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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirby. Welcome aboard everybody. I hope you've managed to

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Speaker 1: have a few days off over these rolling holidays Easter

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Speaker 1: and that day and everything else. And often at holiday

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Speaker 1: times we do something slightly different, which we will today,

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Speaker 1: but it is not in the nature of light entertainment.

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Speaker 1: If you want to figure out how to start your

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Speaker 1: classic car collection or how to build a wine collection,

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Speaker 1: we have done that. Have a look in the archive

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Speaker 1: that's waiting for you. Today. We're going to look at

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Speaker 1: the issue which I have seen so many times, literally

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Speaker 1: dictate the lifelong financial fortunes of an enormous amount of people.

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Speaker 1: And it's not super and it's not your house. It's divorced.

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Speaker 1: And I have a financial advisor who is a specialist

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Speaker 1: in the area. He's an independent financial advisor. He's been

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Speaker 1: on the show before. His name is Nathan Fradley from

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Speaker 1: Nathan Fradley Advice. And we're going to put you through.

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Speaker 1: We're going to put you through, We're going to take

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Speaker 1: you through this issue today. I want you, Nathan.

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Speaker 2: I'm great, thanks having me back on.

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Speaker 1: Delighted to have you back on Okay, It's something that

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Speaker 1: we can all pay enormous attention to building an investment

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Speaker 1: portfolio and optimizing our cash and everything else, interplay between

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Speaker 1: pensions and super whatever, which we talk about every day

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Speaker 1: on this show. We don't talk about divorce, And the

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Speaker 1: fact is that so many times people with their financial

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Speaker 1: world cut in half or more than that. So can

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Speaker 1: I ask you, and you deal in this area, and

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Speaker 1: you've built a reputation in this area, what are the

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Speaker 1: hidden traps? What are the outstandings mistakes that people from

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Speaker 1: either side other marriage make in this area financially, if.

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Speaker 3: We're looking at it during the divorce process, I'd say

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Speaker 3: divorce is probably the hardest thing that most people will

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Speaker 3: go through in their entire life. It's definitely the most expensive.

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Speaker 3: To your point, it is an empire killer from that realm.

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Speaker 3: But because it is lost and it's grief, people tend

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Speaker 3: to lose some of the rationality in the decision making.

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Speaker 3: They get stuck in sometimes a sense of justice. Sometimes

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Speaker 3: they are concept of I get my day in court.

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Speaker 3: Sometimes just someone gets in a third party gets in

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Speaker 3: an ear of one party. So I'd say that when

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Speaker 3: we're doing the financial aspect of a divorce process or

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Speaker 3: any separation, focusing on rational outcomes and what life is

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Speaker 3: going to be like afterwards instead of getting stuck on

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Speaker 3: what life could have been like or what happened. Generally

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Speaker 3: costs fifty percent less money and legal fees than six

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Speaker 3: months off the divorce proceedings. So I think when we

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Speaker 3: get great success in divorce process, most people think divorce.

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Speaker 2: They go, what's the set percentage?

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Speaker 3: How much do I get if they've lived with me

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Speaker 3: for two years?

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Speaker 2: What's the rule? There are no rules.

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Speaker 1: There are no rules.

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Speaker 3: Did you say in the sense of there's no hard

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Speaker 3: and fast and there's certain dates and court time frames

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Speaker 3: that need to be met and must be separated for

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Speaker 3: twelve months to get divorced and things like that. But

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Speaker 3: in terms of financial split, a divorce has a divorce

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Speaker 3: aspect of it, the legal aspect of set breaking that marriage.

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Speaker 3: It's also got a financial or property settlement, and then

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Speaker 3: if there's children, that's a child aspect, So the financial

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Speaker 3: aspect is separate from the divorces.

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Speaker 1: So yeah, we always think of divorce as lawyers right

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Speaker 1: on both sides, not financial advisors, and that is that

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Speaker 1: the reality too.

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Speaker 3: Yeah, what I'm doing in this space is very new,

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Speaker 3: and financial advisors historically when they've gotten involved, they get

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Speaker 3: involved after settlement things are done.

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Speaker 2: I've now got this pool of money.

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Speaker 3: What do I do?

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Speaker 2: But when we look at the.

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Speaker 3: Really successful processes, two people who decide they're not going

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Speaker 3: to continue in a relationship together before lawyers get involved,

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Speaker 3: although you should always get them involved at some point

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Speaker 3: before they're even involved, you can have discussions which can

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Speaker 3: then turn into mediations, which can then turn into lawyer

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Speaker 3: led mediations before a court tells you this is the outcome.

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Speaker 1: That would require. I expect this would for balance, This

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Speaker 1: would require both parties having an advisor, and that would

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Speaker 1: require whatever way you cut it, it would demand a

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Speaker 1: certain amount of cash. Yeah.

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Speaker 3: Yes, So there's actually a form of separation called collaborative

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Speaker 3: divorce where you have two lawyers, a communication specialist that's

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Speaker 3: usually like a psychologist, and a financial neutral And it's

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Speaker 3: a fantastic process for the right people, but when you

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Speaker 3: have four professionals in the room, it can be increasingly expensive.

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Speaker 1: And is the financial persons supposed to carve it out

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Speaker 1: fairly financially between the two people getting divorced.

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Speaker 2: In collaborative divorces.

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Speaker 3: Their job is to equalize understanding, to ensure that there's

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Speaker 3: nothing missed that could be substantially detrimental in a separation.

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Speaker 3: So it's like catching things before they go wrong. But

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Speaker 3: they will never give advice to either party individually, even

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Speaker 3: after the divorce. They'll always refer out from that position there.

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Speaker 3: So there's one way that people can do it. But

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Speaker 3: in the work that I do, it's more working with

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Speaker 3: I often work with the financially disempowered person in the

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Speaker 3: relationship because often is the case that one person, as

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Speaker 3: we do with most jobs in relationships, one person takes.

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Speaker 1: Up the job.

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Speaker 2: I'll do the cooking, you do the washing.

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Speaker 3: I'll take care of the budgeting, and you can take

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Speaker 3: care of managing the kids, time tables, whatever it might be,

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Speaker 3: and we divide labor, and that can be proper madic.

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Speaker 3: If there's anything I'd say to never have to get

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Speaker 3: advice from me unto force, I would say is if

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Speaker 3: you can have an equal understanding of what's happening with money,

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Speaker 3: one person can manage the day to day, but if

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Speaker 3: you both fully understand what's going on, it can decrease

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Speaker 3: so many or decrease the chance of things going on

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Speaker 3: because there is a greater level of clarity.

