires your motivates you to keep going. And it's actually you know, acting as that beacon of light as you go down that financial journey exactly.
And then when does when and where does Adam come in?
Can he also have a look at, you know, someone's mortgages and see if you can help them negotiate a better deal. Is that where this kind of holistic, comprehensive advice comes in.
Well, indeed, part and past of what I do is I German ninety nine times out of one hundred for clients work out a debt reduction strategy for them, making some using their existing rates and surplus. And you know they've setting a goal to get that mortgage paid off. And then it will be a case of sitting down with Adam and working out, Okay, how do we do that? Is you know, is there current lend of the best one achieve? That is the room to is there better deals out there?
And then what about accountants? Do you know liaise with the clients accountants to make sure they're up to speed as to what you're recommending and just also make sure they haven't missed anything.
Yeah, indeed, you know, once we've got the strategy sort of worked out, then it's a case of sitting down with their again existing accountant. A lot of the time that you know, one of the most common questions we could ask is do you know a good accountant?
I believe I asked Adam that recently and I have a new accountant.
That and then yeah, so yeah, when when it's appropriate, then definitely we have those conversations as long as that client's giving us that permission to have those.
All right, Well, look, Adam and Richard, thank you so much for coming in today's episode. I really appreciate and some brilliant advice, wise advice and some greatly appreciated advice this morning.
So thank you so much to all our listeners.
If you want to reach out to Adam or to Richard, do so probably best either through email to Adam, or of course you can reach out to them through their Instagram account at Blue Lantern Home Loans.
In the meantime, if you could take a moment to.
Leave a rating and review, I would greatly appreciate it because every single review I get, and obviously hopefully a five star rating, allows me to keep going and helping create free financial literacy for you to enjoy in your free time. All right, everyone, have a fantastic week ahead, and I'll check back in with you next Monday morning at five am.
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