GPL Financial Group GPL Partners

June 2017

Give your children a saving and investing edge – for life

Perhaps the best way to give your young children a lifetime saving and investing advantage is to ensure they are as financially literate as possible, as early as possible in their lives.



By indulging their every whim is likely to have the opposite effect. It may pave the way for them to become conspicuous spenders; a wealth-destroying approach to dealing with money.

Australian students have mixed results in a just published 2015 OECD study of the financial literacy of 15-year-olds in 15 countries (including 10 OECD members such as the United States, Canada and Italy). Almost 15,000 Australian students participated in the survey.

Australia ranks fifth with 15 per cent of Australian students being ranked as high performers.

However, there are clear gaps confirmed in the financial literacy of many young Australians with low levels of literacy among lower socio-economic groups including indigenous students. A fifth of Australian students do not reach the baseline for financial literacy – a little below the average for the surveyed OECD countries.

The researchers comment that students who did not reach the baseline for financial literacy could, “at best”, distinguish between wants and needs, and make simple decisions on everyday spending.

The survey was designed to assess the extent that 15-year-olds have the financial knowledge and skills to “make successful transition from compulsory schooling into higher education, employment or entrepreneurship”.

In regard to Australian students, the survey's findings include:

67 per cent say they will save to buy something if they don't have enough – close to the OECD average.
57 per cent save money each week or month with 17 per cent saying they will only save when they want buy something.
As the Australian Securities & Investments Commission (ASIC) comments on the survey, financial literacy is particularly essential in an increasing cashless society, where it is easy to borrow on a credit card if you don't have the money right now. (For the record, Australian 15-year-olds are legally too young to be issued with a credit card.)

Young people confront significant financial decisions relatively early in their lives in such ways as choosing a career, financing tertiary education, finding a first job, leaving home for the first time and beginning to save.

Those who have a low level of financial literacy are at a huge disadvantage that can burden the rest of their lives as they may try and learn through trial and error.

Young, financially-savvy investors have the powerful advantage of enjoying the rewards of investment compounding over the very long term as their investments – perhaps including their first salary-sacrificed super – earn returns on returns as well as the original capital.



Written by Robin Bowerman
Head of Market Strategy and Communications at Vanguard.
05 June 2017

‘Bank-like heists’ make way for new wave of cyber crime

Identity theft is an increasingly popular method of cyber crime as opposed to “bank-like heists” of the past, and SMSF trustees are a prime target, according to a university professor.



Professor Matthew Warren, deputy director at the Deakin University Centre for Cyber Security Research, told SMSF Adviser cyber criminals are no longer simply after stealing lump sums by cracking through security systems.

Instead, criminals aim for identity theft, which allows them to assume the identity of the client and transfer funds out into a different account, going under the radar of SMSF firms on the lookout for suspicious external activity.

“Attackers wouldn’t necessarily go after superannuation funds to extract large sums of money in a single transaction because they know identity theft and assuming the identity of customers of those organisations would just be as successful,” he said.

Professor Warren said there is more than one route of attack facing trustees, but more often than not, the pathway is based around identity theft utilising a social engineering method.

“A social engineering attack is when you are trying to manipulate people’s actions in terms of a social context whether it’s via email, whether it’s phoning someone and pretending to be someone else or whether it is physically going into an organisation,” said Professor Warren.

“So in terms of threats you are not seeing one particular type of threat but you are now seeing the sophistication of attackers develop a number of different threat strategies into a single attack.”


Tuesday, 13 Jun 2017



Adequacy of savings still a concern among Australians

The latest research into superannuation showed a significant proportion of Australians were still concerned about having enough money saved to fund their retirement.



The “RaboDirect Financial Health Barometer 2017 Super & Retirement Report” found 44 per cent of Australians did not believe they had enough money to fund their retirement.

Despite this concern, only 32 per cent of respondents said they were making voluntary contributions to their superannuation account.