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Speaker 1: It sounds to me what you're saying to our listeners,

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Speaker 1: and to some extent we will just say that there.

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Speaker 1: What you're saying is one person can manage the money

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Speaker 1: if they want, but both parties should look after themselves

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Speaker 1: by being across what's happening with their money. How much

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Speaker 1: is our mortgage, how much do we actually make together?

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Speaker 1: How many bank accounts do we have, how much is

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Speaker 1: in them? Can you give us some examples when you

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Speaker 1: say making sure everything's accounted for? Is? Are you talking

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Speaker 1: about stuff like money? Literally secret colms, people having money

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Speaker 1: talked away that the other partner didn't do.

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Speaker 3: It?

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Speaker 1: Was that common? Can you give you some examples.

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Speaker 2: That can happen?

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Speaker 3: But I find that happens when things have started going

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Speaker 3: wrong already. So if you've got a couple who'll across

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Speaker 3: the decisions, he's a really easy tell. If I'm the

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Speaker 3: person who manages the money and I'm making sure our

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Speaker 3: plans are on track and we're investing, we're doing all

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Speaker 3: these things, and the other person comes to me and says, hey,

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Speaker 3: let's go on this holiday, or the kids got this excursion,

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Speaker 3: or I want to buy this thing, or and you're

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Speaker 3: always saying no, that says that the other person doesn't

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Speaker 3: have a good handle on the situation, because if you

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Speaker 3: both understand it, it's not a decision of I'm not

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Speaker 3: the no guy, I'm not the one that's always asking

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Speaker 3: for things. It's we both understand the situation and the

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Speaker 3: context of what we can and can't afford. So that's

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Speaker 3: a really early indicator that if you us feel like

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Speaker 3: I wish we could do more, but I'm always feel

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Speaker 3: like we're saying no because we're trying to plan for the.

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Speaker 2: Future, but they just don't get it. Because they don't

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Speaker 2: get it.

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Speaker 1: I wonder my hunch is that the disastrous couple is

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Speaker 1: the couple where neither actually pay attention to the money.

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Speaker 1: Have you come across divorce proceedings where both parties were

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Speaker 1: appalling in terms of that they just didn't pay any attention.

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Speaker 3: Or they a little bit of dangerous information. They did

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Speaker 3: little things, but not everything. I thought you were taking

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Speaker 3: care of that. No, I thought you were taking care

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Speaker 3: of that. I was doing this thing, but I wasn't

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Speaker 3: doing that thing. And yeah, it's often the case where

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Speaker 3: the person who comes to me starts learning about how

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Speaker 3: things are done.

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Speaker 2: Why did we even do it that way? That doesn't make.

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Speaker 3: Any sense at all, because granted their former partner was

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Speaker 3: doing the best they could in the knowledge that they had,

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Speaker 3: but they may not have known what to do. It

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Speaker 3: may have just been thrustle them. You're good with money

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Speaker 3: because you saved a bit more before we go together.

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Speaker 1: So you've got money because you're an accountant and whatever,

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Speaker 1: I'm a portrait artist or whatever. Okay, So what about

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Speaker 1: when you have people in that situation? The home, which

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Speaker 1: in the Australian in every country matters, but in Australia

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Speaker 1: is enhanced because it's also, on top of being a home,

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Speaker 1: on top of having an elevated value VISI v. History

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Speaker 1: and other countries, it also is a tax protected vehicle.

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Speaker 1: So when there's a divorce, is it the case again

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Speaker 1: I'm just exploring here, Is it the case that the

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Speaker 1: person who does not get the house but gets other

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Speaker 1: assets has a much more complex future than the person

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Speaker 1: who got the house.

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Speaker 2: Maybe?

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Speaker 3: And so this sort of falls into one of the

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Speaker 3: old urban legends around around separation that if I keep

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Speaker 3: the house, I'll be better off. And there's plenty of

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Speaker 3: reasons for that, not having to base damp duty when

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Speaker 3: you purchase a new house, which is often missed in

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Speaker 3: separation agreements. Yeah, finding housing. You keep the house. Now

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Speaker 3: I've got to go and find somewhere to live, find

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Speaker 3: somewhere to rent. I got it's been near the kids.

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Speaker 3: I've got to do that, like all those kinds of things.

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Speaker 3: And then obviously the capital gains implications, I'll take the investments, you.

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Speaker 2: Take the house.

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Speaker 3: What happens in time, But I think what when we

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Speaker 3: look at that The root of that problem is actually

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Speaker 3: stems from not just what is the split or how

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Speaker 3: do we divide assets now? But looking forward, And this

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Speaker 3: is where I think financial advice is going to start

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Speaker 3: playing a lot more of a role as people see

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Speaker 3: the benefit of this is when if you look at

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Speaker 3: i'll take fifty percent, or.

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Speaker 2: I'll keep the house. You keep this.

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Speaker 3: That's great until we realize that the person who's kept

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Speaker 3: the house, who was a lower income earner, hasn't really

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Speaker 3: been able to earn that much, can't afford to maintain

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Speaker 3: the mortgage, can't afford the upkeep on the property, can't

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Speaker 3: and then two years they sell it anyway, so that

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Speaker 3: family asset is gone.

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Speaker 2: So this is where when we're looking.

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Speaker 3: At at a separation and trying to decide what's the

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Speaker 3: best way to split assets.

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Speaker 2: And when I do this work.

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Speaker 3: I'm representing one party is looking at it and saying, yes,

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Speaker 3: this might be where you want to be now, but

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Speaker 3: where do you want to be in the medium longer term?

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Speaker 2: Can you even.

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Speaker 3: Afford to keep this place? And how does that fit

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Speaker 3: into your broader lifestyle? The kids are sixteen and seventeen,

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Speaker 3: you want to be in the area for schooling for

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Speaker 3: the next two years than what or these sort of

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Speaker 3: factors start coming in. But yeah, there is definitely a

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Speaker 3: lot of advantages to the family home. There's also a

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Speaker 3: lot of cultural connection to it. As you said, the

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Speaker 3: great Australian dream of owning your own home or owning

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Speaker 3: someone else's is run so strongly in our blood. Keeping

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Speaker 3: that property sometimes can feel like something I want to

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Speaker 3: keep the house. I found the house, I put all

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Speaker 3: the work into the house, I painted the house. There's

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Speaker 3: this emotional connection to something that may not be in

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Speaker 3: the best interest to retain.

