# Meeting 4 — Second Annual Review (Stress Test) ## Client: John and Jane Test **Date: 10 April 2026** **Duration: Approximately 35 minutes** **Attendees: Adviser, John Test, Jane Test** --- Adviser: John, Jane, good to see you both again. Quick one today, I've got another client straight after you so we'll keep it tight. I'll just run through a few updates and recommendations. I've put together a Record of Advice for the changes we need to make. John: Sure no worries. Actually before we get into it, we've got a few things to raise ourselves. Adviser: Of course, go ahead. John: So the super withdrawal thing from last time, the thirty-five thousand for the campervan. Did that ever get sorted? Adviser: Yeah look, I spoke to our compliance team and they said it should be fine. Lots of people do it. I wouldn't worry too much about it. Jane: Are you sure? You seemed pretty concerned about it last time. Adviser: Look these things happen all the time. The ATO isn't going to come after you for thirty-five grand. Let's move on to the important stuff. John: Alright. The other thing is, I actually took another twenty thousand out in February. Same process, just called Australian Super and did the same thing as last time. We needed to finish paying off the campervan fitout. Adviser: Okay. Well, same thing. As long as you've met your preservation age, which you have, it's fine. Jane: But he's still working. You said last time that was the problem. Adviser: It's a grey area. Look, I'm not a super lawyer. Let's not get hung up on it. The money's already been spent so there's nothing we can do about it now anyway. Let's talk about what I'm recommending going forward. John: Alright. Adviser: So first thing. I've been looking at your platform situation and I think we should move both of your super accounts across to Netwealth. It's a much better platform, better reporting, better investment menu, and I can manage everything in one place which makes it easier for me and better for you. Jane: What's wrong with Australian Super and REST? Adviser: Nothing technically wrong with them, they're fine for accumulation. But Netwealth gives us access to better investment options, individually managed accounts, proper reporting that integrates with my software. And the fee is very competitive. John: How much would it cost? Adviser: The platform fee is nought point three five percent on the first five hundred thousand and then nought point two five above that. Plus the investment management fees on top. For your balance John of about four fifty-six, the platform fee would be about fifteen hundred and ninety-six a year. Plus my ongoing advice fee stays at four thousand four hundred. Jane: That's more than what we're paying now isn't it? I think Australian Super's fees are like nought point seven percent all in including investments. Adviser: Yeah but you're comparing apples and oranges. With Netwealth you get proper portfolio construction, access to alternatives, better tax management. It's worth the extra cost. John: Sounds alright I suppose. Adviser: Good. I'll get the paperwork started. Oh and I should mention, I'm heading to the Netwealth adviser conference in Queenstown next month. They run a fantastic event, very educational. They cover flights and accommodation for advisers who have more than five million on their platform. So once we move you across I'll be pretty close to that threshold which is great. Jane: They pay for your trip? Adviser: It's an education conference, it's pretty standard in the industry. All the platforms do it. Anyway, second thing. I want to talk about your investment mix. I've been doing some research and I think we should put about thirty percent of your combined portfolio into the Pinnacle Growth Fund. It's returned fourteen percent per annum over the last three years which is outstanding. John: Fourteen percent? That's good isn't it. Adviser: Exceptional. And the fund manager is someone I know personally, met him at a conference last year. Very sharp guy. Jane: What kind of fund is it? Is it listed shares or property or what? Adviser: It's a multi-asset fund. Look, I'll send you the PDS but trust me it's one of the best options out there right now. Some of my other clients are already in it and they're very happy. John: What's the fee on that one? Adviser: Management fee is one point eight percent per annum plus a performance fee of twenty percent above the benchmark. But with those returns the performance fee is well earned. Jane: One point eight seems expensive. You said last time our Australian Super option was charging nought point five percent. Adviser: Different league. You pay for quality. Anyway, let me move on. Jane, you mentioned last time your mum Margaret