“There’s definitely a head in the sand syndrome with people in terms of their approach to superannuation,” RaboDirect head Bede Cronin said.

Cronin pointed out 31 per cent of people were making voluntary contributions when the survey was performed in 2013, “so we haven’t seen a progressive increase in people making voluntary contributions yet”.

Another alarming statistic the report highlighted was a growing gap between the amount of money people expected to need in retirement versus their actual required living costs. 

This gap stood at $268,502 in 2014 and increased to $353,125 in the 2017 report.

Further, the research showed 18 per cent of respondents were relying on an inheritance for their retirement savings plan.

“That’s a bit of a call out for me particularly when we start to see people’s expectations of what they think they need in retirement are actually far below what actually independent research suggests is what you’ll need for a comfortable retirement,” Cronin said.

“So there is already a disconnect there from what people think they’re going to have and what they actually will need, and this trend of people saying ‘well, I can just not even worry about it because I’m going to get an inheritance’ is slightly concerning.”

Based on the findings, he said RaboDirect advocated for individuals to start to take an interest in their superannuation and understand the changes to the system to be implemented on 1 July, which were likely to have both positive and negative effects. 

The report findings were based on a survey of 2300 Australians aged between 18 and 65.


By Darin Tyson-Chan
15 Jun 2017

Recorded Crime – Offenders, 2015-16

What exactly is the picture in Australia when it comes to crime?



Click on the link below for more detail



  • The number of offenders proceeded against by police in Australia during 2015–16 increased for the fourth consecutive year to total 422,067 offenders, an increase of 1% (or 5,016 offenders) from 2014–15.
  • However, after adjusting for population growth, there was little change in the national offender rate with 2,023 offenders per 100,000 persons aged 10 years and over, compared to an offender rate of 2,027 in 2014–15.
  • Since the beginning of the time series in 2008–09 the number of offenders has increased by 12% (or 46,474 offenders). Over the same period the offender rate increased by less than 1% (from 2,006 to 2,023 offenders per 100,000 persons aged 10 years and over).



Recorded Crime – Offenders, 2015-16



Source:  Australian Bureau of Statistics

Low economic growth likely for years

Despite the current resurgence in equity markets, global economic growth was likely to stay low for a number of years as cyclical and structural factors combined to ensure interest rates and inflation remained subdued for the foreseeable future, according to Standard Life Investments.



Addressing a media briefing in Sydney yesterday, Standard Life head of global strategy Andrew Milligan said investors and asset managers were facing a “world of low numbers” for some time to come, but reasonable growth numbers out of Europe, the United States and China were helping to make risk assets attractive in the short term.

“Global profits are doing well – we are not seeing much upturn in headline inflation, but companies are seeing better revenue,” Milligan said.

“In global real estate we are also seeing a nice combination of improvement in the global economy leading to more demand for offices and the fact that the financial system has not yet allowed much speculative overbuild that often happens in markets.”

However, the risk of imminent rate rises was still hanging over equity markets, with the Federal Reserve, European Central Bank and People’s Bank of China all indicating they were likely to raise rates over the next year, he said.

“History tells us that when central banks move the initial reaction of equity markets is favourable because the reason banks are moving is because growth is good, and then equity markets say ‘oh dear’,” he noted.

“I think we are still some way away from an ‘oh dear’ moment, but history tells us we probably will have turbulent times ahead when monetary policy begins to have too much of an impact on what are relatively expensive financial markets at this moment in time.”

In the longer term, there was also the risk monetary policy was becoming ineffective, which had been underlined recently by Reserve Bank of Australia governor Philip Lowe’s comments that workers needed to encourage their own wage inflation by asking for pay rises.

“There is the worry that central banks cannot create inflation, which has serious implications for markets if that is true,” Milligan said. 

“Cyclically we are seeing improvement in wages in a few countries, but the problem we face from a cyclical point of view is there are still masses of amounts of excess capacity in the world economy – unemployment in the eurozone is still 9 per cent.”