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Speaker 1: So it's not necessarily the case then that the complexity

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Speaker 1: is all upon the person who got other things other

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Speaker 1: than the home.

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Speaker 3: Yeah, I'm finding more that keeping the home is not

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Speaker 3: just not viable for either party, which is becoming increased

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Speaker 3: in the common that so much of the wealth is

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Speaker 3: in the home that the amount of debt the retainer

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Speaker 3: would have to take on either they can't get it

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Speaker 3: or they could can't maintain it, which just makes no sense.

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Speaker 3: That seeming that's coming up a lot more than it

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Speaker 3: used to.

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Speaker 1: Okay, can you give us two seconds on super and

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Speaker 1: how it works, because it's still important now.

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Speaker 3: Yeah, with superinnuation, there's really the common question again, can

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Speaker 3: we combine our super And there's sorts of things where

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Speaker 3: people in a relationship you can't. There's a couple of

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Speaker 3: rules around contribution splitting things like that, but there is

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Speaker 3: a rule around splitting of super innovation in a separation

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Speaker 3: and it forms part of the whole arrangement. So there's

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Speaker 3: no hard and fast you get half my super or

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Speaker 3: you'll come to an agreement that says this is how

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Speaker 3: we're splitting up the assets, and those assets will be

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Speaker 3: made of this much super, this much cash, this house.

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Speaker 2: That sort of stuff.

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Speaker 3: And then when that happens, there's a form, a family

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Speaker 3: law form that most super funds will have that rolls

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Speaker 3: the money from one fund to another. It's a relatively

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Speaker 3: straightforward process of these days from an administrative perspective.

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Speaker 2: But getting to.

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Speaker 3: That point, sometimes you get people who are very short

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Speaker 3: term in they're thinking, I want at least possible super

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Speaker 3: because I want is much.

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Speaker 2: Money in my bank account.

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Speaker 3: Other times they'll be focusing on that super Again, it

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Speaker 3: really plays back to how they're going to maintain their

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Speaker 3: life and moving forward, and is super the best place

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Speaker 3: for it if they don't take the super how they're

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Speaker 3: going to get money to retire?

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Speaker 2: All that kind of stuff.

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Speaker 1: Okay, is there any variation when it comes to self

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Speaker 1: managed super funds? Let's see mom and Dad are the

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Speaker 1: SERF match super fund.

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Speaker 2: The two trustees a really fun one.

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Speaker 3: Actually, I just did SPT points for advisers on this

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Speaker 3: recently because back in what's again, when you look at

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Speaker 3: the dynamics of relationships, we have a self managed super

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Speaker 3: fund because the person who was running the money is

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Speaker 3: it was a good idea. Maybe their business premises is

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Speaker 3: owned inside of the fund.

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Speaker 1: So the same issue emergen as I imagine the person

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Speaker 1: really runs it.

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Speaker 3: Yeah, but what you again have is the amplified effect

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Speaker 3: that all trustees have to know how to run the fund.

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Speaker 2: And have full responsibility for it.

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Speaker 3: And you've also then got to be acting in the trustees'

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Speaker 3: best interest and or best financial interest, and.

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Speaker 2: They have divoting life goals.

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Speaker 3: So it might makes sense to retain the fund right now,

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Speaker 3: but because of business premises is in it, you can't

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Speaker 3: split it and almost into things. But people repartner lives

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Speaker 3: change direction, maybe they just don't get along, and maintaining

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Speaker 3: that connection can be really hard. I've seen cases where

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Speaker 3: partners have taken limited power of attorney over their form

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Speaker 3: of spouse's power to trust, the obligations, and that's just

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Speaker 3: a nightmare of disaster. Wedding to happen self maniership of

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Speaker 3: fund becomes a lot more.

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Speaker 1: Complicated, more complicated understand and tell me what if it

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Speaker 1: was the case that they wanted to split and they

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Speaker 1: wanted to split everything and the core of the self

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Speaker 1: maner super fund was a business premises because they used

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Speaker 1: to have a shop or whatever. Do you have to

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Speaker 1: sell the property at market value and split it is

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Speaker 1: that what.

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Speaker 3: Happened again would come back to how you decided to

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Speaker 3: divide up the assets, whether the balances were segmented, in

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Speaker 3: the first place, there's no have tos.

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Speaker 2: But in regards to the divorce process.

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Speaker 3: But from a super fund perspective, it has to be

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Speaker 3: arms length transactions, market value.

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Speaker 2: Everything has to be above boarder clients.

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Speaker 3: So there's no give from a family or perspective, and

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Speaker 3: that your super responsibilities to struss they are the same.

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Speaker 1: Responsible and the fund must get the value market value

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Speaker 1: for the asset whatever it is, including that whatever you

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Speaker 1: had in it, including a business premises. Okay, really interesting,

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Speaker 1: absolutely absorbing. Let's come back and we're going to cover

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Speaker 1: folks how to divorce in the best possible financial fashion.

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Speaker 1: Back in a moment. Hello and welcome back to the

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Speaker 1: Australian's Money Puzzle podcast. Okay, today we are talking about

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Speaker 1: divorce and money, the best way that you or you

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Speaker 1: and your partner can divorce financially. And I have Nathan

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Speaker 1: Fradley on the show, who is specializes in this is

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Speaker 1: really across it and I'm going to ask him now

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Speaker 1: about the best how to do this the best way financially.

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Speaker 1: What are your mean what are your mean lessons, Neathan

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Speaker 1: from years of working in this area.

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Speaker 3: I'm going to be vague on the legal side of it.

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Speaker 3: Because I'm not a lawyer, but the financial advisor supports

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Speaker 3: the lawyer in this process. But what I've seen work

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Speaker 3: really well. Firstly, working with professionals will make your life easier.

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Speaker 3: People fear divorce lawyers or financial plans because of cost,

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Speaker 3: but inevitably, by working with professionals things to done more efficiently.

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Speaker 3: You're getting your unbiased or your biased to you advice.

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Speaker 3: It saves you money the end of the day, because

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Speaker 3: what can happen is it falls around. But I think

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Speaker 3: that getting the right advice is really important and that

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Speaker 3: sets you up, which is a bit of gimmy for me.

