Meeting 6 — Annual Review (Clean) **Date:** Wednesday, 22 April 2026 **Time:** 10:00 AM – 10:34 AM AWST **Location:** BPF Wealth Group, Perth (in person) **Attendees:** James Whitfield (Adviser), Tom Henderson (Client), Sarah Henderson (Client) **Duration:** 34 minutes James: Tom, Sarah — come in, come in. Sorry, just shifting these. Sarah: You've redecorated. James: Well, "redecorated" is generous. We got rid of the green chairs. Tom: They were truly hideous. James: I know. The bookkeeper kept calling them avocado. Sarah: She was being kind. James: Right — coffee, tea, water? Tom: Coffee, thanks. White, no sugar. Sarah: Just water for me, James. James: Won't be a moment. [brief pause] James: Alright. So this is our annual review for 2025/26 — I sent the agenda through on Monday. Did you get a chance to look at it? Tom: Yeah, we read it on the weekend. Sarah: Most of it. Tom skimmed the insurance section. Tom: I'm here, aren't I? James: Fair enough. I've got us booked for about half an hour to forty minutes. Portfolio first, then super, insurance, then a couple of things you flagged in the email — Jack's situation and your retirement timeline. Sound okay? Sarah: Yes, that's good. Tom: Yep. James: Before I forget — the fee disclosure and ongoing fee consent we discussed in February. Did you get those back to me? Sarah: We signed them last week. I emailed them through. James: Beautiful. Just confirming Karen's got them on file. [typing] Yep, they're in. Good. [short pause] James: Right. Portfolio. The joint investment account at Macquarie — balance at 31 March was $412,000, up from $378,000 at year-end last year. Tom: Better than last year, then. James: Yes. The income distribution component over the twelve months was around $14,800; the rest was growth. I'll send the formal performance report through after this. One thing to flag — the distribution included a lump from the property trust that was a return of capital, not income. So when your accountant does your tax return, that one's a cost base reduction, not assessable income. Just so it doesn't surprise you. Tom: Right. Do we tell the accountant that? James: I'll send him a copy of the tax statements when they're issued in late July. He'll see it. Mention it when you sit down with him though. Sarah: Good. James: Asset allocation. You're sitting at about 71% growth, 29% defensive. Last year-end it was 68/32. The drift is from the equity rally — the defensive sleeve hasn't grown as fast. Tom: Is that a problem? James: Not on its own. Your target band is 65 to 75% growth, and you're inside it. But — given Tom you said in February you wanted to start derisking ahead of the retirement window — we may want to look at a partial rebalance in the next quarter. I'm not recommending it today; I want to get the super conversation done first as that interacts with it. Tom: Makes sense. James: Performance-wise, net of fees, the joint account did about 9.1% for the twelve months. Benchmark for a 70/30 portfolio is around 9.6%. So slightly behind, mostly because the international exposure is a touch underweight on the big US tech names. We don't try to time those. I'm comfortable with that. Are you? Sarah: We trust your call there. James: Thanks. Any questions on the portfolio before I move on? Tom: One — the bond fund in there, has it stopped bleeding? The yearly statement looked grim. James: The statement's misleading. The unit price is up about 2.4% for the year, and you've received roughly $3,200 in distributions. Total return positive. The statement format makes it look ugly as the unrealised cap loss carry from 2022 is still showing on it. Tom: Okay. James: Honestly — I was as relieved as anyone when fixed income started behaving again. Tom: [laughs] James: Right. Super. Tom, your balance at 31 March was $782,400. Sarah, $551,900. Combined $1.334 million. Sarah: That's a fair bit more than last year. James: It is. Contributions doing the heavy lifting. Let's talk about contributions for this year. Tom, salary $185,000, SG at 12% gives you $22,200 in employer contributions. You've also been salary sacrificing $400 a fortnight, which is — let me do this — $400 by 26, that's $10,400. So total concessional going in is $32,600. The cap's $30,000. We're $2,600 over. Tom: Hang on, I thought we'd left some headroom. James: We had — the SG rate stepped up to 12% from 1 July last year. That's the bit that ate the headroom. So I want to wind the salary sacrifice back. Drop it to $300 a fortnight from the next pay cycle. That brings you to $30,000 even. Tom: Easy. I'll let payroll know. James: I'll send a written instruction confirming the change so you've got something to forward to them. Tom: Perfect. James: Sarah — your contributions look fine. SG's $9,720, no salary sacrifice currently. You've still got carry-forward concessional cap available as your balance was under $500,000 at 30 June 2025. Sarah: How much have I got? James: Off the top of my head, around $80,000 of unused cap from the last five years. Let me check that figure and confirm in writing — I want to be