21 Jun 2017
By Sarah Kendell

Smart ways to stretch retirement money

Just think that in early June 2008, the Reserve Bank's cash rate stood at 7.25 per cent. Now fast forward nine years to early June 2017 and Australia's current cash rate is 1.5 per cent.



And just think of the impact of falling interest rates on the many retirees who may have become accustomed before the GFC aftermath to financing their retirement from the interest and yields generated by their portfolios.

Numerous retirees – as well as the swelling numbers of investors on the eve of retirement – are still struggling to adjust their expectations and practices for a low-interest environment.

Every time that the Reserve Bank has announced its latest decision in recent years on the official or “target” cash rate, retirees in particular have received just another reminder of how much rates have fallen. (The Reserve Bank this month has left its cash rate at 1.5 per cent for the 10th time in succession.)

In turn, the Reserve Bank regular interest rate decisions remind retirees that their bond interest rates and interest on term deposits are well below historic averages. But it's not as if they need any reminders.

What choices does a retiree have if they had become used to living off the interest and yield produced by their portfolios?

Many retirees may think, probably fleetingly, about trying to reduce their cost of living. Yet while most of us can spend our money more efficiently, few retirees would be willing or able to reduce their standards of living.

If unable to cut their living costs in a meaningful way, many retirees may jump to the conclusion that their only other choice is to move away from their carefully-prepared target or strategic asset allocations. Such a move usually involves increasing exposure to higher-risk, higher-yield bonds and a more-concentrated selection of high-dividend shares.

In short, retirees who put aside their strategic asset allocations of their broadly-diversified portfolios in pursuit of higher interest and yields are likely to become more exposed to market risk and volatility. And this may damage their portfolio's overall health and longevity.

Fortunately, another possible solution for retirees is to take a total-return approach to financing their retirement spending.

A classic Vanguard research paper, Total-return investing: An enduring solution for low yields, suggests that retirees consider taking both the income returns and the capital returns of a portfolio into account when setting retirement drawdowns and spending.

With this approach, retirees can aim to keep their appropriate asset allocations and broadly-diversified portfolio in tact rather than switching to a higher-risk portfolio.

Further, retirees should consider whether to take specialist advice about how much they should be drawing down from their retirement savings given their circumstances including the levels of yields/interest and capital gains being produced by their portfolios.

It is sometimes said that some retirees are unnecessarily frugal in their retirement spending given the understandable concern of outliving their savings. Taking a total return approach should help them make a realistic assessment of their portfolios and of their spending habits.


Written by Robin Bowerman
Head of Market Strategy and Communications at Vanguard.
19 June 2017

LISTO to help boost women’s super

New Government initiative to benefit women's superannuation.



The government’s introduction of the Low Income Superannuation Tax Offset (LISTO) is an important step towards helping secure the retirement futures of Australians, with new data showing 63 per cent of the policy’s beneficiaries will be women.

The offset will provide a refund of contributions tax for Australians earning up to $37,000, up to a maximum of $500 a year, with the Association of Superannuation Funds of Australia (ASFA) estimating 3.1 million Australians will receive the benefit.

When it was first announced by the Labor government in 2010, the Low Income Superannuation Contribution (LISC) was to take effect from July 2012 and would result in 3.6 million lower-income earners receiving up to $500 each year from the government, paid directly into super accounts.

While the Coalition government had originally intended to end the five-year LISC policy on 30 June this year, the decision was overturned as part of changes to the super system announced in the 2016 budget and instead, LISTO will replace LISC under the new regime in a move ASFA said was “most welcome”.

Releasing its projections on the impact of the new super tax changes, the association’s chief executive Martin Fahy noted that the policy should be seen as an important step towards lifting the retirement income of Australian women, with ASFA data showing approximately 63 per cent of the beneficiaries of the offset will be female. 