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Speaker 3: But I'd say in terms of when you're looking at

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Speaker 3: yourself and how you're going through this, it's going to

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Speaker 3: be awful for everyone in the situation the longer you

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Speaker 3: can stay rational look at things not just on I

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Speaker 3: mentioned before one face value. Now, but what does this

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Speaker 3: mean for me at the end after this is done,

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Speaker 3: what does life look like because I'm starting again and

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Speaker 3: understand that it's going to be okay. That decreases the

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Speaker 3: temperature in the room in the separation, and know that

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Speaker 3: you'll be all right and then work through I think

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Speaker 3: that's really important. And then this is going to be

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Speaker 3: harder to say. It's easier to say than do, but

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Speaker 3: assuming best intent with your partner will be helpful a

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Speaker 3: lot of the time, especially working with the more less

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Speaker 3: sophisticated person in the relationship. The former partner will do

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Speaker 3: things and because it's for twenty years, they've just done

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Speaker 3: things with money, and the now awakened part is.

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Speaker 2: Going, why do they do that? Why do they do that?

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Speaker 2: Are they hiding money? Are they hiding assets of things?

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Speaker 3: And a lot of my job in this instance is explaining,

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Speaker 3: you know, this is how this works, this is what

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Speaker 3: they're trying to do. I can see how this has

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Speaker 3: played out the way it has and unless they're going

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Speaker 3: for that or this will come out in the whitewash

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Speaker 3: because of the disclosure of assets. That again decreases the temperature.

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Speaker 3: The lower the temperature, the comma we are, the camera

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Speaker 3: we are, the easier the process can be, and the

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Speaker 3: more we can focus on the things that we actually

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Speaker 3: want to fight about instead of fighting about everything.

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Speaker 1: I expect you have what goes without saying that if

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Speaker 1: the person the partner on the other side has a

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Speaker 1: lawyer and an advisor and you only have a lawyer

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Speaker 1: it sounds to me like you should have an advisor.

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Speaker 1: I think that sounds like basic logic in terms of

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Speaker 1: the balance of power. The other thing I would ask

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Speaker 1: you is what about priorities? When you're sitting there with

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Speaker 1: the client and you're saying, Okay, here we go. This

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Speaker 1: is a divorce. Again, my client is a very sophisticated operator,

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Speaker 1: but is not interested and has never been financial. The

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Speaker 1: person on the other side is a similar person, but

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Speaker 1: their life has been in finance and they are innately

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Speaker 1: well disposed towards getting the best financial outcome. So when

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Speaker 1: you're looking at your client, the non financial one basically

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Speaker 1: who never asked what they were signing over the years,

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Speaker 1: are often didn't ask what's your priorities? What do you

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Speaker 1: say to yourself? What are my priorities for my client?

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Speaker 1: Is it accommodation, is it cash, flu is it.

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Speaker 2: Super all of those things?

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Speaker 3: So I think the number one priority is understanding your

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Speaker 3: point about just signing things. It's a classic example of

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Speaker 3: trust that distributes to both parties, and the person just

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Speaker 3: signs it every year and all of a sudden they're going,

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Speaker 3: what am I signing? I don't actually understand what's happening.

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Speaker 3: I think getting across and understanding the current state of

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Speaker 3: play is really important because that helps them make a

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Speaker 3: better decision. That can be as simple as the budget,

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Speaker 3: which you just mentioned, but is crucial. Where does that

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Speaker 3: money actually go? I can't believe we spent that much.

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Speaker 3: But also, now that we're separating, we're probably going to

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Speaker 3: run two households. How long can we afford.

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Speaker 2: To do that for?

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Speaker 3: We've got these kids fees, We've got these medical costs

392
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Speaker 3: at this sort of stuff that piles in.

393
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Speaker 2: Who's covering what? How is it paid for?

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Speaker 3: Keeping that as clean as possible and as transparent as

395
00:20:12,560 --> 00:20:16,439
Speaker 3: possible again decrease the temperature, but also allows a cleaner

396
00:20:16,480 --> 00:20:18,760
Speaker 3: process at the end of the day because it really

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Speaker 3: gives evidence to what the needs are of individuals, and

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Speaker 3: I suppose then helps us frame the outcome. What are

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Speaker 3: things going to be at the end of the day.

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Speaker 3: Because there's a difference between winning a divorce and winning

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Speaker 3: a divorce there is I'm going for seventy percent, I'm

402
00:20:35,640 --> 00:20:39,320
Speaker 3: going for blood, or there is a fair and equitable

403
00:20:39,400 --> 00:20:42,000
Speaker 3: arrangement that we come to, which means that I'm going

404
00:20:42,040 --> 00:20:43,959
Speaker 3: to end up in a situation where I can move

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Speaker 3: on and be okay.

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Speaker 1: Can you give me an example when you say someone's

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Speaker 1: going for blood, Can you give me an example of

408
00:20:48,960 --> 00:20:53,080
Speaker 1: the low hanging fruit for the arch aggressor.

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Speaker 2: Valuations?

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Speaker 1: Evaluations?

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Speaker 3: Evaluations is, yeah, I have a pointed a value are Oh,

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Speaker 3: this is a I've used before, And it turns out

413
00:21:02,280 --> 00:21:05,480
Speaker 3: there's been some communication about the nature of this obscure

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00:21:05,520 --> 00:21:09,199
Speaker 3: business that they had, or they might have farm land or.

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00:21:09,160 --> 00:21:09,800
Speaker 2: Something like that.

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Speaker 3: Whether it's a business or there's an asset that's hard

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Speaker 3: to value that's illiquid, that's a massive area for I

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Speaker 3: suppose play, and also a dynamic of understanding that a

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Speaker 3: person who bought it for a certain reason may not

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Speaker 3: have told the other party what the potential opportunities in

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Speaker 3: this business. Maybe they're in the business and it hasn't

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Speaker 3: quite clicked over that winning point, so it's not really

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Speaker 3: much of a business. Don't worry about that one. I

424
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Speaker 3: think it's going under any way, these sorts of things.

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Speaker 3: The accounting side of it, it's a little bit easier

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Speaker 3: because of forensic accounts and what have you to uncover.

427
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Speaker 3: But I think the nature of businesses or certain investments

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Speaker 3: and assets is a low hanging fur the more aggressive one.

