Budget super changes alter advice dynamics
Superannuation will cease to be a significant end of financial year tax planning strategy for the self-employed and small to medium-sized businesses thanks to this week's Budget changes, according to an assessment released by research house, Dexx&r.
The research house has issued an assessment comparing Pre and Post 2016 Budget changes to the Concessional Contribution Cap maximums and concluded that the changes result in "a significant reduction in the amount that members can contribute in addition to employer SG [superannuation guarantee] and stay within the maximum Concessional Contribution limit".
The analysis said that, because of this, superannuation would no longer be a significant end of financial year tax planning strategy for the self-employed and SMEs, and that members approaching retirement would have restricted options to increase contributions to offset reduced account balances during future downturns in the investment cycle, such as the global financial crisis.
The Dexx&r analysis said that these issues would, in turn, mean that financial planners with high income clients would increasingly focus on investment strategies outside super, noting that "with limited scope for a meaningful uplift in voluntary member contributions, it will become increasingly difficult to justify the current cost of full financial advice to super fund members".
"Low cost financial advice solutions such as ‘robo advice' will play a larger role and become the most cost effective advice delivery mechanism for middle and low income members," the analysis said.
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