Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirby. Welcome aboard everybody. I hope you've managed to
Speaker 1: have a few days off over these rolling holidays Easter
Speaker 1: and that day and everything else. And often at holiday
Speaker 1: times we do something slightly different, which we will today,
Speaker 1: but it is not in the nature of light entertainment.
Speaker 1: If you want to figure out how to start your
Speaker 1: classic car collection or how to build a wine collection,
Speaker 1: we have done that. Have a look in the archive
Speaker 1: that's waiting for you. Today. We're going to look at
Speaker 1: the issue which I have seen so many times, literally
Speaker 1: dictate the lifelong financial fortunes of an enormous amount of people.
Speaker 1: And it's not super and it's not your house. It's divorced.
Speaker 1: And I have a financial advisor who is a specialist
Speaker 1: in the area. He's an independent financial advisor. He's been
Speaker 1: on the show before. His name is Nathan Fradley from
Speaker 1: Nathan Fradley Advice. And we're going to put you through.
Speaker 1: We're going to put you through, We're going to take
Speaker 1: you through this issue today. I want you, Nathan.
Speaker 2: I'm great, thanks having me back on.
Speaker 1: Delighted to have you back on Okay, It's something that
Speaker 1: we can all pay enormous attention to building an investment
Speaker 1: portfolio and optimizing our cash and everything else, interplay between
Speaker 1: pensions and super whatever, which we talk about every day
Speaker 1: on this show. We don't talk about divorce, And the
Speaker 1: fact is that so many times people with their financial
Speaker 1: world cut in half or more than that. So can
Speaker 1: I ask you, and you deal in this area, and
Speaker 1: you've built a reputation in this area, what are the
Speaker 1: hidden traps? What are the outstandings mistakes that people from
Speaker 1: either side other marriage make in this area financially, if.
Speaker 3: We're looking at it during the divorce process, I'd say
Speaker 3: divorce is probably the hardest thing that most people will
Speaker 3: go through in their entire life. It's definitely the most expensive.
Speaker 3: To your point, it is an empire killer from that realm.
Speaker 3: But because it is lost and it's grief, people tend
Speaker 3: to lose some of the rationality in the decision making.
Speaker 3: They get stuck in sometimes a sense of justice. Sometimes
Speaker 3: they are concept of I get my day in court.
Speaker 3: Sometimes just someone gets in a third party gets in
Speaker 3: an ear of one party. So I'd say that when
Speaker 3: we're doing the financial aspect of a divorce process or
Speaker 3: any separation, focusing on rational outcomes and what life is
Speaker 3: going to be like afterwards instead of getting stuck on
Speaker 3: what life could have been like or what happened. Generally
Speaker 3: costs fifty percent less money and legal fees than six
Speaker 3: months off the divorce proceedings. So I think when we
Speaker 3: get great success in divorce process, most people think divorce.
Speaker 2: They go, what's the set percentage?
Speaker 3: How much do I get if they've lived with me
Speaker 3: for two years?
Speaker 2: What's the rule? There are no rules.
Speaker 1: There are no rules.
Speaker 3: Did you say in the sense of there's no hard
Speaker 3: and fast and there's certain dates and court time frames
Speaker 3: that need to be met and must be separated for
Speaker 3: twelve months to get divorced and things like that. But
Speaker 3: in terms of financial split, a divorce has a divorce
Speaker 3: aspect of it, the legal aspect of set breaking that marriage.
Speaker 3: It's also got a financial or property settlement, and then
Speaker 3: if there's children, that's a child aspect, So the financial
Speaker 3: aspect is separate from the divorces.
Speaker 1: So yeah, we always think of divorce as lawyers right
Speaker 1: on both sides, not financial advisors, and that is that
Speaker 1: the reality too.
Speaker 3: Yeah, what I'm doing in this space is very new,
Speaker 3: and financial advisors historically when they've gotten involved, they get
Speaker 3: involved after settlement things are done.
Speaker 2: I've now got this pool of money.
Speaker 3: What do I do?
Speaker 2: But when we look at the.
Speaker 3: Really successful processes, two people who decide they're not going
Speaker 3: to continue in a relationship together before lawyers get involved,
Speaker 3: although you should always get them involved at some point
Speaker 3: before they're even involved, you can have discussions which can
Speaker 3: then turn into mediations, which can then turn into lawyer
Speaker 3: led mediations before a court tells you this is the outcome.
Speaker 1: That would require. I expect this would for balance, This
Speaker 1: would require both parties having an advisor, and that would
Speaker 1: require whatever way you cut it, it would demand a
Speaker 1: certain amount of cash. Yeah.
