Hello, and welcome to The Australian's Money Puzzle podcast. I'm James Kirby, the editor at The Australian. Welcome aboard everybody. I've had a lot of financial advisors on the show, and I've had advisors who, although they wouldn't say this on the show, but in reality, they're not actually going to let anybody in the door without ten million or more to invest. That's how they work. Several of them
you hear regularly. I've had other advisors who are in the broader business, at the early stages, probably of their own businesses, where they're collecting new clients, and they're happy to get people in at very modest levels, knowing that those same people will hopefully stay with them forever, that their kids will stay with them forever, and they developed.
I've had all sorts of advisors, but I've never had an advisor like I have on today, and she has a singular story and I think it will lead us to a very interesting episode of the show, and it will be It actually will be a conversation, I think, in substantially about how money. We talk about making money, what we want to do, what it would allow us to do, we rarely talk about what we need to do, how it can actually defend you as an insurance if you like, for peace of mind and something that really
really matters if there's an emergency. And she has a story to tell, like and tell you. Her name is Nikola Besik and she works as an advisor with FMD Advisors. She did always work as an advisor. She started out as a lawyer, and she also runs the pro bono financial Advice Network, which I will also tell you about, but first we'll say hello, how are you Nikola?
Hello, I'm well, thank you, thank you so much for that introduction. I'm sitting here a little bit in tears thinking about my story and how I've evolved to get to this point in my career.
Yes, yes, look, I have no scientific evidence on this whatsoever except to say long experience and in the six years that we've been doing the Top Financial Advisors List, for instance, which we do every year in conjunction with Barons of New York, I often have found that when you go to meet the advisors that are among the best, they often did something quite different before they became an advisor, that they have that wider worldview, and they did a
different discipline and so with you, you were a lawyer first of all, So tell us how long were you a lawyer, like, were you just a year or two or were you well into it and what sort of law did you do before you transferred.
I was well into it. I was close to ten years. I specialized in intellectual property law, particularly patent law, so I was technically a patent attorney and worked in I'm also also a key where you worked in New Zealand for about five years before moving over to Melbourne here working for a reasonably large law firm.
So that was like a career progression, was it to come to Melbourne and step up in the law and into a larger law firm.
It was. It was particularly in New Zealand because intellectual property law firms there are a very small number. It's
quite a specialized area. I've got a science background, so all well, most paindent attorneys have a technical background, so I specialized in genetics and went from sitting in a lab going I've got to do something more with this degree that can actually apply more world right experience, and so I had the option of going into the intellectual property law space and learning that specific area of law
or heading into genetic counseling. So I decided to go down the IP law route and rarely focus on that area. It was actually quite an interesting space with what you'd come across.
I expect.
So I at once staj I was a technology editor, and I was very interested in that area. But of course I was only interested in the stuff that journalists are interested in, you know that when it was really really interesting on patent's technology, patents, et cetera, software patents and the crazy things that are patented, like the Harley Davidson sound I believe is patented for instance, which which is which is an interesting one to some people who don't like that sound, but let me tell you it
was patent. We are wandering here and the listener is saying, hey, James, where are you going here? So so the reason I want to talk to Nicola, folks is a very particular story. So, Nicola, there you were, and you were in mid career, shall we say, as a corporate lawyer, very very particular speciality in patent law, which I imagine is a super hot area and very global area in in in law and then in your and you had no intention of being a
financial advisor. I'm sure you you were well paid, et cetera. But then you had a first hand example of why we need to be across our financial affairs. Just tell us briefly what occurred, and you were your family were back in New Zealand I'm guessing and you were in Melbourne.
That's correct. What had happened was my dad was diagnosed with multiple sclerosis. He was fifty five at that time, so heading towards his later career stage and very much gearing up for what we would say retirement. We fifty five to sixty five, A lot of people are thinking about retirement. And his diagnosis and result of essentially losing the use of his right side so he couldn't write, walking was problematic. That really changed him and what he
could do work wise. So he ended up leaving his job. But the thing with him was he could leave his job because he had an income protection policy and place and that pays his salary for the next ten or so years.