“They can expect to receive around $260 on average, which is a good help because the average super balance of recipients is less than $50,000,” Fahy said.

According to ASFA figures, about 15 per cent of the recipients of the LISTO are aged 30 to 39 and in addition the government’s enhanced tax offset for spouse contributions – for those whose spouse earns less than $40,000 – will benefit a further 10,000 people a year.

ASFA has been vocal in the past of its support for LISTO, with its response to the 2016 budget arguing the offset will be an important incentive for low income earners to save for their retirement.

“ASFA has long advocated for support for low income earners contributing to superannuation. The LISTO scheme provides this and makes the superannuation system stronger,” the association said in its budget response last year. 

The association largely welcomed the government’s new super taxation regime, estimating about 850,000 Australians would be able to claim a tax deduction for personal contributions to super and an additional 800,000 could benefit from other changes announced in last year’s budget.


By Daniel Paperny
​26 Jun 2017

Do’s and don’ts of estate planning

Most financial planners are now fully aware of the importance of estate planning when it comes to developing a comprehensive financial plan for their clients.



Estate Planning can be a complicated area and it’s impossible to create a one-size-fits-all approach. However, there are a few basic rules and tips that can help. Following are my top do’s and don’ts for estate planning.

Do have an up-to-date will; don’t leave it at that

Most financial planners know that a will is just one part of a comprehensive estate plan – and in some cases, a relatively small part.

A will deals only with estate assets – assets owned directly by the will-maker. It doesn’t deal with non-estate assets; that is, the assets that may be controlled by the will-maker but not owned.

This may sound quite straightforward but it isn’t always. In fact, it’s not always easy to know which assets are owned and which are just controlled.

Take the example of the Flynn family. David is aged 58 and Donna is 56; they have three children, all in their 20s. Their wealth position is:



Home owned as joint tenants


Investor property owned as joint tenants


David’s super in SMSF


Donna’s super in SMSF


Life insurance in super


Family trust investments


Total wealth






Mortgage debt on home


Mortgage debt on investment property


Total liabilities


Net wealth



So, in the event of the death of either David or Donna, which of these assets pass via the will?

The answer is, none of them. When Donna or David die, none of these assets will come into their estate and therefore cannot be directed by a will.

The reasons are:

1.    The real estate is owned as joint tenants, so the survivor automatically inherits. Joint tenants cannot pass their interest via a will

2.    Superannuation is held in a trust environment and the trustee of the super fund decides to whom and how a super death benefit is paid. To ensure the death benefit passes to a preferred beneficiary, they would need to have in place a binding death benefit nomination

3.    The same rules apply to any life insurance held in super

4.    Assets held in a family trust are owned by the trustee of the trust. Therefore, it is important to agree upon and document who will control the trust following the death of either David or Donna, as the ultimate power lays with the control.

Do have a comprehensive estate plan

The essential documents in an estate plan include:

  • An up-to-date will
  • An up-to-date enduring power of attorney
  • An up-to-date enduring guardianship
  • An up-to-date SMSF deed
  • An up-to-date death benefit nomination (if applicable)
  • A review of control issues of any investment trust
  • A review of the ownership state of all types of wealth

It’s worth noting that while for most clients, it will be best to have a binding death benefit nomination for superannuation, in some cases it’s preferable not to, so the money doesn’t come into the estate. For example, a death benefit pension to a spouse can be paid by a super fund. Therefore David and Donna may prefer the super death benefit to remain in the super fund in order to pay the survivor a pension.

This is a good example of how it is impossible to have a ‘one size fits all’ approach to estate planning.

Do document the things that are important

An estate plan must be able to stand on its own and therefore needs to deal with any contingencies or concerns. Once the will-maker is dead, it’s impossible to make any further changes or adjustments! So they need to get it right now, and this is where professional advice can be worth its weight in gold.

For instance, any unwritten understandings between couples could be included. As an example, Donna and David both agree that after they have both died, they want their remaining wealth to go to their children to enjoy, and also to any future generations. And they don’t want their children to squabble over their will.