Speaker 3: Yes, So there's actually a form of separation called collaborative
Speaker 3: divorce where you have two lawyers, a communication specialist that's
Speaker 3: usually like a psychologist, and a financial neutral And it's
Speaker 3: a fantastic process for the right people, but when you
Speaker 3: have four professionals in the room, it can be increasingly expensive.
Speaker 1: And is the financial persons supposed to carve it out
Speaker 1: fairly financially between the two people getting divorced.
Speaker 2: In collaborative divorces.
Speaker 3: Their job is to equalize understanding, to ensure that there's
Speaker 3: nothing missed that could be substantially detrimental in a separation.
Speaker 3: So it's like catching things before they go wrong. But
Speaker 3: they will never give advice to either party individually, even
Speaker 3: after the divorce. They'll always refer out from that position there.
Speaker 3: So there's one way that people can do it. But
Speaker 3: in the work that I do, it's more working with
Speaker 3: I often work with the financially disempowered person in the
Speaker 3: relationship because often is the case that one person, as
Speaker 3: we do with most jobs in relationships, one person takes.
Speaker 1: Up the job.
Speaker 2: I'll do the cooking, you do the washing.
Speaker 3: I'll take care of the budgeting, and you can take
Speaker 3: care of managing the kids, time tables, whatever it might be,
Speaker 3: and we divide labor, and that can be proper madic.
Speaker 3: If there's anything I'd say to never have to get
Speaker 3: advice from me unto force, I would say is if
Speaker 3: you can have an equal understanding of what's happening with money,
Speaker 3: one person can manage the day to day, but if
Speaker 3: you both fully understand what's going on, it can decrease
Speaker 3: so many or decrease the chance of things going on
Speaker 3: because there is a greater level of clarity.
Speaker 1: It sounds to me what you're saying to our listeners,
Speaker 1: and to some extent we will just say that there.
Speaker 1: What you're saying is one person can manage the money
Speaker 1: if they want, but both parties should look after themselves
Speaker 1: by being across what's happening with their money. How much
Speaker 1: is our mortgage, how much do we actually make together?
Speaker 1: How many bank accounts do we have, how much is
Speaker 1: in them? Can you give us some examples when you
Speaker 1: say making sure everything's accounted for? Is? Are you talking
Speaker 1: about stuff like money? Literally secret colms, people having money
Speaker 1: talked away that the other partner didn't do.
Speaker 3: It?
Speaker 1: Was that common? Can you give you some examples.
Speaker 2: That can happen?
Speaker 3: But I find that happens when things have started going
Speaker 3: wrong already. So if you've got a couple who'll across
Speaker 3: the decisions, he's a really easy tell. If I'm the
Speaker 3: person who manages the money and I'm making sure our
Speaker 3: plans are on track and we're investing, we're doing all
Speaker 3: these things, and the other person comes to me and says, hey,
Speaker 3: let's go on this holiday, or the kids got this excursion,
Speaker 3: or I want to buy this thing, or and you're
Speaker 3: always saying no, that says that the other person doesn't
Speaker 3: have a good handle on the situation, because if you
Speaker 3: both understand it, it's not a decision of I'm not
Speaker 3: the no guy, I'm not the one that's always asking
Speaker 3: for things. It's we both understand the situation and the
Speaker 3: context of what we can and can't afford. So that's
Speaker 3: a really early indicator that if you us feel like
Speaker 3: I wish we could do more, but I'm always feel
Speaker 3: like we're saying no because we're trying to plan for the.
Speaker 2: Future, but they just don't get it. Because they don't
Speaker 2: get it.
Speaker 1: I wonder my hunch is that the disastrous couple is
Speaker 1: the couple where neither actually pay attention to the money.
Speaker 1: Have you come across divorce proceedings where both parties were
Speaker 1: appalling in terms of that they just didn't pay any attention.
Speaker 3: Or they a little bit of dangerous information. They did
Speaker 3: little things, but not everything. I thought you were taking
Speaker 3: care of that. No, I thought you were taking care
Speaker 3: of that. I was doing this thing, but I wasn't
Speaker 3: doing that thing. And yeah, it's often the case where
Speaker 3: the person who comes to me starts learning about how
Speaker 3: things are done.
Speaker 2: Why did we even do it that way? That doesn't make.
Speaker 3: Any sense at all, because granted their former partner was
Speaker 3: doing the best they could in the knowledge that they had,
Speaker 3: but they may not have known what to do. It
Speaker 3: may have just been thrustle them. You're good with money
Speaker 3: because you saved a bit more before we go together.
Speaker 1: So you've got money because you're an accountant and whatever,
Speaker 1: I'm a portrait artist or whatever. Okay, So what about
Speaker 1: when you have people in that situation? The home, which
Speaker 1: in the Australian in every country matters, but in Australia
Speaker 1: is enhanced because it's also, on top of being a home,
Speaker 1: on top of having an elevated value VISI v. History
Speaker 1: and other countries, it also is a tax protected vehicle.
