Case Study - Retiree
BackgrounD
Retired business owners, and husband and wife, Patrick and Bev are long term clients of Wealth Fundamentals. They first engaged our services after purchasing a stake in a small business. When they received an offer to buy their business for a significant sum, they required guidance on the sale and their retirement planning.
Overview
Over a decade ago, Patrick and Bev engaged the Wealth Fundamentals team to customise a personal insurance solution and to assist them to consolidate their multiple superannuation funds into a retail offering for each of them.
When the couple purchased a 50% shareholding in a small business, we assisted them to identify and articulate their long-term aspirations for their new venture. They shared their strong desire to significantly grow the business, in order to make it a profitable and saleable commodity down the track. Recognising the pair could benefit from the insights of a business development professional, we acted as their central coordinator facilitating introductions to an accountant and business coach from within our trusted network of aligned associates.
As part of Wealth Fundamentals’ enduring approach to financial planning, the team provided Patrick and Bev with guidance around strategies designed to protect their assets and grow their long term wealth. We also facilitated a personalised business insurance solution with goals to safeguard against risks within the business by insuring the key partners and funding a buy-out plan should either of the partners pass away or be totally and permanently disabled.
Patrick and Bev’s small business grew significantly and they received an attractive offer to purchase the business for a significant sum. In a very short period of time, Patrick and Bev’s focus changed from growing and accumulating assets, to needing assistance with tailored retirement planning based on their new financial position.
Our Process
In collaboration with their accountant, our advisers made Patrick and Bev aware of the Small Business Roll-Over Legislation that allows business owners to rollover $500,000 into super (from the sale of their business) which in turn reduced their capital gains tax liability. Consequently, Patrick and Bev were able to sell their share of the business without paying any capital gains tax.
We are accredited SMSF Advisers, and well placed to mentor Patrick and Bev on their options for appropriate platforms in which to hold their newly realised retirement savings. Specifically, we offered insights into the viability of creating an SMSF as opposed to retaining their existing retail funds. After considering these insights, Patrick and Bev determined a SMSF was indeed their preferred superannuation option.
The sale of the business also resulted in the end of Patrick and Bev’s life as full-time salaried employees. They now had to focus on generating income in retirement from their accumulated wealth. After the sale, Matt and the team reviewed their situation to determine where all assets were held. We guided Patrick and Bev through a strategy of making non-concessional contributions to super, using the surplus cash from the sale of the business, as this was designed to hold their funds in a tax effective environment.
The team also helped Patrick and Bev to identify and articulate their lifestyle aspirations post full-time employment, in order to identify their income requirements. Through these discussions we determined that Patrick and Bev had a desire to travel regularly in retirement as they have married children and grandchildren who live overseas. To facilitate this income requirement we suggested they both commence pensions in their SMSF.
Patrick and Bev had concerns about how their newly realised wealth would be invested. Previously they had a large degree of control over their wealth via the operation of the business but now they felt less in control. By working closely with Patrick and Bev to understand their risk profile, we were able to educate them on the different investment options available.
The Outcome So Far
Patrick and Bev have successfully transitioned to semi-retirement and are enjoying ready access to a comfortable income, regular travel and living their desired lifestyle. All this was achieved with assistance from the team at Wealth Fundamentals and in line with the pair’s identified objectives.
We helped them to make their transition to retirement by drawing a pension from their SMSF and encouraging them to share with us their comfort levels around investing. They expressed a desire for a steady income stream, as well as long-term financial growth without exposure to high level risk.
In response to their objectives, the team tailored a bespoke investment strategy based upon a diversified portfolio including a mix of Australian and international shares, domestic and international property and infrastructure, and a combination of fixed interest and cash. We also coordinated a tailored investment protection strategy designed to minimise the chance of capital loss on the equity component of the portfolio.
Given the couple’s newfound wealth, we instigated a review of their Estate plan which revealed updates were required for their Wills, Enduring Powers of Attorney and Advanced Health Directives.
In Patrick’s words…
“The team at Wealth Fundamentals guided us with the utmost efficiency and professionalism. My wife and I placed absolute trust in them because we felt confident we were in expert hands.”
“We haven’t looked back…selling our business was one of the best things we’ve ever done and Wealth Fundamentals played a major role in showing us efficient ways to hold that newfound wealth.”
“I highly recommend Wealth Fundamentals and I’ve already referred some of my business associates to Wealth Fundamentals.”
(*Clients’ names have been changed to protect their privacy)
Matthew Lane is a financial adviser at Wealth Fundamentals. Wealth Fundamentals and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. You should not act on it without first obtaining professional advice specific to your circumstances.