Rob and Julie's story

Changing financial advisors at age 45.

A few years after they got married in their 30's, Rob and Julie received a big windfall of nearly $500,000. So they talked with a financial advisor. But after 10 years of not receiving the service they had expected - and which they paid handsomely for - they decided to look elsewhere. They were both worried that although they were lucky to receive the windfall, their financial future was not planned or guaranteed. So they came and talked to us at The Wealth Designers.

In just the first year, they saved a massive $22,000 in fees.

When we first met, they were both aged 45. Rob was a full-time state manager at an engineering business and earned around $152,000 a year. He had been with the same company for 22 years. Julie was a valuable employee at a local doctor's surgery where she'd worked as a medical receptionist for 10 years on a salary of $45,000.

On top of their salaries, they both earned $10,400 in rental income from their Mandurah investment property.

Their main objective was to have a long-term wealth management plan which would continue to give them the lifestyle they enjoyed and the freedom to travel as they pleased.

"We'd really like to retire at 60, and we'd like an income of around $75,000 a year so we can live comfortably, travel a bit - and don't have to worry," Rob said.

Rob also told us he wanted to stay healthy and happy; and Julie wanted the freedom of choice to stay socially active and buy the things she wanted, when she wanted.

On the move.

Travel was clearly important to Rob and Julie. They told us they would consider renting or selling their home so they could drive around Australia and visit Rob's family in Sydney. They would then spend some time on the Pacific Islands before living on the Sunshine Coast for a year.

Travelling further afield was also on their wish list. They also wanted to visit South America and Spain and, travel by train across Canada followed by a cruise to Alaska.

After discovering what was important to them, we set about helping them achieve their goals.

The Big Picture.

Apart from their home, the majority of their wealth - which amounted to $900,000 - was split between two individual retail superannuation funds and jointly-held managed funds all under the platforms of a large insurance company.

When we audited their funds, we found they were paying the following fees:

• Entry Fees - 2.2% every time a contribution went into their individual funds.
• Master Trust (Wrap) Fees - 1.25%
• Managed Expense Ratio (MER) Fees - 0.85%
• Adviser Review Fees - 1.10%
• Commission to the adviser- 0.55%

So their total ongoing fees averaged 3.75%. In real dollars, that was $33,750 a year plus the entry fee on $50,000 p/a = $1,100. So, in just one year, they'd paid a staggering $34,850.

Our design for Rob and Julie.

Our recommended strategies of salary sacrifice for Rob and taking advantage of the government co-contribution for Julie gave them the highest probability of reaching their goals. We also suggested they established a Self-Managed Superannuation Fund managed, of course, by TWD.

The next step for Rob and Julie was to sell down their $500,000 of managed funds which were held outside of superannuation. $450,000 of the funds went into their Self-Managed Superannuation Fund using the bring forward non-concessional contribution provisions; and the balance was invested in high-earning cash accounts as an emergency fund.

We rolled their existing superannuation savings into this new structure, chose a suitable asset allocation, and then bought these assets in Rob and Julie's names.

After we'd established this new structure, Rob and Julie were advised upfront and charged the one flat fee for all of our services. The fee was $12,500 a year.

So, in just the first year, they saved a massive $22,000 in fees. This money remained in their super fund. By the time they retire, Rob and Julie will have saved a further $140,000 in fees alone.

At the same time, they will have been be serviced by a deliverables team dedicated to helping them achieve what's important. We hope to get a postcard from Anchorage in 2012.