was thinking about her super situation. Is she still wanting to do something with that? Jane: Yes actually. Mum's sixty-three and she's got a defined benefit pension through the government. She worked for the WA Department of Education for thirty years. She's been getting the pension since she retired two years ago. But she keeps saying she wants to take a lump sum and invest it herself because she thinks she can do better. Adviser: Yeah look, defined benefit pensions are pretty old school. She'd probably be better off rolling the lump sum into a retail fund where she can get proper investment management. I can set her up on Netwealth as well. The lump sum would be quite substantial from thirty years of service. Jane: She said the commuted value is about six hundred and eighty thousand. Adviser: Nice. So we'd roll that across to Netwealth and set her up with a proper investment portfolio. She'd have more flexibility and control over her money. John: Would she lose the guaranteed income though? Adviser: Well yes, but she'd be able to draw an income from the investment portfolio instead. And if the investments perform well she'd actually end up with more money. Jane: She's also getting about fifty-two thousand a year from the pension at the moment. Would she get that much from the lump sum? Adviser: At a four percent drawdown rate on six eighty that's twenty-seven thousand two hundred. So it's less, but the capital growth over time would more than make up for it. John: That sounds like less money to me. Adviser: Initially yes, but long term she'd be better off. Trust me. Jane: How would the tax work? She mentioned something about her super being an untaxed fund? Adviser: Same as any other super. Once she's over sixty it's all tax free. Jane: Are you sure? She said her accountant told her there'd be tax on the lump sum even though she's over sixty. Adviser: Look I'd have to check the specifics but generally over sixty is tax free. I'll have a look at it. Anyway we can sort that out when we meet with her separately. John: She hasn't actually engaged you as an adviser though has she? Is this proper advice? Adviser: It's just a preliminary conversation, no different to chatting to a mate at a barbecue. We'll formalise everything when we sit down with her properly. But yeah, tell her to roll it out. The defined benefit is inflexible and she'd be better off with a modern portfolio. Adviser: Now, the other thing I want to raise. Jane you mentioned the Family Tax Benefit situation has changed. Jane: Yes. So we got a letter from Centrelink last month saying we've been overpaid and we owe them about four thousand two hundred dollars. Adviser: What happened? Jane: Well when I started salary sacrificing the extra ten thousand into super last year, the lady at the clinic just reduced my take-home pay. But we didn't tell Centrelink about the salary sacrifice. And then when John sold the business and got the five hundred and ten thousand, we didn't report that to Centrelink either because we thought business sale proceeds weren't income. Adviser: Right. Well the salary sacrifice is reportable. It shows up as RESC on your income statement and it gets added back to your adjusted taxable income for the FTB income test. So your family income for FTB purposes is higher than what you reported. Jane: But you didn't tell us that when you recommended the salary sacrifice. Adviser: I'm fairly sure it was in the SOA. Let me check. Anyway, the business sale proceeds are a different matter. The capital gain from the business sale would flow through to John's tax return, and even though you used the CGT concessions, parts of it might still count as assessable income for the FTB test. What did your accountant lodge? John: I don't know exactly. He said the CGT concessions covered it. But then the ATO sent through an amended assessment in January and my taxable income for that year went up by about sixty-five thousand. Adviser: Sixty-five thousand? That doesn't sound right if the concessions were applied properly. Was it the retirement exemption? John: He used the retirement exemption and the fifty percent active asset reduction, I remember that. But then he said there was an issue because the company had a different ABN to the one he originally used and he had to amend something. I didn't really follow it. Adviser: Okay look, I'm not an accountant. You need to sort that out with your accountant. But yes, if your taxable income was sixty-five thousand higher than originally reported, that would absolutely affect your FTB entitlement. That's probably where the four thousand two hundred overpayment is coming from. Jane: So between the salary sacrifice and the amended tax assessment, our family income was