Speaker 1: So when there's a divorce, is it the case again
Speaker 1: I'm just exploring here, Is it the case that the
Speaker 1: person who does not get the house but gets other
Speaker 1: assets has a much more complex future than the person
Speaker 1: who got the house.
Speaker 2: Maybe?
Speaker 3: And so this sort of falls into one of the
Speaker 3: old urban legends around around separation that if I keep
Speaker 3: the house, I'll be better off. And there's plenty of
Speaker 3: reasons for that, not having to base damp duty when
Speaker 3: you purchase a new house, which is often missed in
Speaker 3: separation agreements. Yeah, finding housing. You keep the house. Now
Speaker 3: I've got to go and find somewhere to live, find
Speaker 3: somewhere to rent. I got it's been near the kids.
Speaker 3: I've got to do that, like all those kinds of things.
Speaker 3: And then obviously the capital gains implications, I'll take the investments, you.
Speaker 2: Take the house.
Speaker 3: What happens in time, But I think what when we
Speaker 3: look at that The root of that problem is actually
Speaker 3: stems from not just what is the split or how
Speaker 3: do we divide assets now? But looking forward, And this
Speaker 3: is where I think financial advice is going to start
Speaker 3: playing a lot more of a role as people see
Speaker 3: the benefit of this is when if you look at
Speaker 3: i'll take fifty percent, or.
Speaker 2: I'll keep the house. You keep this.
Speaker 3: That's great until we realize that the person who's kept
Speaker 3: the house, who was a lower income earner, hasn't really
Speaker 3: been able to earn that much, can't afford to maintain
Speaker 3: the mortgage, can't afford the upkeep on the property, can't
Speaker 3: and then two years they sell it anyway, so that
Speaker 3: family asset is gone.
Speaker 2: So this is where when we're looking.
Speaker 3: At at a separation and trying to decide what's the
Speaker 3: best way to split assets.
Speaker 2: And when I do this work.
Speaker 3: I'm representing one party is looking at it and saying, yes,
Speaker 3: this might be where you want to be now, but
Speaker 3: where do you want to be in the medium longer term?
Speaker 2: Can you even.
Speaker 3: Afford to keep this place? And how does that fit
Speaker 3: into your broader lifestyle? The kids are sixteen and seventeen,
Speaker 3: you want to be in the area for schooling for
Speaker 3: the next two years than what or these sort of
Speaker 3: factors start coming in. But yeah, there is definitely a
Speaker 3: lot of advantages to the family home. There's also a
Speaker 3: lot of cultural connection to it. As you said, the
Speaker 3: great Australian dream of owning your own home or owning
Speaker 3: someone else's is run so strongly in our blood. Keeping
Speaker 3: that property sometimes can feel like something I want to
Speaker 3: keep the house. I found the house, I put all
Speaker 3: the work into the house, I painted the house. There's
Speaker 3: this emotional connection to something that may not be in
Speaker 3: the best interest to retain.
Speaker 1: So it's not necessarily the case then that the complexity
Speaker 1: is all upon the person who got other things other
Speaker 1: than the home.
Speaker 3: Yeah, I'm finding more that keeping the home is not
Speaker 3: just not viable for either party, which is becoming increased
Speaker 3: in the common that so much of the wealth is
Speaker 3: in the home that the amount of debt the retainer
Speaker 3: would have to take on either they can't get it
Speaker 3: or they could can't maintain it, which just makes no sense.
Speaker 3: That seeming that's coming up a lot more than it
Speaker 3: used to.
Speaker 1: Okay, can you give us two seconds on super and
Speaker 1: how it works, because it's still important now.
Speaker 3: Yeah, with superinnuation, there's really the common question again, can
Speaker 3: we combine our super And there's sorts of things where
Speaker 3: people in a relationship you can't. There's a couple of
Speaker 3: rules around contribution splitting things like that, but there is
Speaker 3: a rule around splitting of super innovation in a separation
Speaker 3: and it forms part of the whole arrangement. So there's
Speaker 3: no hard and fast you get half my super or
Speaker 3: you'll come to an agreement that says this is how
Speaker 3: we're splitting up the assets, and those assets will be
Speaker 3: made of this much super, this much cash, this house.
Speaker 2: That sort of stuff.
Speaker 3: And then when that happens, there's a form, a family
Speaker 3: law form that most super funds will have that rolls
Speaker 3: the money from one fund to another. It's a relatively
Speaker 3: straightforward process of these days from an administrative perspective.
Speaker 2: But getting to.
Speaker 3: That point, sometimes you get people who are very short
Speaker 3: term in they're thinking, I want at least possible super
Speaker 3: because I want is much.
Speaker 2: Money in my bank account.