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Speaker 1: That's really interesting and oldmore plays back to your original

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Speaker 1: point at the start of getting advisors in before the settlement,

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Speaker 1: because the settlement assumes the evaluation. We're correct, Yeah, so

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Speaker 1: what what happens? So let's say so let's say the

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Speaker 1: dispute emergers, and what happens is that the partner said

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Speaker 1: such and such a business was worth X, and the

435
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Speaker 1: evaluation is clearly comically low. What do you do?

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Speaker 3: My job in that situation sits more of a supportive position.

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Speaker 3: What are the lawyers will tend to do is send

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Speaker 3: letters back and forth in various tones, depending on the

439
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Speaker 3: style of lawyer they are, whether they are more litigious

440
00:22:32,840 --> 00:22:35,840
Speaker 3: or more cooperative, and they will come to an agreement

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Speaker 3: of an independent valuer that the clients agree to spend

442
00:22:39,680 --> 00:22:42,000
Speaker 3: money on. There could be one that's one hundred thousand dollars,

443
00:22:42,040 --> 00:22:44,880
Speaker 3: there could be one that's ten thousand dollars, and that

444
00:22:44,920 --> 00:22:47,840
Speaker 3: sort of thing plays out, and then that is valuation

445
00:22:47,920 --> 00:22:51,240
Speaker 3: you end up going off. Also, the timeframe evaluation is important.

446
00:22:51,240 --> 00:22:53,840
Speaker 3: If we've got an existing business and we've separated on

447
00:22:53,920 --> 00:22:56,800
Speaker 3: the first of April, that we might use that as

448
00:22:56,800 --> 00:23:00,159
Speaker 3: the date where all valuations are done too, because we

449
00:23:00,160 --> 00:23:03,120
Speaker 3: don't want firstly, this separation is going to be impacting

450
00:23:03,160 --> 00:23:06,200
Speaker 3: the business, and we don't want any nefarious or potential

451
00:23:06,320 --> 00:23:09,440
Speaker 3: nefarious activity of moving money or profits around and things

452
00:23:09,480 --> 00:23:11,679
Speaker 3: like that, or even just the suspicion of that doesn't

453
00:23:11,680 --> 00:23:14,240
Speaker 3: help anyone. And then it also means that the person

454
00:23:14,280 --> 00:23:16,440
Speaker 3: who is who runs that business isn't feeling, oh, I

455
00:23:16,520 --> 00:23:19,280
Speaker 3: might just sandbag my financials and go slow for the

456
00:23:19,359 --> 00:23:21,040
Speaker 3: next two years so that I don't have to give

457
00:23:21,040 --> 00:23:23,960
Speaker 3: as much away. It just takes off the table. But yeah,

458
00:23:24,000 --> 00:23:27,280
Speaker 3: it's getting the right valuers in. And valuers are amazing

459
00:23:27,359 --> 00:23:30,639
Speaker 3: what they do, a meta variety of them in different specialties.

460
00:23:31,400 --> 00:23:34,240
Speaker 1: What do you mean amazingly varied in their talents?

461
00:23:34,800 --> 00:23:37,720
Speaker 3: Just that the angles that valuers take these are largely

462
00:23:37,760 --> 00:23:39,760
Speaker 3: people who work in M and A. They don't just

463
00:23:39,800 --> 00:23:41,560
Speaker 3: look at it and go, oh, this is a business

464
00:23:41,560 --> 00:23:43,960
Speaker 3: of X style, therefore it's worth X times eap it

465
00:23:44,560 --> 00:23:46,919
Speaker 3: or revenue or something. They'll look at it from multiple angles.

466
00:23:46,920 --> 00:23:49,879
Speaker 3: They do cash flow, they'll do forecasting. The reports that

467
00:23:49,960 --> 00:23:52,240
Speaker 3: you get from valuations can be really good, and then

468
00:23:52,240 --> 00:23:56,439
Speaker 3: that can give an indication of whether something seems reasonable.

469
00:23:57,240 --> 00:23:59,360
Speaker 3: What my job is then to look at and go

470
00:23:59,560 --> 00:24:02,280
Speaker 3: if is this, if this has seemed reasonable, what would

471
00:24:02,280 --> 00:24:03,240
Speaker 3: this mean for the client?

472
00:24:04,040 --> 00:24:06,960
Speaker 2: Do they keep fighting? Is this enough?

473
00:24:07,240 --> 00:24:07,440
Speaker 3: Do that?

474
00:24:07,560 --> 00:24:07,800
Speaker 2: Yeah?

475
00:24:07,840 --> 00:24:10,560
Speaker 3: That's where I come in of if this was the

476
00:24:10,560 --> 00:24:12,879
Speaker 3: outcome we got, what would that mean for you? Do

477
00:24:12,880 --> 00:24:15,200
Speaker 3: you want to keep fighting for another two years? Or

478
00:24:15,320 --> 00:24:16,159
Speaker 3: do you take this and go?

479
00:24:16,359 --> 00:24:19,119
Speaker 1: You're something like an expert witness there. Yeah, yeah, okay,

480
00:24:19,359 --> 00:24:20,840
Speaker 1: I can I ask you one last thing on this

481
00:24:20,920 --> 00:24:23,719
Speaker 1: issue about money being touped away a secret accounts, sir

482
00:24:23,960 --> 00:24:26,080
Speaker 1: and all that sort of thing. Is the tax system

483
00:24:26,080 --> 00:24:30,399
Speaker 1: and financial system sufficiently transparent now that you would be

484
00:24:30,480 --> 00:24:34,080
Speaker 1: confident that you have a clear picture of the money

485
00:24:34,119 --> 00:24:37,320
Speaker 1: held in accounts by both parties?

486
00:24:38,640 --> 00:24:42,959
Speaker 3: I would like to think so. But USB stics with crypto.

487
00:24:43,000 --> 00:24:47,160
Speaker 3: Whilet's exists, sometimes people have lost them genuinely.

488
00:24:49,200 --> 00:24:53,199
Speaker 1: I think that's I never thought of that. Crypto rights

489
00:24:53,560 --> 00:24:55,440
Speaker 1: increasingly common, I'm sure.

490
00:24:55,760 --> 00:24:58,960
Speaker 3: Yeah, yeah, I think I would like to have confidence

491
00:24:59,000 --> 00:25:03,120
Speaker 3: that people disclose sets disclosed international holdings do the right thing.

492
00:25:03,720 --> 00:25:06,680
Speaker 3: But I'm sure there is examples of that not being

493
00:25:06,720 --> 00:25:07,159
Speaker 3: the case.

