What is the true value of advice?

By Tina Zawila

At this time of the year, we are very busy providing last minute advice on how to save tax prior to 30 June.  And if you are a regular reader of our articles you will recall we recently covered our top tax tips for 2017. 

However, in today’s article I wanted to talk about the value of advice.  As advisors our challenge is to make the intangible, tangible, the invisible, visible.  The power of the spoken or written word can be invaluable but many fail to recognize it and appreciate it. 

Let me give you an example.  Recently during a tax planning consultation, I spoke to a young businessman about how to save tax before the end of the year.  There were various strategies discussed including contributing to superannuation.  As a self-employed person he is able to claim a tax deduction for contributions he makes to superannuation to save for his own retirement.  It is one of the only tax deductions available to you where you get to ‘keep the money’ (albeit in your superannuation fund).

This advice will potentially save him thousands of dollars this year in tax, but the real value is in the wealth creation opportunity of the superannuation contribution.  To illustrate, let’s do the math, $10,000 (the contribution after tax) invested today for 40 years with a compounding rate of return of 10% per year, will be worth over $452,000. If the interest compounds monthly, that total jumps to $537,000.

So is the value of the tax planning advice, the tax saved this year?  What about the value of the wealth created over the next 40 years? What would you be prepared to pay for someone to give you advice to suit your circumstances and needs?  What is the opportunity cost of NOT receiving that advice?

Of course I need to remind you that the concepts discussed in this article are general in nature, and you should seek individual professional advice to suit your circumstances.  In fact, that’s the message - seek advice!  Call our office today on 49721300.