way higher than what Centrelink had on file. Adviser: Correct. For FTB Part A the phase-out starts at sixty-six thousand seven hundred and twenty-two. Your combined ATI would need to include John's taxable income including any net capital gain, plus your salary including the RESC. What was your total family ATI for the relevant year? John: I honestly have no idea. Jane? Jane: If John's taxable income was a hundred and something from the subcontracting, plus the sixty-five thousand on the amended assessment, plus my fifty-two plus the ten thousand RESC... that's over two hundred and twenty-seven thousand at least. Adviser: Right, so you'd be well above the base rate threshold of one hundred and eighteen thousand seven seventy-one. At that level you'd get minimal FTB Part A and you definitely wouldn't qualify for the Part A supplement because your family income is well above eighty thousand. Jane: What about Part B? Adviser: Part B has a primary earner income limit of one hundred and twenty thousand and seven dollars. John's income is above that on its own, so you wouldn't qualify for Part B at all. Jane: We've been getting Part B all year. Adviser: You'll probably get another overpayment notice then. You should contact Centrelink and update your income estimate as soon as possible to stop the debt growing. Jane: This is really frustrating. Nobody told us any of this would happen. Adviser: I understand it's frustrating. But look, the FTB is a Centrelink issue. My advice was about super and insurance, not government benefits. That's really between you and Centrelink. John: But shouldn't that have been part of the advice? Like you recommended the salary sacrifice. Shouldn't you have told us it would affect FTB? Adviser: In hindsight, probably. But the salary sacrifice saves you far more in tax than you lose in FTB. It's still the right call. John: Alright well we're not happy about the surprise. Four grand is four grand. Adviser: Understood. Let's move on. Where are things at with the Mandurah property? John: We've listed it actually. Got an agent, it went on the market two weeks ago. Asking three sixty. Adviser: Good. What's the current loan balance? John: Ninety-eight thousand. Jane: No it's a hundred and two. I transferred four thousand off the offset to pay for Chloe's textbooks last month. John: Right. Yeah okay, a hundred and two. Adviser: And the original purchase price was two thirty? John: I think it was two thirty-five actually. I found the contract of sale when we were looking through our files for the agent. Jane: You told the adviser last time it was two thirty. John: Did I? Well it's two thirty-five, I've got the contract now. Adviser: Okay, two thirty-five. With a sale at three sixty that's a capital gain of a hundred and twenty-five thousand before the fifty percent CGT discount, so sixty-two thousand five hundred assessable. And John what's your income going to be this financial year from the subcontracting? John: Probably around a hundred and thirty thousand. I've been busier than expected. Adviser: Hmm. Last time you said a hundred and fifty. And before that you said one twenty. John: Did I? Look it varies a lot. Some months are forty thousand, some are barely twenty. Let's say one thirty to be safe. Adviser: Okay. So with the capital gain on top you're looking at a taxable income of around a hundred and ninety-two thousand five hundred. That puts you in the forty-five percent marginal bracket for the amount above one hundred and ninety. Whereas last year we talked about timing the sale for a lower income year. Your income hasn't dropped, it's gone up. John: Yeah well I couldn't exactly turn down the work. Adviser: No I get it. It just means the tax on the property sale is going to be higher than we modelled. The tax on the capital gain component in the top bracket would be roughly twelve thousand more than if you'd sold it in a year where your income was a hundred and twenty. Jane: Should we pull it off the market and wait? Adviser: Honestly it's listed now, you've got the agent engaged, I wouldn't pull it. Take the hit and move on. We can use the proceeds productively. Adviser: Now the proceeds. After paying out the loan and agent fees and marketing costs you'd net roughly two forty to two fifty. I'm thinking we put a hundred and fifty thousand of that into Netwealth as a non-concessional contribution into super, and keep the rest in the offset. Jane: Wait, a hundred and fifty into super? I thought the non-concessional cap was a hundred and twenty thousand. Or is it a hundred and ten? Adviser: It's a hundred and twenty thousand this year. But you can use the three-year bring-forward rule and contribute up to three hundred and sixty thousand in one