Gearing in super can help savings
The Government’s decision to allow gearing in superannuation could be the answer to many Australians’ retirement savings woes, according to Asgard Wealth Solutions head of technical consulting Bryan Ashenden.
Speaking at the Securitor Convention in Auckland, New Zealand yesterday, Ashenden said gearing could be used to supplement the good, but often not entirely adequate, superannuation regime.
Contrary to the views expressed recently by some other prominent industry players, including ING Australia outgoing chief executive Paul Bedbrook, Ashenden believes gearing in super is a positive initiative that could substantially boost the retirement savings of Australians. And he believes it is here to stay.
“I think we can say with a fair degree of certainty that gearing in super is here to stay. There are too many good policy reasons not to keep it in place. The majority of Australians will have a significant retirement savings gap and the Government will work to reduce that.”
Ashenden said Asgard is working with the regulators and other relevant bodies to develop a solution that will facilitate gearing in super for its network of advisers.
The business is also developing a toolkit that will help advisers explain the strategy to clients, including its potential risks and benefits.
He said today’s volatile financial climes present an ideal opportunity for advisers to remind clients of the value of quality professional advice and to discuss new wealth creation options such as gearing in super and wealth protection options such as insurance.
Ashenden stressed that gearing in super is not suitable for everyone and should be regarded as a long-term strategy of about 30 years, if not longer. This long timeframe, he said, makes it particularly well suited to younger (ie. generations X and Y) clients.
He said the strategy will need to be tailored to suit individual circumstances but the Government’s imminent tax cuts, effective from July 1 this year, could be used to boost retirement savings.
“A little difference now can make a big difference 30 or so years down the track. It’s important to remember that the value of the tax cuts isn’t in the extra cash your clients receive … We need to start educating clients now about the value these tax cuts can add to their overall [financial] strategy — if they choose to invest it wisely.”
Ashenden’s comments on gearing in super were part of a broader presentation on elevating the level of advice provided to clients.
AUTHOR
Mike Taylor
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