precise on it as it matters for what I want to suggest next. Sarah: Okay. James: Big picture — if we wanted to put a chunk into your super before 30 June 2026 and claim a personal deduction, the carry-forward gives us room. The question is whether you've got the cash flow for it, and whether the deduction is worth more to you than the after-tax dollar in your hand. Your marginal rate's around 30 cents in the dollar, contributions tax is 15. The headline saving's 15% — that's real money, although not life-changing. Sarah: Mmm. James: Don't decide today. Let me model it properly with the carry-forward number confirmed and send you a comparison. Sarah: Yeah. Let's do that. Tom: Question on super — Steve at the cricket club's been telling me about the Division 296 thing, three million dollar tax. Should we be worried? James: Fair question. The legislation passed in March this year. Commences 1 July 2026. The way it works — and I'll keep it short as it doesn't affect you yet — is an additional 15% tax on earnings above a $3 million total super balance, calculated on unrealised gains as well as realised. Combined you're at $1.33 million. Even at strong growth, you won't be near $3 million during your working lives unless something dramatic happens. Tom: So it's a non-issue for us. James: At present, yes. For some clients with self-managed funds and significant balances, it's a real planning issue. For you and Sarah, no. I monitor it. If it becomes relevant, we'll address it. Sarah: Steve has a self-managed fund? Tom: Steve has six rental properties. James: [laughs] Different situation. Tom: Yeah. Okay. James: Insurance. Last review we did a needs analysis and you both reduced the life cover inside super as the kids were nearing independence. Tom, you held $750,000 life and $750,000 TPD any-occupation, both inside the AustralianSuper account. Sarah, $400,000 life and $400,000 TPD. Income protection — Tom, you held a personal policy outside super, 75% of salary, two-year benefit period, ninety-day waiting period, indemnity. Premium coming up to about $2,400 a year on a stepped basis. Tom: That sounds right. James: Anything changed in your health, occupation, hours, anything I should know about? Tom: Nothing significant. I had the cardiologist appointment in November though he cleared me — said the murmur's been there my whole life and I just hadn't been checked. James: Good. Worth noting on file. Sarah? Sarah: My back's been better since I started physio. James: Good. Now — a thing I want to put to you. Tom, you're 59. The IP benefit period is two years. You're planning to retire in say five to seven years. If you had a serious illness or injury between now and retirement, two years of cover bridges to age 61 or 62. That's three or four years short of your planned retirement. Worth thinking about extending to a "to-65" benefit period. The premium goes up — I'd estimate roughly 35 to 40% — although the protection is materially better. Tom: Hmm. James: I'll get formal quotes from the current insurer and one alternative. We'll look at it together. Not pushing you to change today. Tom: Yeah, get the quotes. I want to see the numbers. James: Done. James: Sarah, on your end — your TPD inside super is "any-occupation". Given you've got 8 to 10 years of work left and teaching's reasonably demanding, you might want own-occupation cover. The trade-off is own-occupation isn't available inside super since 2014 — you'd need a personal policy, which means non-deductible premiums though a more useful definition. Sarah: I don't think I want to add another premium, James. Honestly. James: Fair enough. I'll record that. We don't have to do it. The any-occupation cover does still pay out — it's just got a higher bar. Sarah: Yeah. Leave it as is. James: Right. Bigger conversation. Tom, you said in your email you were thinking about going part-time next year, with a view to full retirement at 65. Still where you're at? Tom: Yeah. The body's good though I'm tired of the project deadlines. I want to start dialling back. James: How would part-time look — three days, four days? Tom: Probably four days. Drop a day. Maybe go to three after a year. James: Income drops proportionately? Tom: Yes. From $185,000 to about $148,000 if I'm at four days. Three days would be $111,000. James: Okay. Couple of things to think through. One — at four days, your concessional contribution headroom shifts as the SG drops. We'd want to look at whether to start a transition-to-retirement pension to supplement income while keeping super contributions going. That's a strategy I'd want to model properly. Two — when you do go part-time, the salary sacrifice arrangement might be worth restructuring. Tom: Can we do the modelling? James: Yes. Let me put together a TTR scenario, a no-TTR scenario, and a part-time-without-strategy baseline. I'll have it ready for our next meeting. Date for that — looking at the calendar — late June would work, before EOFY decisions need to land. Sarah: 25th of June we're in Margaret River. James: Then early July, after you're back. Let's