In running a small business, we receive regular feedback and service from other key individuals that advise us on all facets of what we do. This includes advice from a business coach, our accountant and a ‘web guy’ to help us manage our website – just to name a few. Each brings a different skill set and knowledge base to the table that we rely upon.
A recent trip to the Eyre Peninsula highlighted to me just how important good financial advice can be. As a partner in a small business that provides a service in this area, it is something I am already aware of, yet it is easy to underestimate the value that can be added simply by knowing a client’s situation well enough and what they can do.
The best examples that come to mind involve family farming businesses across multiple generations.
A popular strategy being used is purchasing farm land inside superannuation. This involves using a self managed super fund as the vehicle which is also able to borrow from a lender. It can work brilliantly for the family as the lease payments are deductible to the farm and the parents have a reliable source of income for their retirement.
The key factor to these strategies is that the family units all get along and want to help one and other. Regular contributions, lease payments and a flat 15% tax rate can mean repaying the loan in a fraction of the time, saving thousands on repayments and tax in the process. Obviously each case is vastly different and must be worked through carefully to ensure that each stakeholder achieves the outcome they are after. Another example is helping the farming parents transition off of the farm in the most tax effective and Centrelink effective way. Past cases we have been involved in have been able to spread tax amongst family members in good years and receiving the Age Pension in bad ones.
Often the role of the financial adviser is narrowly thought of as the person to help with investing, although we find vastly more value can be added through sound financial strategies that adapt to a client’s circumstances over time. Not all advice we give, however, has a tangible windfall or saving attached to it that can be easily measured in dollars and cents. One measure we continually promote is having good working relationship with an accountant that provides timely financials and tax returns. The time saving and value this can provide should not be underestimated. In every case we come across we believe the best result is achieved when the accountant is on board with each strategy.
Above all else, you don’t know what you don’t know.