Speaker 3: Other times they'll be focusing on that super Again, it
Speaker 3: really plays back to how they're going to maintain their
Speaker 3: life and moving forward, and is super the best place
Speaker 3: for it if they don't take the super how they're
Speaker 3: going to get money to retire?
Speaker 2: All that kind of stuff.
Speaker 1: Okay, is there any variation when it comes to self
Speaker 1: managed super funds? Let's see mom and Dad are the
Speaker 1: SERF match super fund.
Speaker 2: The two trustees a really fun one.
Speaker 3: Actually, I just did SPT points for advisers on this
Speaker 3: recently because back in what's again, when you look at
Speaker 3: the dynamics of relationships, we have a self managed super
Speaker 3: fund because the person who was running the money is
Speaker 3: it was a good idea. Maybe their business premises is
Speaker 3: owned inside of the fund.
Speaker 1: So the same issue emergen as I imagine the person
Speaker 1: really runs it.
Speaker 3: Yeah, but what you again have is the amplified effect
Speaker 3: that all trustees have to know how to run the fund.
Speaker 2: And have full responsibility for it.
Speaker 3: And you've also then got to be acting in the trustees'
Speaker 3: best interest and or best financial interest, and.
Speaker 2: They have divoting life goals.
Speaker 3: So it might makes sense to retain the fund right now,
Speaker 3: but because of business premises is in it, you can't
Speaker 3: split it and almost into things. But people repartner lives
Speaker 3: change direction, maybe they just don't get along, and maintaining
Speaker 3: that connection can be really hard. I've seen cases where
Speaker 3: partners have taken limited power of attorney over their form
Speaker 3: of spouse's power to trust, the obligations, and that's just
Speaker 3: a nightmare of disaster. Wedding to happen self maniership of
Speaker 3: fund becomes a lot more.
Speaker 1: Complicated, more complicated understand and tell me what if it
Speaker 1: was the case that they wanted to split and they
Speaker 1: wanted to split everything and the core of the self
Speaker 1: maner super fund was a business premises because they used
Speaker 1: to have a shop or whatever. Do you have to
Speaker 1: sell the property at market value and split it is
Speaker 1: that what.
Speaker 3: Happened again would come back to how you decided to
Speaker 3: divide up the assets, whether the balances were segmented, in
Speaker 3: the first place, there's no have tos.
Speaker 2: But in regards to the divorce process.
Speaker 3: But from a super fund perspective, it has to be
Speaker 3: arms length transactions, market value.
Speaker 2: Everything has to be above boarder clients.
Speaker 3: So there's no give from a family or perspective, and
Speaker 3: that your super responsibilities to struss they are the same.
Speaker 1: Responsible and the fund must get the value market value
Speaker 1: for the asset whatever it is, including that whatever you
Speaker 1: had in it, including a business premises. Okay, really interesting,
Speaker 1: absolutely absorbing. Let's come back and we're going to cover
Speaker 1: folks how to divorce in the best possible financial fashion.
Speaker 1: Back in a moment. Hello and welcome back to the
Speaker 1: Australian's Money Puzzle podcast. Okay, today we are talking about
Speaker 1: divorce and money, the best way that you or you
Speaker 1: and your partner can divorce financially. And I have Nathan
Speaker 1: Fradley on the show, who is specializes in this is
Speaker 1: really across it and I'm going to ask him now
Speaker 1: about the best how to do this the best way financially.
Speaker 1: What are your mean what are your mean lessons, Neathan
Speaker 1: from years of working in this area.
Speaker 3: I'm going to be vague on the legal side of it.
Speaker 3: Because I'm not a lawyer, but the financial advisor supports
Speaker 3: the lawyer in this process. But what I've seen work
Speaker 3: really well. Firstly, working with professionals will make your life easier.
Speaker 3: People fear divorce lawyers or financial plans because of cost,
Speaker 3: but inevitably, by working with professionals things to done more efficiently.
Speaker 3: You're getting your unbiased or your biased to you advice.
Speaker 3: It saves you money the end of the day, because
Speaker 3: what can happen is it falls around. But I think
Speaker 3: that getting the right advice is really important and that
Speaker 3: sets you up, which is a bit of gimmy for me.
Speaker 3: But I'd say in terms of when you're looking at
Speaker 3: yourself and how you're going through this, it's going to
Speaker 3: be awful for everyone in the situation the longer you
Speaker 3: can stay rational look at things not just on I
Speaker 3: mentioned before one face value. Now, but what does this
Speaker 3: mean for me at the end after this is done,
Speaker 3: what does life look like because I'm starting again and
Speaker 3: understand that it's going to be okay. That decreases the
Speaker 3: temperature in the room in the separation, and know that
Speaker 3: you'll be all right and then work through I think
Speaker 3: that's really important. And then this is going to be
Speaker 3: harder to say. It's easier to say than do, but
Speaker 3: assuming best intent with your partner will be helpful a
Speaker 3: lot of the time, especially working with the more less
Speaker 3: sophisticated person in the relationship. The former partner will do
Speaker 3: things and because it's for twenty years, they've just done
Speaker 3: things with money, and the now awakened part is.