pencil in the 9th of July, 10am? Tom: Yep. Sarah: Works. James: I'll send a calendar invite this afternoon. James: One more thing on the part-time decision — you'll need to review the income protection if you drop hours. The benefit definition is based on pre-disability income, and most policies look at the highest 12 of the last 36 months. So there's some flexibility, although if you go part-time for years before claiming, the benefit will be assessed on the lower income. Something to factor in. Tom: Right. James: Not a reason to stay full-time. Just something to know. Tom: Got it. James: Sarah — still planning to work to 62? Sarah: 62, maybe 63. Depends what's happening at the school. New principal next year and we'll see. James: Okay. I'll model two scenarios for you too — retire at 62 and at 64. Different decumulation pictures. Sarah: Yes, please. James: Jack — you said in the email he's looking at moving back home for a year while he finishes the postgrad? Sarah: Yeah. Rents are mad and he's got the research thesis. James: Any financial implications? Are you supporting him? Tom: We're not paying his fees, he's got HECS. We'll cover his food and whatnot. Maybe $400 a month? James: Okay. So nothing that should affect the long-term plan. Reason I ask — sometimes parents under-budget what coming home actually costs. Power, food, the car insurance creeping back on. If it ends up more like a thousand a month, just tell me, as over a year that's $12,000 we should account for in the cash flow plan. Sarah: We'll keep an eye on it. James: Good. James: Tax planning items for EOFY. Few things on the list. One — Sarah's carry-forward question, which I'm modelling. Two — Tom, the bring-back on salary sacrifice we just talked about. Three — neither of you needs the LISTO or co-contribution given your incomes, so we skip those. Four — I want to check whether it's worth pre-paying the income protection premium for next year. If you pay it before 30 June, you get the deduction this year. Useful if your income's dropping next year as you'd capture the deduction at the higher marginal rate. Small effect though real. Tom: Just do that. James: Let me confirm two things first — that the policy allows annual prepayment, and whether it actually saves you anything given you may or may not go part-time. I'll send you the working before we instruct anything. Tom: Fair. James: Five — investment property, you don't have one, so we skip. Six — donations. Did you donate anything this year you want to claim? Sarah: We did a thing for the Salvos in November. About $400. James: Keep the receipt for the accountant. Sarah: Already filed. James: Excellent. James: Estate planning — check-in question, nothing changing. Are your wills still current? Last reviewed when? Tom: 2022. After Dad died. James: And binding nominations on super — these expire every three years on most funds. Yours were lodged in… let me check… April 2023. So they'll expire next month. Sarah: Oh. James: Yeah. I'll send fresh nomination forms this week. You both nominate each other, with the children as backups — correct? Tom: Yes. Sarah: Yes. James: Good. I'll get them out. Wills — if anything's changed in your thinking, talk to your solicitor. Not my area, although I can refer you back to Greg if you need. Sarah: We'll think about it. I don't think anything's changed. James: I think that's covered the agenda. Anything I haven't asked about? Tom: The Bitcoin question. [laughs] Sarah: Tom. James: [laughs] Have you been reading Steve again? Tom: He keeps mentioning it. James: My answer hasn't changed from last year. It's not part of any portfolio I construct, it's outside our research scope, and I won't be advising on it. If you want to put a small punt of your own discretionary money into it — that's not something I'm going to recommend or recommend against, as it's outside the scope of advice we agreed. Just keep it separate from the strategy. Tom: Yeah. Fair enough. I won't. Sarah: Good. James: Right. Recap. After this meeting I'll send through, by end of next week — the formal performance report, the salary sacrifice instruction for Tom, written confirmation of Sarah's carry-forward cap, the IP cover quotes, the prepayment working for IP, fresh binding nomination forms for both of you, and a calendar invite for 9 July. Anything I've missed? Sarah: I think that's everything. Tom: I'm good. James: I'll formalise the recommendation we discussed today — the salary sacrifice change — in a Record of Advice. The carry-forward, TTR, IP changes and any prepayment we'll handle through a fresh Statement of Advice once we've done the modelling, as they're new strategy territory. Tom: Why the difference? James: Record of Advice is for advice within the scope of our existing strategy where your circumstances haven't materially changed. New strategies — TTR, additional contributions you haven't done before, an IP cover variation — those need a Statement of Advice. Bit more thorough. Tom: Got it. James: Right. Thanks both. Walk you out? Sarah: Yes please. Tom: Cheers, James. [end]