Can I ask you what?
What? Can I ask you what? What was his job or what was he self employed or was he employed?
He was a very senior executive working for Telecom, so the equivalent of Toustra here in so I.
Would strike it would strike me if you were in Telstra, the last thing you'd need to be in come protection insurance, I associate. I had income protection insurance for maybe a decade when I was in charge of a startup company, and I did feel not so much precarious, but I was acutely aware that it could all come tumbling down or something that could go very wrong. But now I in a in you know, like a global media group, I don't have it, and I didn't have it before that.
So it strikes me that he may have been cautious. Were your family and were you cautious anyway? Financially?
This is an interesting question because as a family, we didn't really talk about money that much, and that's a very common statement that people make. For me, seeing what Dad went through, that made me start thinking about my own situation financially. Like you said, I was in law, earning good money, and it really changed the way I thought about things. It changed having Dad go through what
he went through. I went, I've got to make sure my partner and I set up I've got to make sure that if something happens to me or term mark that where we're covered, and.
So you had an elevated you had an elevated.
Awareness correct of the of the trauma, the financial trauma that could occur, and you're you're just tell us a little bit more with your dad. Income protection is notoriously expensive and extremely narrow, it seemed to me in the terms of of the payouts. So just would you mind just explain to the listeners, like what what it is and whether it was worth it in your case, and what were the risks what might have happened to not make it worth it.
Ah, So there is a slight difference with what dad had. Dad had an insurance policy based in New Zealand, uh and so it was part of his package, so to speak. So a lot of companies have that policy in place and they pay for those premiums and so forth. So I think he was quite lucky because.
The company had was paying for the income protection policy. Okay, Well that is I imagine relatively unusual.
Yes, okay, yes.
Where you think about where Australians are at the moment, a lot of people have insurance, particularly income protection or total and permanent disability insurance, life insurance, all attached to their superannuation policies, and a lot of that is based on just set normal amounts that the superfund will say based on the income that they're getting in from the employment and the salary contributions. So not a lot of people realize that they actually have these insurance policies.
In place, nor do they if they're in a big fund. Correct, if they're in a big fund, correct, not in certain mode? Super Obviously you're on your own.
That's right, that's right. And so a lot of people don't necessarily stop and look at superannuation to start with, but they don't necessarily then go, Okay, what else do I have to look at from a superannuation cover perspective? So not not just the balance, but insurance is how much is that insurance for? And what am I going
to get if something happens to me? And generally people going off a little bit of a tangent here, but a lot of people don't look at those things until it's too late, until something happens and they go and see someone to work out this mess. That's so the crew.
Part of this is if you're diagnosed, right, it's too late, correct, isn't that? It? Basically if I'm diagnosed with something now and I go back into income protection, they're going to say, they're going to say forget it. So it's very much you precluding something. It's very much a personal insurance and I'm not here to sell in con protection. I'm still skeptical about it, Nikola, because it's so expensive, it's so so exciting.
And that's the biggest thing, isn't it is there's always this balance between making sure that would you say, having an insurance policy, for example, that it's there for the right reasons and it's there for what you want it to be for. So say, for example, someone who has coming to the end of their career, they've built up a really nice nestig they're only going to be working for another year or something, then you kind of question it.
As opposed to someone who may be just starting out and building their wealth and wanting to maximize their income. At that stage, their biggest asset is the time that they have to accumulate wealth, but also their ability to earn an income. And so it is that I think this is where the benefit of having an advisor comes
into it. Have been able to have those conversations and say, is this actually still right for you right now based on your situation and where you're going, and the cost of it is ever increasing, and we've seen premiums increase time and time again, and a lot of PEO people do sit there and go, what is what is the
benefit that I'm going to get out of this? And it's a reasonable question, particularly if you start thinking about where we're at today with cost living pressures and this knowledge that when we get to retirement that the age pension system, for example, was probably going to be extremely different to what it is right now. So we do have to be more cautious about what we're what is being paid out of our super funds in terms of fees and charges and things like that. So it is it is a tough.