Speaker 2: Going, why do they do that? Why do they do that?
Speaker 2: Are they hiding money? Are they hiding assets of things?
Speaker 3: And a lot of my job in this instance is explaining,
Speaker 3: you know, this is how this works, this is what
Speaker 3: they're trying to do. I can see how this has
Speaker 3: played out the way it has and unless they're going
Speaker 3: for that or this will come out in the whitewash
Speaker 3: because of the disclosure of assets. That again decreases the temperature.
Speaker 3: The lower the temperature, the comma we are, the camera
Speaker 3: we are, the easier the process can be, and the
Speaker 3: more we can focus on the things that we actually
Speaker 3: want to fight about instead of fighting about everything.
Speaker 1: I expect you have what goes without saying that if
Speaker 1: the person the partner on the other side has a
Speaker 1: lawyer and an advisor and you only have a lawyer
Speaker 1: it sounds to me like you should have an advisor.
Speaker 1: I think that sounds like basic logic in terms of
Speaker 1: the balance of power. The other thing I would ask
Speaker 1: you is what about priorities? When you're sitting there with
Speaker 1: the client and you're saying, Okay, here we go. This
Speaker 1: is a divorce. Again, my client is a very sophisticated operator,
Speaker 1: but is not interested and has never been financial. The
Speaker 1: person on the other side is a similar person, but
Speaker 1: their life has been in finance and they are innately
Speaker 1: well disposed towards getting the best financial outcome. So when
Speaker 1: you're looking at your client, the non financial one basically
Speaker 1: who never asked what they were signing over the years,
Speaker 1: are often didn't ask what's your priorities? What do you
Speaker 1: say to yourself? What are my priorities for my client?
Speaker 1: Is it accommodation, is it cash, flu is it.
Speaker 2: Super all of those things?
Speaker 3: So I think the number one priority is understanding your
Speaker 3: point about just signing things. It's a classic example of
Speaker 3: trust that distributes to both parties, and the person just
Speaker 3: signs it every year and all of a sudden they're going,
Speaker 3: what am I signing? I don't actually understand what's happening.
Speaker 3: I think getting across and understanding the current state of
Speaker 3: play is really important because that helps them make a
Speaker 3: better decision. That can be as simple as the budget,
Speaker 3: which you just mentioned, but is crucial. Where does that
Speaker 3: money actually go? I can't believe we spent that much.
Speaker 3: But also, now that we're separating, we're probably going to
Speaker 3: run two households. How long can we afford.
Speaker 2: To do that for?
Speaker 3: We've got these kids fees, We've got these medical costs
Speaker 3: at this sort of stuff that piles in.
Speaker 2: Who's covering what? How is it paid for?
Speaker 3: Keeping that as clean as possible and as transparent as
Speaker 3: possible again decrease the temperature, but also allows a cleaner
Speaker 3: process at the end of the day because it really
Speaker 3: gives evidence to what the needs are of individuals, and
Speaker 3: I suppose then helps us frame the outcome. What are
Speaker 3: things going to be at the end of the day.
Speaker 3: Because there's a difference between winning a divorce and winning
Speaker 3: a divorce there is I'm going for seventy percent, I'm
Speaker 3: going for blood, or there is a fair and equitable
Speaker 3: arrangement that we come to, which means that I'm going
Speaker 3: to end up in a situation where I can move
Speaker 3: on and be okay.
Speaker 1: Can you give me an example when you say someone's
Speaker 1: going for blood, Can you give me an example of
Speaker 1: the low hanging fruit for the arch aggressor.
Speaker 2: Valuations?
Speaker 1: Evaluations?
Speaker 3: Evaluations is, yeah, I have a pointed a value are Oh,
Speaker 3: this is a I've used before, And it turns out
Speaker 3: there's been some communication about the nature of this obscure
Speaker 3: business that they had, or they might have farm land or.
Speaker 2: Something like that.
Speaker 3: Whether it's a business or there's an asset that's hard
Speaker 3: to value that's illiquid, that's a massive area for I
Speaker 3: suppose play, and also a dynamic of understanding that a
Speaker 3: person who bought it for a certain reason may not
Speaker 3: have told the other party what the potential opportunities in
Speaker 3: this business. Maybe they're in the business and it hasn't
Speaker 3: quite clicked over that winning point, so it's not really
Speaker 3: much of a business. Don't worry about that one. I
Speaker 3: think it's going under any way, these sorts of things.
