Redundant employees need financial advice
Long-serving employees who have received a substantial redundancy payout are often in urgent need of financial advice, according to HLB Mann Judd Wealth Management partner Jonathan Philpot.
People who have just received the largest lump sum payment in their life are in danger of making big mistakes without advice from a financial planner - particularly if they are facing the prospect of long-term unemployment, Philpot said.
"For those nearing retirement, redundancy may provide the opportunity for an additional boost to their savings, enabling retirement to be made sooner and/or more comfortable," he said.
If the taxable component of the payout is rolled into superannuation, it will only be taxed at 15 per cent, Philpot said. However, he added that for people who were further away from retirement, paying off a large debt (like a mortgage) could be a better idea than taking advantage of the tax savings in superannuation.
"The overriding thing for redundant workers to avoid is going on a spending spree even if they do feel in need of a holiday or retail therapy," Philpot said.
He also warned against using the redundancy payment to make a speculative investment or start a high-risk business, unless the plan had been thoroughly discussed with a financial planner.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