And in terms of you becoming an advisor then from that period in your dad's case and he had a mess, which is is progressive obviously and you can't it can't be cure now. But you just said, was there a distinct link between that happening and you're becoming an advisor?
It's it was what happened was Dad was diagnosed and I remember, I remember that conversation I had with him around his illness as diagnosis and being able to get this insurance pay out. And I sat there and I went, I'm going to have to start learning about money. I have to learn about this unknown language that effectively it is and how it all works.
So and even that you were a very advanced professional, but you were, and I meet this so often doctors, dentists, lawyers are terrific at what they do, but they don't know anything about and they're terrible investors often as well. Yes, yes, we come across the.
Yes, definitely, definitely highly intelligent, smart people, well known in the field, and you know, I have a really really high level of income, but they don't understand it. And this is the biggest thing with money is it is It is a language. It is Once you understand it, it becomes more and more. It's like anything when you're learning something.
It's very interesting you said that there was a woman at Na Carew who was on the Financial Review a long long time ago, and she had a series of books called The Language of Money. It was on the early sort of person of finance books in Australia. So just so, there was obviously a co protection insurance which in a very fortunate fashion in your household saved the day and even more fortunate, was actually paid for by the employer, which.
Is rare to tell me.
In terms of more broadly, when you meet people now as an advisor, a lot of advisors have these rules about having cash for a rend and how much you should have. Do you talk to people about that and what do you say?
Yes, I do talk to people about that, and everyone's specific situation is different in terms of the amount and what they're doing and what they should do. So for example, retirees who are living on their superannuation wealth that's been accumulated, making sure that there is a set bucket of money of cash that can be accessed if they need it.
Compared to someone who is starting out in their career and working a lot where I was going to say, working really hard to try and establish themselves from a koreer. You look at purchasing a house because that's the Australian and New Zealand dream, but then also look at raising
a family. You know, making sure that people are allocating at least X amount towards that buffer or that emergency account because you don't actually know when it's going to be needed and So it's taking those two extremes and seeing where people are at and making sure that we're still getting that allocation to an emergency buffer because you just don't know when something's going to happen.
Do you have a rule for the buffers for the pre retiree and for the retiree? Some people say a year's worth of money? Some people say three months?
Have you a ruled? I? Again, it depends. But for the retire pre retirees, that year at least is easily achievable. For someone that's starting out, I think it's about not scaring them too much and working towards a relatively easy and potentially achievable goal. So three months, for example, sitting in cash.
Three months household expenses. So what you're thinking three months? Yeah? Yeah, I And once you have that, if you can keep that and what would you keep it in a cash account or what would you keep.
It cash account? High inter're saving this account, term deposits something well, term desposits again question mark around liquidity there, but particularly now with the interest rates being where they're at, you can make that money work for you. But yeah, that that gives you access, It gives you the ability to go that money is there.
Just in case, Yes, exactly, a rhetorical question, why would a retireing need. Is the retireing going to get their pension or their retirement or whatever, Why would the retireing need.
So it's say, for example, someone comes in they've got money super invested in superannuation. It's the similar kind of concept with having a bucket of money that could be easily accessible if an emergency happens within their superannuation hunt and particularly because we know at that stage of life
people are drawing on their account balances, the core capital. Yeah, and the last thing we want people to do is have to sell an investment before sellers of an investment at a particular point in time if there was a.
Crash, that's what you're thinking. And there's always going to be a crash. We don't know when the next one is, unfortunately, but around yeah, yeah, And so what you're saying is that the disaster is they're selling their come bank shares
and the price has halved. And it's the stupidest thing in the world because that bank is going to come back, roaring back to hiring it used to be in any event, entirely hypothetical here, folks, but I hope I'm making the point clear, right, Okay, So in terms of that, in terms of the so I expect you are unusual in an advisor in that many advisors their whole thing.