Rather than take it for granted their children also know this and agree with it, it’s a good idea for Donna and David to put it in writing.

In addition, they can’t assume anything – that their children will behave in the way that they want them to, or that their children will automatically know or understand why Donna and David made the decisions that they did. If anything needs explaining, it’s best to do it in person, and reinforce it by leaving a document in the estate plan to account for the choices made.

Don’t try to rule from the grave

The over-riding aim of most estate plans should be to protect loved ones, not rule from the grave. This is why it’s important to document any understandings or agreements.

If necessary, also put in place strategies to protect children from themselves, and also from the financial effects of failed relationships.

One approach we have started using is an Inheritance Protection Agreement (IPA).

The way an IPA works is that firstly, Donna and David agree that if, after the death of the first of them, the surviving spouse was to begin a new relationship, then the survivor will have a financial agreement (commonly known as a ‘pre-nup’) with the new partner to prevent any claim.

Secondly, Donna and David make it clear their wish is for each child to have a long and happy relationship; however as a matter of principle they believe that any inheritance should not be carved up if there is a relationship breakdown. They therefore direct that after their deaths, their children should enter into an IPA with any partner to exclude any claims on inheritances and, if the child does not have the benefit of an IPA, other protection provisions are incorporated in the wills.

 Do help children if possible

It’s becoming increasingly common for parents to help their children financially during their lifetime – for instance, helping them buy their first home, or get a business off the ground.

While it is a good idea to help children if there is capacity to do so, it’s best not to gift the money but rather to lend it. This should be carefully documented so that the loan can be recalled if the parents need the money later in life, or if the child goes through a relationship breakdown.

It’s important that other children aren’t left feeling disadvantaged as a result of assistance given to one child, as this could lead to bad feeling in the family, and potentially to challenges on the estate. Provisions can be placed in the Will to take into account any gifts or loans in the ultimate distribution to the children.

Don’t put it in the ‘too hard’ basket

Understandably, no-one likes to think of their own death or incapacity.

But when clients are refusing to think about their estate plan because they say they aren’t planning on dying any time soon, I only need to remind them of Princess Diana, Heath Ledger or even James Dean or Buddy Holly, who all died before age 40.

It’s never too soon to have an estate plan, and anyone who has superannuation, children or owns their own home, has enough assets to make it worthwhile.

Likewise, an estate plan is not a ‘set and forget’ approach. It needs regular reviewing and updating to ensure it is still up to date. The birth of a grandchild, the purchase of a new asset, or a relationship breakdown, could all make the existing estate plan incorrect.


By Robert Monahan
HLB Mann Judd Sydney
June 8, 2017




Beyond super: Our other personal investment market

Many investors may not realise that Australia's super and non-super personal investment markets are almost equal in value.




Yet super tends to dominate the personal investment headlines – particularly in the lead-up to the biggest changes to the super system in at least a decade from July. The Personal Investments Market Projections 2016 report, just published by actuaries and consultants Rice Warner, calculates that the total value of super and non-super personal investments was $4.75 trillion at June 2016. And non-super investments made up 49 per cent of this total.

It is critical for investors to co-ordinate their super and non-super investment portfolios. This includes for their retirement and investment strategies, strategic asset allocations for portfolios, periodic rebalancing of portfolios, tax planning and estate planning.

One of the challenges when trying to assess the adequacy (or inadequacy) of your retirement savings is to fully take into account all of your investments, inside and outside of super.

Rice Warner defines the personal non-super investments market in its “broadest sense” including all investment assets held by individuals in their own names or through trusts and companies. It does not include family homes and personal effects.

Direct property and directly-held cash and term deposits make up the vast majority in value of non-super personal investment. While direct property (net of mortgages) accounts for 40 per cent of the assets, directly-held cash and term deposits account for 43 per cent. By contrast, direct shares make up just 9 per cent of personal non-super investments.