494
00:25:07,400 --> 00:25:09,399
Speaker 1: But yeah, and of course, once upon a time whatever

495
00:25:09,480 --> 00:25:11,960
Speaker 1: Swiss accounts. So we're only for the very very wealthy.

496
00:25:11,960 --> 00:25:13,840
Speaker 1: You know, I can open a Swiss account in ten minutes.

497
00:25:13,840 --> 00:25:16,119
Speaker 1: I could open a Swiss account when the minute we

498
00:25:16,160 --> 00:25:20,639
Speaker 1: finished this show, I could have it done in twenty minutes. Yes, okay, terrific,

499
00:25:20,840 --> 00:25:23,800
Speaker 1: Very interesting, Nathan. I think we might hold it there

500
00:25:23,800 --> 00:25:26,560
Speaker 1: and go to questions, and I expect we may get

501
00:25:26,560 --> 00:25:30,119
Speaker 1: some questions off the back of today's show specifically, but

502
00:25:30,240 --> 00:25:41,560
Speaker 1: let's see all right back in a moment. Hello, Welcome

503
00:25:41,600 --> 00:25:44,480
Speaker 1: back to the Australians Money Puzzitive podcast James Kirkby with

504
00:25:44,600 --> 00:25:48,080
Speaker 1: Nathan Fradley. Wasn't that interesting, folks? On how divorce the

505
00:25:48,119 --> 00:25:51,800
Speaker 1: financial the financials of divorce. I hope it was useful

506
00:25:51,880 --> 00:25:54,879
Speaker 1: to youth the show wanted to do for some time. Hey, Nathan,

507
00:25:55,000 --> 00:25:57,639
Speaker 1: just before on the questions that are of course not

508
00:25:57,640 --> 00:26:01,880
Speaker 1: necessarily enough about divorce, they are this week's questions. You're

509
00:26:01,920 --> 00:26:04,560
Speaker 1: a financial advisor the government we're in the middle of

510
00:26:04,560 --> 00:26:07,399
Speaker 1: an election. There was also some promises about financial advice

511
00:26:07,440 --> 00:26:10,359
Speaker 1: being reformed and straightened out. Here we are with only

512
00:26:10,440 --> 00:26:14,520
Speaker 1: a short period to go before the election. Did they

513
00:26:14,560 --> 00:26:16,959
Speaker 1: make any progress? Do you think on financial advice and

514
00:26:17,000 --> 00:26:20,400
Speaker 1: how it works for as far as most people are concerned?

515
00:26:20,480 --> 00:26:23,439
Speaker 1: In terms of simplifying it, in terms of widening the

516
00:26:23,800 --> 00:26:27,960
Speaker 1: availability of advice to everybody.

517
00:26:27,400 --> 00:26:32,919
Speaker 3: I think that they did some things. Some changes happened,

518
00:26:33,200 --> 00:26:35,960
Speaker 3: but nothing I would say that moved the needle enough.

519
00:26:36,240 --> 00:26:40,920
Speaker 3: There was one experience exemption for education standards, which came

520
00:26:40,960 --> 00:26:42,480
Speaker 3: in so late that I think a lot of people

521
00:26:42,480 --> 00:26:45,080
Speaker 3: who had the experience, who didn't do the education would

522
00:26:45,080 --> 00:26:46,240
Speaker 3: have left the industry already.

523
00:26:47,080 --> 00:26:49,440
Speaker 2: And they proposed a piece of legislation.

524
00:26:49,680 --> 00:26:51,840
Speaker 3: Then they didn't go down very well, so they changed

525
00:26:51,880 --> 00:26:55,000
Speaker 3: the acronym and re launched it, and then they launched

526
00:26:55,000 --> 00:26:58,560
Speaker 3: a half version of that right beforehand. But if I

527
00:26:58,600 --> 00:27:04,320
Speaker 3: went the full term the industries largely it's changed, It's evolved,

528
00:27:04,640 --> 00:27:07,120
Speaker 3: but not at the end of any substantial show.

529
00:27:07,280 --> 00:27:08,440
Speaker 1: At the end of the day, this is all about

530
00:27:08,440 --> 00:27:11,080
Speaker 1: how much financial advice costs, and if it costs five

531
00:27:11,119 --> 00:27:13,760
Speaker 1: thousand a year or so to have an annual review

532
00:27:14,560 --> 00:27:18,960
Speaker 1: of your advice. These are industry figures when we're talking

533
00:27:19,000 --> 00:27:25,280
Speaker 1: about specific projects. Unfortunately, divorce being the issue of djuur,

534
00:27:25,359 --> 00:27:28,480
Speaker 1: here any guidelines to what it would cost people to

535
00:27:28,640 --> 00:27:29,600
Speaker 1: use an advisor.

536
00:27:30,800 --> 00:27:35,280
Speaker 3: In the situation my I cank my face sit somewhere

537
00:27:35,280 --> 00:27:37,920
Speaker 3: around seven and a half to thirty depending.

538
00:27:38,000 --> 00:27:40,439
Speaker 1: We'll leave it at that. We'll assume that is a

539
00:27:40,480 --> 00:27:42,480
Speaker 1: sort of industry standard, and that is quite a ranger

540
00:27:42,520 --> 00:27:42,800
Speaker 1: give us.

541
00:27:42,880 --> 00:27:44,119
Speaker 2: It's much more than the standard.

542
00:27:44,200 --> 00:27:46,840
Speaker 1: Or I see, Pat asks, do you think the big

543
00:27:46,880 --> 00:27:50,040
Speaker 1: super funds like A or T being now? I think

544
00:27:50,160 --> 00:27:53,119
Speaker 1: the number two fund, because of course it was the

545
00:27:53,200 --> 00:27:56,600
Speaker 1: combination of Sun Super and q C will return a

546
00:27:56,640 --> 00:27:59,080
Speaker 1: positive or negative return at the end of this year

547
00:27:59,119 --> 00:28:01,320
Speaker 1: and the next. I be better off putting my money

548
00:28:01,320 --> 00:28:03,840
Speaker 1: in a bank term deposit Number one. Pat, We don't

549
00:28:03,880 --> 00:28:06,320
Speaker 1: give advice number two. We are not going to talk

550
00:28:06,320 --> 00:28:09,800
Speaker 1: about whether that particular fund art will give you a

551
00:28:09,800 --> 00:28:11,920
Speaker 1: positive or negative return. But we're happy to talk about

552
00:28:11,960 --> 00:28:15,919
Speaker 1: whether all the funds, the big funds, the Austrian super

553
00:28:16,040 --> 00:28:19,840
Speaker 1: Uni super Art and all the usual suspects, Host plus

554
00:28:19,840 --> 00:28:22,800
Speaker 1: aware on they go, will they give a positive or

555
00:28:22,880 --> 00:28:25,240
Speaker 1: negative return at the end of this year and the next.