Is to grow wealth.
I'm sure you have that too, but also your your advice, I expect is informed by this particular trauma with your dad, which was where that he couldn't make the money he was going to make and be it was going to cost an awful his life was going to cost an awful lot more than you thought it was going to
as the years went by. I think what we might do actually here because you've designed something over and you have a side hustle, except it's a positive side hustle on like a lot of side hustles, and Nikola has an organization I want to tell you all about. We'll take a short break and we'll be back. Hello, Welcome
back to The Australian's Money Puzzle podcast. I'm James Kirby, the editor at The Australian, and I'm talking to Nicola Beswick, who is a advisor at FMD Financial Advisors, and you've been hearing her story a particular story about how she became an advisor. I made the point that a lot of the advisors are very good advisors that I know, I did something entirely different before they became advisers, and
I think it does widen their world. Now. In Nicola's case, she has from that time and the experience with her dad and the shock of all that, and basically the shock which pushed her into thinking about money and ultimately becoming a financial advisor when she was when she was a patent lawyer. She has created an organization which is called the Pro Bono Financial Advice Network. Now, Nicola, there is out there the very very admirable Financial Counseling Association Counselors,
a big organization. I've had financial counselor on the show, and they are They're very They're great, and what they do is terrific. And I'm delighted to see they got some more money in the budget federal budget recently so. But their work, if I may say, is very much focused on people who are in terrible straits financially. In conventional fashions, they'd let the bills run up, everything went on. Gambling is a particular problem that comes up again and
again in that area. So you've got something different, Just tell me what you've got and what its ambitions are.
So the pro Bono Financial Advice Network is an organization that essentially connects people with a health crisis and we work with specific charities with advisors that are willing to give pro bono financial advice. Now currently we work with the Multiple Grossest Community, the MNDS mode and neuron Disease community here in Victoria and pank here, so they specialize in pancreatic cancer and IGI cancers and particularly climb clients of the years that can't ordinarily afford financial advice.
Yes, right, which is four which which we know is four thousand a year. I mean basically that's that's that's the going rate if we'd seen per animal, that's.
Right, that's right. And what we've done is built and continuing to build a network of advisors. And these are accredited advisors who are employees or run their own business, who have put their hand up to help someone once a year who fit that criteria that we've got. Now we know that there's a lot of more people in Australia outside of those specific charities that need advice and are going through a hardship, particularly because of illness and injury.
That would fit that criteria. So our plans are to ever grow the number of people we can help. That is also acutely linked to the number of financial advisors that exist in Australia as well.
I mean, so there's fifteen thousand of them, shrink, shrinking, fifteen thousands and dropping, yes, ironically not for a whole bunch of reasons, which we would do with another time. So the idea, the concept is that the advisor, the qualified doesn't advisor, gives how much of their time per year for you.
It all depends on the client case.
Yeah, I see, yes, yes, So.
It could be some clients they need a conversation for an hour just to sit down and get a little bit of direction. Some clients who come to us need a lot more help than that, So an advisor of course would set through with them and go through the process of providing financial advice. So the outcome would be assisting effectively that client with say insurance applications or dealing with Center Link with things like that, depending on on their needs.
So do you guys have to go through the whole rigmarole of stepments of advice and all the all the formality.
Unfortunately, yes, if personal advice and again comes to that specific requirement around legislative side of things, right, and and we're really fortunate where a lot of advisors do provide that service free of charge to a client that comes through us from their nets, through the network. Uh, that's that's life changing for people and they get that that guidance.
We've had people that didn't know that they had insurances within their superannuation and advisors help the client get that insurance paid out, but then also make sure that things are structured right as well.
So okay, okay, yeah, that's well, that's a good side. That's the upside, isn't it of the giant super funds being so dominant now and the fact that it's compulsory super there is a sort of de fact or compulsory insurance built in there, invariably not comprehensive of course, but but but but life and TPD normally to totally permanent.