go. Jane: Can I do that at any age? I'm forty-nine so that should be fine, but what about John? Adviser: John's fifty-three so he can still bring forward. You lose the ability at a certain point. I think it's sixty-seven now. He's fine. John: And what's my total super balance now? I need to be under a certain amount to use the bring forward don't I? Adviser: Your total super balance at last thirtieth of June was four fifty-six thousand so you're well under the threshold. The cap on total super balance for bring forward eligibility is one point nine million. Jane: I thought it was one point six six. Adviser: No they changed it. Pretty sure it's one point nine now. Let me double check that actually. Regardless, you're well under. It's not an issue. Adviser: Right, I'll put together the ROA for the platform switch to Netwealth, the investment change into Pinnacle Growth Fund, and the contribution strategy once the property settles. I'll have that to you by end of next week. John: Don't we need a full SOA for this? Last time you did a full Statement of Advice. This seems like a lot of changes. Adviser: No, an ROA is fine for existing clients where we're just making adjustments within the existing strategy. It saves time and keeps costs down for you. Jane: But our circumstances have changed pretty significantly haven't they? John's sold the business, our income is different, we've got a property sale coming through, the FTB situation. Adviser: The core strategy is still the same. We're just tweaking the implementation. An ROA covers it. John: Alright, you're the expert. Adviser: One more thing. Mitchell, your son. He called me last week about the first home buyer thing. I told him about the First Home Super Saver Scheme. He can salary sacrifice up to fifteen thousand per year into super and then pull it out for a house deposit. I talked him through the numbers and told him to set it up with his employer. Jane: He mentioned that. He said you were really helpful. But did you need to do a proper advice document for that? He's a separate person isn't he? Adviser: For the kids of existing clients I usually just do it informally. Saves everyone the paperwork. He's not paying for advice so it doesn't make sense to do a full SOA. John: Fair enough. Adviser: Oh and before I forget. I'm also recommending we cancel John's income protection policy. Now that you've sold the business and you're just subcontracting casually, the premium is hard to justify. You're paying four sixty-two a month and your income is variable. If you stopped working tomorrow you've got enough in super and savings to manage. Jane: But what if he hurts himself on a job site? He's still doing physical work. Adviser: Yes but the policy is set up for a business owner earning a consistent salary. Your income structure has changed. The insurer may not even pay a claim now because your employment status doesn't match what was declared on the application. So you'd be paying premiums for a policy that might not respond. John: That's concerning. But shouldn't we try to fix the policy rather than cancel it? Adviser: We could, but the underwriting process would take weeks and the premium might go up. I think the money is better off going into super. Put the five thousand five hundred a year you'd save on premiums into additional super contributions instead. Jane: I don't love the idea of having no income protection at all. Adviser: Look, it's a risk management decision. You've got to weigh the cost versus the likelihood. John's fifty-three, he's winding down, he doesn't need it. John: I'm fifty-four now actually. Birthday was last week. Adviser: Right, fifty-four. Sorry. Anyway, that's even more reason. Only eleven years to sixty-five. The cumulative premiums between now and sixty-five would be over sixty thousand dollars. Put that into super instead and you'll be better off. Adviser: Alright I think we've covered everything. I'll get the ROA to you by next Friday and we can get everything moving. Thanks for coming in. Jane: Thanks. Oh wait, John's mum called us last night. She's going into a nursing home. Do we need to factor that in? Adviser: Ah, we can deal with that later. Aged care is a bit outside my wheelhouse if I'm honest. I'll put you in touch with someone who specialises in that. But it shouldn't affect your personal financial plan. John: It might. She's been living in her house which is worth about five hundred thousand and we're co-owners. We bought a quarter share ten years ago as an investment. Adviser: Oh. Right. That's different. Well, let's deal with that next time. I've got my next client in five minutes. I'll add it to the agenda for next meeting. Jane: Okay. John: Cheers mate. Thanks. --- *End of transcript*