556
00:28:25,400 --> 00:28:28,560
Speaker 1: Nobody knows, Pat, Sorry, nobody knows the future. Even on

557
00:28:28,560 --> 00:28:31,280
Speaker 1: this show. We don't know the future. But the second

558
00:28:31,280 --> 00:28:33,399
Speaker 1: part of your question, would I be better off putting

559
00:28:33,400 --> 00:28:35,840
Speaker 1: my money in a bank deposit? Nathan, I come into

560
00:28:35,920 --> 00:28:38,720
Speaker 1: you and I say I'm in industry fund or retail

561
00:28:38,760 --> 00:28:42,640
Speaker 1: fund number four. They've had some really good years and

562
00:28:42,680 --> 00:28:45,320
Speaker 1: it looks pretty bad this last few months. I see

563
00:28:45,400 --> 00:28:48,000
Speaker 1: that they will be lucky to pull off a positive

564
00:28:48,040 --> 00:28:50,120
Speaker 1: return this year. Should I put my money in a

565
00:28:50,240 --> 00:28:53,440
Speaker 1: term bank deposit? In other words, should I go to cash?

566
00:28:53,640 --> 00:28:54,400
Speaker 1: What do you say?

567
00:28:56,040 --> 00:28:58,920
Speaker 3: My answer, which I'm sure is frustrating, is it largely

568
00:28:59,000 --> 00:29:00,840
Speaker 3: depends on who you are, what your situation is.

569
00:29:00,880 --> 00:29:03,280
Speaker 1: What did it ever make sense to order cash.

570
00:29:03,520 --> 00:29:06,320
Speaker 3: If maybe you needed the money in the next twelve

571
00:29:06,360 --> 00:29:11,040
Speaker 3: months and you any loss of capital would mean you

572
00:29:11,080 --> 00:29:14,200
Speaker 3: couldn't achieve what you needed to achieve, or the thought

573
00:29:14,240 --> 00:29:16,760
Speaker 3: of losing any money kept you awake at night. But

574
00:29:17,240 --> 00:29:20,080
Speaker 3: trying to time the perfect day to do that, as

575
00:29:20,120 --> 00:29:23,480
Speaker 3: we've known with recent volatility, let alone normal volatility, is

576
00:29:23,520 --> 00:29:25,040
Speaker 3: impossible and you will get it wrong.

577
00:29:25,680 --> 00:29:27,880
Speaker 1: Okay, but it's worth anning. We've had the worst day

578
00:29:29,040 --> 00:29:31,880
Speaker 1: on the share market since COVID, and we've had the

579
00:29:31,880 --> 00:29:36,280
Speaker 1: best day since COVID on the share market in recent weeks.

580
00:29:36,280 --> 00:29:39,360
Speaker 1: In fact, it happened inside a week. These are wild times.

581
00:29:39,800 --> 00:29:42,240
Speaker 1: And the other thing I think that's important to anyone

582
00:29:42,320 --> 00:29:46,760
Speaker 1: considering going to cash, going partially to cash, is that

583
00:29:46,840 --> 00:29:49,680
Speaker 1: the rates are dropping. You might tune into the show

584
00:29:49,680 --> 00:29:54,320
Speaker 1: with Liam Short, which was the last recorded show, where

585
00:29:54,680 --> 00:29:58,640
Speaker 1: he is explaining that though the RBA only official rates

586
00:29:58,680 --> 00:30:01,200
Speaker 1: by a quarter of percent, banks, don't you love it.

587
00:30:01,200 --> 00:30:04,200
Speaker 1: They've already cut in three times. They've put the equivalent

588
00:30:04,200 --> 00:30:06,920
Speaker 1: of three RBA quarter percent cuts in already to the

589
00:30:06,960 --> 00:30:10,600
Speaker 1: bank deposits. So they are dropping, my friends, unfortunately, just

590
00:30:10,640 --> 00:30:13,200
Speaker 1: when you want them, of course, to be an alternative

591
00:30:13,280 --> 00:30:17,480
Speaker 1: but all relevant, I hope for you, Pat all right, Luke, Well,

592
00:30:17,480 --> 00:30:19,240
Speaker 1: he just wants to make the point that I have

593
00:30:19,360 --> 00:30:22,280
Speaker 1: We had mentioned in the show that some people might

594
00:30:22,360 --> 00:30:25,760
Speaker 1: say in rocky markets, volatile markets like we're having, that

595
00:30:27,320 --> 00:30:30,360
Speaker 1: they are frustrated with big super funds and feel powerless,

596
00:30:30,360 --> 00:30:33,280
Speaker 1: and that perhaps it would be time to have a

597
00:30:33,400 --> 00:30:37,240
Speaker 1: self managed superfund. And I don't know if this is

598
00:30:37,280 --> 00:30:40,080
Speaker 1: a coincidence, but self managed super funds are about to

599
00:30:40,200 --> 00:30:42,640
Speaker 1: record their best year for a long best year ever,

600
00:30:42,840 --> 00:30:48,240
Speaker 1: forty thousand commencements apparently on the way. And so Luke says,

601
00:30:49,400 --> 00:30:54,680
Speaker 1: a self managed super fund is completely unnecessary for listed assets,

602
00:30:54,720 --> 00:30:58,160
Speaker 1: and I'm not sure how you could justify it for

603
00:30:58,400 --> 00:31:03,880
Speaker 1: this purpose, especially a portfolio of exchange traded funds. The

604
00:31:03,960 --> 00:31:09,160
Speaker 1: additional layer of costs adds up. Even an industry super

605
00:31:09,160 --> 00:31:11,920
Speaker 1: fund allows you to select your investments, and as thet

606
00:31:11,960 --> 00:31:16,720
Speaker 1: allocations the reasoning provided of market volunteerity is no reason

607
00:31:16,760 --> 00:31:20,360
Speaker 1: to go to a self managed super fund. I don't know.