Disability as they call that.
So if I said to you, I know you've got going on this, I know you have a panel of advisors. I know you don't have core funding. Correct, and you don't have government funding. If I said to you, what's the best thing that could possibly happened to the foundation, what would it be to.
Get money to be able to funds a panel of advisors full time, to be able to look after these clients.
Oh, I see, to actually have your own advisors on the books. Is that your ultimate ambition? Aha? Yes, I see, very very good. Okay.
And also just on the broader issue that has become the theme of the show because of the nature of your particular story for someone who is thinking, most people have got things rolling, they've got investments, they might have mortgages, they do their best on building that. They might also give some money to charity once a year around. Now, folks, you've got a few weeks left. It's tax deductible. You
should do it. But in terms of protecting themselves, we'll put into we'll put in comprotection insurance on the table, and we'll say, so many people will will do that, and so many won't, And a lot of people will look at and go, oh boy, that's just what I'm not going to pay, and they have to make their
own minds. But apart from income protection insurance, what are the other core conclusions you would like to give to our listeners about that idea of having the emergency fond that everyone should have them.
I know it's really really boring, but saving that cash for a particular point in time can be life changing. We we're talking about illness here, and if you think about the expenses that go with even trying to get to the bottom of being diagnosed, that can be quite quickly accrude.
So Mriyes, yeah, that's that's that's that's terrible istic because once you are ironically, once you are diagnosed and you know what you have, and then you can work on it and presume financially you can work on this. But it's a terrible period where you don't know what you've got and you're getting very expensive, what are theoretically optional examinations from a different specialists. That's when I imagine you're really.
Correct, and I think those are the things that we forget about. But then it's the everyday things like if you're a homeowner and your hot water cylinder bursts. You know, just being able to access money for that is you know, it means you don't have to question it and getting it, getting someone in but then also building on that next level of if we're going to protect ourselves being across where our money is, what what it is doing, and do you have the right checks and balances in place.
That's the biggest the next part of the whole conversation around people protecting themselves.
Okay, terrific.
And also I think even from the most pragmatic investor point of view, you don't ever want to be selling. You don't want to be a forced seller, as Nikola pointed out.
And it might just be shares either.
I mean, you might have put everything into an investment property and you might have built that over the years and years, and then things go wrong and for no other reason that you couldn't pay the mortgage for three months. You've got to say that and someone basically basically someone's going to win and you're going to lose on that. Okay, we'll take short break, we'll be back with some questions.
Hello and welcome to the Australians Money Puzzle podcast. James Kirby here, and I'm talking to Nicola Beswick from f m D Financial Advisors. Nicola, apart from apart from being a patent lawyer, apart from being a financial advisor apart from running the pro bono financial advice network, is of course qualified advisor, so she can answer the questions that come in and I have just collated?
Is that the word?
A few choice questions for her? Okay, Scott, sorry, not Scott. Sorry, folks, we read Scott out last week. Brad, thank you for concise market commentary.
You're welcome. Brad.
I plan to hold some shares and sell after the thirtieth of June in order to realize capital gains in twenty twenty four twenty five at a lower tax rate because of the Stage three tax cuts. Do you believe others will do the same and will there be any significant impact on markets in the next year as a result of Stage three tax cuts?
Big question?
Why don't we just put the macropart on one side on what Stage three tax cuts will do. Maybe they'll be inflationary, maybe they won't. Of course they'll be inflationary, but they'll be offset by other things perhaps. But what have you been telling clients about Stage three and what to do that everyone's getting a tax cut basically at every level.