Speaker 3: The accounting side of it, it's a little bit easier
Speaker 3: because of forensic accounts and what have you to uncover.
Speaker 3: But I think the nature of businesses or certain investments
Speaker 3: and assets is a low hanging fur the more aggressive one.
Speaker 1: That's really interesting and oldmore plays back to your original
Speaker 1: point at the start of getting advisors in before the settlement,
Speaker 1: because the settlement assumes the evaluation. We're correct, Yeah, so
Speaker 1: what what happens? So let's say so let's say the
Speaker 1: dispute emergers, and what happens is that the partner said
Speaker 1: such and such a business was worth X, and the
Speaker 1: evaluation is clearly comically low. What do you do?
Speaker 3: My job in that situation sits more of a supportive position.
Speaker 3: What are the lawyers will tend to do is send
Speaker 3: letters back and forth in various tones, depending on the
Speaker 3: style of lawyer they are, whether they are more litigious
Speaker 3: or more cooperative, and they will come to an agreement
Speaker 3: of an independent valuer that the clients agree to spend
Speaker 3: money on. There could be one that's one hundred thousand dollars,
Speaker 3: there could be one that's ten thousand dollars, and that
Speaker 3: sort of thing plays out, and then that is valuation
Speaker 3: you end up going off. Also, the timeframe evaluation is important.
Speaker 3: If we've got an existing business and we've separated on
Speaker 3: the first of April, that we might use that as
Speaker 3: the date where all valuations are done too, because we
Speaker 3: don't want firstly, this separation is going to be impacting
Speaker 3: the business, and we don't want any nefarious or potential
Speaker 3: nefarious activity of moving money or profits around and things
Speaker 3: like that, or even just the suspicion of that doesn't
Speaker 3: help anyone. And then it also means that the person
Speaker 3: who is who runs that business isn't feeling, oh, I
Speaker 3: might just sandbag my financials and go slow for the
Speaker 3: next two years so that I don't have to give
Speaker 3: as much away. It just takes off the table. But yeah,
Speaker 3: it's getting the right valuers in. And valuers are amazing
Speaker 3: what they do, a meta variety of them in different specialties.
Speaker 1: What do you mean amazingly varied in their talents?
Speaker 3: Just that the angles that valuers take these are largely
Speaker 3: people who work in M and A. They don't just
Speaker 3: look at it and go, oh, this is a business
Speaker 3: of X style, therefore it's worth X times eap it
Speaker 3: or revenue or something. They'll look at it from multiple angles.
Speaker 3: They do cash flow, they'll do forecasting. The reports that
Speaker 3: you get from valuations can be really good, and then
Speaker 3: that can give an indication of whether something seems reasonable.
Speaker 3: What my job is then to look at and go
Speaker 3: if is this, if this has seemed reasonable, what would
Speaker 3: this mean for the client?
Speaker 2: Do they keep fighting? Is this enough?
Speaker 3: Do that?
Speaker 2: Yeah?
Speaker 3: That's where I come in of if this was the
Speaker 3: outcome we got, what would that mean for you? Do
Speaker 3: you want to keep fighting for another two years? Or
Speaker 3: do you take this and go?
Speaker 1: You're something like an expert witness there. Yeah, yeah, okay,
Speaker 1: I can I ask you one last thing on this
Speaker 1: issue about money being touped away a secret accounts, sir
Speaker 1: and all that sort of thing. Is the tax system
Speaker 1: and financial system sufficiently transparent now that you would be
Speaker 1: confident that you have a clear picture of the money
Speaker 1: held in accounts by both parties?
Speaker 3: I would like to think so. But USB stics with crypto.
Speaker 3: Whilet's exists, sometimes people have lost them genuinely.
Speaker 1: I think that's I never thought of that. Crypto rights
Speaker 1: increasingly common, I'm sure.
Speaker 3: Yeah, yeah, I think I would like to have confidence
Speaker 3: that people disclose sets disclosed international holdings do the right thing.
Speaker 3: But I'm sure there is examples of that not being
Speaker 3: the case.
Speaker 1: But yeah, and of course, once upon a time whatever
Speaker 1: Swiss accounts. So we're only for the very very wealthy.
Speaker 1: You know, I can open a Swiss account in ten minutes.
