Proud to be an Adviser – Part two – Tristan Barnes

From

Tristan Barnes

Becoming a financial adviser wasn’t an obvious career choice for me. In my younger years I gravitated towards jobs with a strong physical component. I had a stint in the army and also worked in the wine industry but, after meeting my wife in my mid-20s, I decided it was time to knuckle down and choose a career.

As a financial adviser working in the university sector, the thing that gets me out of bed in the morning is working with clients who do extremely meaningful and impactful work but may not have the financial literacy to know how to handle their money. It’s extremely rewarding to be able to help people in that respect, so they can focus on what they do best.

I also enjoy hearing people’s different stories – their successes, failures, struggles and hopes and I am always amazed by the resilience of people in the face of adversity. Hearing alternative views and perspectives also challenges my own views, so for me, being a financial adviser is a constant state of learning.

Working with clients to achieve the best outcomes possible, particularly in retirement, is at the heart of what I do and I love seeing clients’ progression as they work towards their personal and financial goals.

My clients’ personal situations and financial challenges are obviously interesting in their own way, but there are a few that stick in my mind and remind me why I do what I do, and why I love my work. I had one client, Tom*, an exceptionally interesting, intelligent professional in his 50s. Tom had a very strong ethical viewpoint and had spent over half of his working career in pursuit of humanitarian

causes. Unfortunately, he had sacrificed his own financial wellbeing and, to some extent, that of his family to give to others.

Tom was facing the difficult decision of whether to remain in Australia, a place he and his family love, or return to his home country so he could qualify for a full government pension.

I had to convince Tom that he could not be of help to others in a sustainable way unless he looked after himself and his family first. There is the old adage that when the plane is going down, you need to put on your own oxygen mask first before helping anyone else.

I spent a lot of time helping Tom to change his mind set and reorder his financial priorities.

From a strategic perspective, we created a worst-case scenario which involved the family remaining here, with a lower income and higher expenditure. In doing this we found that with the right structuring, the family could stay, live quite comfortably and continue to donate money to the various causes he was passionate about.

We focused on helping Tom plan to unwind his debt positions and plan for the future sale of his investment property, so he could live the simpler life he wanted in retirement. We also looked at maximising his concessional super contributions and investing his super in a responsible investment fund to align with his values and strong personal beliefs.

However, as Tom was still relatively young, we recommended holding some assets outside super. One of his goals was to help his children to buy property of their own when the time was right, so we advised on ways he could put aside money for that particular goal. We discussed a number of options: investment bonds, term deposits, managed funds, non-concessional contributions to super to be redeemed in the future via a transition to retirement strategy. We talked about risk, return, time horizon, tax implications and the drivers behind recent market volatility. In the end, Tom was happy with our advice to channel his discretionary cashflow towards his debt to optimise his cashflow position overtime, and drawdown capital from his offset account to help his sons when they were older. By talking Tom through our modelling he was able to see how he could still eliminate his debt by retirement while helping his children.

Despite having a number of dependants, Tom did not have a Will, so another area we assessed was his estate planning needs. We put in place an enduring Power of Attorney and Advance Medical Directives so he knew his affairs would be handled according to his wishes if the worst happened.

Tom is now on track to retire at 65 which is a great outcome for him and his family. Tom was in tears when he realised that he could meet all his personal objectives and still continue his philanthropic pursuits, and that his family were not going to face an uncertain financial future.

I was able to help another client, Dan*, with some general information about an inheritance he was receiving.

Dan was visibly anxious when he first came to see me, so I took some time to ask about his life and how he was feeling. He opened up to me and explained he’d been through a particularly emotional time, having spent the past six months grieving and packing up his dad’s home.

As financial advisers, we know that a death in the family can be a difficult time in more ways than one. Dan’s family, who were also receiving an inheritance, wanted to finalise the estate and were inadvertently pressuring Dan for some decisions.

Dan was unsure how to invest his inheritance. He was no longer working, had been unable to meet the work test, and was on a disability pension so had been accessing his super to supplement it.

I was able to help Dan understand his options, so that he could take the required time to assess the impacts for him. We spoke about gifting, the fact that the inheritance was likely to affect his pension and how the income and assets tests work. We also spoke about how financial decisions are best made with a clear head.

In the end, Dan chose to put his inheritance in the bank in the short term. He decided to see the tax he was likely to pay as an insurance against making a poor decision under duress. This allowed his family to settle the estate, removing that pressure so Dan can, in time, make a decision that’s right for him. He also decided to come back to see me for some personal financial advice a while later so I could help him develop a financial strategy underpinned by clear, informed investment decisions that are right for him.

Another interesting case I had recently was that of a Japanese client, Akihiro*, who came to see me with his Australian wife, Michelle* – and what a lesson this was in the cultural differences in the way people view money. Both Akihiro and Michelle came into senior roles later in their careers, so they hadn’t accumulated a great deal of wealth early in their lives.

We initially discussed tax efficiency and moving assets between partners to maximise the Age Pension but I could see that Akihiro was feeling uncomfortable. When I asked him why, he explained his deeply embedded cultural belief that you should stand on your own two feet financially, and it was clear that joining a Centrelink queue would compromise this.

Although taking some Age Pension would have been the best financial outcome for the couple, we agreed it was critical that we adhere to their values. We chose to focus instead on their short-term goal of buying a property near Akihiro’s family in Yokohama and on ensuring the couple would have a comfortable retirement without any Government assistance.

When it came to implementing the strategy, we opted to use Akihiro and Michelle’s high cashflow to save for the Yokohama property in a year with no debt required.

We also focused on reducing Michelle’s exposure to excess contributions tax, while maintaining her full defined benefit. In addition, an insurance gap analysis revealed that the couple were over-insured, so we undertook an in-depth review of their insurances.

We also referred Akihiro and Michelle to a specialist estate planner with international expertise, who helped them to create a will and enduring Powers of Attorney to enable them to leave money to their families overseas.

And they’re on track to purchasing their new property in the next six months.

Across the board, psychology and behavioural finance play a big part in the advice process, as people feel negative events much more acutely than positive ones. You see tears, fear, anger and despair. I

love working with my clients to empower them with the right information and choices to get the best possible outcome regardless of their personal situation.

I think what gets me through difficult times with the markets or the financial advice profession more broadly is a sense of duty. It’s the job of an adviser to do the right thing by the client regardless of the circumstances – and it’s a great feeling when I know my client is in a better place when they walk out my door.

Looking beyond the numbers, however, I think the essential service we provide as financial advisers is to give people sound financial options to consider. Money is not something to be idolised. We put money in its place and help people plan and make important decisions about their family situation, health and the number of hours they work, so they can truly enjoy every stage of their lives. And seeing clients who are financially secure as a result of the advice process is the best reward possible.

By Tristan Barnes, State Manager South Australia, UniSuper Advice

*The names and other personal details of clients have been changed to protect their privacy

 

Read: Proud to be an Adviser – Part one – Jenny Brown

 

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UniSuper Advice is operated by UniSuper Management Pty Ltd (ABN 91 006 961 799 AFSL 235 907) which administers UniSuper (ABN 91 385 943 850) on behalf of the trustee, UniSuper Ltd (ABN 54 006 027 121 AFSL 492 806).

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