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Advice should reflect super changes: Rice Warner
Advice should reflect super changes: Rice Warner
Financial advisers will need to adapt the way they provide advice to clients following the recently legislated changes to superannuation contribution limits, according to Rice Warner.
The introduction of a $1.6 million cap on tax-free pension accounts will mean "decisions on the optimal mix between super and other financial assets become more complex and more important" for clients, the company said.
Rice Warner gave the example of a client retiring with $2 million, noting that while $1.6 million could still be left in a tax-free pension account, choosing where to hold the remaining $400,000 would be difficult.
"A super accumulation account would involve tax of up to 15 per cent - which could compare favourably with holding the assets directly if returns are taxed at 49 per cent," the company said.
"However, someone without other taxable income holding the $400,000 directly will pay little or no tax on their investment earnings outside super, so they may prefer to move the money out of the accumulation account."
Rice Warner said these changes had "not only increased the complexity of super, but has also increased the range of structures and strategies that should be considered", and advisers should look to manage their clients' savings "as a family" as well as make decisions on a whole-of-wealth basis rather than in product silos.
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