Speaker 1: I could open a Swiss account when the minute we
Speaker 1: finished this show, I could have it done in twenty minutes. Yes, okay, terrific,
Speaker 1: Very interesting, Nathan. I think we might hold it there
Speaker 1: and go to questions, and I expect we may get
Speaker 1: some questions off the back of today's show specifically, but
Speaker 1: let's see all right back in a moment. Hello, Welcome
Speaker 1: back to the Australians Money Puzzitive podcast James Kirkby with
Speaker 1: Nathan Fradley. Wasn't that interesting, folks? On how divorce the
Speaker 1: financial the financials of divorce. I hope it was useful
Speaker 1: to youth the show wanted to do for some time. Hey, Nathan,
Speaker 1: just before on the questions that are of course not
Speaker 1: necessarily enough about divorce, they are this week's questions. You're
Speaker 1: a financial advisor the government we're in the middle of
Speaker 1: an election. There was also some promises about financial advice
Speaker 1: being reformed and straightened out. Here we are with only
Speaker 1: a short period to go before the election. Did they
Speaker 1: make any progress? Do you think on financial advice and
Speaker 1: how it works for as far as most people are concerned?
Speaker 1: In terms of simplifying it, in terms of widening the
Speaker 1: availability of advice to everybody.
Speaker 3: I think that they did some things. Some changes happened,
Speaker 3: but nothing I would say that moved the needle enough.
Speaker 3: There was one experience exemption for education standards, which came
Speaker 3: in so late that I think a lot of people
Speaker 3: who had the experience, who didn't do the education would
Speaker 3: have left the industry already.
Speaker 2: And they proposed a piece of legislation.
Speaker 3: Then they didn't go down very well, so they changed
Speaker 3: the acronym and re launched it, and then they launched
Speaker 3: a half version of that right beforehand. But if I
Speaker 3: went the full term the industries largely it's changed, It's evolved,
Speaker 3: but not at the end of any substantial show.
Speaker 1: At the end of the day, this is all about
Speaker 1: how much financial advice costs, and if it costs five
Speaker 1: thousand a year or so to have an annual review
Speaker 1: of your advice. These are industry figures when we're talking
Speaker 1: about specific projects. Unfortunately, divorce being the issue of djuur,
Speaker 1: here any guidelines to what it would cost people to
Speaker 1: use an advisor.
Speaker 3: In the situation my I cank my face sit somewhere
Speaker 3: around seven and a half to thirty depending.
Speaker 1: We'll leave it at that. We'll assume that is a
Speaker 1: sort of industry standard, and that is quite a ranger
Speaker 1: give us.
Speaker 2: It's much more than the standard.
Speaker 1: Or I see, Pat asks, do you think the big
Speaker 1: super funds like A or T being now? I think
Speaker 1: the number two fund, because of course it was the
Speaker 1: combination of Sun Super and q C will return a
Speaker 1: positive or negative return at the end of this year
Speaker 1: and the next. I be better off putting my money
Speaker 1: in a bank term deposit Number one. Pat, We don't
Speaker 1: give advice number two. We are not going to talk
Speaker 1: about whether that particular fund art will give you a
Speaker 1: positive or negative return. But we're happy to talk about
Speaker 1: whether all the funds, the big funds, the Austrian super
Speaker 1: Uni super Art and all the usual suspects, Host plus
Speaker 1: aware on they go, will they give a positive or
Speaker 1: negative return at the end of this year and the next.
Speaker 1: Nobody knows, Pat, Sorry, nobody knows the future. Even on
Speaker 1: this show. We don't know the future. But the second
Speaker 1: part of your question, would I be better off putting
Speaker 1: my money in a bank deposit? Nathan, I come into
Speaker 1: you and I say I'm in industry fund or retail
Speaker 1: fund number four. They've had some really good years and
Speaker 1: it looks pretty bad this last few months. I see
Speaker 1: that they will be lucky to pull off a positive
Speaker 1: return this year. Should I put my money in a
Speaker 1: term bank deposit? In other words, should I go to cash?
Speaker 1: What do you say?
Speaker 3: My answer, which I'm sure is frustrating, is it largely
Speaker 3: depends on who you are, what your situation is.
Speaker 1: What did it ever make sense to order cash.
Speaker 3: If maybe you needed the money in the next twelve
Speaker 3: months and you any loss of capital would mean you
Speaker 3: couldn't achieve what you needed to achieve, or the thought
Speaker 3: of losing any money kept you awake at night. But
Speaker 3: trying to time the perfect day to do that, as
Speaker 3: we've known with recent volatility, let alone normal volatility, is
Speaker 3: impossible and you will get it wrong.
Speaker 1: Okay, but it's worth anning. We've had the worst day
Speaker 1: on the share market since COVID, and we've had the
Speaker 1: best day since COVID on the share market in recent weeks.
Speaker 1: In fact, it happened inside a week. These are wild times.
Speaker 1: And the other thing I think that's important to anyone
Speaker 1: considering going to cash, going partially to cash, is that
Speaker 1: the rates are dropping. You might tune into the show
Speaker 1: with Liam Short, which was the last recorded show, where
Speaker 1: he is explaining that though the RBA only official rates
Speaker 1: by a quarter of percent, banks, don't you love it.