608
00:31:20,360 --> 00:31:22,960
Speaker 1: It depends who you are and your level of confidence

609
00:31:22,960 --> 00:31:26,400
Speaker 1: in your level of understanding in the markets. I do

610
00:31:26,480 --> 00:31:29,600
Speaker 1: take the point though, it's fair enough, isn't it. But

611
00:31:29,800 --> 00:31:33,320
Speaker 1: luc is saying that you can have ANYTF option now

612
00:31:33,360 --> 00:31:35,760
Speaker 1: in big industry funds more unless you can say okay,

613
00:31:36,240 --> 00:31:38,720
Speaker 1: So if you had ten ETFs in an industry super fund,

614
00:31:38,720 --> 00:31:40,880
Speaker 1: you do wonder why you would have a super fund,

615
00:31:40,960 --> 00:31:43,560
Speaker 1: a self manageable fund that just had ten ETFs, and

616
00:31:43,640 --> 00:31:46,440
Speaker 1: comparing one against the other, you wonder whether it be

617
00:31:46,520 --> 00:31:47,120
Speaker 1: worth the effort.

618
00:31:48,480 --> 00:31:50,640
Speaker 3: I think it's my general philosophy so that I can

619
00:31:50,640 --> 00:31:53,560
Speaker 3: do it simpler, easier, or with less riskquy wouldn't I?

620
00:31:53,680 --> 00:31:56,719
Speaker 3: And so if the ETFs that you're wanting to invest

621
00:31:56,720 --> 00:31:58,479
Speaker 3: in you want some control, you want to take out

622
00:31:58,480 --> 00:32:01,520
Speaker 3: of it at some level. If they're available and you

623
00:32:01,520 --> 00:32:03,320
Speaker 3: can put the weight in them that you'd like to,

624
00:32:04,160 --> 00:32:07,160
Speaker 3: because that's often a limiting factor, then and you can

625
00:32:07,160 --> 00:32:10,000
Speaker 3: do it at a cheaper cost, with less responsibility and

626
00:32:10,040 --> 00:32:10,800
Speaker 3: less administration.

627
00:32:11,320 --> 00:32:11,960
Speaker 2: Why wouldn't you.

628
00:32:12,400 --> 00:32:16,280
Speaker 3: I think where people have ETF portfolio that aren't available

629
00:32:16,280 --> 00:32:18,640
Speaker 3: on these menus, Remember they are restricted, they're going to

630
00:32:18,680 --> 00:32:21,480
Speaker 3: take a more conservative view on what they can add

631
00:32:21,480 --> 00:32:24,800
Speaker 3: because they're on the hook for allowing their members.

632
00:32:24,600 --> 00:32:26,280
Speaker 1: So they've got to be there's very much the sort

633
00:32:26,320 --> 00:32:28,920
Speaker 1: of bread and butter vanilla.

634
00:32:29,280 --> 00:32:31,520
Speaker 3: And they're going to put caps. I think there's often

635
00:32:31,560 --> 00:32:33,960
Speaker 3: a complaint that maybe the cap on a Goald ETF

636
00:32:34,040 --> 00:32:34,680
Speaker 3: is too low.

637
00:32:35,280 --> 00:32:36,920
Speaker 1: You're talking about industry funds.

638
00:32:36,600 --> 00:32:37,680
Speaker 2: Now, yeah, industry funds.

639
00:32:37,720 --> 00:32:39,680
Speaker 3: Yeah, they're going to say you can only put up

640
00:32:39,680 --> 00:32:42,000
Speaker 3: to twenty percent of your money in this particular ETF

641
00:32:42,040 --> 00:32:43,840
Speaker 3: because of the risk grading we've given it.

642
00:32:43,960 --> 00:32:45,240
Speaker 2: And that might be a reason.

643
00:32:45,520 --> 00:32:47,120
Speaker 3: I think one of the big super funds was in

644
00:32:47,160 --> 00:32:50,719
Speaker 3: the news recently for commentary around crypto ETFs and why

645
00:32:50,760 --> 00:32:52,800
Speaker 3: they wouldn't allow people to invest in them. And if

646
00:32:52,800 --> 00:32:55,720
Speaker 3: you can't do what you want to do and it

647
00:32:55,800 --> 00:32:57,480
Speaker 3: makes sense to do, and you're taking control of it

648
00:32:57,520 --> 00:33:00,840
Speaker 3: and responsibility for it, and you understand and the responsibilities

649
00:33:00,840 --> 00:33:03,320
Speaker 3: of a self manishiper fund the work involved, then that's

650
00:33:03,320 --> 00:33:04,800
Speaker 3: when you start looking at that as an option.

651
00:33:05,200 --> 00:33:07,840
Speaker 1: Okay, very good, all right, I can see your I

652
00:33:07,880 --> 00:33:10,560
Speaker 1: can see how your balanced demeanor is useful in the

653
00:33:10,600 --> 00:33:16,480
Speaker 1: job you don Yeah, yeah, yeah, thank you very much

654
00:33:16,640 --> 00:33:18,440
Speaker 1: for being on the show today. Great to talk to

655
00:33:18,480 --> 00:33:23,200
Speaker 1: you again. It was a very interesting single subject show

656
00:33:23,240 --> 00:33:26,000
Speaker 1: that we should have done a long time ago. It

657
00:33:26,040 --> 00:33:28,000
Speaker 1: was only when I saw, when I thought about it

658
00:33:28,040 --> 00:33:30,920
Speaker 1: and I thought about you, that you do that. I said,

659
00:33:30,960 --> 00:33:32,520
Speaker 1: this is the time to do it. This is when

660
00:33:32,520 --> 00:33:36,800
Speaker 1: there is actually something of a lull between these at

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00:33:36,800 --> 00:33:38,960
Speaker 1: this time of the year. Very good to step out

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00:33:38,960 --> 00:33:41,080
Speaker 1: and have a look at something like that. Okay, hey,

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00:33:41,080 --> 00:33:43,000
Speaker 1: thank you Nathan Fradley. Great to have you on the show.

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00:33:43,400 --> 00:33:47,320
Speaker 1: Thanks Jev, and thank you everybody for listening. Remember the

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00:33:47,440 --> 00:33:51,360
Speaker 1: email the money Puzzle at the Australian dot com dot au.

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00:33:51,520 --> 00:33:54,760
Speaker 1: Today's show was produced by Leah Sammaglu Talk to you soon,

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00:34:00,320 --> 00:34:01,680
Speaker 1: SA The Fool