That's right, but it all depends on what the motivation is behind the reason why you're selling something is and your specific situation. I think that is the most important piece of the puzzle, particularly if you're selling something to realize again, it's taking your specific reasons and going yes, this is a good time to do it. Yes, basically
the tax implications will be better next financial year. But what we've also got to do is look at why are you selling, what's the motivation behind that, and are there any other things that you can do to minimize the capital gains tax that you'll incur. Those things are really really important when making a decision to to sell something in there in someone's personal name. One of the things that is really quite useful at the moment that the government brought in quite a number of years ago
now was the catch up concessional contributions. That has been really really beneficial for a lot of people wanting to liquidate an asset like an investment property for example, minimize the gains the money I.
Get the money into super on a tax concessional basis, because they can do five years under most circumstances, you can you can add five years together and put it all in in one hit. Yeah, Okay, that's a good point. We'll keep that in mind.
Folks.
Remember this is not advice. This is always information on the show. It is not advice. One other thing I suppose on the tax cuts is what people I'm really saying is my tax, my tax right off will definit by definition, be bigger this year than next year because next year I'll be paying that's tax. Isn't that really how it works? But I would think nicola really for a lot of people on salaries, especially at the operand
especially the tax cut is pretty teeny. It's important in middle income, but over one hundred and is it over one hundred and ninety? I think they'reabouts you're talking. You get a couple of grand more a year post tax, and that's great, look at you three or four grand, but it's not exactly worth to be constituting your investment.
Is that the posture makes exactly it?
I think that's that's the very specific that's the exact point is have a have a broader look at why you're doing this first, and.
Then yeah, correct, bigger, bigger picture. Don't get don't get two micro folks, all right, David. David says, this is one of these We get a lot of these questions. They are They are what I call creative questions. Why not limit the home exemption counted towards eligibility for age persons to the average value of the Australian home. It seems grossly unfair that other taxpayers are currently funding the retirement of some very asset rich people.
David. I have no problem with your.
Statement that it's grossly unfair that you can have a ten million dollar house on Sydney Harbor and get the pictures, because you can. But how you would do it more precisely, I don't know. But certainly it's as good an idea as any other. The average value of the Australian home. People would say, oh, hang on a second, that gives a huge advantage to the people. You know, obviously some houses are way low.
Average and some are way above average.
But it's an idea we're taking on board, and thank you very much for sending it in. But you was there something you were going to say there, Nikola.
I think the one thing that a lot of people miss when we talk about people her on the age pension is the level of income and assets that people have to have to be able to get the full age pension. That is something that there is this cohort out there that are precisely fit into that camp in terms of having a home in Sydney Harbor and not having anything else. But the majority of people that are on the full age pension don't really have a lot, and sometimes the only thing that they do have is
their home. So to be able to count that as could detrimentally impact those people. So bringing it in could be quite a challenge for any government.
Yeah, okay, but I suppose at the heart of this is the issue that the home, the family home, is a de facto exempt from pension access estimations, and that creates all sorts of problems, all sorts of problems. One of the big problems is about the whole thing about using your super for buying a family home. Well, well, unfortunately the person with the home wins. The person who
wants her home wins for all ages in our tax system. Okay, Hey, final question, which isn't really a question that you're not going to be able to answer, Nikola, but from Jesse j E. Sse she says, I'm looking for a trusted financial advisor. I'm a regular wristler. Are you able to share a list of advisors you've had on the show. No, I'm not Jesse. However, however I will say this. Look two things. We have a list published in The Australian's
Top hundred Financial Advisors list that's there every year. And separately, anyone who is an advisor who's been on this show, well obviously by definition I endorse them. And all you have to do is go back through your app and have a look at all the names that were advisors on the show, and there are dozens and dozens of them. Hopefully that's useful to you. Okay, very good, Hey, thank
you very much, Nicole. Really interesting, interesting story, and best of luck with your practice and particularly best of Look. I love the idea the pro bono financial advice network. I think it's really good and I hope someone's listening out there that you'll get some volunteers hopefully, but also someone with the deep pockets perhaps might come and knock on your door. Okay, thank you. Okay, folks, keep the questions rolling, and the statements and the observations and the complaints.
They're all equally welcome. The Money Puzzle at the Australian dot com dot Au talk to you soon.