Speaker 1: They've already cut in three times. They've put the equivalent
Speaker 1: of three RBA quarter percent cuts in already to the
Speaker 1: bank deposits. So they are dropping, my friends, unfortunately, just
Speaker 1: when you want them, of course, to be an alternative
Speaker 1: but all relevant, I hope for you, Pat all right, Luke, Well,
Speaker 1: he just wants to make the point that I have
Speaker 1: We had mentioned in the show that some people might
Speaker 1: say in rocky markets, volatile markets like we're having, that
Speaker 1: they are frustrated with big super funds and feel powerless,
Speaker 1: and that perhaps it would be time to have a
Speaker 1: self managed superfund. And I don't know if this is
Speaker 1: a coincidence, but self managed super funds are about to
Speaker 1: record their best year for a long best year ever,
Speaker 1: forty thousand commencements apparently on the way. And so Luke says,
Speaker 1: a self managed super fund is completely unnecessary for listed assets,
Speaker 1: and I'm not sure how you could justify it for
Speaker 1: this purpose, especially a portfolio of exchange traded funds. The
Speaker 1: additional layer of costs adds up. Even an industry super
Speaker 1: fund allows you to select your investments, and as thet
Speaker 1: allocations the reasoning provided of market volunteerity is no reason
Speaker 1: to go to a self managed super fund. I don't know.
Speaker 1: It depends who you are and your level of confidence
Speaker 1: in your level of understanding in the markets. I do
Speaker 1: take the point though, it's fair enough, isn't it. But
Speaker 1: luc is saying that you can have ANYTF option now
Speaker 1: in big industry funds more unless you can say okay,
Speaker 1: So if you had ten ETFs in an industry super fund,
Speaker 1: you do wonder why you would have a super fund,
Speaker 1: a self manageable fund that just had ten ETFs, and
Speaker 1: comparing one against the other, you wonder whether it be
Speaker 1: worth the effort.
Speaker 3: I think it's my general philosophy so that I can
Speaker 3: do it simpler, easier, or with less riskquy wouldn't I?
Speaker 3: And so if the ETFs that you're wanting to invest
Speaker 3: in you want some control, you want to take out
Speaker 3: of it at some level. If they're available and you
Speaker 3: can put the weight in them that you'd like to,
Speaker 3: because that's often a limiting factor, then and you can
Speaker 3: do it at a cheaper cost, with less responsibility and
Speaker 3: less administration.
Speaker 2: Why wouldn't you.
Speaker 3: I think where people have ETF portfolio that aren't available
Speaker 3: on these menus, Remember they are restricted, they're going to
Speaker 3: take a more conservative view on what they can add
Speaker 3: because they're on the hook for allowing their members.
Speaker 1: So they've got to be there's very much the sort
Speaker 1: of bread and butter vanilla.
Speaker 3: And they're going to put caps. I think there's often
Speaker 3: a complaint that maybe the cap on a Goald ETF
Speaker 3: is too low.
Speaker 1: You're talking about industry funds.
Speaker 2: Now, yeah, industry funds.
Speaker 3: Yeah, they're going to say you can only put up
Speaker 3: to twenty percent of your money in this particular ETF
Speaker 3: because of the risk grading we've given it.
Speaker 2: And that might be a reason.
Speaker 3: I think one of the big super funds was in
Speaker 3: the news recently for commentary around crypto ETFs and why
Speaker 3: they wouldn't allow people to invest in them. And if
Speaker 3: you can't do what you want to do and it
Speaker 3: makes sense to do, and you're taking control of it
Speaker 3: and responsibility for it, and you understand and the responsibilities
Speaker 3: of a self manishiper fund the work involved, then that's
Speaker 3: when you start looking at that as an option.
Speaker 1: Okay, very good, all right, I can see your I
Speaker 1: can see how your balanced demeanor is useful in the
Speaker 1: job you don Yeah, yeah, yeah, thank you very much
Speaker 1: for being on the show today. Great to talk to
Speaker 1: you again. It was a very interesting single subject show
Speaker 1: that we should have done a long time ago. It
Speaker 1: was only when I saw, when I thought about it
Speaker 1: and I thought about you, that you do that. I said,
Speaker 1: this is the time to do it. This is when
Speaker 1: there is actually something of a lull between these at
Speaker 1: this time of the year. Very good to step out
Speaker 1: and have a look at something like that. Okay, hey,
Speaker 1: thank you Nathan Fradley. Great to have you on the show.
Speaker 1: Thanks Jev, and thank you everybody for listening. Remember the
Speaker 1: email the money Puzzle at the Australian dot com dot au.
Speaker 1: Today's show was produced by Leah Sammaglu Talk to you soon,
Speaker 1: SA The Fool