Individuals hold 93 per cent of personal non-super personal investments directly rather than through investment products and investment platforms.

Numerous investors, of course, hold geared and non-geared direct property in their own names – often dominating their personal non-super portfolios – while having more widely-diversified super portfolios.

Rice Warner expects that the lowering of the super contribution caps from July 1 to lead to a small fall in the total value of non-super personal investments in 2016-17 followed by “modest but sustained” growth in subsequent years.

“This reflects many wealthier individuals making one-off contributions to superannuation in the current financial year; potentially funding the contributions from existing assets rather than income,” its report explains.

However, Rice Warner anticipates that the lower contribution caps will mean that more money is directed into non-super personal investments after July this year.

It is worth considering whether to take professional advice about your overall super and non-super investment portfolios. It can be a trap to look at each in isolation.

Upcoming article: How Australia's non-super personal investment market may develop over the next 15 years and what it may mean for you.


Robin Bowerman
​Head of Market Strategy and Communications at Vanguard.
01 May 2017

ATO guidance provides clarity on death benefit confusion

ATO guidance released yesterday has provided peace of mind for SMSFs receiving death benefit pensions in excess of $1.6 million, with the guidelines applauded by those in the SMSF industry.




The ATO yesterday released Practical Compliance Guideline (PCG) 2017/6 Superannuation reform: commutation of a death benefit income stream before 1 July 2017, which outlined the ATO’s compliance approach towards SMSFs that commute death benefit pensions prior to 1 July 2017 and retain the excess in the fund.

Prior to this guidance, SuperConcepts technical services and education Peter Burgess said there had been a lot of confusion in the industry in relation to whether a super fund could commute a death benefit pension and retain the excess in the fund, if the commutation occurred before 1 July 2017.

While the SMSF industry has always understood that funds would not be able to do this after 1 July, there was some contention over whether funds would be able to do it before 1 July 2017.

“There’s been a fair bit of confusion in recent times about the options available to members who are receiving a death benefit pension, if they have a pension balance in excess of $1.6 million. There’s been some uncertainty about the options available to them in terms of commuting the excess and retaining the excess in the fund,” Mr Burgess explained.

The SMSF industry believed it would be possible to retain the excess in the fund based on public guidance material previously issued by the ATO, he said.

While the ATO expressed the view in the guidelines that it would not be possible for people receiving these death benefit pensions to commute these pensions and retain it in the accumulation phase, the tax office has decided to take a practical approach, since it is a common industry practice to do so, Mr Burgess said.

“The ATO, therefore, won’t apply or take any compliance action, where one of these pensions has been commuted and the proceeds have been retained in the accumulation phase prior to 1 July 2017.

“The ATO should be congratulated here. This issue came to light at some recent industry consultations and they moved very quickly to explain this particular issue and to agree on a practical compliance approach.”

This is currently a live issue for a number of individuals receiving death benefit pensions.

“With the release of these practical compliance guidelines, clients now have some certainty and peace of mind that they can commute that excess and retain it in super, as long as it’s done before 1 July 2017,” Mr Burgess said.

“It enables advisers to have some certainty when providing advice to clients as to what their options are, so if they are receiving one of these death benefit pensions and their pension balance is in excess of $1.6 million, we now have some certainty and peace of mind that they can commute that excess and retain it in super. There’s no need for that excess amount to be cashed out of super.”

Mr Burgess said the guidance will also simplify things from an administration point of view.

“SMSF trustees now won’t have to identify any pension balances that comprise a death benefit pension. It doesn’t matter under this guidance, whereas without this guidance they would have to identify any portion of the pension balance that relates to a death benefit pension, and that can be very difficult,” he said.

“That’s one of the reasons the ATO is saying they’re not going to apply any compliance resources here, because it’s just too difficult for funds to identify a death benefit pension where it’s been mixed with other money in the fund.”


Tuesday, 23 May 2017

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